Source: Capital News    Published: 2023-09-09

Recently, the Secretary of State for Foreign, Commonwealth and Development Affairs of the UK, James Cleverly, concluded his one-day visit to China. Despite its short duration, the trip was packed with activities.

According to reports from Xinhua News Agency and the Ministry of Foreign Affairs website, on August 30th, Vice President Han Zheng and Wang Yi, member of the Political Bureau of the CPC Central Committee and Minister of Foreign Affairs, separately met with Cleverly.

With the UK Foreign Secretary visiting China after a five-year hiatus, has there been a thaw in Sino-UK relations? Why has the UK's policy towards China been so changeable? Given the revelations about the UK conducting background checks on companies' 'sensitive' investments, does this imply alignment with the United States in restraining China's development in fields like semiconductors? Can we still trust the goodwill signals being sent by the UK government?

Capital News, in collaboration with RDCY, has launched the "Global Governance Talk" section. John Ross, former director of Department of Economic and Business Policy of the Mayor London and Senior Fellow at RDCY, shared his views with us on topics such as Sino-UK relaions and the impact of the Belt and Road Initiative.

GLOBAL ECONOMY

Capital News: I'm sure that you have heard of the new regulations announced by US President Biden on August 9th, which prohibit private equity and venture capital firms from investing in China's high-tech sectors such as quantum computing, AI and advanced semiconductors. How do you perceive the reasons behind and the consequences of this ?

John Ross: This seems to be another attempt by the United States to slow down China's economy. I mean the challenge for the United States lies in the fact that China's socialist market economy is growing at a much faster rate than that of the United States. Over the last four years, in terms of total GDP growth, China's economy has grown 2.5 times faster than that of the United States.

However, this actually somewhat understates China's rapid growth in productivity and potential improvements in living standards. The comparison becomes more accurate when considering per capita terms, which provides a better indication of the overall productivity of the economy and the potential to enhance living standards. In this context, China's economy is growing over three times faster than that of the United States. This poses a significant challenge for the United States, which struggles to accelerate its own economic growth. Hence, it appears the U.S. is attempting to hinder China's progress.

President Xi eloquently articulated this in his speech during the BRICS meeting, stating that some country, obsessed with maintaining its hegemony, has gone out of its way to cripple the EMDCs. Whoever is developing fast becomes its target of containment; whoever is catching up becomes its target of obstruction. But this is futile. Blowing out others’ lamp will not bring light to oneself– a sentiment that is indeed accurate. If you put out the lamp of various people in the room, the whole situation becomes darker. In essence, the United States' actions are causing damage to global economic growth.

It's not really succeeding in slowing down China significantly. It creates some problems in specific sectors, but it's not greatly slowing down China's economy. But it's having very negative consequences for the world economy, because if you follow the United States, you suffer damage.

Britain suffered serious damage by going to cut itself off from China and has got its economy into a right mess. This is also the present situation in Europe. the United States policy in Europe has been a disaster. The whole expansion of NATO, the United States model for Europe, which is that everybody should have the same political system, presidential or parliamentary type system on the western model, combined with the military block has been a total disaster in Europe. We got from this slow growth, high inflation, and the biggest war going on since World War II. This policy has proven to be disastrous.

Furthermore, the biggest impact seems to be borne by U.S. allies, not China. By restricting companies from countries like South Korea, Japan, or the Netherlands from exporting to China, the world's largest chip markets, the United States is also inflicting damage on its allies.

The more important is that, United States will cut itself off from the world's most important markets and advanceesin AI, chips, etc. Because China is absolutely one of the leading countries in the world in these areas, notably AI, and the U.S. might be undermining its own interests in this process – a situation best described as ‘cutting off one's nose to spite one's face'.

Capital News: But we found that the U.S. government believes that although de-risking strategy may reduce efficiency, adhering to restrictions on sensitive products will mitigate the harm caused by lowered efficiency. Moreover, it believes that incurring additional costs is deemed worthwhile, as it enhances U.S. security. Will the U.S. blockade of China in the high-tech sector truly lead to greater security for itself?

John Ross: This is absolute nonsense. That policy has got nothing to do with security.

I perfectly well understand that the United States will not allow companies to export missiles or supply tanks to China– such actions would indeed be reasonable restrictions. China is not trying to buy them. However, the examples I'm referring to are different in nature. Take the case of the Android operating system on mobile phones – the United States banned Huawei from using it. Why does the U.S. want to do this? Because Huawei is becoming one of the world's largest manufacturing of mobile phones. Is the security of the United States truly dependent on the Android system in mobile phones? This is absolutely laughable. The real motivation behind such actions has nothing to do with U.S. security concerns. Instead, it's about attempting to damage highly successful Chinese telecommunications companies.

