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Chinese Foreign Minister Wang Yi is scheduled to embark on a three-nation tour of the South Pacific this week that will include a stop in the Solomon Islands where he will sign a controversial new security agreement.

Prime Minister Manasseh Sogavare described Wang's upcoming one-day visit as a "milestone" and characterized Beijing as “an important development partner at a very critical time in our history.”

Wang will be accompanied by an unusually large 20-member delegation on the tour who will also join him for the subsequent stops in Fiji and Papua New Guinea. There are unconfirmed reports the Foreign Minister may also go to Vanuatu, Samoa, Tonga, and Kiribati.

The trip is likely to spark renewed anxiety from certain Western governments, particularly the U.S., New Zealand, and Australia, who are fearful of China's expanding political and military presence in the South Pacific, a region that Canberra has long considered its traditional sphere of influence.

Expert Views on China's Growing Influence in the South Pacific

• AUSTRALIA: "More and more, over the last few years, Australia has found itself moving to a position where our approach to managing the rise of China is to try and stop it happening. That's not going to work. Australia has to learn to live with Chinese power -- and that includes Chinese expanded influence in the southwest Pacific" -- Hugh White, emeritus professor of strategic studies at Australian National University (CNN)

• UNITED STATES: "The U.S. and its allies should balance the rhetoric about the new security pact and its potential threat to U.S. interests with a strategy for renewed engagement in the region. The United States should also coordinate with its regional allies, partners, and the private sector to reestablish a credible presence in the region and provide alternatives to China’s financial resources" -- Zongyuan Zoe Liu, international political economy fellow at the Council on Foreign Relations (CFR)

SUGGESTED READING:

• Solomon Times: Chinese Foreign Minister Will Visit Solomon Islands as Quad Leaders Convene in Tokyo by Samson Sade
• ABC News (Australia): China's foreign minister, Wang Yi, arriving for Pacific Islands visit by Stephen Dziedzic, Marian Faa, and Evan Wasuka

U.S. President Joe Biden formally lifted the veil on the new Indo-Pacific Economic Framework (IPEF) at a ceremony on Monday in Tokyo alongside fellow Quad leaders Fumio Kishida from Japan, India's Narendra Modi, and newly-elected Australian Prime Minister Anthony Albanese. 

13 countries in the region signed on to the new initiative, although at this point it really doesn't mean very much since the specific details of the plan have yet to be negotiated. Broadly speaking, IPEF will have four pillars:

1. Supply-chain resilience
2. Clean energy, decarbonization, and infrastructure
3. Taxation and anti-corruption
4. Fair and resilient trade

The plan was greeted with enthusiasm by Washington's closest allies in Northeast Asia. Elsewhere, though, not so much. In Vietnam, for example, two of the country's largest news outlets, VN Express and Tuoi Tre (both closely supervised by the Communist Party) did not feature a single story on IPEF following the announcement even though Vietnam is a signatory.

Why Are Asian Countries So Ambivalent About IPEF?

• NO MARKET ACCESS: Without any preferential access to the U.S. market, most countries in Asia-Pacific are not taking IPEF that seriously. The 13 signatories are being nice to Joe Biden in the vain hope that it will encourage the U.S. to get more involved in the region but few have any illusions that this will produce any tangible economic benefit.

• U.S. POLITICS: If it takes 18 months to negotiate the terms of IPEF (and that is being generous given that most large-scale trade agreements require much more time) that will mean it will be ready to sign on November 23, 2023 -- precisely 60 days before a new president will take office in the United States.

  Memories are still fresh in this part of the world of what happened the last time a Asian trade agreement was done just before a change of power in Washington.

• THE CHINA THING: There's a palpable perception gap between IPEF members that want to take a hard line against China (U.S., Japan, Korea) and those who don't (Vietnam, Singapore, the Philippines). Bridging that divide is going to be extremely difficult and will no doubt be a point of contention in the negotiations given China's outsized economic heft in Asia and its penchant for punishing countries that it deems hostile.

China: The U.S.-led IPEF “Creates Division and Confrontation”

The Chinese government fired back on Monday against the launch of the Indo-Pacific Economic Framework by belittling it as "a big scam" and accusing Washington of "stoking division" in Asia.

Foreign Minister Wang Yi addressed the issue at a press conference over the weekend when he called the new pact "questionable." State media, however, was far less measured in its assessment. The tabloid Global Times, always a great source of flamboyant headlines described the new U.S. pact as "loud but empty."

