International Relations and Diplomacy (ISSN2328-2134) Volume 8, Number 04,2020

International Relations
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Volume 8, Number 4, April 2020 (Serial Number 79)
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★Abdel-Hady (Qatar University, Qatar); ★Martha Mutisi (African Centre for the Constructive
★Abosede Omowumi Bababtunde (National Open Resolution of Disputes, South Africa);
University of Nigeria, Nigeria); ★Menderes Koyuncu (Univercity of Yuzuncu Yil-Van,
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★Anna Rosario D. Malindog (Ateneo De Manila University, Canada);
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★Basia Spalek (Kingston University, UK); Applied Systems Analysis, Austria);
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Poland); ★Niklas Eklund (Umeå University, Sweden);
★Brian Leonard Hocking (University of London, UK); ★Phua Chao Rong, Charles (Lee Kuan Yew School of
★Chandra Lal Pandey (University of Waikato, New Public Policy, Singapore);
Zealand); ★Peter A. Mattsson (Swedish Defense College, Sweden);
★Constanze Bauer (Western Institute of Technology of ★Peter Simon Sapaty (National Academy of Sciences of
Taranaki, New Zealand); Ukraine, Ukraine);
★Christian Henrich-Franke (Universität Siegen, Germany); ★Raymond LAU (The University of Queensland,
★Christos Kourtelis (King’s College London, UK); Australia);
★David J. Plazek (Johnson State College, USA); ★Raphael Cohen Almagor (The University of Hull, UK);
★Dimitris Tsarouhas (Bilkent University, Turkey); ★Satoru Nagao (Gakushuin University, Japan);
★Fatima Sadiqi (International Institute for Languages and ★Sanjay Singh (Ram Manohar Lohiya National Law
Cultures, Morocco); University, India);
★Ghadah AlMurshidi (Michigan State University, USA); ★Shkumbin Misini (Public University, Kosovo);
★Guseletov Boris (Just World Institute, Russia); ★Sotiris Serbos (Democritus University of Thrace,Greece);
★Hanako Koyama (The University of Morioka, Japan); ★Stéphanie A. H. Bélanger (Royal Military College of
★Kyeonghi Baek (State University of New York, USA); Canada, Canada);
★John Opute (London South Bank University, UK); ★Timothy J. White (Xavier University, Ireland);
★Léonie Maes (Vrije Universiteit Brussel, Belgium); ★Tumanyan David (Yerevan State University, Armenia);
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The Editors wish to express their warm thanks to the people who have generously contributed to the
process of the peer review of articles submitted to International Relations and Diplomacy.
International Relations
and Diplomacy
Volume 8, Number 4, April 2020 (Serial Number 79)
Contents
Terrorism
Terrorist Framework and Inclination: The Behavourial Pattern of Boko Haram in Nigeria 127
Regis Chima Anyaeze
Political Economy
The Global Value Chains and the Evolution of Chinese Economic Model 142
Fernanda Ilhéu
State-Company Institutional Complementarities on Biomedical R & D in the US and

Its Global Consequences 155
Felipe De Carvalho
Sino-US Relations
China and the United States’ Critical Roles in Tackling Climate Change and
Shaping the International Regimes 173
Fang-Ting Cheng
International Relations and Diplomacy, April 2020, Vol. 8, No. 04, 127-141
doi: 10.17265/2328-2134/2020.04.001
D DAVID PUBLISHING
Terrorist Framework and Inclination: The Behavourial Pattern of

Boko Haram in Nigeria
Regis Chima Anyaeze

Spiritan University Nneochi (SUN), Nneochi, Nigeria
Nigeria has witnessed a continuous deadly onslaught from Boko Haram since 2008. Boko Haram has survived
three different administrations in Nigeria and has between 2008 and 2020 killed more than 54,000 people and
1
displaced nearly two million in North-Eastern Nigeria. Since 2011, the sect has withstood Nigeria’s military and
defense strategies with equanimity, claiming more than 200 Nigerian plus 92 military Chadian personnel, capturing
and destroying more than $200 million worth of military equipment. Military installations, open markets,
religious-worshipping houses, government and defense institutions have remained consistent targets for Boko
Haram’s attack. The level of attacks, intelligence and near unbeatable approach being displayed by Boko Haram
situate Boko Haram in de broader framework of international terrorism and depict a high level of negligence or
compromise from the security institutions and the Nigerian state. The swapping of captives, striking of deals,
negotiated release of Boko Haram captives, attempts at general or selected amnesty, and the huge benefits of
political economy of terrorism equally suggest that Boko Haram has not only been an enemy, but a veritable partner
of the Nigerian State, with its defeat not foreseeable anytime in the near future.
Keywords: terrorism, Boko Haram, Nigeria, security, behaviour
Introduction
Boko Haram has become a household name in Nigeria, Africa and globally. In Nigeria, people refer
“Boko Haram” to persons who threaten others or cause others to panic. In public and private spheres, people
scamper for their live at the shout of “Boko Haram”! These describe the level of insecurity and security alert
that Boko Haram has occasioned in Nigeria. Alert, not in the sense of responding to ensured security, but rather
in the sense of a level of consciousness devoid of security and safety―a reaction to hopeless situation. This is
because the security personnel (police or military) has never prevented attacks or raids by Boko Haram or
known to have carried out any swift operation to rescue victims of attacks or raids. The last two decades (more
since 2012) has witnessed a collapse of national and sub-regional security owing to the activities of Boko
Haram. The security situation has continued to degenerate, despite national, regional, and international efforts
to contain the threats and activities of Boko Haram. Boko Haram has carried out more than 330 successful
attacks and raids, more than 50 suicide attacks, destroyed more than 20 national and international symbols,
Regis Chima Anyaeze, Ph.D, Acting Head of Department, History and International/Diplomatic Studies, Spiritan University
Nneochi (SUN), Nneochi, Nigeria.
1
Amnsesty International Report, 2015, https://www.amnesty.org/en/latest/news/2015/01/boko-haram-glance/; 2019,
https://www.amnesty.org/en/countries/africa/nigeria/report-nigeria/; Internal Displacement Monitoring Centre (IDMC), Latest
Global Report on Internal Displacement (GRID), 2012, https://www.internal-displacement.org/.
128 THE BEHAVOURIAL PATTERN OF BOKO HARAM IN NIGERIA
captured and taken more 1,000 women (including schoolgirls), recruited more than 20,000 young men and
women, displaced over 2,000,000 people including children, attacked and sacked more than five military bases,
killing at least 152 soldiers, sacked more than 28 towns and villages, abducted more than 2,000 women, and
once succeeded in erecting its flag in vast area (27 municipalities) of the northeast of Nigeria as a caliphate.
This paper is a result of a two-year participatory observation in Nigeria―Northeast, and a conscious
intermingling with security operators at the frontline of the aggression against Boko Haram in Nigeria. It
involved semi-structured interviews, semi-structured questionnaires, and visits to internally displaced persons
(IDP) camps. The definitions and analysis of the activities and behaviour of Boko Haram as an organization
and as insurgents are based on secondary literature.
The paper goes beyond ethnicism and religion in probing the activities of Boko Haram for a tally with
global terrorist tendencies. Using historical examples and definitional and behavioural approaches, this paper
examines the intentions behind the activities and ideologies of Boko Haram, and analyses how Boko Haram fits
into the characteristics of the global terrorist framework.
Boko Haram, Historical Background

Prior to 2008, the name Boko Haram was not attached with any value in Nigerian politics and history.
Boko Haram did not exist, or if it did, it made insignificant impact. Though religiosity (Islamic and Christian)
have been part of Nigerian history, however, activities of fundamentalist sects occasionally were spontaneous
and could be described as “hit and run” affair (Soyinka, 2012). According to Soyinka (2012), the
fundamentalist Islamic sect that could come near to using religion to threaten national security in Nigeria was
2
the Maitatsine of the 1980s. Using violence as strategy, Maitatsine, as a sect, felt divinely instructed by Allah
to Islamize the country by killing and wiping out non-Muslims in Nigeria. In 1980, the civilian government of
Shehu Shagari rose to the occasion, and mustered courage by confronting and defeating the Maitatsine sect. In
2008, a similar group sprang up in Borno State, northeast of Nigeria, with the name “Boko Haram”. Literally
translated, Boko Haram means “Western education is evil”. A study of the Boko Haram at the inception of the
movement in 2008 shows that it was mainly an Islamic group made up of local and illiterate almajiris (Islamic
3
youth beggars), with the original mission to force everything Western out of Northern Nigeria. Following the
same strategy of violence as Maitatsine, Boko Haram has added kidnapping, raiding, suicide bombing, and
raping as strategies to force the northeastern population of Nigeria into submission.
In 2008, the group numbered about 500 and was led by an Islamic cleric called Mohammad Yusuf. With
initial attacks on installations that had Western background, such as schools, hospitals, and police stations, the
group never hid its motivation to target Western installations. In 2009, the Federal Government of Nigeria
under President Umar Y’ardua militarily responded to the threats posed by Boko Haram and significantly
reduced the capacity of the sect to carry out large scale attacks. The 2009 military victory against Boko Haram
was not only as a result of political will by the then government to defeat the sect, but also because the sect
could be regarded at the time as non-sophisticated and a rag-tag organization. As a result of the operation which
also saw to the death of its leader Yusuf in a custody, Boko Haram seized to function as a deadly Islamic
fundamentalist sect, and the name almost forgotten.
2
Maitatsine, as a sect regarded non-Muslims as infidels, and therefore had no right; according to the fundamentalist Islamic rules,
we know to them and find in their own Koranic versions.
3
Refer to the speech of the Nigerian president on Boko Haram in the Paris Summit, CTV New, May 17, 2014.
THE BEHAVOURIAL PATTERN OF BOKO HARAM IN NIGERIA 129
The Resurrection of Boko Haram

In April 2011, on the eve of the declaration by the Independent National Electoral Commission (INEC) of
Nigeria of the winner of the 2011 presidential elections, believed to have been won by Goodluck Jonathan,
parts of the North were thrown into violent attacks. The attacks which sounded as a protest and rejection of the
new president from the Christian South resulted in many deaths. Members of the National Youth Service Corps
(NYSC) deployed by INEC as ad hoc staff in various polling stations in the north became easy targets of
attacks. The name Boko Haram resurfaces after the Nigeria’s general elections of April 2011 to claim
responsibility for the attacks. After the announcement of the new leader, Abubakar Shekau as the successor of
the slain leader Yusuf, not all of Yusuf’s followers joined Shekau because of split in the group. In 2015, Boko
Haram was made up of six factions that sometimes collaborated for attacks, and sometimes came into conflict
with each other. However, with massive recruitment and sympathy, Boko Haram became a new platform for
various splinter groups to converge and launch terrorist attacks.
From random and irregular bomb blasts to semi-targeted attacks and the use of improvised explosive
devices (IEDs) in 2008 and 2009, Boko Haram that was an illiterate group has by 2014 metamorphosed into an
elite group capable of organizing, coordinating, and carrying out multiple attacks, with huge intelligence and
4
first class logistics, powerful internal and external contacts, network and sponsorship. The fear in Nigeria
became real that a humble group has been hijacked by some powerful political elites in the North (who lost in
5
the political competition of 2011) to fight their clandestine political wars. From the precision of its attacks,
the superiority of its weapons and the deadly nature of its activities, it became obvious that Boko Haram had
moved from being a local fundamentalist rag-tag to a powerful “terrorist platform”, enjoying both domestic and
6
global network in the global terror industry.
Since April 2011, the northeastern part of Nigeria became a theater of regular attacks and siege by the new
Boko Haram. As already mentioned, members of the National Youth Service Corps who took part in the
Nigeria’s 2011 general elections were the first targets, followed by non-Northern indigenes who became
7
victims of targeted attacks, massacre, and expulsion from parts of the North. Northern political leaders and
civil servants who refused to show strong sympathy to the course of Boko Haram equally became target of
attacks. By 2015, the Northern part of Nigeria has witnessed an upsurge in insecurity including attacks on
markets, churches and schools, raids on villages and military bases. These include the bombing of the United
Nations headquarters, the Police headquarters and many Christian churches, one of which was the bombing of
St. Theresa’s Catholic Church Mandela on the Christmas day of 2011, with over 40 casualties. Markets, banks,
police stations, motor parks, schools, and many public buildings have been destroyed in their hundreds with
Boko Haram always at hand to claim responsibility and credit. Boko Haram has killed an estimated number of
7,000 civilians, with over 17 million displaced in more than 50 IDP camps, while property worth over 200
4
The Nigerian president has in his various speeches to both local and international audiences equally made allusions that Boko
Haram has metamorphosed and now operates in the same capacity as Al Qaeda.
5
Edwin Clark, an interview with the Sun Newspapers, June 15, 2014, Abuja Nigeria.
6
The Nigerian president Goodluck Jonathan and French president Hollande alluded that Boko Haram has strong ties and network
with Al Qaeda, CTV News, May 17, 2014.
7
On January 5, 2012, 13 indigenes of Adazi, Anambra state were murdered in Mubi while holding an end of year party in Mubi,
Adamawa state in the northeast. Owning the attack, Boko Haram announced that it was a warning for people from the southern
part of Nigeria to leave the north, Vanguard, January 14, 2012.
8
million dollars have been destroyed in random and targeted attacks in parts of Northern Nigeria. Perhaps the
most discomforting was the kidnapping of over 270 schoolgirls in Chibok, Bornu State that attracted both
national and international concern and condemnation.
Table 1
Activities of Boko Haram Between 2008 and 2020
No. of local
Phases in No. of No. of Type of No. kidnaps No. of people
No. of IDPs governments No. of camps
years insurgents targtes raids/bombings & abductions killed
involved
2008-2011 300 17 soft 0
Soft/hard: villages, 15 local
schools, police government
2012-2015 15,000 330 1,200 5,400
security posts, areas in 22
military camps north-eastern
Hard: military bases, 2.7million
Vast area of
police stations, in over
2016-2020 20,000 800 1,600 Sambisa 32 in borno
military/police 321,580
forest
security posts households
Note. Source: Adapted from Displacement Tracking Matrix, Round XX (Dec. 2017) and Round XXI of January 2018,
https://www.internal-displacement.org/; Amnesty International Report 2015; Internal Displacement Monitoring Centre (IDMC),
Latest Global Report on Internal Displacement (GRID) 2020, https://www.legit.ng/1142900-list-idp-camps-nigeria-locations.html.
Boko Haram and Terrorism: Definition and Behaviour

Though scholars are slightly in disagreement on the precise definition of terrorism, a few attributes of
terrorism remain central. Following Viotti and Kauppi’s (2009) and Baylis Smith, and Owens’s (2008)
definitions, we can generally view terrorism as the systematic use of terror, often violent, especially as a means
of coercion to effect political change. Common definitions of terrorism refer only to those violent acts which
are intended to create fear and terror and could be perpetrated for a religious goal, political, or ideological
objective (Soyinka, 2012), and by deliberately targeting or disregarding the safety of innocent people and
non-combatants (Hoffman, 2006). Some acts of unlawful violence and war, such as hostage taking and
targeting of vulnerable institutions like schools and monuments have been included in the modern
understanding and definition of terrorism. Somehow, the use of similar tactics by criminal organizations for
protection, intimidation or to enforce a code of silence is usually not labelled terrorism, though these same
actions may be labelled terrorism when done by a politically and ideologically motivated group (Hudson, 2002;
Viotti & Kauppi, 2009). Therefore, the difference between an organized crime and terrorism is clearly
9
demarcated.
Since 1994, the United Nations General Assembly (UNGA) has repeatedly condemned terrorist acts by
insisting that:
Any criminal acts intended or calculated to provoke a state of terror in the general public by a group of persons or
particular persons for political purposes are in any circumstance unjustifiable, whatever the considerations of a political,
philosophical, ideological, racial, ethnic, religious or any other nature that may be invoked to justify them. 10
8
Amnesty International Report, 2015.
9
While criminal gangs are motivated by economic gains, terrorist groups are politically motivated by seeking to violently
overrun a legitimate government or induce political change. Cf. Viotti et al. (2009); Baylis et al. (2008).
10
Cf. UNSC Resolutions 1373 and 1456.
For van Krieken (2010), any acts of terrorism are criminal and unjustifiable, regardless of their motivation,
whenever and by whomsoever committed and are to be unequivocally condemned, especially when they
indiscriminately target or injure civilians.
Based on the above definitions of terrorism, Soyinka (2012) insisted that Boko Haram has carried its
activities in Nigeria based on political, philosophical, ideological, and religious considerations (Soyinka, 2012).
The targets of its attacks have been both religiously, ideologically, and ethnically based as their initial targets
were members of other religions, ethnic, and social orientations. Leaders and commanders of Boko Haram have
equally on several video broadcasts threatened to forcefully make Nigeria an Islamic state, in contradiction to
the wish and freedom of the Nigerian people to choose and practice their religions as enshrined in the Nigerian
Constitution (Ezeanokwasa, Ewulum, & Mbanugo, 2016). 11 The purported forceful conversion of the
kidnapped Chibok schoolgirls, as shown on the publicized video of May 7, 2014 by the leader of Boko
Haram―Abubakar Shekau, gives credence to the intention of Boko Haram as an ideological and religious war.
In November 2004, the United Nations Secretary General in his annual report described terrorism as: “any
act intended to cause death or serious bodily harm to civilians or non-combatants with the purpose of
intimidating a population or compelling a government or an international organization to do or abstain from
doing any act” 12.
Since 2008, Boko Haram has inflicted deadly harm to civilians and non-combatants with more than 330
attacks and 7,000 deaths, ostensibly to intimidate and compel the government to abstain from its work, to
influence a seeming political change, and to derail the democratic process in Nigeria. Boko Haram has also on
12 different occasions boasted and threatened to sack a legitimate Nigerian government, promising to replace
an elected government with a caliphate, and went ahead to erect a caliphate in more than 18 local governments
in the North east of Nigeria in 2014.
Boko Haram attacks Nigeria’s northeast, not solely because of religious and political reasons, but also
because of the interaction between democracy and terrorism, which Shabad and Ramo (1995) described as a
fight for supremacy. Democracy supports human freedom and human rights which adherents of
fundamentalism mostly oppose and object to (Soyinka, 2012), since oppression and suppression seem attributes
of fundamentalism. Boko Haram represents this view and ideological locus-standi. Therefore, the relationship
between domestic terrorism represented by Boko Haram, and democracy which represents freedom in Nigeria
remains very complex as seen in the ideology of Boko Haram to suppress religious freedom, block access to
education and repress women in northern Nigeria by targeting churches and kidnapping schoolgirls to send out
stern warning to girls to shun education and freedom. Nigeria is still on the consolidation stages of its
democracy, and therefore a clear target of terrorism, corresponding to Shabad’s opinion that terrorism festers
most commonly in nations with intermediate political freedom, and least common in stable and consolidated
13
democracies (Shabad & Ramo, 1995).
In his analysis of terrorist organizations, Hoffman (1998; 2003; 2006) identified some key characteristics
of terrorist organizations, arguing that by distinguishing terrorists from other types of criminals, and terrorism
from other forms of crimes, we come to appreciate that terrorism is:
11
Cf. Sections 37, 38, 41, and 42 of the 1999 Constitution of Federal Republic of Nigeria (as amended) on “Freedoms”.
12
Cf. UNSG, Annual Report 2004.
13
Refer also to the article, “Poverty, Political Freedom, and the Roots of Terrorism” (2004). Here the argument is made explicit,
that there is a correlation between terrorism against the desire for political and social freedom.
 ineluctably political in aims and motives;