But the problem for the United States is that China isn't limited to just one successful company. China now boasts numerous prosperous companies, and it's becoming increasingly expensive for the U.S. to consistently impose restrictions.

This becomes evident in cases like TikTok. Previously, the U.S. propagated the idea that China lacks creativity and cannot develop brands – that it can only assemble others' products for export. However, TikTok has surged to become the world's most visited website, with around 120 million Americans having it installed on their phones.

Although many of the most visited websites in the U.S. are Chinese, let's focus on TikTok.

Someone at Bloomberg summed up the U.S.'s predicament aptly: they want to ban TikTok. But picking a fight with an app present on 120 million phones may lead to unintended losses. While the U.S. has made threats against TikTok, it hasn't taken extensive actions against it so far.

Most of the United States’ actions – like the attacks on TikTok, Huawei, or even the Android mobile operating system – have little to do with national security. Instead, they are just attempts to slow down China's companies, that's all.

Capital News: Do you think the United States can really reduce its reliance on China?

John Ross: Not very much, probably a bit around the edges, but it will pay a significant price for doing so.

The predicament arises for several reasons:

Firstly, such measures would lead to higher prices for American consumers, thus adversely affecting their well-being.

Secondly, American companies don't really want it. The current policy pursued by the United States, including economic sanctions, seems to be at odds with the interests of the vast majority of US enterprises. They know perfectly that China is the most rapidly growing economy in the world, making it an appealing and swiftly expanding market. These companies aspire to engage with China. Unfortunately, the stance taken by the United States involves placing hurdles in their path.

An additional challenge faced by the United States relates to insufficient investment, particularly in infrastructure. Before the recent shift in U.S. policy initiated under the Trump administration towards China, many individuals within the United States, including political figures and state governors, recognized this issue. There was a trend of U.S. state governors visiting China to encourage investments in the establishment of factories within their respective regions and seeking investments for their states.

Now they've been warned off from that, leading to diminished investments. As a result, the United States is now confronted with a situation where the the cooperation with China's top-tier infrastructure companies is reduced.

In reality, China's infrastructure companies have established themselves as global leaders due to their extensive track record in successfully developing infrastructure projects. In contrast, the United States has lagged behind both in terms of the strength of its infrastructure companies and its commitment to infrastructure development over several decades.

So, the answer is, no. The United States will not really succeed in doing this. While It will probably succeed in severing ties in specific high-tech sectors, a comprehensive disentanglement is unlikely.

Capital News: Since we're discussing the U.S. containment of China's high-tech industry, we've also noticed a similar trend recently in the United Kingdom. According to reports of POLITICO, British firms are asked if they have invested in a list of 17 areas — covering everything from advanced materials and robotics to synthetic biology. Department for Business and Trade (DBT) officials have told companies that — like the Biden administration — the U.K. will curb investment into China's semiconductor, artificial intelligence and quantum computing technology. The same business representative said that the survey “looks like a kind of embryonic form of a new, very difficult export control mechanism”. Have you heard about this news? How do you view the investigation being conducted by the British government? Does the UK intend to follow the United States in restraining China's development in same areas such as semiconductors?

John Ross: Unfortunately, yes. Britain has indeed been closely following the United States in this regard. Very, very faithfully. The result of which has been enormous damage inflicted upon the British economy. It's terrible. The economic condition of Britain is awful – over the last four years, we've experienced a meager 0% per capita GDP growth, a paltry 0.1% increase in overall GDP, and a decline in real wages.

In fact, using Britain as a cautionary example is quite effective. It's a very good negative lesson of what not to do. The British economy has borne a heavy cost for aligning itself with the United States. Unfortunately, Britain will continue to follow this deeply damaging policy. Because it appears that the dominant circles within Britain are committed to mirroring whatever decisions the United States makes, even if it comes at a significant cost to their own well-being – as demonstrated by the pursuit of Brexit.

I don't see any sign of a shift in their stance. However, it's important to note that while Britain's impact on China might be limited due to its size, the damage it inflicts upon itself remains significant.

Capital News: We remember that, in 2015, Britain used to be China’s “best partner in the west.” It had become a founding member of Asian Infrastructure Investment Bank, against American opposition. From 2020 onward, however, Britain transformed itself from China’s best partner in Europe to its harshest critic, sweeping away decades of foreign-policy consensus in the most drastic such shift in the Western world. Since Rishi Sunak formally became UK's new prime minister, the UK's policy towards China had become notably tougher. However, there has been a recent shift in this stance. Two days ago, the UK Government officials have reportedly been told not to use the term “hostile state” by the Foreign Office in case it upsets China. The move is understood, according to the report, to help improve relations with China via diplomacy. How do you assess the UK government's policy towards China and its frequent changes? Can China trust the goodwill signals emitted by the UK government?