SUGGESTED READING:

• Bloomberg: Understanding IPEF and How It Counters China’s Clout: QuickTake by Enda Curran and Michelle Jamrisko 
• Associated Press: What to Know About the New IPEF Trade Bloc Biden Is Touting In Asia by Josh Boak and Aamer Madhani

The 30-meter-high Statue of the Amazon ("Statue de l'Amazone") is a tribute to the all-female military regiment in the 18th century Kingdom of Dahomey that is now present-day Benin.

Chinese artist Li Xiangqun won the commission to build the statue following an extensive selection process that began three years ago. The statue was paid for by the government of Benin. (VUDAF -- in French)

Foreign Ministers from the five-nation BRICS group agreed to support China's call to expand the bloc for the first time in more than a decade when South Africa was added. Member states said in a joint statement after the meeting that they agreed in principle to the move but did not hint at which countries might be in line to join.

Thursday's meeting with Russian Foreign Minister Sergei Lavrov was the first time the five foreign ministers have gotten together since Moscow's invasion of Ukraine.

Who Might be Next? The two most-talked-about countries poised to join the BRICS club are Indonesia and Argentina.

Why Is This Important? China's drive to expand the BRICS is most likely part of Beijing's longstanding "blunting strategy" that aims to challenge U.S. international influence by bolstering multilateral organizations, particularly those institutions like the BRICS, NDB, and AIIB that were initiated by Beijing.

SUGGESTED READING:

• South China Morning Post: BRICS members back China’s call for expansion by Amber Wang
• Buenos Aires Times: With key backers onboard, Argentina moves closer to joining BRICS group

With the U.S. Summit of the Americas set to get underway in Los Angeles in two weeks, China appears to be stepping up its own diplomacy in Latin America. Foreign Minister Wang Yi on Friday held talks with his counterparts from Uruguay, Ecuador, and Nicaragua.

Specific details of the meeting were not available but based on the coverage from Chinese state media it appears that the U.S. was very much on Wang's mind during the call when they said he "expressed opposition to some countries' stubborn Cold War mindset."

Why is the timing of Wang's call important? The Summit of the Americas is already in trouble after other LatAm-Caribbean countries angrily pushed back against the U.S. refusal to invite Cuba, Venezuela, and Nicaragua. The situation is so bad, in fact, that Mexican President Manuel López Obrador has said he may stay away unless all countries in the hemisphere are invited.

Wang likely sees this as a good opportunity to take advantage of the current displeasure with the U.S. and to throw a bit of shade Washington's way given the increasingly sour mood in the region.

SUGGESTED READING:

• CGTN: Chinese FM elaborates on China-Latin America relations
• Associated Press: Biden risks troubled Americas summit in Los Angeles by Chris Megerian and Matthew Lee

The Zimbabwean government is once again accusing the U.S. of paying local journalists to write negative stories about Chinese investment in the country. The state-run Herald newspaper reported on Tuesday that the U.S. embassy in Harare is working with the opposition MDC party to foment opposition to Chinese mining interests in the country ahead of planned protests next week. The embassy has previously similar accusations by the government and the ruling ZANU-PF party. (THE HERALD)

The Indian Army is shifting a large number of its forces along northern border regions from its frontier with Pakistan to the disputed border region with China. Army Chief General Manoj Pande announced that six divisions would be redeployed to the contested region along what's known as the "Line of Actual Control" (LAC) in eastern Ladakh in a move that is likely to provoke a reaction from the PLA. Troops from both sides have been locked in a tense stand-off in recent years including brief skirmishes that killed and injured dozens. (INDIA)

Construction is underway in Chile of a new factory that will produce 50 million doses of various vaccines made by the Chinese pharmaceutical company Sinovac. The new plant will serve mostly as a "fill and finish" facility rather than manufacturing vaccines from scratch, similar to a Sinovac joint venture in Egypt. With 26 million COVID jabs given to date, Chile is among the world's largest consumers of Chinese vaccines. (GLOBAL TIMES)

Investors will be keeping a close watch on the value of the Thai baht in Monday trading after the currency closed last week at a five-year low on the news that China is now restricting tourists from traveling abroad. The Chinese announcement, part of its COVID-control measures, is a massive blow to Thailand's economy where Chinese visitors accounted for a third of all tourists. It's a similar story in other SE Asian countries, including Vietnam, Malaysia, and Singapore which also came to rely heavily on Chinese travelers to bolster their tourism sectors. (NIKKEI ASIA)