 violent and indiscriminate, designed to have far-reaching psychological repercussions beyond the
immediate victim or target;
 conducted by an organization with an identifiable chain of command or conspirational cell structure,
whose members wear no uniform or identifying insignia;
 perpetrated by a sub-national group or non-state entity.
The capture of some disguised male and female sympathisers, intending on blowing up themselves in
suicide attacks to create and expand public panic and fear among the public in Nigeria provides further clue on
14
the inclination and behaviour of Boko Haram. The bombing of 17 churches, 12 open markets, seven motor
parks, and more than 30 public buildings in parts of Nigeria, including the police headquarters and UN office in
Abuja all have the trappings Hoffman’s characteristics of terrorism, and have further inflicted psychological
pains on individual families and the Nigerian state.
Book Haram has identifiable chains of command. After the death of its first commander in 2009, Boko
Haram has since witnessed the succession of leadership each time a commander was either wounded or
liquidated. The current political and spiritual leader, Abubakar Shekau, served previously as a deputy
commander, taking power after the previous leader, Mohammad Yusuf was killed in custody by the Nigerian
police in 2009. Abubakar heads the council of elders called Shura.
Boko Haram qualifies as an identifiable non-state entity, therefore possesses no legal rights to carry arms
or use violence against the Nigerian state and its population. According to the principles of International State
system, and in consonance with the 1999 Nigeria’s constitution as amended, only the state, through its security
agencies, are bestowed with the legitimate use of force, and therefore permitted to bear arms as stipulated in the
15
Nigerian constitution to provide peace and security to the nation .
The activities of Boko Haram could further be considered conspiratorial, with an aim to forcefully
engineer both religious and political change in Nigeria. Therefore, a definition proposed by Bockstette (2008),
which underlines the psychological and tactical aspects of terrorism fits in all intents and purposes, the
activities of Boko Haram as a terrorist group. Bockstette (2008) defined terrorism as “political violence in a
situation of asymmetric conflict, designed to induce indiscriminate terror and psychic fear through the violent
victimization and destruction of innocent targets, including, sometimes iconic symbols” (p. 3).
By analysis, we can understand why Boko Haram attacks churches, mosques, schools, markets, motor
parks and other public buildings. The targeted attacks on schools and the kidnapping of schoolgirls were strong
signals and message from Bako Haram to terrorized families and to every girl in northern Nigeria to think twice
and to consider education a zero option.
Just as other terrorist organizations do, Boko Haram enjoys media hype. With media hype, wide broadcast
and audience, a terrorist organization gains more confidence and considers itself successful (Bockstette, 2008).
Osama bin Laden enjoyed a kind of media hype and attention, which he readily signified by how he raised his
hand and flag each time major media houses broadcast his terrorist activities around the world, with ensuing
media analysis. The regular release of video clips by Osama bin Laden was meant to serve this purpose. The
14
Between 2013 and 2019, there were 124 incidents of suicide attacks by mail and female sympathizers of Boko Haram,
including underage and brainwashed girls between 8 and 17 years old. In 2018, 48 children were used as human bombs by Boko
Haram, including 38 girls. Cf. BBC news Nigeria: “Children used” as suicide bombers in Borno attack, 18 June 2019.
15
Section 14(2)(b) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended)
leaders of Boko Haram, including the current leader―Abubakar Shekau, all adopted this strategy to attract
attention and expand public anxiety. As Bockstette (2008) noted, “Terrorist organizations exploit the media in
order to achieve maximum and attainable publicity by engaging in activities that attract wider audience and
public outcry” (p. 3), further insisting that media hype and attention as strategy serve as an amplifying force
with a multiplier effect capable of influencing and inducing the targeted audiences into negotiating short- and
midterm political goals and desired long-term ends (ibid). The bombing of the UN office, police headquarters,
and motor parks in the Nigerian capital city of Abuja, and the kidnapping of vulnerable Chibok schoolgirls
were meant to create media hype, and therefore force the government into a negotiation, capable of serving a
16
short or midterm political goal for Boko Haram.
Research into the motives of terrorists has shown that terrorist attacks usually are planned and executed to
maximize the severity and length of psychological impacts on their victims and on the state (Hoffman,
2003; 2006; Viotti & Kauppi, 2009; Baylis et al., 2008). Each act of terrorism is therefore a calculated
attempt devised to have an impact on many large audiences and layers of society. Mostly, international and
national symbols are targeted, simply to induce humiliation and inflict psychological pains on national or
international psyche. The targeted attacks by Al Qaeda on the World Trade Centre, the Pentagon, the foiled
attempt to hit the White House in Washington in the US, and the various attacks on US embassies outside
the United States were possibly meant to induce humiliation and pain on the US. We can adduce the same
intention to the targeted attacks of Boko Haram on the Police Headquarters and the UN office in the Nigeria’s
capital city, Abuja. The goal possibly was to show power and supremacy, to belittle the Nigerian
security network, and to attempt to induce humiliation and pain on the Nigerian psyche. While such attacks
negatively affect a government and increase national anxiety, they increase the prestige of the given
terrorist organization and sharpen its ideology. For instance, the members of Boko Haram must have had “real
fun” watching the Nigeria’s First Lady, Patience Jonathan, publicly shed tears in 2014, in reaction to the
17
kidnapped Chibok schoolgirls. The Nigerian former president, Goodluck Jonathan, felt visibly humiliated
when Boko Haram leader Abubakar Shekau in 2013 rejected government’s offer of amnesty for Boko Haram
18
members.
Terrorist events of the last two decades in Nigeria have shown that terrorist acts frequently have a political
purpose, though mostly not conducted in a political tactic, like protest-write ups and street protests, which
activists use as the last resort to influence a desired change. Terrorists opt for a different strategy. According to
Hoffman (2003), terrorists tend to believe that a certain desired change is so urgent that failure to achieve the
intended change is seen as a worse outcome than the deaths of innocent people. Hoffman argues that terrorist
groups in general, operating globally or domestically, often consider the death of innocent people as a vehicle
for a desired change. For instance, the number of innocent lives lost on the hijacks of 9/11 did not matter for Al
Qaeda if the US probably could be pressurized to change its foreign policy, especially in the Middle East (Yoo
& Ho, 2003). Likewise, the number of innocent Nigerian citizens that have died in various attacks was not
meant to matter for Boko Haram if the Nigerian state could be pressured to profess Islamism or give in to the
16
The defeat of an incumbent president of southern extraction by a presidential candidate of northern extraction could not be far
from a short and even, midterm political goal of the sponsors of Boko Haram.
17
The image of the First Lady shedding tears in the public has been turned into a national comedy by many musicians and
comedians.
18
Cf. BBC News Africa: Nigeria’s Boko Haram rejects Jonathan’s amnesty idea, April 11, 2013,
https://www.bbc.com/news/world-africa-22105476.
articulated demands of Boko Haram, like the abolition of schools for girls and the recognition of Nigeria as
their caliphate.
The combination of religion and ideology creates a complex web of interaction that often disposes the
society into manipulation, rendering it a willing tool for terrorist organizations. Religion thrives on sentiments
and emotions. Often, people rise to defend their religion even when it is obvious that a particular religion has
become a vehicle for the conveyance of dangerous ideology (Soyinka, 2012). Religion, when mixed with
ideology, assumes huge capacity to exact pressure in a complex interwoven and symbiotic relation where both
feed on and from each other. As Soyinka (2012) observed, “The religious and ideological goals of Boko Haram
exact much pressure and appears embedded in the activities of Boko Haram because of a symbiotic relationship
between terrorism and religion”. He argues further that such a pressure becomes prominent when a political
struggle becomes integrated into the framework of a religious or “cosmic struggle”, such as over the control of
a region as in the fight of control over some of the federating states in northern Nigeria by Boko Haram.
Therefore, failing in the political goal may become equated with spiritual failure, “which, for the highly
radicalised and fundamentalists religionists, is considered worse than their own death or the deaths of innocent
civilians” (Hoffman, 2003; 2006). Boko Haram fighters and sympathizers have increasingly engaged in suicide
attacks and many more appear ready to die for their course. Their failure at this stage of their radicalized
19
struggle ultimately would mean a spiritual death. To give up on the fight ultimately means a spiritual death,
worse even than their own deaths and a promise of 72 virgins in the paradise. In rejecting government amnesty
proposal in 2013, the supreme leader of Boko Haram Abubakar Shekau said: “It was the Nigerian government
that was committing atrocities against Muslims. Surprisingly, the Nigerian government is talking about
20
granting us amnesty. What wrong have we done? On the contrary, it is we that should grant you pardon” ,
expecting any remorse or change of attitude from Boko Haram sounds foolhardy, not even with amnesty and
negotiation from the government.
Book Haram, originally a national terrorist organization, which now operates across border is an ideology
that started by targeting against anything “Western”. The initial objective was to conquer and Islamize the
Nigerian state (Soyinka, 2012). Since it lacked the political power to achieve this objective, a resort to violence
and intimidation became a veritable medium to force down the dream on “infidels”. Soyinka argues that the
initial or “original victims of Boko Haram were targeted not because they were threats, but because they were
specific ‘symbols, tools, animals or corrupt beings’ that tie into a specific world view that Boko Haram
possessed” (Soyinka, 2012). For Boko Haram, the suffering of the innocent people accomplishes their goals of
instilling fear, getting their message out to a wider audience, or otherwise satisfying the demands of their
often-radical religious, ideological, and political agendas.
Can a Terrorist Act of Any Kind Be Justified?

Relying on newspaper reports, social media, and opinion pools and semi-structured interviews, a section
of the Nigerian public appears to sympathize with the course of Boko Haram but detest Boko Haram’s
19
Cf. Chadian Army Kills More Boko Haram Terrorists as Shekau Begs Fighters not to Run in New Audio, Sahara Reporters, New
York, April 5, 2020,
http://saharareporters.com/2020/04/05/chadian-army-kills-more-boko-haram-terrorists-shekau-begs-fighters-not-run-new-audio.
20
Ibid.
21
indiscriminate targets on the innocent Nigerian population . In other words, if Boko Haram could target
government and security officials and their families, believed to be the cause of Nigeria’s agony for reasons
22
bothering on corruption and bad governance, perhaps, many would be willing to support Boko Haram . “If
Boko Haram would do this by ‘meaningfully’ targeting its grievance, then many in the Nigerian public would
23
cease to refer to the group as a terrorist organization and perhaps ascribe to them as ‘freedom fighters”. Boko
Haram therefore would become a liberation movement or an opposition group if the populace could rely on the
terrorist group for the execution of a common agenda, sacking the, or taking a pound of flesh from the ruling
class. Following Hoffman’s characteristics of terrorism, Boko Haram could have garnered heroic respect from
the public if not for the indiscriminate nature of its attacks that appear awful to the public. The indiscriminate
attacks make Boko Haram a terrorist group because attacks on civilian targets, like markets, banks, churches,
schools, and villages fit into the description of terrorism and UN Resolutions 1373 and 1456.
Another debate across Nigeria claims that Boko Haram, despite its attacks, whether targeted or
indiscriminate, could not fit into the description of terrorism. This perspective maintains that Boko Haram as a
sect possesses a genuine grievance and so merits some level of sympathy, and possibly an amnesty as accorded
to some other militant groups in the Niger Delta of Nigeria in 2009 (Kperogi, 2018)24. Through a genuine and
sympathetic opinion, many scholars and security experts have opposed such a debate and argument, viewing it
25
as clearly distorting any meaningful understanding of terrorism, security, and the use of force. In comparison
to Boko Haram, other militant groups in the Nigeria’s Niger Delta were essentially different in terms of mission,
agenda, strategy, the use of force, targets of attack and grievance. The militant groups in the Niger Delta were
pressure groups that had clear objectives and end desires: resource control, environmental protection, and youth
26
empowerment (Obi, 2009). Their objectives were made public, while their grievance was directed and
targeted. A research into the aims and objectives of the militant groups in the Nigeria’s Niger Delta suggests no
meeting point between the movement and militancy in the Niger Delta with Boko Haram in the Nigeria’s
Northeast.
To what extent then can a terrorist act, such as killing civilians be justified as the lesser evil in a particular
circumstance? Philosophers and terrorism experts have expressed different views concerning this kind of
situation. For Soyinka (2012), “No matter the motivations, no matter the extra-motivations of those who send
them out, terrorist acts cannot be justified, because the only one motivation is to kill”. Rodin (2006)
theoretically conceived of cases in which the good which could not be achieved in a less morally costly way
outweighs the evil of terrorism. Rodin argues further that the “harmful effects of undermining the convention of
non-combatant immunity, by targeting innocent citizens and civilians is considerably thought to outweigh the
goods that may be achieved by particular acts of terrorism” (p. 5). On the other hand, Walzer (2000; 2004a;
2004b) argued that terrorism as an option can only be considered in one specific case when a nation or
community faces the extreme threat of complete destruction and extinction. Walzer (2000; 2004a; 2004b)
21
Author’s interview with a prominent Nigerian residing in the Netherlands on the possibility of supporting of fighting against
Boko Haram in Nigeria. Eindhoven, The Netherlands.
22
A professor of sociology confirmed to the author that he would volunteer to provide intelligence services to Boko haram if the
group would become more focused with their targets, especially the ruling class and their families―interview.
23
Ibid.
24
Cf. International Centre for Investigative Reporting (ICIR): Amnesty for Boko Haram? That’s unconscionable! April 28, 2018.
25
Ibid.
26
Declaration of the Mission and goal of the Movement for the Emancipation of the Niger Delta (MEND).
argued that if a terrorist act appears to be the only way a nation or a community can preserve itself by
intentionally targeting civilians and non-combatants, such a strategy can then be excused or justified in such a
situation.
However, though situations of extreme threat of complete destruction of a community has occurred in
history to warrant, excuse, or justify acts of terrorism on non-combatants as a strategy, resort to such a strategy
has been rare. The non-utilitarian option therefore raises the obvious question of the motivation behind the
activities of Boko Haram. Are communities in the north-eastern part of Nigeria under threat of complete
destruction? Has Boko Haram any genuine grievance against the Nigerian state or society? Is Boko Haram’s
grievance rooted in its ideological shenanigan embedded in its name: “away with western influence”? We may
extend the question to interrogate the second generation of motivation behind Boko Haram. For instance, has
the group been hijacked by other more powerful hidden groups or persons for political ends?
If Boko Haram as an “entity” existed, it was neither under threat nor at war with any government agency
whether national or local before the inception of violence against the Nigerian state and its population in 2008.
Though perspective into the poverty level and backwardness of the north-eastern region has figured as a
palpable reason for Boko Haram’s attack on innocent people, experts think that linking poverty as a reason for
terrorist acts smacks of integrity and only a political ploy to access the political economy inherent in war or
conflict economies (Kisangani & Nafziger 2007; Obi 2009). Poverty exists everywhere, with terrorism
increasing the tally of poverty, oppression, and ignorance. Research shows that the commanders and sponsors
of Boko Haram are not poorer than most Nigerians. Moreover, Boko Haram has not come forward to declare
that poverty has been the reason for its terrorist war against the Nigeria state and the innocent civilian
population.
Labelling and Declaring Boko Haram a Terrorist Organization