John Ross: China is quite mature enough to judge people based on their actions rather than their words. In this context, the absence of the term "hostile" in statements will have no meaningful impact on China-UK relations. What truly matters is whether the UK modifies its actions. And I'm afraid its actions have been far from friendly and have led to significant repercussions. The issues between Britain and China weren't originated by China; it's important to note that the situation isn't just about China's relations with Britain.

Allow me to clarify an assumption that some in China made after the Brexit vote. They speculated that Britain's exit from the European Union would lead to a stronger friendship with China. I said sorry, you're quite wrong. You're only looking at the word, not the reality that was behind Brexit.

Britain's economy is too small to pursue an independent course. It's between two of  world's largest economic blocs, the United States and Europe. And the idea that Britain can achieve complete independence from either of these spheres is complete nonsense. It's either a part of the European sphere or it's part of the U.S. sphere. The meaning of Brexit was that the Britain decided to be less part of the European sphere and more part of the U.S. sphere. And once Britain decided to become more part of the U.S. sphere, it would follow what the United States did.

So, the Brexit decision doesn't imply that Britain will be more favorably disposed toward China. On the contrary, Brexit reflects a shift towards aligning more closely with the United States and thus, adopting a stance that tends to be less accommodating to China.

And I think recent events have substantiated this viewpoint. Britain's actions and policies haven't fundamentally changed and are unlikely to do so unless it decides to break free from its subservience to the United States. While there might be some tactical shifts for appearance's sake, because Britain is paying a very, very severe price for its bad relations with China, the core attitude towards China won't significantly change unless Britain is willing to detach itself from U.S. Influence.

Capital News: British Foreign Secretary James Cleverly has just concluded his visit to China. How do you assess Cleverly's trip?

John Ross: It appears that he might attempt to use diplomatic language and maneuvers to create an illusion, hoping to persuade China that Britain is pursuing a more independent policy, etc.  But it is not the truth. Cosmetic changes in language or attempts to present a facade of pursuing an independent policy won't hold water with China. China possesses the capability to discern whether actions align with words or not.

So, I imagine that this visit will yield minimal results and have little impact. China, as a serious and discerning country, assesses nations based on their actions rather than mere rhetoric.  Unless the UK is willing to alter its policies and halt actions such as banning Huawei, meddling in Hong Kong, and engaging in the fields of high technology boycotts, there won't be a notable improvement in relations.

Given this context, the Foreign Minister's intentions to utilize diplomatic efforts to create a façade are unlikely to bear fruit. China won't easily be swayed by such tactics.

So, I don't foresee this trip being particularly successful in altering the trajectory of China-UK relations.

Capital News: As Foreign Minister Wang Yi pointed out during his meeting with Cleverly, "Sino-UK relations are at a strategic crossroads." Chinese people believe in the principle of "actions speak louder than words," so we eagerly await to see how the UK will follow through with its actions in the coming days.

Belt and Road Initiative

Capital News: What is your overall impression of the Belt and Road Initiative?

John Ross: I think it's the most important development initiative taking place in the world because it fits into the general trend that is occurring worldwide and China's specific ability to play a role in it.

The general trend is that the so-called Global South economies, the developing economies, are growing significantly more rapidly than advanced capitalist economies. According to projections by the IMF, 70 % of world economic growth in the next 5 years is going to take place in the developing countries based on PurchasingPower Parities (PPPs). Even if you take it at current exchange rates, 55 % of the world's economic growth will take place in developing countries.

The first overall global trend is the development which is taking place in the Global South. Within this trend, China is the most important and largest developing economy in the Global South, and it has some very great advantages to contribute to this situation. First, it has a rapidly growing economy. Second, it boasts the world's most efficient infrastructure companies due to its extensive experience in infrastructure development. Third, it holds substantial foreign exchange reserves that can be deployed outside of China to provide assistance. And therefore, this gives a new model of the way that the economy can develop.

I know that the Belt and Road Initiative is not formally confined to Global South countries, but it primarily involves participation from Global South countries. If we examine the overall trend of the world economy, where the Global South experiences much more rapid growth than the Global North, and then consider the specific contributions China can make, it becomes evident that this initiative is the most significant ongoing development effort in the world.