Pakistani security forces arrested a separatist militant on Monday who was reportedly planning to attack Chinese workers in southwest Baluchistan province. Counter-terrorism authorities say the woman in custody is a member of the Baluchistan Liberation Army, the same group that killed three Chinese language teachers in a suicide bombing attack at Karachi University. The arrest happened just two hours before Prime Minister Shahbaz Sharif spoke by phone with his Chinese counterpart Li Keqiang. (ASSOCIATED PRESS)

Brazil's largest meat exporter, JBS SA, is brushing aside concerns that the ongoing lockdowns in China will adversely impact beef sales in the world's largest consumer market. JBS did acknowledge that higher grain prices brought on by the war in Ukraine and supply chain disruptions in the U.S. are points of concern but the situation in China, not so much. The company said because of Chinese consumers' low per capita beef consumption, they're confident there will be a lot of upside once the lockdowns end. (REUTERS)

The two-year effort to relax intellectual property rules (IPR) for producing COVID-19 vaccines in the world's poorest countries is on the verge of becoming the latest casualty in the U.S.-China standoff. Deputy U.S. Trade Representative Maria Pagan told Bloomberg on Monday that any WTO IPR agreement must exclude China or else the U.S. will back out of the proposed plan. South African President Cyril Ramaphosa among other Global South leaders have issued urgent appeals for IP waivers that would allow low-income countries to manufacture COVID-19 vaccines. (BLOOMBERG)

Tensions are running high in Pakistan's southwestern Balochistan province following Tuesday's arrest of a second woman allegedly connected with a planned attack on Chinese nationals. The government believes the women are members of the separatist Balochistan Liberation Army which claimed responsibility for a suicide bombing in Karachi last month that killed three Chinese teachers. (REUTERS)

Iraq is apparently concerned that too much Chinese investment in its oil sector could accelerate an exodus of Western oil companies. News emerged on Tuesday that the oil ministry blocked three deals last year in order to prevent Chinese oil majors from becoming too dominant in the market. "We don't want the Iraqi energy sector to be labelled as a China-led energy," said an unnamed Iraqi official. (REUTERS)

Chinese Foreign Minister Wang Yi will chair a virtual meeting with his counterparts from the other four BRICS countries on Thursday. This will be the first high-level BRICS meeting since Russia's invasion of Ukraine, a topic that's expected to top the agenda. The ministers will also discuss preparations for a BRICS leaders summit that is expected to take place next month. (THE HINDU)

A massive cargo ship carrying 2 million barrels of Iranian crude is expected to arrive this week in southern China to be added to the country's strategic oil reserve. This is the third such shipment from Iran since December even though Iranian oil exports are subject to U.S. sanctions. Iranian oil, according to unofficial estimates, now accounts for around 7% of China's total crude imports. (REUTERS)

China appears to be reviving its COVID-19 vaccine distributions to countries in the Global South. This week Ecuador took delivery of 2.5 million doses that will be will used to innoculate young children.The Ecuadorian shipment follows news that Sinovac is building a new vaccine factory in Chile and Chinese vaccine manufacturing equipment is on its way to Morocco. (XINHUA)

Philippines President-elect Ferdinand Marcos said he plans to expand ties with China when he assumes office on June 30th. The incoming president told his Chinese counterpart Xi Jinping in a phone call on Wednesday that he hopes relations between the two countries will "shift to a higher gear."

"The way forward is to expand our relationship not only diplomatic, not only trade, but also in culture, even in education, even in knowledge, even in health, to address whatever minor disagreements that we have right now," Marcos said in a statement.

The president-elect seemingly brushed aside what he described as "conflicts or difficulties," which is widely regarded as a nod to ongoing territorial disputes between the two countries in the South China Sea.

Marcos is clearly building on the momentum set by his predecessor, Rodrigo Duterte, who erratically veered between fostering closer ties with the U.S. and China but, in the end, tilted Manila's foreign policy more towards Beijing.

SUGGESTED READING:

• Reuters: Philippines' Marcos wants China ties to 'shift to higher gear' under his presidency by Neil Jerome Morales and Karen Lema
• CNN: Why the Philippines election could be a win for China by Simon McCarthy
• Associated Press: Marcos presidency complicates US efforts to counter China by David Rising and Jim Gomez

International companies are by no means alone in looking to move their supply chains out of China. A growing number of Chinese manufacturers are doing the same, albeit for very different reasons.

While U.S., European and Japanese companies have been frustrated by souring political ties, tariffs, and ongoing lockdowns, Chinese companies see an opportunity to take advantage of new regional free trade agreements and cheaper labor costs in nearby countries like Vietnam.

