At a top regional security forum on Saturday, US Defence Secretary Jim Mattis said China’s recent militarisation efforts in the disputed South China Sea were intended to intimidate and coerce regional countries. Mattis told the Shangri-La Dialogue that China’s actions stood in “stark contrast with the openness of [the US] strategy,” and warned of “much larger consequences” if China continued its current approach. As an “initial response”, China’s navy has been disinvited by the US from the upcoming 2018 Rim of the Pacific Exercise, the world’s largest international naval exercise. It is important to understand the context of the current tensions, and the strategic stakes for both China and the US. In recent years, China has sought to bolster its control over the South China Sea, where a number of claimants have overlapping territorial claims with China, including Vietnam, the Philippines and Taiwan. China’s efforts have continued unabated, despite rising tensions and international protests. Just recently, China landed a long-range heavy bomber for the first time on an island in the disputed Paracels, and deployed anti-ship and anti-air missile systems  to its outposts …

Immigration is at the heart of the Brexit debate. It’s a large reason why economic arguments have failed to sway voters. Despite warnings of the high economic costs of leaving the EU (warnings supported by a majority of economists), immigration has continued to have a powerful influence – and is perhaps the major reason why the opinion polls have become so close in recent weeks. The immigration debate is quite polarised. On one side, the Remain campaign either ducks the issue or focuses on the benefits that immigration brings to the economy as a whole. On the other side, the Leave camp focuses on its costs and plays into fears (often in a cruel and cynical way) that migrants are putting pressure on public services that are already at breaking point. At least among Labour supporters intending to vote leave, immigration also appears to be a key issue. The need for a more even-handed assessment of the costs and benefits of immigration is sorely needed. While immigration brings undoubted benefits, it also places pressures on particular communities. It also feeds a sense of …

Emerging markets have come under a bit of pressure recently, with the combination of the dollar’s rise and higher U.S. ten year rates serving as the trigger. The Governor of the Reserve Bank of India has—rather remarkably—even called on the U.S. Federal Reserve to slow the pace of its quantitative tightening to give emerging economies a bit of a break. (He could have equally called on the Administration to change its fiscal policy so as to reduce issuance, but the Fed is presumably a softer target.) Yet the pressure on emerging economies hasn’t been uniform (the exchange rate moves in the chart are through Wednesday, June 13th; they don’t reflect Thursday’s selloff). That really shouldn’t be a surprise. Emerging economies are more different than they are the same. With the help of Benjamin Della Rocca, a research analyst at the Council on Foreign Relations, I split emerging economies into three main groupings: Oil importing economies with current account deficits Oil importing economies with significant current account surpluses (a group consisting of emerging Asian economies) And …

I increasingly suspect my view on Chinese “rebalancing” is at odds with the current consensus (or perhaps just with a plurality of the investment bank analysts and financial journalists who watch China). In two significant ways. One. I think China’s balance of payments position is fairly robust. In both a “flow” and a “stock” sense. The current account isn’t that close to falling into a deficit (and it wouldn’t be that big a deal if China did have a modest deficit). And China’s state is back to adding to its foreign assets in a significant way. The days of “China selling reserves” are long past. And two, I think the rebalancing that has lowered the measured current account surplus is more fragile than most think. It is a function of policies—call it a large off-budget “augmented” fiscal deficit or excessive credit growth—that some believe to be unsustainable, and many think are unwise. The IMF, for example, wants China to bring down its fiscal deficit and slow the pace of credit growth, policies that directionally would …

Impact studies have revealed how different parts of the UK will suffer from Brexit more than others. One irony, as many have pointed out, is that a lot of these regions voted for Brexit. Another irony, which is less talked about, is that these are also regions that benefit a great deal from EU regional policy. The UK is an unevenly developed state. Some territories (such as London) are much more well off than others (such as the northeast of England) as a result of decades of investment (or under-investment) in their economies. Others benefit from varying levels of devolution, which gives them a relatively greater autonomy to tailor policy to their own needs, and stronger political representation within Britain and the EU. Over recent decades, when the UK government has fallen short in terms of regional policy to address the needs of less economically favoured regions, the EU has provided much-needed support. So the key question now is what will happen to the regions which have relied on this in the event of any Brexit? So far this remains …

There are two ways of looking at the new Press Review announced by Theresa May, the UK prime minister: a genuine attempt to inject some badly needed funds into the failing business model of journalism, or another backhander to the mainstream corporate press to keep them sweet. Depressingly, history suggests the latter. The prime minister was effusive about the importance of journalism as a “huge force for good” – and anyone who has seen Spielberg’s The Post could scarcely disagree. That film encapsulated everything noble about great reporting and the vital importance of a free and independent press to a healthy democracy. May chose to highlight the crisis in local journalism – where the journalism may be less dramatic than that portrayed by Tom Hanks et al, but is just as vital: the leaders of local institutions such as hospitals, police forces, local courts or local councils can be equally susceptible to corruption or incompetence and also require the kind of scrutiny which keeps them accountable to local people. At a more mundane level, communities …

Democratic governments regularly supply weapons to what are sometimes called “outlaw states” – oppressive regimes that violate the basic rights of their own citizens, or aggressive regimes that wrongfully threaten the security of outsiders. Sometimes democratic governments sell the weapons themselves; sometimes they issue export licenses to private arms firms within their jurisdiction. Both practices are frequently condemned on moral grounds. But how might governments who help to arm outlaw states try to defend themselves? What arguments could they appeal to in an attempt to justify their actions? Politicians sometimes claim that their acts make no difference to the degree of suffering inflicted by the regimes that they arm – that if they didn’t sell weapons to the regimes in question, some other government would. For example, when it was revealed in 2014 that Hong Kong’s riot police had used British-made tear gas against unarmed pro-democracy protesters, then foreign secretary Philip Hammond remarked: “CS gas is available from large numbers of sources around the world. To be frank, I think that is a rather immaterial …