While “terrorism” connotes a state of action, “terrorist” refers to someone who engages in the action
(terrorism), thus carrying strong negative connotations. In general, the two terms are used as political labels to
condemn violence or the threat of violence by certain actors as immoral, indiscriminate, and unjustified
(Hudson, 2002, United Nations Security Council [UNSC] Resolution 1373 and 1456). The terms are further
used to condemn an entire segment of a population if such a population supports or harbours people who
27
engage in defined acts of terrorism or unacceptable acts. When the Nigerian state, experts, and various
segments of the Nigerian and international community condemned the activities of Boko Haram as terrorism,
this was ostensibly done because the activities of Boko Haram were at best immoral, indiscriminate, unprovoked
and therefore unacceptable and cannot be justified as Resolutions 1373 and 1456 of UNSC stipulate.
However, those labelled “terrorists” by their opponents rarely identify themselves as such, and typically
use other terms to describe their specific actions, though, this does not make such actions redeemable. Boko
Haram, like other terrorist groups, such as Al Qaeda, ISIS, and El Shabbab, refers themselves to as “Jihadists”.
In the political lexicon, words, such as jihadists, separatist, believers, freedom fighters, liberators or
revolutionary forces, vigilante, militant, paramilitary, guerrilla, rebel, patriot, or any similar word in other
languages and cultures have become common and popular political phrases. This is mainly because terrorists
and their sympathisers view their own actions differently. Jihad, Mujahedeen, and Fedayeen are similar Arabic
27
After the unsuccessful attempt by a Nigerian, Abutaleb, to blow the US bound plane on December 25, 2012, the US authority
placed Nigeria on the terrorist list, ostensibly, an indication that Nigeria habours terrorists.
words which have entered the English political lexicon. They are mainly used to divert attention away from
terrorist tendencies. How the group labels itself (like the friendly term of jihadists) does not necessarily matter
and does not make the group less terrorists. It is common that parties in a conflict describe each other as
terrorists, just as the commander of Boko Haram has severally and consistently described the Nigerian state and
the Military Task Force as the “real terrorists”. However, terrorism is not attributed by terms or words, but by
28
actions and activities . The act of carrying out large scale violent and indiscriminate activities that result in
29
hundreds of deaths and psychological fears remain terrorist by all intent and inclination.
The tendency for terrorist groups to present their actions in friendly and sympathetic terms, and force a
section of the populace to view it that way is perhaps why the term terrorism remains distorted despite its
horrendous impacts and the horror it exhumes. In his book Inside Terrorism, Bruce Hoffman (2003; 2006)
offers an explanation why the term terrorism becomes distorted and remains so, even though, at least, everyone
agrees that terrorism is a pejorative term. According to him, “…the term projects negativity and generates
intrinsically negative connotations that are generally applied to one’s enemies and opponents, or to those with
whom one disagrees and would otherwise prefer to ignore.” (Hoffman, 2006, p. 23).
Brian Jenkins (2006) concurs with Hoffman that is called terrorism seems to depend on one’s point of
view. Owing to the burden of scorn, the use of the term increasingly implies a moral judgment. However, with
30
the support of power relation, if one party can successfully apply the labels “terrorism” or “terrorist” to an
opponent, it can indirectly persuade others to adopt its moral viewpoint if imbalance exists in power relation.
Boko Haram as a non-state actor does not share equal power relation with the Nigerian state. The Nigerian state
has the monopoly of violence with agencies that make laws and prescribe punishment. It was easier for the
Nigerian state and other stakeholders in the Nigerian security project to successfully label Boko Haram as a
terrorist organization, and to further convince and invite other stakeholders in the regional and international
community to accept and cooperate in the fight against Boko Haram as a domestic and international terrorist
group. Boko Haram, as a non-state actor, does not enjoy such a privilege of supporting its labelling with
effective implementation as a state actor would do despite its international network.
In Nigeria, many have referred to some militant groups, like the Movement for the Emancipation of Niger
Delta (MEND) and the Movement for the Sovereign Survival of Biafra (MOSSOB) as terrorist groups. The
acceptance or refusal of such labelling has depended largely on power relation. The Nigerian state has in 2018
declared IPOB a terrorist organization but was unable to convince stakeholders in the international community
31
to follow suit. The actions and activities IPOB supposedly did not sufficiently fit into terrorism definitions.
28
In 2013, Boko Haram leader rejected Nigeria’s offer for amnesty, claiming that the government was the real terrorist and
therefore needed amnesty for Boko Haram whom he referred to as jihadists and liberators. BBC World News, Africa, April 11,
2013, https://www.bbc.com/news/world-africa-22105476.
29
Refer to Hoffmans’ description and characteristics of terrorist acts in page 6.
30
Power relations are the interactions between different groups in a society. Power relations exist at all levels of society and
concern the ability of one group or a person to control others. These relations exist in societies around the world and among states
in the international state system. Thus, power relations take place in interpersonal relationships, among members of a community
and on larger scales. They can be associated with gender, socioeconomic status, political status and more. In places where
different groups live together, one is more likely to exert control over the others. With reference to this topic, power relation is
associated with political, economic and power imbalance that exist between state and non-state actors in using instruments of
government as an advantage.
31
The Nigerian state declared IPOB a terrorist organization on September 15, 2017 through a press release by the Director of
Defence Information (DDI), Maj. Gen John Enenche. Cf. The Guardian, September 16, 2017, Premium Times, September 15,
2017, Abuja, Nigeria.
In other words, the decision to call someone or label a particular organization as “terrorist” can become
almost unavoidably subjective, and can largely depend on whether one sympathizes with or opposes the person
or organization concerned (Jenkins 2006; Hoffman, 2006). An attempt to identify with the victim of a particular
violent act, for instance, could present the act as terrorism. On the other hand, a show of sympathy for the
perpetrator could turn the violent act into a more sympathetic and often positive light, and therefore not a
terrorist act. Thus, it may not be surprising that sympathisers of Boko Haram do not consider any acts by the
group as terrorism, indicating that taking side with the perpetrator may blind the observer to objectively judge
an issue correctly.
The pejorative connotations of the term terrorism can therefore be summed up in the aphorism, “One
man’s terrorist is another man’s freedom fighter” (Rudner, 2008; Humphreys, 2006, Friedersdorf, 2012; Wikan,
2018). Historical examples help us here to understand this dictum closely.
Several groups that adopted irregular military methods have in history suddenly become allies of the state
against a mutual enemy. There is a record of how some of those groups later fell out with the state, to become
enemies of the state, and went on to use the same violent methods against their former allies. Clark (2007) had
given an account of an event during the World War II, where the Malayan People’s Anti-Japanese Army allied
with the British against Japan, a mutual enemy at the time. Unfortunately, later, during the Malayan Emergency,
the same British branded as “terrorists”, the members of the Malayan Races Liberation Army, who were the
32
successors of the Malayan People’s Anti-Japanese Army. Same was the case in the relationship between the
US and Afghan Mujahideen in the 1980s. During their war against the Soviet Union, the US president Ronald
Reagan and others in the American administration and intelligence service frequently called the Afghan
33
Mujahideen including Osama bin Laden “freedom fighters”. Yet 20 years later, when a new generation of
Afghan men and women began to fight against a regime perceived to be a stooge of foreign powers, the
Mujahideens were labelled “a terrorist group” by George W. Bush. 34 Chouvy (2009) had shown with
Afghanistan that “...an unbiased look at terrorism in Afghanistan reveals that many of those labelled terrorists’
were individuals or groups once regarded as ‘freedom fighters’, ‘struggling against the Soviets during the
1980s” (p. 119). In 2018, the Nigerian State labelled the group, Indigenous People of Biafra (IPOB) a terrorist
organization, even though many believe that IPOB by its activities did not show any untoward signs of a
35
terrorist group. Recently, America and Iran have declared a section of state agencies of each other as
terrorists. While America declared the Iranian military as a terrorist group, Iran in retaliation designated all
36
American military troops in the Middle East as terrorist groups. Who blinks first in this show of supremacy
32
See also The Britannica Concise: Malayans peoples Anti-Japanese Army.
33
Refer also to the speech delivered by Ronald Reagan on March 8, 1985 to National Conservative Political Action Conference.
Retrieved from Spartacus Educational Website.
34
“President Bush Meets Afghan Interim Authority Chairman.” January 29, 2002, https://georgewbush-whitehouse.archives.gov,
Accessed June 26, 2020.
35
The reasons for declaring IPOB a terrorist organization include: the formation of a Biafra Secret Service; formation of Biafra
National Guard; unauthorized blocking of public access roads; extortion of money from innocent civilians at illegal road blocks,
militant possession and use of weapons (stones, molotov cocktails, machetes and broken bottles among others) on a military patrol;
physical confrontation of troops by the leader and other IPOB actors at a police checkpoint and attempts to snatch their rifles.
Gaurdian News Newspaper, September 16, 2017, https://guardian.ng/news/military-declares-ipob-terrorist-group/, Premium
Times, September 15, 2017,
https://www.premiumtimesng.com/news/headlines/243351-nigerian-military-declares-ipob-terrorist-organisation.html.
36
Cf. Reuters―World News “Iran designates as terrorists all US troops in the Middle East (Iranian President Hassan Rouhani
signed a bill into law on Tuesday, April 30, declaring all U.S. forces in the Middle East terrorists and calling the US government a
sponsor of terrorism. https://www.reuters.com/article/us-usa-iran-rouhani-idUSKCN1S61GB.
and power depends largely on power relation and global economic strength to mobilize allies to do the same.
“Terrorism and terrorist” as activities and terms have in history witnessed evident mutation. The mutation
of terrorism and terrorist has depended on who is imposing the burden of meaning on the activities of a
given organization. As pointed out earlier, power relation has played key role in swinging the mutation. The
more political power an entity wears, the more leverage the entity has in determining, labelling, and giving
meaning to the labelling. For instance, as long as the Nigerian state (politically more powerful in this case) has
labelled Boko Haram a terrorist organization and subsequently imposed the burden of this term on Boko Haram,
and has caused others to see and consider Boko Haram as a terrorist group, Boko Haram as a group or an
organization would continue to carry the burden of such a stigma as a public enemy, until the state withdraws
such a label. This remains so even as Boko Haram understandably prefers terms reflecting legitimate or
ideological action, as jihadists. The argument that one man’s terrorist is another man’s freedom fighter and ones
official’s refugee is another’s terrorist appear misleading, because the validity of the cause of terrorism seems
to be assessed when terrorism is only an act (Rudner, 2008). In this sense, an organization or someone can have
a perfectly beautiful cause, yet if one or an organization indulges in or commits any of the acts associated with
terrorism, it becomes terrorism regardless of the intention (UNSC Resolutions 1373 and 1456).
No wonder, many individuals who today are celebrated as public icons were once labelled terrorist mostly
by some Western governments or media on account of their involvement in a “liberation” struggle. Ironically,
some persons labelled terrorists, have, long time later, as leaders of liberated nations, been referred to as
“statesmen” by similar governments and media organizations. Two examples stand out in history. The Noble
Peace laureates Menachem Begin and Nelson Mandela were labelled terrorists by some world leaders and
37
media (Ahmed, 2002). The Wiki Leaks whistle-blower Julian Assange was on several occasions labelled and
referred to as a “terrorist” by Sara Palin and the former US vice president, Joe Biden (Beckford, 2010;
MacAksill, 2010). However, some of the formally labelled “terrorists” have proved to be successful political
38
leaders of their countries and later, became good friends of those who labelled them as terrorists. Further,
states that have been close allies for reasons of history, culture, and politics, have equally disagreed over
whether or not members of a certain organization could be labelled as terrorists (Cass, 1997). For instance, for
many years, some branches of the United States government refused to label members of the Irish Republican
Army (IRA) as terrorists while the IRA, which the United Kingdom (UK) branded terrorist, continued to direct
terrorist attacks on the UK, the closest ally of the United States (McCabe, 2003).
The media outlets are not left out in the politics of terrorist labelling and branding. Depending on which
side they stand, media outlets wishing to preserve a reputation for impartiality try to be careful in their use of
the term terrorism for organizations that enjoy sympathy with big powers. As such, many political leaders, and
media outlets of northern extraction in Nigeria have remained so silent and careful in condemning or
contributing to any genuine debates and discussions that would portray the activities of Boko Haram as terrorist
acts.
37
The former British Prime Minister Margret Thatcher and former US president Ronald Regan referred to Mandela and his
struggles in South Africa as terrorist act.
38
Lord Desai Hansard has referred to Jomo Kenyetta, Nelson Mandela and Menachem Begin as examples of successful
statesmen who were once denounced as terrorists by some “powerful” world leaders like Margret Thatcher and Ronald Reagan.
Conclusion
The paper has attempted to give a background of the formation and metamorphosis of Boko Haram into a
deadly terrorist movement. The paper has further discussed Boko Haram as a terrorist organization using
historical, research, and behavourial analysis to situate Boko Haram within the framework of global terrorist
modus operendi. The battle to rescue Nigeria from the clutches of Boko Haram rages. With expansion and in
number, sophistication in logistics and weaponry, the religious and ethnic disparity in Nigeria, the expansion of
Boko Haram’s influence into three neighbouring countries of Cameroun, Chad, and Niger, and the inherent
political economy of conflict, defeating Boko Haram be hectic while Boko the security situation in Nigeria
continuous to look grim. As “One man’s terrorist remains another man’s freedom fighter”, in the ongoing
insecurity and terrorism in Nigeria, only a political will reminiscent of that of Umar Y’ardua in 2009 would
deter Boko Haram in Nigeria.
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doi: 10.17265/2328-2134/2020.04.002
D DAVID PUBLISHING
The Global Value Chains and the Evolution of Chinese

Economic Model ∗
Fernanda Ilhéu
Lisbon University, Lisbon, Portugal
According to the Word Bank, in the first 38 years of China, economic reform took 700 million people out poverty
line in China at the same time benefiting the Global South economy due to the integration of the transnational
enterprises global value chains with China. Chinese government understood the economic rational of global value
chains, Flying Geese Model, and foreign direct investment theories and introduced policies to attract foreign capital,
technology, production, and foreign buyers, placing China as the final stage of the production networks in Asia and
also transforming China in the biggest buying market of many resources and energy suppliers from less developed
countries in Asia, Africa, and South America. But a new model of Chinese economic development even more
interconnected and interdependent with the world is now on move. Even quite before the world acknowledge the
protectionist mindset of the US in Trump era, Chinese President Xi Jinping launched in 2013 a very ambitious
initiative under the name of “One Road, One Belt, the 21st-Century Maritime Silk Road” to enhance a new stage of
world globalization, which together with two complimentary initiatives: the “International Production Cooperation”
and “Third-Country Market Cooperation”, and in complementarity with the “Made in China 2025” and “Internet
Plus” plans will lead China to develop global value chains leaded by Chinese companies and integrating countries
of Europe, Africa, Asia, and South America.
Keywords: global value chains, Chinese economic model, Belt and Road Initiative (BRI), international cooperation,
Made in China 2025
Synopsys of 70 Years of the Economic Model Evolution

The historical evolution of the economic relations between China and the world in the last 70 years is
correlated first with the Chinese economic struggle for economic survival and latter its economic growth
sustainability. Each phase allowed China to establish different relations with the world and was closely
followed by the Chinese economic diplomacy. Four stages in this process should be considered. In the first
phase from 1949 till 1979, People’s Republic of China (PRC) closely followed the soviet economic model,
with total nationalization of the means of production, closed economy, investment in heavy industry, light
industry to replace imports, with the main economic activity being the artisanal agriculture; as we can see in
Figure 1, this policy was a complete failure in economic terms, and China diplomatic relations were mainly
with countries of Marxist-Leninist influence.
∗
Acknowledgement: This work was supported by FCT, I.P., the Portuguese national funding agency for science, research and
technology, under the Project UID/SOC/04521/2019.
Fernanda Ilhéu, PhD, Professor, Centre of African, Asian and Latin America Studies (CEsA), School of Economics and
Management, Lisbon University, Lisbon, Portugal.
GLOBAL VALUE CHAINS AND THE EVOLUTION OF CHINESE ECONOMIC MODEL 143
Figure 1. Nominal GDP (1952-2005) (Source: China Statistics, 1952-2005).
In a second phase, China pragmatically began to open-up to the world. The US President Nixon’s visit to
China in 1972 marks the beginning of the dialogue between China and the Western world with American
influence. In December 1978, Deng Xiaoping announced the Reform and Open Door Policy; this economic
reform involved the de-collectivization of agriculture, the opening-up of the country to foreign investors, and
the beginning of permission of Chinese citizens to start businesses. Many countries re-approach China for
established or reestablish diplomatic relations. At same time, China pro-actively called foreign businessmen
and foreign entrepreneurs to invest in special economic zones (SEZs) that meanwhile were created, first in
1980 in Shenzhen, Zhuhai, Shantou, and Xiamen and latter during the 80’s and 90’s similar zones were open in
Hainan, Shanghai, and other 14 larger and older cities. The foreign investment in China that was then initially
circumscribed to these SEZs was mainly in light export-oriented industry following as can be seen in the SEZ
Economic Development Model (see Figure 2).
Agriculture
Export-led Market Investment

Light Industry Infrastructure
Growth System -driven
FDI
FIEs
Industrialization
Figure 2. SEZ Economic Development Model (Source: Hao & Ilhéu, 2014).
144 GLOBAL VALUE CHAINS AND THE EVOLUTION OF CHINESE ECONOMIC MODEL
With the Reform and Open Door Policy, economic activities began to be developed by private individuals
and prices to be marked according with the demand in many products and services as a result the gross
domestic product (GDP) started to grow immediately, as can be seen in Figure 1. But we can say that the big
takeoff was really verified only after the visit of Deng Xiaoping to the South of China near Hong Kong in 1992,
where he announced the Socialist Market Economy, introducing pragmatic changes in the Chinese economic
model and making it very attractive to the foreign investors.
We can consider a third phase in China’s relationship with the outside world that began with the entry of
China into the World Trade Organization (WTO) in 2001; it was carried out by Jiang Zemin, who left the
important legacy of the “Three Represents”, thus opening up the Chinese Communist Party to the entrepreneur
and to all the most advanced forces of the society. Anyway the first private property law was only approved by
the Chinese Parliament in 2007, already under Hu Jintao’s leadership and after 14 years of discussion, but this
was yet another major economic and political development towards China economic development and
openness to the outside world, we can observe a step-by-step approach to these two vectors, starred by Chinese
political leaders since Deng Xiaoping.
With China’s entry into WTO, the Chinese economy developed very rapidly. In terms of GDP, in few
years, China bypassed France, UK, Germany, and Japan to become the second world economy in 2010 (see
Figure 3).
Overpass Japan in
2010 as the second
world economy
Figure 3. China in the world GDP.
Lin (2011) explained this rapid growth of Chinese economy with the advantage of backwardness theory;
Gerschenkron (1962) said that a latecomer country to development process can borrow technology, industry,
and institutions from the advanced countries at low risk and costs and if that country “knows how to tap the
advantage of backwardness in technology, industry, and social and economic institutions, it can grow at an
annual rate several times that of high-income countries for decades before closing its income gap with those
countries”.
But there are other important explanations. According the Word Bank, the first 38 years of the China
economic reform took 700 million people out of poverty in China, at the same time, benefiting the economy of
the Global South due to the integration of the transnational corporations (TNCs) global value chains (GVCs) in
China. In fact, the success of China in this process was not isolated; it also provided many gains to foreign
companies that invested in China and provided also important benefits to the countries that in Africa, Asia, and
Latin America supplied raw-materials and semi-finished goods to the GVCs in China, enabling those countries
to initiate development processes and also improved the purchasing power of the middle and lower-middle
classes consumers in US and EU countries, China’s main export destinations, since Chinese-made products
could be sold in those markets at a much lower prices due the low production costs in China.
We can conclude that China’s success in the global economy was initially due to its ability to integrate in
its economy the GVCs. China’s so-called miracle was based on the export industry and foreign investment, but
we have to recognize that China’s dependence on the rest of the world was very high and even dangerous.
Anyway this situation is changing; in a recent report on China’s world exposure to trade, technology, and
capital, published by McKinsey Global Institute in January 2019, it concluded that this exposure is diminishing
in relative terms and the other way around the exposure of the world to China in that dimensions is increasing.
Today, the main growing force of Chinese economy is already the domestic consumption, making it less
exposed to the economic conditions of the rest of the world, and instead we now see a greater dependence of
the rest of the world of the Chinese economy.
We can now talk of a fourth phase that can be considered to have started with the 12th Five-Year Plan
(2011-2015), in which we can envisage the transition of China from the world factory to the China factory, and
from the world factory to the world office. In 2013, China became the world’s largest nation in terms of trade in
goods and by 2014 the world’s largest economy in terms of purchasing power parity. But although China has
110 of the Global Fortune 500 companies, more than 80% of its revenue is made in the Chinese domestic
market, which means that the degree of Chinese economy internationalization is still low.
A key vector in this new process of greater openness and internationalization of Chinese economy was the
launching in 2013 by Xi Jinping of the Initiative “One Belt, One Road, and the 21st-Century Maritime Silk
Road” (BRI) with the aim of developing the provinces in the north and West of China and globalizing more the
coast and south provinces. BRI also foresees China cooperation with other countries from various geographies,
in the development processes of countries that although they have development potential, they are not able to
do it alone they lack driving factors, like capital, technology, and foreign markets, they are in situation China
was in 1979. Can BRI do it and this process will generate a new model of globalization, not any more lead by
the transnational companies GVCs in China but by china global value chains in those countries.
In the 13th Five-Year Plan (2016-2020), the growth drivers of Chinese economic model are based on
increased domestic consumption, greater healthy and sustainable urbanization, the Industry 4.0 through the
implementation of the “Made in China 2025” and “Internet Plus” plans, and BRI. In this new model, China
seeks to avoid the middle income trap, by growing Chinese GVCs add-value. China can do it through internal
growth or through mergers & acquisitions (M & A) which allows it to be done at a faster pace, and as China
has enormous foreign exchange reserves M & A; it is the preferential way to do it. China’s concern is no longer
to integrate GVCs in Chinese economy but to lead them.
As expected, this process is creating trade tensions and increases protectionism in countries that feel
threaten, mostly the USA. Already facing a protectionist attitude, President Xi challenged to USA the
leadership of globalization by saying in Davos Forum 2017,
“If the United Sates adopts a more mercantilist path, the Asians and Europeans in general will have to combine to
preserve free trade” and “We must remain committed to the development of global free trade and investment, and promote
trade liberalization and investment”. (Xi, 2017a)
The Economic Rational of the GVCs and China Integration in GVCs