The Chinese news site First Financial Information (第一财经资讯) highlighted the trend this week in a WeChat story that showcased the decision by factory owner Tang Hongshen (唐红生) to move some of his company's operations from the manufacturing hub in southern China's Pearl River Delta region to Binh Duong province outside of Ho Chi Minh City in Vietnam.

First, Tang was able to lower monthly labor costs by almost half, from $740 a month per worker in China to less than $440 a month in Vietnam. The cost of electricity in Vietnam is also about half as much as in China and the tax rates are basically the same in both countries.

So, the net cost to produce the vast quantities of molded plastic shoe components that his company makes is considerably lower in Vietnam than it is in southern China. Plus, now with the new Chinese-initiated RCEP regional free trade agreement in effect, Tang is able to ship his product back to China for final processing duty-free.

The Kenyan government's years-long effort to export fresh avocados to China ran into yet another obstacle this week when Chinese authorities informed Nairobi that another round of audits will be required before shipments can begin.

“We have received communication from China that they need to carry out a virtual audit of orchards and facilities before we can start exporting our avocado to their market,” said Isaac Macharia, General Manager of Phytosanitary services at the Kenya Plant Health Inspectorate Service (Kephis).

Farmers will no doubt be very frustrated by this latest obstacle that comes three years after the initial agreement was signed for Kenyan avocados to be allowed entry into the Chinese market.

While Kenya ships tons of fresh avocados to Europe and the Middle East every year, China initially required the fruit to be flash-frozen first as a preventive measure against unwanted pests. They later relaxed that regulation after Kenyan complaints that obtaining those freezers was cost-prohibitive.

Kephis says at least ten firms have met the requirements, passed the initial sanitary audits, and were just waiting for the go-ahead to begin exporting when this latest request for a "virtual audit" came in.

Why Kenyan Avocado Exports to China Are Symbolically Important

• MARKET ACCESS: China pledged at last year's FOCAC that it would open its market wider to African agricultural products using so-called "Green Lanes" to expedite the approval process. The optics of the ongoing avocado saga in Kenya is a clear test of that commitment.

• TRADE BALANCE: Agriculture is among the only ways for resource-poor African countries like Kenya to reduce their massive trade deficits with China. But that's going to be difficult to achieve if the import requirements are as onerous as they've been for Kenyan avocados.

SUGGESTED READING:

• Business Daily: China set to conduct another audit round on Kenyan avocados by Gerald Andae
• Development Reimagined: Fresh or Frozen: Should Kenya and China Renegotiate Their 2019 “Avocado Deal”? by Samu Ngwenya

This is what critics of the new Nairobi Expressway feared would happen: that a select few wealthy motorists would be able to afford the tolls while everyone else is relegated to the side roads that are jammed far beyond capacity.

Last November, Laji Adoyo, an urban planning scholar at Kenyatta University, warned: "The expressway is not a serious attempt to deal with congestion. This is because it’s a road for those who “are able to afford it”, a public subsidy for the rich, so to speak."

Now admittedly, it's still early days for the expressway and the road isn't fully open to the public so it's hard to tell if this picture is representative of what the situation will look like six months from now. 

But in terms of perceptions, this is not a good look.

Cargo vessels loaded with Congolese cobalt are once again making their way to China now that port operations in Durban are beginning to recover. The port was shut for weeks after severe floods last month blocked the roads and railways that transport the tons of raw materials that depart from southern Africa's largest shipping facility. 

The new problem is what happens when those vessels make it to China? Many of the ports along China's eastern seaboard are either closed or have limited operations due to the ongoing lockdowns. Similarly, many of the factories in Zhejiang and other eastern provinces that process the cobalt are similarly hobbled.

SUGGESTED READING:

• S&P Global: Lockdowns in China dampen cobalt market sentiment by Michael Greenfield and Leah Chen
• S&P Global: COVID-19 outbreak in China dents battery metals demand by Leah Chen

In a rare display of bipartisanship, a group of U.S. Senators this week sent letters to four cabinet members expressing their frustration over the administration's lack of progress in using funds allocated by Congress in the Energy Act of 2020 to build a domestic critical mineral supply chain.

The Senators' impatience on this issue reflects a broader anxiety in Washington about the current U.S. dependence on China for supplies of processed metals and minerals including cobalt, manganese, and nickel which are essential to electric vehicle batteries and other next-generation technologies.