Chinese government understood the economic rational of GVCs, as well as that of the Flying Geese Model
and Foreign Direct Investment Eclectic Paradigm and introduced policies to attract foreign capital, technology,
production, and foreign buyers.
In GVCs, intermediate goods and services are traded in fragmented and internationally-dispersed
production processes and the GVCs establish trade flows of intermediary goods and services between different
places in the world, that are incorporated at various stages in the production process of goods and services till
the final consumer. This cross-border trade of inputs and outputs takes place within the networks of affiliates,
contractual partners and arm’s-length suppliers. Presently GVCs presently account for 70% of global trade in
goods and services, whereas it was around 60% in 2013, 49% in 2011, and 36% in 1995 (Organisation for
Economic Co-operation and Development [OECD], 2018; World Investment Report [WIR], 2013; International
Statistics, 2015). This shows the progressive trend of countries to specialize in particular stages of good’s
production (known as vertical specialization), brought about by foreign direct investment, that thus create new
trade opportunities.
WIR (2013) defended that GVCs have been important for the economic growing of developing countries,
contributing on average to 30% of the GDP of these countries whilst its contribution to the income of the
developed countries was around 18%. The WIR also considers that a positive correlation exists between
participation in the GVCs and growth rates of GDP per capita, as these chains have a direct economic impact
on the added-value, employment, and income of the countries where they operate.
Global investment and trade are thoroughly entwined in international production networks. This is
especially true of TNCs investing in productive assets worldwide, as they manage trading inputs and outputs in
cross-border value chains which are often highly complex. Such value chains (intra-firm or inter-firm, regional
or global) transfer technology and knowledge, facilitated by trade with intermediates and Foreign Direct
Investment (FDI) which made it possible for developing countries in 70’s, such as Korea, Taiwan, Hong Kong,
and Singapore to move up the product ladder in terms of capital intensity and quality. At the same time, the
industrialization of these countries or territories gave rise to an increase in wages, which, in turn, triggered the
outsourcing of unskilled labor-intensive tasks to China, Thailand, the Philippines, Indonesia, and Malaysia after
1990.
The integration of GVCs in China transformed this country into the biggest buying market of many
resources and energy suppliers from less-developed countries in Asia, Africa, and South America. In fact,
China made a fundamental contribution to the present globalization process and has also benefited highly from
this process by becoming the final stage of the GVCs production networks in Asia. In 2012, the processing
trade units based in China imported 60% of the components incorporate in their production from Japan, South
Korea, Taiwan, and other Asian countries, and they exported 17.1% of their final production to the USA,
16.3% to EU, and around 41% to Asian Countries.
Akamatsu’s (1962) Flying Geese Model explained that this industrial development process as a result of
the interaction between developing and the developed countries, concluding that technology and production fly
away from the more advanced countries to the less-developed ones, making use of international labor division
based on dynamic comparative advantages. In Asia, the leader geese were considered to be from Japan
followed by the Dragons, after this the Tigers and then China, followed by Vietnam, Cambodia, etc.
The economic rational of the GVCs obliges companies to create their own specific advantages, because
these advantages will be critical for the acceptance clients’ products, and subsequently for their success in
international markets. According with Dunning’s (1980; 1988) eclectic paradigm, these companies that supply
a particular market are chosen by their ownership of specific advantages, and it is these companies that choose
the production location of the products that they are going to supply, according to the countries’ specific local
advantages, which can be; labor costs, resources, knowledge, infrastructures, trade facilities or taxes incentives,
all of which fall into the company’s country of origin or other parts of the world, and which obliges countries to
create specific local advantages. As referred to above countries’ specific advantages today are far more
complex than just the cost of labor, which thus oblige countries to offer competitive business environments to
attract the inward investment of the transnational companies with ownership advantages, which can then
choose them as the production location.
During the first phase of China’s globalization process, China’s political leaders concentrated their
policies on attracting the FDI of TNCs in China, be they American, European, Japanese, Overseas Chinese,
Korean, or others, in order to bring investment, technology and the setting-up of markets. At the beginning,
these investments were in intensive low-cost export-oriented sectors, as China’s leaders believed that if China
knew how to tap the advantages of backwardness in technology, industry, and social and economic institutions,
by pursuing a structural transformation, it could grow at an annual rate several times more than that of
high-income countries (Lin, 2011).
In 1979 when Deng Xiao Ping initiated a structural economic transformation with the “Reform and Open
Door” and “Four Modernizations” policies, the per capita income of China was US$182. Thirty-five years later,
the per capita income was US$7,900, as an output of GDP annual growth rates of 9.9% in media. This strategy
accepted that the added-value that remain in China, albeit very small it was very important for providing jobs to
millions of Chinese in order to take them out of the absolute poverty line. Other policies taken during the first
35 years of the China Economic Reform were equally important, such as “Grasp the Big Let Go the Small”, the
“Socialist Market Economy”, the “Go West”, and the “Go Global” to transform Chinese economy in the second
biggest in the world.
Indeed, it could be said that a new world economic order begun when China joined WTO, placing China at
the center of the world. In 2006, the percentage of Chinese exports carried out by Foreign Investment
Enterprises (FIEs) was around 60%, most of these exports (60%) being manufactured by processing trade units
that imported from between 50% to 80% of the exported incorporated value that make up foreign products and
parts. In 2017, the percentage of Chinese exports carried out by FIEs was 43.1% of China total exports, with 32%
of the output being manufactured by processing trade units that imported 22% of the final value exported (see
Table 1).
Table 1
Importance of FIEs in China’s Foreign Trade
Note. Source: China Statistical Yearbook (2006-2018).
This economic model does not produce anymore such high rates of growth, and Chinese domestic
economy indicates that China has to make structural changes to achieve a sustainable economic development.
A new model has to be implemented that avoids middle-income trap and raises income per capita, reducing
inequality. The new growth drivers have to be based more on domestic consumption and less in exports and
investment. The rules of this new economic model oblige China not to be chosen by FDI investors to integrate
in China a small add-value in production, but pushes Chinese companies to lead global value chains by their
own specific advantages as leading innovation, brand, design consumers convenience and services assistance.
This new economic model has at the same time ecological concerns utilizing productive processes that reduce
pollution and guarantee energetic securitization.
China and the World―Macroeconomics and GVCs Trends

Even if trade war and trade tariffs between USA and China dominate the present world news concerning
globalization, it is important to refer that the structural changes in macroeconomics global environment and in
GVCs begun in 2008 with the financial crisis and recession.
In the World Economic Forum Annual Meeting 2016, macro environment remarks appointed inclusive
growth is a big global challenge, and the rising of income inequality was appointed as a cause for economic and
social problems, from low consumption to social and political unrest. Participants referred that several years
after the 2008 Crisis, the world economy was still struggling with slow growth, the labor market was showing a
mismatching, with a need of 500 million jobs till 2020 for unemployed people around the globe and, at the
same time, a shortage of skilled people that the businesses were looking for. International trade and investment
were considered vital drivers for economic growth. In his speech at Davos Forum 2017, President Xi Jinping
recognized that
The global economy has remained sluggish for quite some time. The gap between the poor and the rich and between
the South and the North is widening. The root cause is that the three critical issues in the economic sphere have not been
effectively addressed. (Xi, 2017a)
He went on to identify these three root causes as being: the lack of driving forces for global growth, the
inadequate global economic governance, and the uneven global development. He assumed that globalization
has problems and threats; however, he also mentioned the positive aspects saying “China has not only benefited
from economic globalization but also contributed to it. Rapid growth in China has been a sustained, powerful
engine for global economic stability and expansion”, and as mentioned above he affirmed its intentions to lead
the globalization process together with other Asian and European countries if USA is showing retrieving
attitudes.
According with The Economist (July 13th, 2019), “there are signs that the golden age of globalization may
be over” …“Cross-border investment dropped by a fifth last year” and although output and trade continue to
increase in absolute terms, it is growth rates fallen from 5.5% in 2017 to 2.1% this year, OECD predicts that the
trade war between USA and China could take off 0.7% of global output growth, around 600 bn.
Also, trade intensity is declining within almost every goods-producing value chain. Now flows of services
and data play a bigger role in global economy. Not only trade in services growth more than trade in goods, but
also services are creating more value on GVCs integration than goods (McKinsey Global Institute, 2019). We
have to analyze the GVCs trends to understand the position of China and its consequences for its economic
development mode. The Mckinsey survey on global flows and digital globalization researched 23 GVCs in both
products and services industries, working in 43 countries that account for 96% of global trade, 69% of global
output, and 68% of global employment; this survey cover the years 1995-2017. The findings of this survey are
that globalization is in the process of transformation, the mix of countries, companies, and workers skills are
changing, and they move according specific drivers, such as:
1. All GVCs are becoming more knowledge-intensive.
2. GVCs driven by global innovation on industries including automotive, computers, electronics, and
machinery account for 13% of gross output and 35% of trade. One-third of the workforce is highly skilled. R &
D expenses and intangible assets account for 30% of the revenues. These GVCs are concentrated in small
number of developed countries; only 12 countries are responsible by 75% of the exports. The role of China is
rising.
3. Low-skill labor is becoming less important as a factor of production, only about 18% of global trade in
goods is now justified by labor arbitrage.
4. GVCs including textiles, apparel, shoes, toys, and furniture are still labor and trade intensive. More than
two-thirds of income goes to low-skill labor, and around 28% of the global output is exported. Production is
concentrated in developing countries and those countries account for 62% of trade. But they only represent 3%
of global gross output and employ only 3% of the global workforce. China is the largest producer, but new
manufacturing technologies, changes in the demand, protectionism and China rising labor costs are shifting
country participation, we are already observing the movement of labor-intensive chains from China to other
developing countries.
5. GVCs of products, like metals, rubber and plastics, glass, cement, ceramics, and food and beverage, are
low in intermediary goods they are spread around the world and have a regional processing and a high share of
intraregional trade (56%) and are low global tradable with the exception of food and beverage. Anyway trade in
these GVCs is growing faster than global innovation or labor intensive chains and they account for 9% of gross
global output, and 5% of global labor force.
6. Goods-producing value chains are becoming less trade-intensive. Trade still grows in absolute terms,
but the share of output moving across global borders has fallen from 28.1% in 2007 to 22.5% in 2017. It
reflects the development of China and other emerging markets that are now consuming a lot of they produce.
7. Emerging economies are building more comprehensive domestic supply chains, reducing the weight of
imported intermediate inputs.
8. Services play a growing role in GVCs. Although the gross trade in services is 2017 was only 29.4%
than the gross trade in products, it has grown 60% faster on the past decade, and in some subsectors, like
telecom and IT services, business services and intellectual property charges, are growing two or three times
faster.
9. GVCs of labor-intensive services include retail, wholesale, transportation and storage, and healthcare
and they are the largest job creators, after agriculture employing 23% of global workforce. Given its nature the
trade intensity is low but is increasing.
10. GVCs of knowledge-intensive services include professional services, financial intermediation, and IT
services. These value chains have lower trade intensity than goods producing chains mostly due to regulatory
barriers. They are highly concentrated in advance countries, rich in skilled workforce and intangible assets,
only 21% of all exports in this category comes from developing countries.
GVCs are being reshaped by cross-border data flows and new technologies including digital platforms,
Internet of Things, automation, and AI.
We can conclude that these trends favor advanced economies, given their strengths in innovation and
services and highly skilled workers, but developing countries geographically near large consumers markets,
may also benefit since production is moving near the consumers. Countries that mix last wave of globalization
can face problems since automation reduces the importance of labor costs, reducing changes for low-income
countries to utilize labor-intensive exports as a driver of development. Companies must decide where to
compete along the value chain, considering new service offerings, and speed to market is becoming a key
competitive tool, companies are also considering that instead-off localizing supply chains for keeping suppliers
at arm’s length they can establish cooperative relationship with those that are core to the business in place.
China Vision of a New Stage of Globalization
In China’s vision, the world needs a more integrated and globally-controlled world economic model, to
achieve a more dynamic and balanced growth, where China must assume global responsibilities. China wants
to have a role in the decision-making of the rules of the relationship model for the world’s countries, especially
regarding international organizations and regional integration policy. The world can expect a higher integration
of China in the global economy (Angang, 2015, p. 8). According with this author, the more integrated is the
Chinese economy, more it will act as a global stabilizer, as it happens in 2008, when the aggressive economic
stimulus plan of Chinese government positively contributed to the global recovery.
On September 7, 2013 President Xi Jinping announced while visiting the Nazarbayev University in Astana
an initiative he called “One Belt One Road” and a month later more precisely on October 2 while addressing
the Indonesian Parliament announced the “New Maritime Silk Road of the 21st Century”. With these two
announcements, what is now know the BRI was created, with it Chinese President envisaged cooperation
between China and neighboring Central Asian and Association of Southeast Asian Nations (ASEAN) countries
in a process of cooperation and development with various corridors by land and by sea, that will link China to
Europe, revitalizing and reshaping the ancient Silk Roads and turning them in new vectors of global trade.
According with the document that structured BRI the “Vision and Actions in Jointly Building Silk Road
Economic Belt and 21st-Century Maritime Silk Road”, published in March 2015, by National Development
and Reform Commission (NDRC) and the Ministry of Commerce of PRC, “The initiative will enable China to
further expand and deepen its opening-up, and to strengthen its mutually beneficial cooperation with countries
in Asia, Europe and Africa and the rest of the world”.
The justification presented by NCRD of the Chinese Government to create BRI is centered in the complex
and profound changes that have affected world as well as the 2008 Crisis, which continues to impact the world
with slow economic growth recovery, and uneven global development as well as the difficulty felt by many
countries in their development process as was referred on World Economic Forum Meeting in 2016
conclusions and in the Davos 2017 speech of Xi Jinping.
Winter (2016) referred BRI as “the most significant and far-reaching initiative that China has ever put
forward” and mention five major goals for this initiative policy coordination; facilities connectivity; unimpeded
trade; financial integration; and people to people bonds.
In 2015, the 65 countries that had joined BRI accordingly with the World Bank, accounted for 62% of the
world’s population and 30% of the world GDP they own 75% of the world energy reserves and they purchase
50% of China’s iron and steel exports, 49% of aluminum, 38% of cement and they supply 65% of China’s oil
imports and 78% of gas (OECD, 2017a). Six years after the announcement of BRI, 125 countries, including
developed and developing ones and 29 organizations have shown interest in cooperate with China and 173
cooperation agreements were signed for projects development.
BRI’s vision as a major development opportunity can be explained by the increased trade and investment
being generated by the sheer size of the physical and digital infrastructure projects being carried out and the
synergies they create.
The impact of BRI on global trade has been high, it is estimated that in 2018 alone BRI added $170 billion
to global trade, of which $50 billion were exports from China.
Imports and exports from China to BRI countries grew at a higher rate than China’s trade with the rest of
the world but imports grew stronger. The value of goods transacted with these countries and regions in the last
six years exceeded US$6 trillion about 27.4% of China’s total trade in that period. In 2018 alone, this figure
was US$1.3 trillion, 16.4% more than in 2017 while China’s total foreign trade in that year grew 9.7%. In 2018,
imports from China grew by 12.9% but imports from the BRI countries (49 countries) grew by 21%. China’s
exports grew by 7.1% but exports to BRI countries grew by 7.9%.
The impact on investment is also remarkable; between 2014 and 2018, more than $410 billion of China’s
investment was made in the BRI countries, only the FDI was US$90 billion. Between 2014 and 2017, loans
totaling US$120 billion were made, among other projects financed from railways, highways, and power
stations. The value of China’s construction project contracts at BRI exceeded US$400 billion. China also
signed industrial cooperation agreements with more than 40 countries in the BRI and the 82 Chinese
state-owned enterprises in 24 BRI countries generated US$2.28 billion in taxes for local governments and
created 300,000 jobs. By the end of 2018, only 933 enterprises have been set up in China’s economic and trade
cooperation zones, which have invested US$20.96 billion and employ 147,000 people.
Global Value Chains Leaded by Chinese Companies

China links the BRI with two complimentary initiatives―the “International Production Cooperation” and
“Third-Country Market Cooperation”.
The “International Production Cooperation” was launched by Chinese Government on the 16th May 2015,
with the release of the “Guiding Opinions of the State Council on Promoting International Cooperation in
Industrial Capacity and Equipment Manufacturing”. This initiative aims to match the China’s industrial
production with existing global demand, giving priority to China’s cooperation with emerging countries whose
economic structures require large amounts of money to spur growth. “Third-Country Market Cooperation” was
first mentioned by Premier Li Keqiang in June-July 2015, when he attended the 17th China-EU Leaders’
Meeting and visited Belgium and France. This initiative aims to combine China’s production capacity with
developed countries’ advanced technology and equipment, to jointly develop markets in developing countries.
Clearly BRI aims for global and regional cooperation, and plans should be worked out for regional
cooperation on large-scale projects, implementing “Third-Country Market Cooperation” and creating the
conditions for the development of the China Global Value Chain Model of BRI, whereby, in the spirit of the
“International Production Cooperation”, the division of labor and the distribution of industrial chains should be
improved by encouraging the entire industrial chain and related industries to develop in conjunction, as well as
to establish R & D, production, and marketing systems.
According to China Outlook (2016, p. 26), “This would benefit: China, by facilitating the export of its
production capacity and industrial products to the international market; Developed countries, by creating new
sources of economic growth; Developing countries, by promoting their industrialization and economic
development”. During Summer World Economic Forum in Davos in September 2015, Premier Li Keqiang
referred doing his speech in September 2015 to the fact that
China has come up with the initiatives to build the Silk Road Economic Belt and the 21st Century Maritime Silk Road,
and to promote global cooperation on production capacity. We believe these initiatives could help further open up our
country and forge a more balanced and inclusive global industrial chain. This in turn could pool the comparative strengths
of all countries and foster a global community of common interests and development for win-win, inclusive and common
progress. (Li, 2015b)
With the advent of a more mature economy, a new normal growth’s pace, China’s investment priorities
focused now more on sectors based on industrial technology, machinery, consumer, modern services, and
financial institutions.
China’s State Council announced the “Made in China 2025” plan in May 2015, as a national initiative to
improve its manufacturing industry―initially up to 2025, and then up to 2035 and 2049. We can see that
“Made in China 2025” fit the GVCs trends summary made above, it is a 10-Year plan that will be followed by
another two plans, in order to transform China into a leading manufacturing power by 2049, the year of the
100th anniversary of the founding of the PRC.
“Made in China 2025” was inspired by Germany’s “Industry 4.0” plan. Lothar de Maiziere, the former
prime-minister of the GDR, declared to the China Daily newspaper that “China wants to learn from the ‘Industry
4.0’ German Plan to combine industrialization and customization, with intelligent production technologies”.
The concept of this plan is to link virtual reality to real production, as in the German project, which
primarily means using the Internet of Things to connect small and medium-sized companies more efficiently in
global production (Kennedy, 2015). This plan stresses the need to underscore the innovation-driven approach in
making the switch of emphasis from “Made in China” to “Create in China”, from speed to quality, and from
products to brands. In order to avoid the “Middle Income Trap”, China needs to move up the value chain to
avoid being challenged at one end by low-cost countries and at the other end by high-quality manufacturers
around the world. This presents opportunities for partnerships with EU companies with renowned expertise in
the export of high tech equipment, technical and management consultancy services, joint R & D, design,
education and skills training, and financial and professional services.
The “Made in China 2025” document available on the State Council website identified 10 priority sectors
for China, highlighting areas of opportunity for partnerships with EU companies. The sectors include: advanced
rail and equipment; aviation and aerospace equipment; agricultural machinery and technology; power
equipment and technology; low and new-energy vehicles; new materials; high-end manufacturing control
equipment and robotics; biopharmaceuticals and high-end medical equipment; advanced marine equipment and
high-tech vessels; and integrated circuits and new generation information technology.
At the Summer Davos Forum in 2016, Premier Li referred that
The leading role of consumption and services is becoming more visible. New areas of consumption, such as
information and communication, smart phones, and new energy vehicles are rapidly expanding. The five “happiness
industries” of tourism, culture, sports, health, and old-age care are rapidly growing,
and he advocated “mass entrepreneurship and innovation, to further promote the ‘Internet+’ strategy,
extensively applying the new generation of information technologies, such as the Internet of Things, big data,
and cloud computing”. Premier Li promise to implement the “Made in China 2015” Initiative to make
manufacturing more “IT-based and smarter”.
Conclusion
We can conclude that now China is not anymore passively following the globalization process but rather is
taking the initiative by leading changes in macroeconomic environment with BRI and, at the same time,
developing internally policies and plans to positioning their companies as leading GVCs, by integrating
resources and international production supplies of third countries of the Eurasia, Asia, South America, and
Africa, high-technology through cooperation with developed countries namely the European ones, and by
supplying big consumer markets, like China and Europe among others with high quality products and services.
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doi: 10.17265/2328-2134/2020.04.003
D DAVID PUBLISHING
State-Company Institutional Complementarities on Biomedical

R & D in the US and Its Global Consequences
Felipe De Carvalho
Federal University of Rio de Janeiro, Rio de Janeiro, Brazil
Financial accumulation and technological dominance by transnational biopharmaceutical companies―and its

global consequences―have been an important research topic at innovation economics, institutional economics, and
international political economy literature. The United States is a privileged field for investigation, as it is home both
for the companies that control the core of this industry and for the highest State-led investments on biomedical
research and development (R & D). New analytical approaches that focus on State-Company interactions identify
dysfunctional relations on risks and rewards. However, a neglected angle on this debate is the geopolitical
dynamics surrounding market concentration, knowledge control, and technological asymmetry in the
biopharmaceutical sector. This paper combines a qualitative analysis of State-Company institutional
complementarities in the biopharmaceutical sector, comprised by analysis of selected official documents, review of
empirical data and a case study, with a theoretical investigation inspired on the institutional thought of Torstein
Veblen, the structuralism of Susan Strange and the realistic approach to international political economy of José Luis
Fiori. We propose a new analytical framework in which State-Company interactions in the US are seen as
symbiotic, taken under the systemic functioning of a “medical-technological-financial-complex”, what suggests
“biopharmaceutical geopolitics” as an important field for future studies.
Keywords: biopharmaceutical industry, US hegemony, financial accumulation, technological asymmetry
Since 2014, pharmaceutical industry’s global income exceeded one trillion dollars (Packaging World,
2017). According to the “Fortune 500” ranking, by Forbes Magazine, the pharmaceutical sector has the highest
profit margins among all industries, leaving behind the energy and financial sectors, with an average profit
margin of 17.44% between 1995 and 2015 (Roy & King, 2016). The pharmaceutical company with the best
performance in 2015, the US-based Gilead Sciences, achieved the impressive profit margin of 55% (Securities
and Exchange Comission, 2016). It is also important to note that some characteristics of the pharmaceutical
market favors concentration, such as high levels of product differentiation, high entry barriers for new
competitors, inelastic demand and asymmetry of information (Agência Nacional de VigilânciaSanitária, 2003).
In fact, also between 1995 and 2015, around 60 companies became only 10 companies through mergers &
acquisitions (M & A) (Genpact, 2017). The formation of oligopolies is also a historical trend in this sector
(Drahos & Braithwaite, 2002).
Scholars have been addressing these unique features of pharmaceutical industry under different frames,
Felipe De Carvalho, Masters degree on International Political Economy, Institute of Economics (PEPI/IE/UFRJ), Federal
University of Rio de Janeiro, Rio de Janeiro, Brazil. Contact: felipecbf@gmail.com.
156 STATE-COMPANY INSTITUTIONAL COMPLEMENTARITIES ON BIOMEDICAL R & D
such as “differential accumulation” (Nitzan, 1998), “value extraction” (Mazzucato & Roy, 2017),
“financialized business model” (Lazonick, Hopkins, Jacobson, Sakinç, & Tulum 2017), and “global governance
of knowledge” (Drahos, 2002). All these frames, in different degrees, point to a process of “corporate capture”,
whereas State function, regulations, and institutions are shaped by business interests, leading to dysfunctional
State-Company relations and a disproportional relation between innovation/production and earnings. These
analyses are essential considering that the corporate-led accumulation model that rules the pharmaceutical
sector dictates, at the same time, the conditions for access to essential medicines and other health goods, which
can thus represent major social consequences for entire populations.
However, a neglected angle in the debate refers to the geopolitical dynamics surrounding the market
concentration, knowledge control and technological asymmetry observed in the pharmaceutical sector.
Considering many empirical analyses indicating that this is an oligopolistic sector, because despite the large
number of companies just a small fraction of them concentrate the larger piece of the global market, and
considering that there is a core made of just a few firms, who dictate the direction and evolution of the industry
as a whole (Baranes, 2016), we must acknowledge that, in this core, there is a major presence of US-based
companies. Therefore, it is worth asking what factors have enabled such a hegemony in this particular industry
and what are their geopolitical implications.
To respond to this question, we propose a look to the institutional complementarities that mark the US
pharmaceutical sector to then analyze them in the light of the institutional thought of Torstein Veblen (1967),
the structuralism of Susan Strange (1994), and the realistic thought of Jose Luis Fiori (2004b).
The findings are based on a qualitative research performed using selected official documents issued by the
US government as primary sources and other studies and analyses as secondary sources. The methodology also
includes a case study focused in one particular US-based pharmaceutical company, namely Gilead Sciences,
using as main source data from reports submitted by the company to the US Securities and Exchange
Commission (SEC). In total, we analyzed 40 official documents: 17 related to strategic priority-setting and 23
related to the institutional architecture of the US-government funded biomedical research institutions and programs.
For the case study, we analyzed 21 reports submitted by Gilead to SEC and used six public databases.
The purpose of this research is to explore a new analytical framework to understand the State-Company
complementarities on biomedical R & D in the US and propose a preliminary theoretical investigation into the
relationships between technological, military, and financial objectives in the biopharmaceutical sector. The
research also draws attention to the connections and interferences between innovation economics, institutional
economics and international political economy in this particular technological field. Hereafter, we will use the
term biopharmaceutical industry, considering the considerable increase on biotechnology based products, that
already represent 25% of the pharmaceutical market (Evaluate Pharma, 2017).
State-Company Institutional Complementarities on Biomedical R & D in the US

The US was home in 2016 to six of the 10 largest biopharmaceutical companies, ranked by income
volume, including the top three in the ranking (IgeaHub, 2017). According to Organisation for Economic
Co-operation and Development (OECD) evaluation, from 2009, the US was the destination of 68% of venture
capital invested in life sciences (Salter, 2011). In biotechnology, that is now driving most of the new trends in
the life sciences sector, the US is the first in number of companies, patent applications and in number of
treatments approved by regulatory agencies (The Balance, 2019).
STATE-COMPANY INSTITUTIONAL COMPLEMENTARITIES ON BIOMEDICAL R & D 157
As the US is widely recognized as a liberal market economy (LME), such numbers could be attributed to
company-led investments, but, in reality, in the biopharmaceutical sector, the US has a large presence of
State-led investments, or what Mazzucato (2013) would call an “entrepreneurial state”, who actually creates
value.
In effect, at the same time, the US has the largest venture capital market. It has also the largest scientific
research base in the world (Department of Commerce, 2016), formed by solid academic institutions that count
on substantial government funding. This combination of regular and substantial public investments in one hand
and a robust ecosystem of investors and stock markets in the other hand is actually the cornerstone of US
hegemony in the biomedical sector (Salter, 2011). The two institutional arrangements are connected through
regulations and dynamics that lead to concentration of knowledge and power in the hands of big US-based
biopharmaceutical companies, which benefit directly from licensing and transfer of research made by public
institutions, or indirectly using financial market dynamics to do mergers & acquisitions (M & A) of smaller
companies that, by their turn, emerged from the combination of government-led investments and venture
capital investment. Looking to the biotechnology field, for example, we can notice that the major clusters are
formed right in the cities that have a solid venture capital scene and a strong network of universities and
research institutes, such as Boston and San Francisco, the two main biotechnology clusters in the US today
(Owen, 2017).
In the biopharmaceutical sector, state investments are particularly led by the Department of Health and
Human Services (DHHS) and the Department of Defense (DoD). According to data from the American
Association for the Advancement of Science (AAAS), the biomedical discipline, which is a subgroup of the life
sciences, is the top target of federal investments since 1984 (Department of Commerce, 2016), especially due to
outstanding investments by the National Institute of Health (NIH), linked to DHHS. These investments
increased at a faster pace since the late 90’s.
The NIH has 27 research centers and invests around U$41.7 billion per year on biomedical research
(National Institutes of Health, 2020). More than 80% of this amount is directed to “extramural” research, which
means projects performed outside NIH centers. Every year, around 50,000 grants are given to more than
300,000 researchers in more than 2,500 universities, medical schools, and research institutes, inside and outside
the US (National Institutes of Health, 2020). Only 10% of NIH’s budget is spent in “intramural” projects,
which are those performed by NIH laboratories, where around 6,000 scientists work. The reach of NIH funding
is impressive, a recent study found that between 2010 and 2016, all (100%) new molecular entities (NME)
approved in the US market were connected to publications and projects funded by NIH (Galkina, Beierlein,
Khanuja, McNamee, & Ledley, 2018, p. 4).
In 2016, considering the investments made by NIH and other DHHS related institutes and agencies,
namely, the Center for Disease Control and Prevention (CDC), the Center for Medicare and Medicaid Services
(CMS), the Food and Drug Administration (FDA), the Agency for Health Research and Quality (AHRQ), the
Biomedical Advanced Research and Development Authority (BARDA), and the Bioshield project, the total
found was U$35.2 billion (Carvalho, 2019).
In general numbers, the Department of Defense (DoD) has 22 research institutes involved in biomedical
research, out of which 10 are managed by the Army (three of them located outside the US), nine managed by
the Marine (four of them located outside the US), two managed by the Air Force, and one related to the
Defense Department as a whole. This represents 35% of the DoD network of laboratories and research centers,
comprised by 63 institutions (Government Accountability Office, 2018, p. 1). Furthermore, four out of the 18
agencies connected to the Office of the Secretary of Defense coordinate and/or execute biomedical research.
Also, the DoD has 167 Military Treatment Facilities (MTFs) (Tier Seven, 2017b) that are often used for clinical
trial purposes.
In 2016, the identified investments made by DoD in biomedical related research totals U$4.2 billion
(Carvalho, 2019), considering funds provided by the Defense Health Program (DHP), the Congress Directed
Medical Research Program (CDMRP), the Clinical Investigation Program (CIP), the Chemical and Biological
Defense Program (CBDP), the Defense Advanced Research Projects Agency (DARPA), the Office of Naval
Research (ONR), the Army Research Office (ARO), and the Air Force Research Laboratory (AFRL).
It is worth highlighting that although DoD investments are much smaller in comparison to the DHHS, they
have important particularities, such as the fact they are normally mission-oriented, have a focus on radical
innovation, and take a multidisciplinary approach, focusing on the convergence between different fields of
knowledge. Therefore, DoD has a strong capacity to move the technological frontier, exploring new concepts
and creating new disciplines, as synthetic biology for example (Carvalho, 2019), that later on are explored for
commercial purposes. In summary, as DoD supports R & D to sustain US military and technological
superiority, the investments are driven towards high risk innovations, that when successful have a huge impact
on scientific and technological progress.
Adding the total investments identified at DoD level (U$4.2 billion) to the total investments identified at
DHHS level (U$35.2 billion), the final amount is U$39.4 billions, invested in biomedical R & D by two
departments of the US government in 2016. When it comes to industry’s investments, the report from Research
America says that, in 2016, the biopharmaceutical sector spent U$89.82 billion in R & D (Research America,
2017, p. 5). A ranking based on the reports filed by companies to the Securities and Exchange Commission
(SEC) reveals that from the 15 biopharmaceutical companies with the best performance in 2016, eight were
north-Americans (IgeaHub, 2017). Looking to these eight companies and adding their investments on R & D,
the total found was U$44.4 billion. The investments by company are: Pfizer (7.87B), J & J (9.09B), Merck
(10.12B), Gilead (3.39B), Amgen (3.84B), AbbVie (4.36B), Eli Lilly (5.24B), and BMS (0.53B). Therefore, we
can notice that the total investment by the government, considering only two Departments, is quite close to the
total investment of the eight largest US biopharmaceutical companies. Also, considering that the total
investment by industry was U$89.82 billion and that big companies were responsible for around U$44.4 billion,
it is possible to assume that medium and small companies accounted for the other U$45 billion.
Coming back to the government’s role, it is worth noting that beyond these investments themselves,
there are a number of initiatives and programs that complement or orientate the flow of government support
to biomedical research. Both DHHS and DoD run, for example, the Small Business Innovative Research
Program (SBIR) and the Small Business Technology Transfer Program (STTR), which focuses on government
support to small companies or to joint ventures between small businesses and non-profit research institutions,
fostering the final development and commercialization of innovations. At DoD level, there is also the Rapid
Innovation Fund (RIF) that is used to invest in final development, test, and evaluation of technologies. Any
company can apply for RIF, but small companies are given priority (Department of Defense, 2017b, p. 248).
Both DHHS and DoD also run Cooperative Research and Development Agreements (CRADAs), an
instrument created to build proximity between government and industry in R & D efforts. CRADAs do not
imply financial resources, but rather the offering of the infrastructure, human resources, services, equipment
and knowledge from federal laboratories to private companies and the other way around. CRADAs are
preferentially offered to small companies, but big companies can also use this instrument. In 2016, the NIH
initiated 115 new CRADAs, leading to a total of 523 active CRADAs in that year (NIH, 2016, p. 5). In 2014,
the DoD was the government department with the largest number of active CRADAs, 2.762 out of 9.180, or
30% of all CRADAs from all government departments (Tier Seven, 2017a). In 2016, it was not possible to
identify how many DoD-led CRADAs were related to biomedical research. However, it is fair to say it is a
considerable number given that only the Navy had, between 1989 and 2017, a total of 1569 CRADAs in the
biomedical field, around 33% of the total of CRADAs the Navy held in this period (Department of the Navy,
2017).
Other relevant initiatives are the Federally Funded Research and Development Centers (FFRDCs) and
University Affiliated Research Centers (UARC). These institutions are sponsored by different federal agencies,
including DHHS and DoD, and they respond to specific technical needs. The UARCs in general focus on
multidisciplinary research.
DoD also funds Institutes for Manufacturing Innovation (IMIs) that serves as hubs of articulation between
government, industry, and academia. These institutes have a mix funding structure in which private partners
need to match the investment made by the government. Other instruments used by DoD are the Collaborative
Technology and Research Alliances (CTAs) and Collaborative Research Alliances (CRAs) that aims to bring
private sector expertise and academia expertise to the DoD laboratories, especially on basic research. Finally,
DoD also coordinates a program called Multidisciplinary University Research Initiative (MURI), that involves
a coalition of universities and is focused on accelerating technical progress in areas considered strategic by the
defense, with emphasis on radical innovations that can serve as a reference for the applied research initiatives to
be taken by DoD laboratories.
By its turn, the NIH has a well-developed structure for technology transfer through licenses and
collaboration agreements. Between 2013 and 2017, NIH performed around 1,280 licensing agreements over
research initiated in NIH laboratories and institutes. In 2016 alone, NIH granted 95 licenses of technology for
big companies and 112 to small companies.
Such institutional environment provides new insights about the different investments clusters, here divided
in government investment (DoD and DHHS), investment by small-medium companies and investment by large
companies (the top eight US companies in 2016).
Figure 1. Proportion between investments by large pharmaceutical companies, government agencies, and small and
medium companies in the US in 2016.
The big circles represent the investments made by the selected government agencies (U$39.4 billion), by
the eight largest US-based pharmaceutical companies (U$44.4 billion) and by small and medium US-based
companies (U$45 billion). The small circles represents government funding through direct contracts,
SBIR/STTR funds, NIH “extramural” grants, etc. The line represents joint development efforts, collaboration
and technology transfer agreements, through CRADAs, NIH licenses, etc. The small triangles represents
mergers & acquisitions (M & A).
Some important remarks are necessary. Firstly, the idea that government investments are only on basic
research can be challenged considering that, in 2016, the major volume of investments made by NIH was on
clinical research, considering that CRADAs can be used in any stage of research, including in clinical trials
stage and considering that SBIR/STTR programs are focused on late stage development. Also, special attention
should be paid to small companies. As mentioned above, many programs have a special focus on these
companies and they are also normally close, or even born at university research centers funded by government
money. Therefore, they have an important role in making the transition of a relevant research from the
university to big companies. Their performance normally relates to moving a given research from basic to
advanced stage, benefiting from government support (funding, licensing, etc.) and attracting investors in the
financial market, then becoming target for mergers & acquisitions by larger companies, when the innovation is
mature enough.
Nonetheless, the public investments play a key role in mobilizing venture capital during this cycle. So,
even if the government investments under some programs can be seen as small, they are used by small
companies to attract attention from investors. Normally the announcement of a contract with the government
has a positive effect in the stocks of small companies, resulting in increased private investments (Niler, 2002, p.
24). As an example, when the company Cepheid got a U$5 million grant from DARPA to develop a device that
can rapidly detect the DNA of organisms transmitted through the air, its stocks increased from U$1.50 to
U$8.00, despite the company’s poor sales balance (Niler, 2002, p. 24).
The same happens when CRADAs or licenses from NIH are announced. Although these two instruments
do not represent any financial resources to the company, they send signals to the financial market. The
SBIR/STTR program by its turn is divided in three stages and the last one that is based on commercialization of
the product normally requires that the company adopts fundraising strategies in the private market.
Big companies can also benefit from all the opportunities provided by government institutions, such as
CRADAs, licenses, direct R & D contracts, and SBIR/STTR funds. The company Gilead Sciences, for example,
between 1988 and 2017, had 14 CRADAs signed with the DHHS, got eight exclusive licenses from NIH and
six grants from DHHS through the SBIR/STTR program 1. Between 1991 and 2017, Gilead also had 16 R & D
contracts with the Department of Defense (DoD) 2. Under this research, it was not possible to find information
sources about CRADAs involving Gilead and DoD.
In order to have a better picture of how much Gilead absorbed knowledge and research performed with
government funding and support, it is necessary to consider not only the company itself but all the companies
that were targeted by Gilead on its mergers & acquisition (M & A) strategy. From 1996 to 2017, a total of 17
companies were target of M & A by Gilead (one merger and 16 acquisitions). Most of these companies
1
Data from KEI and SBIR program websites. The six SBIR/STTR grants to Gilead were between 1989 and 1994, when the
company was small.
2
Data extracted from: https://www.fpds.gov/fpdsng_cms/index.php/en/.
originated from university research centers, which got intense flows of government support to R & D in many
levels (project funding, building of laboratories, training of highly qualified scientists). For example, the
company Triangle Pharmaceuticals, acquired by Gilead in 2003, had obtained an exclusive license and global
rights from Emory University for the use of purified forms of the drug emtricitabine on HIV/Aids and Hepatitis
B (Securities and Exchange Commission, 2003). With the acquisition, these rights went to Gilead. Most of the
research by Emory on emtricitabine was funded by NIH (Chemical & Engineering News, 2005).
In fact, from the 17 companies acquired by Gilead, the most expensive ones were exactly those that had
more connections with the government support flows: Kite pharma (three CRADAs and 16 NIH licenses),
Pharmasset (one NIH License and 14 projects funded with SBIR), and Myogen (eight projects funded with
SBIR). As noted above, such connections help on the valuation of company’s stocks, especially when positive
research results are announced.
The stock market has an important role in a broader sense, as according to many scholars, important
institutional changes have put forward a “new economy” that established a new “variety of capitalism” in the
US economy, which has the financializing process as its main feature. Lazonick (2010; 2013) and Lazonick et
al. (2017) had extensive research on “new-economy business model” and on how this model has been applied
to the biopharmaceutical industry. At industry’s level, this model means that distribution of profits (dividends)
and valuation of share price activities prevails over investment in productive capacity, innovation, human
resources, etc. leading to what some may call “shareholder capitalism”. This model contributes to an
ever-expanding number of M & A as a way for big companies to compensate for the lack of investment in
innovation and increase their market share. To operate in such a way, big corporations have entered financial
markets, so when they want to perform M & A operations they can rely not only on their accumulated profits,
but also raise high volumes of money in financial markets (Lapavitsas, 2013). As Lazonick et al. (2017) noted,
many biopharmaceutical companies also do regular “buybacks”, purchasing their own shares to increase their
price. In this regimen, the short-term logic prevails over decision-making and big corporations are more and
more governed by the need to maximize shareholder value, therefore earnings per share (EPS) become the main
indicator of superior performance in the financialization era (Lazonick, 2016), what represents a considerable
change in institutional culture in comparison to the previous model, based on retention of profits to reinvest in
long-term innovation strategies.
Lazonick (2016) and others (Cassier, 2016; Mazzucato & Roy, 2017) had also indicated that price
strategies are increasingly focused on its capacity to increase share price, rather than in its capacity of
generating sales return. The same happens to intellectual property rights that are another indicator used by
financial markets to value companies. The economist, Elli Malki (1997), analyzed the financialization of
biotechnology companies and found that most of them have negative balance sheets, but still are highly valued
in stock markets due to their potential of future earnings, measured by their patent portfolios.
As discussed, financialization changes company’s governance model and behavior, influencing their
expansion, price decisions, and reliance on the patent system. Despite the capacity of big biopharmaceutical
corporations to operate in the financial markets themselves, they are also quite connected to financial
institutions, especially investment funds.
The financial institutions are relevant in the structure of the biopharmaceutical market not only because
they are major shareholders of big biopharmaceutical companies, but also because they facilitate quite often
market operations. Baranes (2016), when observing the waves of M & A in the biopharmaceutical sector, noted
in the 80’s a fourth wave associated with Regan administration and its liberalizing policies, after which banks
started to be more regularly involved in loans to finance M & A by biopharmaceutical companies.
Looking again to Gilead Science and analyzing data provided at NASDAQ database (consultation
performed in February 2019) we found that there are five institutions that control over 35% of the company’s
institutional shares: Black Rock (10.07%), Vanguard Group Inc. (9.59%), Capital Research Global Investors
(6.89%), State Street Corp (5.53%), and Bank of New York Mellon Corp (3.09%). They are all financial
institutions with the exception of the Vanguard Group. They are also part of the 50 “top control holders”
according to a study by Vitali, Glattfelder, and Battiston (2011) that identified a network of global corporate
control, a small number of corporations that control most of the value of a universe of 43.060 transnational
corporations.
An example of how stock control and company strategy are connected can be found in the case of Gilead.
In order to enable one of its latest M & A moves, the acquisition of Pharmasset, Gilead used bank loans
(Cassier, 2016) and issuance of new securities in the financial market. The bank loan came mostly from
Barclays Capital (Pollack & De La Merced, 2011), that is one of the members of the Black Rock investment
fund. In addition, Black Rock also became one of the four largest institutional shareholders of Pharmasset
during its Initial Public Offering (IPO) in 2007, acquiring more than 5% of the company (Roy, 2017, p. 117).
Figure 2 shows and correlates all data gathered about Gilead Science, in order to demonstrate how the
institutional complementarities between government investments on R & D and the financialized governance
model of the biopharmaceutical industry are convergent and contribute to concentration of knowledge and
power in the hands of the largest companies, such as Gilead Sciences, specially through M & A, but also
through patent portfolios. Figure 2 also accounts for strategic alliances with other biopharmaceutical companies.
Most of these alliances involve exclusive licensing of a patent right and, in many cases, we also found that
companies exchange stocks as part of payment arrangements, what creates institutional connections between
them, reinforcing the idea that large companies in this sector create a sort of closed network of dominant
companies, that can only be accessed by those who achieved considerable critical mass in intellectual property
and high levels of valuation on financial markets. This leads to higher barriers for companies that are not part of
this core (Herscovici, 2007, p. 403).
The four zones of Figure 2 are correlated, what indicates a systemic functioning. The M & A strategies
(second quarter), for example, are taken forward based on a financialized business model focused on
maximizing shareholder value. Stock offerings are also means for raising funds for an M & A operation. Thus,
the major shareholders listed in the graphic (third quarter) have an important role in defining the strategic
direction for M & Es. In addition, when a M & A process takes place, Gilead also acquires the accumulated
knowledge of the target company, which means also the knowledge produced with government support (fourth
quarter). Remembering that the government programs are both a material contribution for the advancement of
important research and a valuation factor for the stocks of small companies that become targets of M & A, such
valuation is also important to motivate investments that will ensure the maturation of research to the point it
justifies a M & A move by a big company. The constant interaction between State and companies has thus an
effect of constant renovation of the investments by financial markets, that works in two levels: boosting the
technological development that is led by state investments and boosting the concentration of this knowledge in
the hands of big companies, which by their turn use this expansive process to increase their geographical
dispersion, through subsidiaries (first quarter), achieving privileged market positions across the globe, but
especially in Europe where most of the other big biopharmaceutical companies are based. The dispersion of
subsidiaries also indicates a process of “great fragmentation of the firm” (Reurink & Garcia-Bernardo, 2018)
whereas not only the operational activities of transnational corporations are off shored, but also their
legal-financial structure, with some subsidiaries holding equity or debt stakes and intellectual property rights
and top holding companies located in low-tax jurisdictions. Such dispersion “enable firms to more efficiently
capture the value created by their globalized operational activities” (Reurink & Garcia-Bernardo, 2018, p. 10).
Figure 2. Gilead Science political-economic anatomy (Data from 1997 to 2018).
Geopolitical Motivations Behind Institutional Complementarities

This model can be seen through the lens of appropriation or “value extraction” (Mazzucato & Roy, 2017),
given that government takes most of the risks over R & D investments and big companies reap the resulting
benefits, leading to an unbalanced “risk and reward nexus” (Mazzucato & Lazonick, 2013). According to
Mazzucato and Lazonick (2013), the high public investments and the entrepreneurial role played by the State in
R & D should bring as return tax collection, job creation and life quality improvement for citizens, but these
rewards are undermined for the sake of the intensification of the financialized model, with increased tax
evasion, migration of jobs, decreasing innovation levels and unsustainable prices for the resulting products.
As it is well noted by Mazzucato (2016), State-led investments are not just to fix markets; they actually
create markets and technological breakthroughs. However, the agendas and strategic priorities behind this state
investment are less discussed in her work. More broadly speaking, very few scholars have brought inter-state
competition into the picture. Therefore, we propose the need to maintain technological, economic, and military
superiority as a hypothesis that explains State-led investments in the biopharmaceutical sector. As discussed by
Medeiros (2004), the need to be in a higher position in the international system through technological
dominance, has created, especially in the military field, a very dynamic innovation environment that has no
parallel in the civil sphere.
According to Fiori’s work, the inter-state system is essentially competitive and anarchical, and has the war
as its main dynamic, integrative, and hierarchizing force. Therefore, the need for technological superiority, the
need for a better performance in potential wars, and the need for economic superiority, to secure resources for
improved defense capacity, are present in many fields, especially the ones dealing with disruptive innovations.
Seeking all these levels of hegemony also imply reducing the space for other states to develop their own
capacities. Taking this view, we can understand market concentration, knowledge control and technological
asymmetry as more than a mere market phenomenon, boosted by the economic strength of big companies alone,
but rather as the result of the conditions created by the US for its companies to operate in, favoring its
geopolitical objectives. This brings us to the concept of structural power, put forward by Susan Strange (1994),
conceived as “the capacity to shape the structures of the global political economy in which other states and their
political institutions and their professionals will need to operate” (p. 24). According to Strange (1994), to
possess the technological edge “means both military superiority and economic prosperity, invulnerability and
domination” (p. 136). Currently, biotechnology is considered an important technological edge, with great
relevance due to its strategic features (Chase-Dunn, Niemeyer, & Allison, 2005).
Under Fiori’s realistic approach that the international system evolves around the war or preparation
for war, and that financial accumulation is essential for warfare superiority, we may understand capitalism
itself as an accumulation strategy inside the inter-state dispute, that creates an automated accumulation
dynamic for the advantage of a given state in the disputes with other States for resources and territories
(Fiori, 2004b, p. 24). This view is strongly opposed to the theory by Hardt and Negri (2000) of a superstructure
of the globalized capitalist economy that is governed by market forces, making it irrelevant the power of
states. Fiori emphasizes the opposite, and according to his theory, the globalization of capitalism was not
performed by capital, it was the result of expansive disputes among national State-economies, that successively
imposed one to the other their currency, their public debt and their taxation model, in order to make the
international monetary system a privileged space for the expansion of their national financial capital (Fiori,
2004a, p. 102).
Fiori is strongly influenced by the economic structuralism of Tavares and Melin (1997) that sees the
establishment in the 80’s of the international financial system as we know today as a strategy from the US
power to rebuild its hegemony in a new basis. This systemic rupture imposed a new model of wealth
management, based on accumulation of financial titles, that became a systemic global pattern and reinforced
the central position of the US currency, that became the main denomination currency for international reserves
and for financial and commercial transactions (Tavares, 2009). Another consequence of this rupture was the
consolidation of a “trustfied capitalism” (Tavares & Belluzzo, 2004, p. 115), where all sectors are dominated by
large companies, under control of financial capital.
Among the benefits the US has by ruling such a financialized regimen, we can highlight the reinforcement
of the dominant position of the currency, as discussed by Tavares and Melin (1997), but also the possibility of
increasing the volume of resources at disposal, increasing thus the capacity of “sustaining power actions in the
international arena, whether economic or military in nature” (Teixeira, 2018, p. 264). From this perspective, the
fact that the US financial market has the highest liquidity worldwide and the fact that the dollar is the currency
in which most of the international reserves are denominated (Teixeira, 2018, p. 262) provides the US with an
almost unlimited capacity of investment, in all fields. This is an explanation, for example, for the impressive
amount of resources applied in biomedical research through the NIH, that totalized 804 billion between 1938
and 2011, with more than half of this amount invested 1998 onwards (Mazzucato & Lazonick, 2013, p. 1112).
Therefore, if the State obtains its large investment capacity in the biomedical field through the subordination of
other actors to a “pattern of regulation and functioning of the international monetary system based on its
self-interest” (Teixeira, 2014, p. 434), we can relativize the argument made by Mazzucato and Lazonick (2013)
in two aspects: Firstly, the amount of money invested by the State is not a concern from such a privileged
position and, secondly, the “return” on such investments made by the State should be understood not only in
terms of taxes, jobs and life quality improvement, but also in geopolitical terms when it comes to the
maintenance of a dominant position, both in the economic and technological spheres.
Chesnais’s (2003) analysis of the globalization of capital and the “new economy” converges with Tavares
once he concludes that the financialized regimen happened first in the US in conditions that cannot be
reproduced anywhere else. According to Chesnais (2002), “It was only in the US where the accumulation
regimen with financial domination was fully implemented and where all its characteristics apply” (p. 38).
In geopolitical terms, under the realistic approach to international relations, pushing national companies to
monopolistic privileged global positions is also a strategic move in the inter-state dispute (Padula, 2017);
therefore the globalization of this model of financial accumulation has benefited US companies, in many
sectors, including the biopharmaceutical sector. Monopolistic positions for US companies are also the result of
the globalization of the patent regimen in a shape defined by a strategic alliance between the US companies and
the US government (Drahos, 1996, p. 15). As Strange (1995) had argued, “the influence of U.S. laws on patents
and property rights in medicine and pharmaceutical research throughout the world demonstrates a structural
power that directly affects the life chances good or bad-of millions of people” (pp. 65-66).
The financialization and the expansion of patent rules are connected, as they both converge in ensuring
that financial profits surpass operational profits (Tavares & Belluzzo, 2004, p. 127) and that profit seeking
through the accumulation of rent generating intangible assets prevails over the production of serviceable output
(Baranes, 2017). In a way, patents and other intangible assets serve as basis for financialization (Baranes,
2017).
Looking at the financial reports of all pharmaceutical companies listed at Fortune 1,000 between 2002 and
2014, Baranes (2017) found expressive increases in ratio of intangible assets to productive capital (265%), the
ratio of goodwill to net physical assets (239%), and the ratio of other intangible assets to net physical assets
(406%). Baranes (2017) also looked at four different calculations of profit rates: return on revenue (ROR),
return on assets (ROA), return on equity (ROE), and earnings per share (EPS). He showed that ROR has
increased, ROA remained relatively unchanged (despite the reduction in physical capital), and ROE remained
between 17% and 21% and EPS increased by 78%. He draws the conclusion that pharmaceutical companies
increasingly rely on intangible rent-generating assets to secure their profit rates, in disregard of their productive
and innovative capacity. In this context, price increases are necessary to maintain return on revenue despite the
reduction in pharmaceutical output. Also, as many scholars (Cassier, 2016; Lazonick, 2016; Mazzucato & Roy,
2017) have indicated, high prices also lead to increased valuation on stock markets, favoring thus a better result
in earnings per share.
This data seem to confirm Veblen’s institutional theory of the business enterprise when it comes to
American pharmaceutical industry. Veblen describes a sort of evolution in the role played by intangible assets
according to different stages of firm growth: commercial enterprise, industrial enterprise, and finally financial
enterprise. In this last stage, Veblen identifies that industry and business have become inherently distinct realms.
Industry relates to the collective human activity of creativity and material production, while business is the
sphere of pecuniary distribution, and the link between them is not positive but negative (Nitzan, 1998). Given
this separation, the owners of industrial facilities are not anymore responsible for the production management;
these decisions are taken by businessmen in the scope of financial markets. Therefore, modern capitalists are
disconnected from the production realm; that is why Veblen calls them “absentee owners”.
According to Veblen (1904), when the businessmen achieves a dominant position, he does not direct its
efforts to sustain or improve the efficiency of industrial production, but rather to shape the market structure,
influence the behavior of investors and the perception of other players in that market (p. 35). That is why
Veblen considered that the earnings of a businessmen were not proportional to its productive contribution, but
to its capacity to cause harm in the industrial process as a whole.
Plainly, ownership would be nothing better than an idle gesture without this legal right of sabotage. Without the
power of discretionary idleness, without the right to keep the work out of the hands of the workmen and the product out of
the market, investment, and business enterprise would cease. (Veblen, 1967, p. 66)
The conclusion is that profit maximization is only possible if some social needs are not covered, not
because there is no capacity to address them, but because there is a process of “industrial sabotage”. For this
purpose, intangible assets are essential, because they are ownership rights whose primary purpose is to grant a
differential advantage through a “locking out” process (Veblen, 1904). Such logic has evident negative effects
on the rate of productive innovation; as discussed by many scholars, however, in geopolitical terms, it creates
advantages for a State that has hegemony over financial markets and technological edge. This State will benefit
from market concentration, knowledge control and will create technological asymmetry in comparison to other
States.
In this regard, the expansion in the scope of application of intellectual property rights and the
intensification of other forms of appropriation and accumulation of knowledge, such as mergers & acquisitions
and government subsidies to R & D, are equivalent to a “primitive accumulation of knowledge, comparable to
the primitive accumulation described by Marx” (Herscovici, 2007, p. 402) and blocks the accumulation of
knowledge by others, reducing thus the economic and technological threats posed by rival states. In this
perspective, Veblen’s “industrial sabotage” can be understood in a broader sense, that goes beyond the mere
relationship between the businessman and the community, in which the former deprives the later from the fruits
of creativity and production, and includes the dimension of the hegemonic state depriving rival states from
strategic knowledge, what brings us back to Strange’s (1994) definition of the structural power over knowledge:
“A negative capacity of deny knowledge and exclude others” (p. 119).
The US biomedical R & D governance model described above is quite unique, not only because the almost
unlimited investment capacity by the government and the high performance of the firms (both related to a
structural power over the financial system and over the global norm-setting on intellectual property), but also
because of its connection with national security objectives, what creates an incredible dynamism between the
different stakeholders. In fact, seems that military, technological and economic objectives are indissociably
linked, what reflects in a symbiotic structure between State, universities, and companies.
Looking to the institutional mandates of different government agencies and departments analyzed in this
paper, this interconnection becomes more evident. The NIH, for example, is guided by two inter-related
objectives: “promoting the health of American people and all mankind through biosciences research, and fostering
a vigorous domestic biotechnology industry” (President’s Council of Advisors on Science and Technology,
1992, p. 1). Also, in the scope of the Bay Dhole Act, NIH acquired as part of its institutional obligations “to
ensure that new technologies developed in its laboratories will be transferred to private sector and
commercialized rapidly and efficiently” (Schacht, 2012, p. 13). By its turn, DoD major objective on R & D is:
To provide a strong Science & Engineering (S & E) basic research foundation for the discovery and enhancement of
new and future technologies, assist in the development of revolutionary military capabilities and systems, keep DoD
informed of worldwide technological developments and opportunities, that might affect US defense. (Department of
Defense, 2017b, p. 4)
DARPA by its turn has as mission “to prevent and create technological surprise” (Defense Advanced
Research Projects Agency, 2016) in a way that US armed forces become “initiators and not victims of
technological surprises” (Defense Advanced Research Projects Agency, 2016). In 2014, DARPA created the
Biological Technologies Office (BTO), to promote research able to direct and remodel biotechnology in order
to create advantages for the US (Department of Defense, 2017b). Even the SBIR program that is focused on
small companies has as its mission to develop and deliver cost-effective innovations that are able to sustain the
technological and economic superiority of the US over its adversaries (Department of Defense, 2015b, pp. 3-4).
In the most recent US National Security Strategy (US Government, 2017), the competition with other
powers is present all over the document, especially with Russia and China. The National Defense Strategy that
derives from the NSS mentions that the proliferation of knowledge is eroding the historical advantages of the
US and that this process must be reversed, for the sake of US security and prosperity. In this sense, the NSS
puts as priority action the support to biomedical innovation. When it comes to biomedical research in particular,
there is a strong emphasis in strengthening the intellectual property system, considered “the basis of biomedical
industry” (US Government, 2017). In this strategy, the US government makes clear its intent to lead research,
technology and innovation and its intention to monitor research under development in other countries,
including in the biomedical field, in order to protect US advantages over its competitors.
The US has a National Center for Medical Intelligence (NCMI) that puts together information about
external threats on health and other medical issues related to the protection of US interests worldwide
(Department of Defense, 2009) and also monitors trends in biomedical research in other countries. These
analyses are normally focused on rival states, such as Russia, China, Iran, and North Korea (Clemente, 2013, p.
75). The NCMI has four divisions, one of them the division on global health systems, evaluates medical
capacities in other countries, including “military and civilian medical infrastructures, including all hospitals,
laboratories, blood banks and pharmaceutical manufacturing units” (Clemente, 2013, p. 76).
Such intelligence is relevant because, according to US strategic documents analyzed under this research,
disease burden has impact on economy, government legitimacy and military capacity of geopolitically relevant
regions (National Intelligence Council, 2008). Therefore, limited access to healthcare to prevent or treat
infectious and chronic diseases tends to intensify social divisions, which is a relevant factor of political
instability. From the strategic point of view, the major impact of a poor health response is the effect on younger
generations, whose morbidity impacts directly on military capacity and readiness (National Intelligence
Council, 2002). Therefore, monitoring rivals’ health structures and limiting their capacity to improve, it can be
seen as a relevant factor in the process of safeguarding US’ superiority. Thus, we can notice a degree of
convergence between technological, military, and financial objectives in the biopharmaceutical sector,
evidencing that the institutional framework and the State-Company dynamics in the US limits the policy space
and the stock of knowledge available for other States.
Conclusion
Considering that economy is always affected by power relationships, we focused on the dynamics of the
biopharmaceutical sector, trying to understand what institutional factors explain US hegemony and what the
geopolitical motivations are behind those factors. Taking an approach through the institutional
complementarities framework, we addressed the State-Company relations, considering their dysfunctional ties
when it comes to social outcomes but also their coherence towards geopolitical outcomes. Based on the
perception of the US as a liberal market economy, we brought the view of structural power, to indicate that by
applying its own variety of capitalism, the US “sets the game” that must be played by other States, due to its
dominance over the financial system and its strategic use of the patent system.
Considering all these empirical and theoretical inputs, we propose the concept of
“medical-technological-financial complex”, associated to US power affirmation. Such complex responds
primarily to the strategic priorities of defense and refers to an articulation between public institutions and
companies, through State-led funding channels. Using this exploratory concept, we intend to emphasize how
financial accumulation and the shaping of technological edge are deeply associated and how both are connected
to national defense purposes. It is clear that companies have their own priorities, but through this complex, they
are constantly directed to invest in technological areas that respond to the defense challenges formulated by US
defense community:
Unlike traditional defense developers, commercial developers in biotechnology are “discovery-oriented”; that is, they
are pursuing developments in many directions as determined by the marketplace, which so far is predominantly medical.
The Army, however, has become used to managing and influencing R & D directed toward specific procurement
objectives. (National Research Council, 2001, p. 3)
The word “complex” refers to a decentralized network, that is however partially coordinated under the
institutional arrangements described in this paper. Therefore, military, technological and economic objectives
are inseparable. In this sense, technological leadership is considered the best defense strategy against biological
threats and biotechnology is seen as an important asset in building a more lethal force and the ability to win the
wars of the future (US Government, 2018a). At the same time, emergent technologies associated with
biotechnology are considered equally essential for economy (US Government, 2017). In a deeper level, there is
no clear separation between these two objectives, because advancing biomedical industry is seen as a defense
objective (US Government, 2018b), and in the same level, technological advancements in other countries are
considered a threat both for US defense and US companies’ monopolies. That is why DoD is a central player,
that can conduct R & D, but also monitor advancements in biomedical industry through its intelligence efforts,
being in a privileged position to define priorities for research, shaping the technological edge in a way that
benefits both military and economic dominance, ensuring thus the continuity of US hegemony.
Our conclusion is that US pharma companies transform willingly the socio-economic institutional settings
to increase their strategic control over the industry and society, but they do so under the frame of a State-led
strategic agenda focused on building and maintaining technological and financial hegemony. Therefore, the
debate on State-Company institutional complementarities must acknowledge not only market dynamics but also
underlying biopharmaceutical geopolitics.
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doi: 10.17265/2328-2134/2020.04.004
D DAVID PUBLISHING
China and the United States’ Critical Roles in Tackling Climate

Change and Shaping the International Regimes∗
Fang-Ting Cheng
Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO), Chiba, Japan
This paper argues that major powers can play critical roles in a complicated regime system, as evidenced by China
and the U.S. which have had pivotal influence in the construction of the post-2020 climate regime. China and the
U.S. have participated in multilateral consultations beyond the scope of the United Nations Framework Convention
on Climate Change (UNFCCC) while making use of many political platforms, such as Asia-Pacific Economic
Cooperation (APEC), G20, and informal meetings and dialogues to bridge the gap among various approaches to
mitigating climate impacts. China-U.S. bilateral cooperation has incorporated energy and climate issues into the
strategic and economic dialogue (S & ED) and launched other schemes, such as EcoPartnerships and wide-ranging
dialogues and initiatives on clean energy/clean vehicles. These schemes support the reconciliation of ideas related
to domestic abatement policies in the areas of energy, climate change, and environmental protection. Since the
Trump administration came to power in 2017, the bilateral cooperation at national level has been retreated
significantly and therefore slowdown the UN’s institutional response to climate change. At the stage, the U.S. may
not be able to play a critical role in shaping the regime, yet China is regarded to be the most important player in
negotiations under the Paris Agreement.
Keywords: Sino-U.S. relations, climate change, the Paris Agreement, Major Economies Forum on Energy and
Climate Change (MEF), S & ED, EcoPartnerships, UNFCCC
Introduction
Recent studies have analyzed international regimes related to the issue of climate change from the
viewpoint of the regime complex. For example, Robert O. Keohane and David G. Victor have emphasized
fragmentation in the international system that deals with climate change by proposing the concept of a
regime complex. The regime complex for climate change has been explained by Keohane and Victor (2010) as
“a loosely coupled system of institutions; it has no clear hierarchy or core, yet many of its elements are linked
in complementary ways”. Through rounds of climate change negotiations, many regime types have formed,
reflecting a complicated interest structure among countries, and this trend is continuing (Raustiala & Victor,
2004; Alter & Meunier, 2006). This indicates that contemplation of climate change negotiations after the Paris
Agreement and the future collaboration among organizations based on the concept of a regime complex will be
useful. However, it is still not clear why “complementary linkage” between overlapping regimes is possible.
∗
Acknowledgment: This work was supported by IDE-JETRO research project, and JSPS KAKENHI Grant-in-Aid for Young
Scientists (B) Number 16K17077.
Fang-Ting Cheng, Dr., Research Fellow, Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO),
Chiba, Japan. Email: Fangting_Cheng@ide.go.jp.
174 CHINA AND THE UNITED STATES’ CRITICAL ROLES
It is generally stated that overlapping regimes likely compete, and this competition, in some cases, reduces
the efficiency of cooperative systems. However, considering negotiations that continued until the Paris
Agreement was officially adopted by the UN in 2015, the following observations can be made.
First, the United Nations Framework Convention on Climate Change (UNFCCC) is still considered a
legitimate platform for the construction of an international cooperation system, despite the creation of many
alternative regimes (UNFCCC, 2012). The role of the UN has long been under criticism, but, in fact, it is still
regarded as a core international regime through which to address climate issues. This point of view has gained
support since the Paris Agreement was adopted and entered into force. Thus, we need to ask why the UN
succeeded in shaping the framework of cooperation. Second, many concrete ideas about constructing a post-Kyoto
Protocol system resulting from discussions outside the UN were agreed upon within the UNFCCC. Accordingly, it is
instructive to ask who brought outside influences into UN negotiations. Third, confrontation between major
countries has not always worsened, mainly owing to improvements in relationships via platforms outside the
UN. In pushing forward bilateral or multilateral approaches, major emitters, including the U.S. and China,
share common goals that are agreed upon within the UN. Why and how have the U.S. and China shifted their
relationship from a rivalry to a partnership? Despite our focus on outcomes achieved through UN negotiations,
it is also important to consider factors unrelated to the UN that positively determined UN outcomes.
All the above-mentioned developments in climate change negotiations are not explained in terms of
overlapping regimes characterized with respect to the regime complex. This paper makes a theoretical
argument for why complementary relationships can be generated between overlapping regimes. Additionally, it
examines the roles of major actors outside the UN by looking at progress in international negotiations and
improvements in the relationship between the U.S. and China to complement Keohane and Victor’s concept of
a climate change regime complex.
Regime Complex for Climate Change and “Critical Roles” of Major Actors
Regime Complex for Climate Change
The concept of a regime complex, which involves a complicated international regime system, was first
introduced by Raustiala and Victor. They defined a regime complex as “an array of partially overlapping and
nonhierarchical institutions governing a particular issue-area”; in particular, “where interests are varied and
complex it is difficult to specify precise rules ex ante, and the transaction costs for making formal changes to
rules that span multiple regimes is [sic]high” (Raustiala & Victor, 2004, p. 280). They also indicated “the rules
in these elemental regimes functionally overlap, yet there is no agreed upon hierarchy for resolving conﬂicts
between rules” (Raustiala & Victor, 2004; Keohane & Victor, 2010). This raises the following question: how
can overlapping rules possibly function complementarily?
Dealing with climate change is already an urgent and universal problem, but friction over national interests
is unchanged because there is no clear hierarchy among nation-states. Keohane and Victor tried to understand
current international climate change-related cooperation by applying the regime complex, describing it as “a
wide range that includes nested (semi-hierarchical) regimes with identifiable cores and non-hierarchical but
loosely coupled systems of institutions” (Keohane & Victor, 2010). 1 Instead of building a new architecture or
agreeing on a universal treaty, they promote regime complexes to address climate change by taking advantage
1
“The climate change regime complex is a loosely coupled system of institutions—it has no clear hierarchy or core yet many of
its elements are linked in complementary ways” (Keohane & Victor, 2010, p. 4).
CHINA AND THE UNITED STATES’ CRITICAL ROLES 175
of existing international regimes and systems. Two merits of using the concept of the regime complex, which is
built to resolve environmental deterioration in many ways, can be acknowledged, as follows.
First, the regime complex provides a framework to comprehensively consider many systems that have
been established to deal with climate change. Since climate change is a multidimensional and complicated
problem relevant to various fields, such as the natural sciences, environmental science, politics, security,
economics, society, industry, and technology, it should be favorable to involve many professional institutions.
Regime complex explicitly acknowledges the involvement of various specialized institutions and international
institutions and organizations, and accordingly the situation can be considered in a more realistic manner and
with more flexibility.
Second, the regime complex for climate change serves as a basis for policy analysis. In other words, from
this point of view, it is possible to avoid significant changes to the current international cooperation system and
to minimize the cost of building a structure (Keohane & Victor, 2010). The regime complex for climate change
argues that by effectively utilizing the existing international regime, the cost of establishing the post-Kyoto
framework can be minimized. The Kyoto Protocol, with the first commitment period of four years from 2008 to
2012, although agreed upon as a comprehensive international treaty, regulated only 27% of the total worldwide
Greenhouse Gas (GHG) emissions owing to the U.S. withdrawal and emerging economies’ refusal to regulate
emissions. Making use of the established international regime to lower the cost of international negotiations
would be a rational response. This implies that a policy approach to climate change, developed in accordance
with the concept of a regime complex, has substantial advantages.
One problem with the climate change regime complex presented by Keohane and Victor is related to the
complementary relationship between overlapping regimes, as mentioned in the “Introduction”. They identified
the regime complex as “a loosely coupled system of institutions—it has no clear hierarchy or core, yet many of
its elements are linked in complementary ways”; at the same time, they did not offer a clear theoretical
interpretation forwhy complementary linkage between regimes is achievable. Therefore, it is thought to be
difficult to obtain a logical explanation for the complex international negotiations in the post-Kyoto framework.
In fact, there are many bilateral and multilateral negotiations that overlap with each other during the process of
decision-making with respect to post-Kyoto agreements, and these overlapping regimes or arrangements seem
to include not only oppositional but also complementary or cooperative relationships, all of which complicate
the current situation regarding climate negotiations. This paper aims to provide a theoretical explanation for
complementary relationships that have been generated between international regimes and arrangements.
Two factors are considered to explain theoretical ambiguity regarding the formation of complementary
relationships between overlapping regimes under Keohane and Victor’s viewpoint. The first is that they regard
international regimes as having been developed and maintained by path-dependence or historical contingency
(Keohane & Victor, 2010). 2 However, in some cases, states in fact flexibly adjust confrontation over
complicated interests and even establish an international regime to effectively practice diversifying measures.
For instance, in the process of negotiations over the regulation of GHG emissions, even though many policy
makers felt it was difficult to achieve a global agreement, major emitting countries set up various international
2
“…international regimes often come about not through deliberate decision making at one international conference, but rather
emerge as a result of ‘codifying informal rights and rules that have evolved over time through a process of converging
expectations or tacit bargaining.’ That is, they emerge in path-dependent, historically-shaped ways” (Keohane & Victor, 2010, pp.
3, 9).
regimes or arrangements to break through the stagnant situation, where mitigation, adaptation, and so on were
discussed in parallel with the UN negotiation.
The second explanation for the ambiguity is that the concept is based on a fixed interest structure between
main actors, without considering dynamic transformations of interest structures. Keohane and Victor (2010)
argued that the fragmentation of international regimes occurs owing to inconsistencies in the interests of major
actors with respect to faith, power, information, benefits, and so on. 3 However, due to the uncertainty of
climate change and changes in interests over time, it is impossible to exclude the possibility that the bargaining
power of major countries will change, thereby affecting the structure of conflicts of interest. In fact, it was
observed that the United States and China, which are the most important countries that influence the success or
failure of international cooperation, alleviated conflicts of interest and resolved a conflict situation to a
considerable extent.
Critical Roles of Major Actors Under the Regime Complex
The regime complex for climate change points out the difficulties and limitations of the construction of a
single international regime to deal with the climate change problem and provides a feasible solution. However,
from the viewpoint of Keohane and Victor, although overlapping complementary relations between
international regimes are emphasized, the conditions for the formation of a complementary relationship
between regimes are not discussed. Therefore, this paper presents conditions and considers the “critical role”
played by major actors, that is, the U.S. and China, in the progress of international negotiations in recent years
within and outside of the UN.
Diversification and the share of corresponding measures. Despite its adoption in 1997, the Kyoto
Protocol lost its effectiveness due to the withdrawal of the United States, and the reduction obligation was not
imposed on developing countries, including China. 4 Thus, in the negotiations for a post-Kyoto framework, the
requirement for comprehensive cooperation between major economies and emitters, including both developed
and developing countries, intensified. In addition to GHG emission reductions, major countries began to
emphasize the importance of adaptation to the negative consequences of the frequent occurrence of natural
disasters and extreme weather events. In addition, instead of setting legal numerical targets for reducing GHG
emissions, “mitigation” which does not necessarily set absolute reduction targets and reduces relative increases
in emissions, and “adaptation” which refers to coping with the negative impacts of climate change, have both
become important and are increasingly emphasized.
The basis for proactively promoting mitigation and adaptation measures is the expansion of
climate-related natural disasters and associated damage. The international society has engaged in negotiations
involving a great deal of time and effort over the years, but the GHG concentration in the atmosphere is increasing
worldwide and the impact of climate change-related extreme weather events can no longer be ignored. 5 It is
argued that melting sea ice, rising sea levels, frequent occurrences of extraordinary weather, and depletion of
water resources caused by severe climate change represent a direct threat to human society (Busby, 2008).
3
“…When patterns of interests (shaped by beliefs, constrained by information and weighted by power) diverge to a greater or
lesser extent, major actors may prefer a regime complex to any feasible comprehensive, highly integrated, institution” (Keohane
& Victor, 2010, p. 3).
4
World GHGs emissions have grown 14% after the enforcement of the Kyoto Protocol. “Total GHG Emissions Excluding LUCF,
2005-2010”, World Resources Institute, Climate Analysis Indicators Tool (CAIT) 2.0. Beta (accessed on September 1, 2013).
5
“Summary for Policymakers: Climate Change 2014: Synthesis Report”, accessed on January 31, 2014).
Other researchers have also pointed out that the progression of climate change strengthens existing social
and political contradictions and factors that may trigger conflict and accordingly can weaken domestic, social,
and political stability (Homer-Dixon, 1999; Barnett & Adger, 2007). In any case, the seriousness of climate
change is an objective phenomenon and is the result of economic activities of mankind; its progression has
long-term impacts on the economy, society, politics, culture, and human livelihoods. Given that the broad
impacts and adverse effects on the natural environment must be addressed with urgency, major countries with
different positions must commonly recognize the importance of collective effort (UN Security Council,
Department of Public Information, 2007; UN Security Council, 2011).
Exercise of major countries’ critical roles. Regarding the quantitative reduction of GHG emissions in
the framework of the Kyoto Protocol, the U.S. repeatedly claimed that emerging economies, such as China,
should be responsible for as much of the burden as developed countries, while China firmly refused to share the
burden. The difference in the interest structure between these two major superpowers is the fundamental cause
of the difficulties in international cooperation.
China’s economy and emissions have grown significantly since the 1990s, and GHG emissions by the U.S.
and China together account for 41% of the world’s total emissions (International Energy Agency [IEA], 2011).
If major powers, such as the U.S. and China do not actively enforce emissions reduction and mitigation
measures, problems will continue to worsen without effective remedial measures against climate change
(Clarke et al., 2009). Owing to their large contributions to climate change, including emissions, the two
countries are major powers that can play critical roles in the post-Kyoto framework. Thus, the policy-making
process involving international cooperation is substantially influenced by these countries. The structure of the
interests of the two countries is not always fixed or constant. The two countries may coordinate conflicts of
interest according to their respective purposes, playing a critical role in the establishment of the international
regime and international cooperation.
In fact, the U.S. and China have already predicted that changing climate and dead-end international
negotiations will delay cooperative efforts and eventually have a serious impact on both countries; thus, the two
countries began working together to break through the stagnation. Concretely speaking, the two governments
have engaged in dialogues on climate change measures and the efficient use of energy to ensure economic
stability, environmental protection, and energy security, and have supported the continuation of international
negotiations in the UN. This seems to represent a shift in the structure of conflicting interests by gradually
forming a common aim to construct a scheme from which both sides could benefit. In this way, it is supposed
that the complementary relationship was enabled between the UN, an established international regime, and
other multilateral talks because the U.S. and China have effectively balanced inter-country interests under
various multilateral platforms outside the UN.
It can be argued that the critical roles of the U.S. and China have been influenced by at least three
dimensions in the process of building the international regime of the post-Kyoto Protocol. The first dimension
is building mutual trust. After climate negotiations reached a deadlock owing to the absence of mutual trust
between the U.S. and China, bilateral climate cooperation was subsequently promoted as one of the major
themes to improve bilateral relations. The second factor is the clarification of issues and compromises. Owing
to frequent dialogue between the U.S. and China, the core areas of conflict in climate negotiations became clear,
resulting in a common awareness of various countermeasures and solutions. The third is the adjustment of
conflicting interests. By coordinating interests among countries by efforts outside the UN, severe controversy at
UN negotiations and a collapse of the UNFCCC conference were avoided, and thereby a power-driven system
was built.
In discussions regarding international cooperation on the issue of climate change, it has been fundamental
for interests of actors to be invariable, based on neo-liberalism, in which absolute gains are emphasized.
However, the interests of actors are not necessarily constant; they can vary according to various factors, such as
the diversification of coping methods, technological innovation, and stochastic or unexpected changes in
circumstances. With respect to these points, which have often been overlooked, the following sections of the
paper spotlight how the U.S. and China diversified abatement approaches, supported innovation, and reduced
uncertainty, through a case study.
The Sino-U.S. Strategic Partnership on Energy and Climate Change

Notwithstanding the disagreement between the U.S. and China over the responsibility for tackling climate
change, which was identified as the main cause of the stalemate in their negotiations, the two countries have
recently agreed to cooperate to reduce or slow the increase in GHG emissions (Han, Hallding, Carson, Thai, &
Nilsson, 2009; International Energy Agency, 2015). Sino-U.S. cooperation on climate change has expanded and
intensified to a great extent in recent years (Cheng, 2015). To better understand the effects of bilateral
partnerships on climate change, energy, and the environment in each country, the development of bilateral
cooperation is discussed below by reviewing the frameworks and projects that have been implemented in recent
years.
Sino-U.S. SED (G.W. Bush Administration) and S & ED (Obama Administration)
The U.S.-China strategic economic dialogue (SED) was established to facilitate discussion on topics
related to U.S. and Chinese economic issues under the G.W. Bush and Hu Jintao administrations in 2006. SED
was held five times in total, with periodic meetings from 2006 to 2008, and it has continued as the U.S.-China
strategic and economic dialogue (S & ED) under the Barack Obama administration since 2009 (U.S.
Department of State, 2011). SED was initiated by the U.S. Department of Treasury, spearheaded by its former
Secretary Henry Paulson, who advocated closer economic relations with China, including policies for
environmental protection and sustainable economic growth. SED later expanded its focus to embrace a wider
range of topics, and as a result the current U.S. State Department was given a broader authority by the Obama
administration. 6
To deal with energy and environmental issues, the Ten-Year Framework for Cooperation on Energy and
Environment (TYF) was established in 2008 at the fourth SED. The TYF aims to foster innovative solutions for
existing energy and environmental problems by facilitating the exchange of information and best practices (U.S.
Department of State, 2012). To date, the TYF has had seven focus areas, involving various sub-national public
and private actors from the U.S. and China in order to encourage innovation and sustainable development
among state and non-state stakeholders. Further details on the TYF are provided in the next section.
Since 2009, China and the U.S. have held S & ED periodically to discuss critical issues. At the first S &
ED, held in July 2009, the U.S. and China signed the Memorandum of Understanding to Enhance Cooperation
on Climate Change, Energy and the Environment (MOU), which can be considered a starting point for
6
Author’s interview with a research fellow at the Center for Strategic and International Studies (CSIS), Washington, DC,
November 2014.
cooperation on energy and climate change. The 2009 MOU was aimed at cooperation on a wide range of issues,
while strengthening the existing TYF (see Figure 1 and Table 1).
Figure 1. Structure of Sino-U.S. partnerships on energy and climate change (Source: Author).
Table 1
Sino-U.S. Cooperation on Energy and Climate Change
Cooperation Cooperation topics/Focuses areas
(1) Energy saving for electric power systems and logistics
(2) Efficiency of transportation
SED IV
(3) Water pollution
Initiating TYF and EcoPartnerships
(4) Air pollution
(5) Forests and wetlands protection
S & ED I
Signature of First Memorandum on climate change
Joint Press Statement of the First S & ED
Ten fields in a cooperative relationship including:
S & ED I Energy-saving
Memorandum of Understanding to Enhance Cooperation on Renewable energy
Climate Change, Energy and the Environment Clean coal
Carbon Capture and Storage (CCS)
To launch or to establish:
(1) The clean energy research center
(2) The Electric Vehicles Initiative
(3) New energy saving action plan
The Sino-U.S. Joint Statement
(4) New renewable energy partnership
(President Obama visits China)
(5) Large-scale CCS project
(6) Promotion of clean coal
(7) New Shale Gas Initiative
(8) The Energy Cooperation Program (ECP)
Research subjects include:
Energy efficiency of buildings
Clean energy
CCS
Protocol for Cooperation on a Clean Energy Research Center
Clean vehicles
To support:
(1) The Electric Vehicles Initiative
(2) Large-scale CCS project
Table 1 to be continued
The Sino-U.S. Joint Statement Confirmation of current dialogues and negotiations
(President Hu visits the U.S.) Support for UNFCCC, COP, and the Cancun Agreement
S & ED III
Signature of the six new EcoPartnerships under the TYF
Improvement of TYF and EcoPartnerships
Establishment of the Sino-U.S. Bilateral Working Group on
Joint Sino-U.S. Statement on Climate Change
Climate Change (CCWG)
The Sino-U.S. Joint Statement Phase down the consumption and production of hydro
(President Xi visits the U.S.) fluorocarbons (HFCs) under the Montreal Protocol
Continuation of the current work of the CCWG
S & ED V
Five fields of cooperation added to prompt GHG emission
The Sino-U.S. Joint Statement
reduction
Eight new EcoPartnerships
S & ED VI CCWG special event on the private sector
Policy dialogue among top negotiators
Reduction of 26%-28% GHG emissions by 2025 from 2005
APEC Summit (Beijing)
levels in the U.S.
Sino-U.S. Joint Announcement on Climate Change and Clean
CO2 emissions to peak out around 2030 in China; Increase in the
Energy Cooperation
non-fossil fuel share of all energy to around 20% by 2030
Two high-level events to strengthen joint efforts on climate
change: a public dialogue and a private joint session on climate
change
S & ED VII Announcement of new projects, initiatives, programs, and
EcoPartnerships
Discussion on 2015 Paris Agreement through an “enhanced
policy dialogue”
Notes. Source: Author; References: U.S. State Department; Committee on Sino-U.S. Cooperation on Electricity from Renewable
Resources et al. (2010, pp. 205-216); Sino-U.S. EcoPartnership official website.
In the MOU, the U.S. and China agreed to launch a new action plan for energy efficiency under the TYF.
Furthermore, to achieve mutual goals, the Memorandum of Capacity Building 7 and the Protocol Clean Energy
Research Center (CERC) 8 were also signed (see Figure 1). At the second S & ED in May 2010, the countries
agreed to address energy and climate change-related issues by announcing an action plan under the S & ED and
TYF, and they signed an Implementation Plan for EcoPartnerships. These partnerships aim to promote
collaborative relationships between the public and private sectors. In addition, the dialogue was designed to
accelerate the application of clean energy by improving technologies and the competitiveness of companies.
The subject of climate change was again taken up in a Joint Statement at the Sino-U.S. Summit in January
2011, when Chinese President Hu Jintao visited the U.S. Both sides agreed to support the Clean Energy
Research Center, the Renewable Energy Partnership, the Joint Statement of Cooperation on Energy Security,
the TYF, and the Cancun Agreement (U.S. Department of State, 2011). They also agreed to continue to
negotiate under the UNFCCC. In 2013, the Bilateral Sino-U.S. Working Group on Climate Change (CCWG)
was established and became one of the most important focal points of the strategic partnerships (U.S.
Department of State, 2013a).
The two sides agreed on a joint effort to phase out the emission and consumption of hydro fluorocarbons
(U.S. Department of State, 2013b). This is the first direct cooperation between the U.S. and China to reduce
7
Full title: “The Memorandum of Cooperation between the National Development and Reform Commission of the People’s
Republic of China and the Environmental Protection Agency of the United States of America to Build Capacity to Address
Climate Change”.
8
Full title: “The Protocol between the Department of Energy of the United States of America and the Ministry of Science and
Technology and the National Energy Administration of the People’s Republic of China for Cooperation on a Clean Energy
Research Center”.
GHG emissions, and both actors confirmed that they would continue their efforts at the fourth S & ED in 2014.
The CCWG aims to intensify this cooperative relationship facilitating enhanced policy dialogues among major
policy makers and stakeholders in public and private sectors (U.S. Department of State, 2014a). Both sides
agreed to work together to reach a global agreement by the 21st Conference of Parties (COP) of the UNFCCC,
scheduled to be held in Paris in December 2015 (Stern, 2014). The working group issued its first report to the
5th S & ED in July 2013, with suggestions for launching new action plans for future cooperation. Later, in
November 2014, before the close of the 22nd APEC economic leader’s meeting, President Obama and
President Xi released a Joint Announcement on Climate Change and Clean Energy, including their targets to
cut 26% to 28% of GHG emissions from the 2005 levels by 2025 in the U.S., and to peak out CO2 emissions by
2030 in China (U.S. Department of State, 2015a; 2015b; 2016).
The current position of the U.S. and China on climate change and clean energy has been shaped by their
bilateral cooperation and through consecutive dialogues and communication. Of note, the S & ED has provided
a bilateral platform for the two countries to negotiate international agreements. With the CCWG, TYF,
EcoPartnerships, and many other initiatives, the S & ED has brought about both political-strategic and practical
outcomes through dialogues and projects involving national and sub-national public and numerous private
actors. Although international negotiations were in a deadlock for decades, the Sino-U.S. bilateral cooperation
became enhanced because energy-related technology transfers and information exchanges certainly served the
interests of both the U.S. and China. In other words, the objective to search for a strategic foundation to break
through the stagnation in international negotiations, while meeting their practical goals, remains crucial for the
two countries to secure their national interests and to maintain influential positions in international negotiations.
The U.S. Announcement of Withdrawal From the Paris Agreement under Trump Administration
As demonstrated above, the Sino-U.S. bilateral cooperation on climate change has increased significantly
via the initiation of dialogues and various programs in recent years. However, certain potential issues persist.
For example, the partnerships are not compulsory. In other words, they are not legally binding, but are simply
based on initiatives, forums, dialogues, and voluntary projects/programs, each of which could be negatively
influenced by political confrontations or other exogenous factors. The changed administration in the U.S. was
the best counter-evidence. Since President Trump took office, the U.S.-China turned out to make no specific
progress in high level cooperation on related issues. Although there may have a chance to be altered again after
President Trump stepped down.
Soon after the inauguration of Presidential Donald Trump, he announced U.S. withdrawal from the Paris
Agreement on June 1, 2017, along with refusing to provide financial support to Global Climate Fund (GCF) for
developing countries in responding climate change (The White House, 2017). Negotiation on finance related
issues are always the most sensitive one. So that stopping funding GCF irritates most of the developing
countries and may significantly erode political trust in the UN-based multilateral system (Urpelainen & Van de
Graaf, 2018).
As federal government’s domestic response to climate policy, President Trump not only repealed Obama’s
clean power plant act (CPP) but also encouraged the use of coal-fired power plant, rolled back motor vehicle
emission standards (Jotzo, Depledge, & Winkler, 2018; Berardo & Holm, 2018). The administration also cut
the research budget on climate science, such as climate change related programs at National Oceanic and
Atmospheric Administration (NOAA) and National Aeronautics and Space Administration (NASA), and on
research and development grant of renewable and clean energy under current EPA. All in all, these actions
targeted with taking away the role of U.S. in reducing carbon emission and playing as global leader in regime
building, which in consistent with President Trump criticism on multilateralism (Robinson, 2017). The retreat
of the U.S. inevitably reduces other countries’ emission space, raising emission reduction cost thus put huge
pressure for the global community to achieve 2-degree goal (Dai, Zhang, & Wang, 2017; Zhang, Dai, Lai, &
Wang, 2017; Sprinz, 2018; Jotzo et al., 2018).
In contrast to Trump’s opposing to tackle climate change and federal government’s negative attitude on
de-carbonization, sub-national cooperation has been further facilitated under state government’s initiatives and
became more important (Chen et al., 2018; Galik, De Carolis, & Fell, 2017; Pickering, McGee, Stephens, &
Karlsson-Vinkhuyzen, 2018). Regarded as a symbolic event, recently organized conference, the Global Climate
Action Summit, which held on September 12-14 in San Francisco, shows that the U.S. current leadership goes
from global and international to regional and sub-national.
According to the Paris Agreement, although the official withdrawal will not come into effect until 2021,
the withdrawal decision has caused huge political impact on the progress of global regime construction under
the Agreement. The impact includes the foundation of global climate governance and process of climate
cooperation (Zhang, Chao, Zheng, & Huang, 2017; Jotzo et al., 2018). Thus, based on its ability and attitude,
China’s role was naturally expected by European and other developing countries’ leaders. Whether China can
lead the world to implement the climate agreement without the U.S. is not the subject of the paper, but it is
foreseeable that China will still play a key role in global governance in responding climate change (Robinson,
2017; Jotzo et al., 2018; Urpelainen, 2018).
Sino-U.S. Cooperation on Climate Change and Their Critical Roles
The Sino-U.S. strategic relationship has promoted cooperation between the U.S. and China to achieve the
diversification of corresponding measures, including CCS, energy efficiency, and clean and renewable energy.
These developments provided a strong basis for the U.S. and China to exercise their critical roles in the
negotiations to build the post-Kyoto framework.
The rhetoric of the leaders in both countries after the Copenhagen conference shifted to become relatively
constructive, contributing to the formation of a complementary relationship between the UN and other
multilateral political consultations and arrangements. One of the most important objectives of the Obama
administration was to reach an alternative and practical agreement, while maintaining its satisfactory relations
with China. Soon after his inauguration, President Obama explicitly emphasized the impact of climate change
and indicated that it is an urgent issue that must be dealt with in a serious way (Holland, 2008). Building
mutual trust became an urgent task under Obama’s administration to facilitate progressive international
negotiations.
Furthermore, U.S. Secretary of State Hillary Clinton delivered a speech before attending the Fifth East
Asia Summit, in which she emphasized the common strategic interests of the U.S. and China on global issues.
She stated, “The two countries share the responsibility of constructing an obvious strategy in addressing climate
change” (Clinton, 2010). The political will of top leaders has provided positive incentives for the U.S. to
cooperate with China for strategic purposes on energy, the environment, and climate change. Considering its
recent outcomes, the Sino-U.S. cooperative relationship on climate change and energy contains a wide range of
projects aimed at a goal, namely, to facilitate negotiations and reach international agreements that best suit both
sides’ interests. U.S. and Chinese leaders have emphasized the importance of working together to continue
dialogues and forums with the primary aim of understanding each other better. After repeated dialogues, the
two countries clarified core issues that need to be resolved and identified primary common ground to
successfully achieve a global pact for tackling climate change.
Furthermore, both countries have re-evaluated and adjusted their ever-present conflicting interests. One of
the primary aims of the S & ED relates to economic perspectives (e.g., industry, the market, and employment).
Some have argued that the Obama administration tends to expand its rights and interests by integrating
standards and regulations with China on environmental technologies (Sasaki, 2011, p. 10). It is also critical for
China to solve domestic environmental degradation, such as air pollution and energy resource concerns, by
introducing efficient technologies and systems while maintaining economic growth (Chinese State Council,
2007). Under the Sino-U.S. S & ED, as shown in Table 1, technological development, such as CCS, clean and
renewable energy, and electric vehicles, represents a large proportion of the current environmental and energy
cooperation.
By agreeing that climate change should be tackled through a balanced approach that combines
environmental technologies and opportunities for further economic growth, the U.S. and China have come to
consider energy efficiency and technological cooperation as crucial tasks to meet their common interests in
promoting emissions reduction (Cheng, 2015). For instance, both sides try to integrate industrial and
technological specifications and regulations while dealing with climate change and air pollution through
measures such as CCS. A major achievement was the joint effort to quantitatively reduce hydro fluorocarbons,
a potent type of GHG with high global warming potential. This was the first time that the two countries agreed
to work together to reduce GHGs. The progress described above contributes to the formation of complementary
relationships among regimes inside and outside of UN negotiations.
After Trump administration came to power, project-based China-U.S. national cooperation has been down
streamed significantly. Served as official and political platform of bilateral cooperation on climate change
under Obama administration, numbers of new EcoPartnership had decreased drastically and so far, there is no
new program since 2018 although the framework still exists. On the other hand, the S & ED had its eighth
session in 2016 also suspended after President Trump took office.
Turning to the negotiations under UNFCCC, since the U.S. presidential election ended in 2016, the UN
process of negotiation on political issues has been moving extremely slowly with many technical and detail
items that needs to be addressed; however, strong political will among top emitters, particularly China’s, has
weakened greatly due to the U.S. attack on multilateralism and its decision of withdrawal from the Paris
Agreement. France, under the Macron administration, has been trying to maintain the political momentum by
emphasizing the importance of stay with the Agreement. Yet, the centripetal force is regarded limited since the
emission of France only accounts less than 1% of world emission and EU’s post on emissions reduction is
originally high. As a result, lack of major emitters, that is, U.S. and China’s participation to engage the
international negotiation, to certain degree has slowed down (or so called “chilling”) the progress of finalizing
the rules and procedures, particularly on agendas with political controversy, to implement the Paris Agreement
(Jotzo et al., 2018).
We have witnessed that there are no prominent outcomes decided at COP22 in Marrakesh and COP23 in
Bonn. At these COPs, President Trump did not send high level governmental representatives and decided not to
organize national pavilion, although the sub-national, such as California is active in engaging the process. On
the contrast, China rhetorically shows its intentions to continue to realize its Nationally Determined
Contributions (NDCs) and work with major emitters, such as EU; however, it faces domestic pressure of
reducing GHGs emissions since the U.S. had decided to hold back its leading role. At present, the U.S.
withdrawal has caused the stagnant of negotiations which means it may not be able to play the critical role in
regime building, yet China is now regarded to be the most important player under the Agreement. However,
because there is no external pressure from the U.S., whether China can continue to play its critical role needs
further observation and analysis.
Conclusion
Discussions on the Sino-U.S. relations on climate change have focused on the rivalry between these two
major emitters and their reluctance to contribute to international cooperation. This study, in contrast, argues that
cooperative partnerships have been established to a significant degree in recent years to promote bilateral
cooperation on climate-related issues.
In recent years, the U.S. and China have begun to take the various adverse effects and risks of climate
change seriously and to tackle the issue by facilitating mutual technological, academic, financial, and
capacity-building support. In particular, energy efficiency and environmental protection, including climate
change, have been adopted as sufficient basis for constructing a mutually beneficial relationship. The two
countries have developed reciprocal relations in many areas by initiating a range of projects, for example, those
related to renewables, clean energy, electric vehicles and Combined Charging System (CCS), clean water, and
clean air. At the same time, these efforts enable the achievement of mutual sustainable development, while
minimizing confrontations or contradictions within each country. Through dialogues and implementation,
cooperation on energy and environment-related issues has come to play an important part in enhancing
U.S.-China relations.
Since the Copenhagen Accord in 2009, the adoption of the Cancun Agreement in 2010 allows the
registration of voluntary targets decided by countries. In the 2015 Paris Agreement, it is stipulated that each
party, including the U.S. and China, must submit its Nationally Determined Contributions, in which domestic
countermeasures or voluntary emissions reduction targets and mitigation activities are set. The position of the
U.S. and China is consistent with the contents of the Copenhagen Accord, the Cancun Agreement, and the Paris
Agreement, which formed the framework of the post-Kyoto Protocol. It became important for the major powers
to share their abatement approaches through various measures, while realizing their own purposes. It can be
concluded that the U.S.-China cooperation has triggered a multilateral agreement at the UNFCCC and other
multilateral talks since 2009 and has eased rival relations between international regimes and made
complementary relations possible. At the root of this progress was the development and strengthening of
strategic cooperative relations between the U.S. and China.
Through multi-leveled bilateral consultations, dialogue, and forums, the U.S. and China have promoted the
provision of resources, information sharing, and a shift toward a reciprocal interest structure. Multilateral
cooperation is substantially influenced by the diversification and the share of corresponding measures and by
the major powers’ endeavor. Different from the concepts of “forum shopping” or “regime shifting”,
international cooperation shaped by the critical roles of the U.S. and China has made it possible to form
mutually complementary relations between international regimes, thus contributing to existing UN negotiations.
Undoubtedly, the motivations for the U.S. and China to cooperate on energy and climate policies derive from
their own interests. That is, they became aware that national interests could be promoted by facilitating
collaboration on energy/climate-related clean technologies and policies.
Lastly, it is important to continuously observe Sino-U.S. cooperation on energy efficiency and climate
change for two reasons. Firstly, both the U.S. and Chinese domestic response in tackling climate change could
influence the effectiveness of the Paris Agreement. Secondly, the bilateral cooperation was initially established
based on political purposes; therefore, other potential concerns and extrinsic factors, such as security, political,
even economic events, may negatively influence the cooperation, particularly after President Trump came to
power. Fortunately, inter-sub-national and inter-regional cooperation continues between the two countries, and
Chinese influence and bargaining power has been assumed to expand in climate negotiations.
At this stage, the U.S. withdrawal has obviously caused the stagnant of negotiations with its critical role
became limited. Meanwhile, as for China, since external pressure and engagement from the U.S. has
disappeared, whether China can continuously exert its critical role needs further observation and analysis.
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International Relations

David Publishing Company

Aims and Scope:

David Publishing Company

David Publishing Company

Editorial Board Members of International Relations and Diplomacy:

State-Company Institutional Complementarities on Biomedical R & D in the US and

Terrorist Framework and Inclination: The Behavourial Pattern of

Regis Chima Anyaeze

Keywords: terrorism, Boko Haram, Nigeria, security, behaviour

Boko Haram, Historical Background

The Resurrection of Boko Haram

Boko Haram and Terrorism: Definition and Behaviour

 ineluctably political in aims and motives;

Can a Terrorist Act of Any Kind Be Justified?

Labelling and Declaring Boko Haram a Terrorist Organization

The Global Value Chains and the Evolution of Chinese

Synopsys of 70 Years of the Economic Model Evolution

Figure 1. Nominal GDP (1952-2005) (Source: China Statistics, 1952-2005).

Export-led Market Investment

The Economic Rational of the GVCs and China Integration in GVCs

Note. Source: China Statistical Yearbook (2006-2018).

China and the World―Macroeconomics and GVCs Trends

Global Value Chains Leaded by Chinese Companies

State-Company Institutional Complementarities on Biomedical

Financial accumulation and technological dominance by transnational biopharmaceutical companies―and its

Keywords: biopharmaceutical industry, US hegemony, financial accumulation, technological asymmetry

State-Company Institutional Complementarities on Biomedical R & D in the US

Figure 2. Gilead Science political-economic anatomy (Data from 1997 to 2018).

Geopolitical Motivations Behind Institutional Complementarities

China and the United States’ Critical Roles in Tackling Climate

The Sino-U.S. Strategic Partnership on Energy and Climate Change

Retrieved from https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_summary-for-policymakers.pdf

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