Capital News:  A few years ago, the British political sphere expressed multiple times the desire to participate in the "Belt and Road" initiative. At that time, the British Ambassador to China, Sebastian Wood, indicated that given the significance of the regions along the "Belt and Road" to the global economy, promoting economic growth in those areas aligned with the interests of all parties. The UK hoped to witness economic cooperation and connectivity between China and the UK based on the "Belt and Road" construction. Why hasn't the UK joined the "Belt and Road" initiative yet? What considerations are involved?

John Ross: I'm afraid that since those statements were made, Britain's economic policies have taken a disastrous turn. I mean the last 7 years have been marked by failure after failure. If we look at the period since 2019, especially the latest phase since the pandemic, Britain's economic results are absolutely terrible.

The general GDP growth rate is 0.1% per year, and both its actual per capita GDP and average growth are zero. That means the only increase, which is 0.1% of GDP, has simply come from the expansion of the population. This is an absolutely disastrous track record, and Britain's economy has gone off the rails in a whole series of ways.

The first issue was the decision for Brexit, which was completely irrational and greatly against Britain's interests. Secondly, there was the reversal in policies towards China.

When Cameron was the Prime Minister, before the Brexit referendum,, there was a so-called golden period with China. He understood the logical complementarity between the British and Chinese economies, which is that Britain possesses one of the world's only two international financial centers– London and New York. This is a significant advantage.

On the other hand, Britain is now weak in manufacturing industries and so on，while China is the world's largest industrial and manufacturing center. Chinese companies aiming to go international often choose Europe, and Britain, especially London, offered a series of advantages. Firstly, it has an international financial center, which makes operations for Chinese companies smoother. Secondly, English is the foreign language most commonly learned by Chinese people, so there's a larger pool of Chinese individuals who can work effectively in Britain compared to other European countries like France, Germany, or Spain. And therefore this was greatly advantageous for Britain.

However, after this period, Britain's economies and policies have completely gone off the rails. It happened for one simple reason – its determination to subordinate itself to the United States.

Britain wanted to get out of the European Union because important figures in the United States supported Brexit. For instance, Trump wanted Brexit to weaken the European Union. So, in order to accommodate itself to the United States, Britain left the European Union，which turned out to be a disaster. But the United States didn't even offer Britain a free trade deal because that would have damaged the U.S. So, Britain essentially shot itself in the foot by leaving Europe and received nothing in return from the United States. Similarly, Britain adopted a very anti-China stance to appease the United States. That's why it distanced itself from any involvement in the Belt and Road Initiative.

Banning Huawei from participating in the 5G network in Britain was also a big setback. Unfortunately, this disastrous policy which has been carried out on all fronts by Britain, resulting in negative outcomes across all sectors. The decisions have made Britain overly reliant on the United States and have brought about terrible economic situation in Britain.

Capital News:  We have noticed that the United States has implemented a series of anti-China policies in recent years, and views the BRI as China's ideological expansion and geopolitical competition, using economic interests as bait. How do you perceive the United States' criticism and negative portrayal of the BRI?

John Ross: This is completely stupid policy as viewed by the United States. China hasn't set out any attack against the United States, nor have I noticed any aggressive actions taken by China against the United States. Instead, what I have observed are numerous aggressive economic actions taken by the United States against China– such as imposing tariffs. China did not initially impose tariffs on the United States, but the Trump administration introduced tariffs against China, and unfortunately, the Biden administration has not yet removed them. Now, this is proving to be very costly for American households.

Well-regarded estimates, such as those from Oxford Economics, which has got nothing to do with China, indicate that the complete set of tariffs will burden the average American household with an additional $800 in expenses per year.  And this is a situation in which real wages in the United States has been growing extremely slowly for the last 44 years, with an average annual increase of just 0.3 %, which is tiny. And in actual fact, in several years, real wages in the United States have even declined.

Given the ongoing situation of rapid inflation in the United States – the highest in 40 years – the imposition of tariffs on goods imported from China only exacerbates the problem further. This is aggression on the part of the United States.

Moreover, the United States is actively attempting to ban exports of chips to China. This strategy is causing damage to all sorts of chips companies around the world, and the American business community isn’t particularly supportive of it. After all, China operates the largest markets for chips in the world due to its status as a significant manufacturing hub. This move by the United States is anything but logical. I've yet to notice China initiating such steps against the United States.

Thus, the assertion that China is carrying out aggression against the United States just won't stand up even on the economic field. The reality is that the aggressive policy is being pursued by the United States against China.

Regarding the BRI, this is a strategic approach for China that makes perfect sense. China wants to involve itself with Global South economy, a region experiencing more rapid growth than the advanced economies. This is a logical choice, as any sensible entity would seek to tap into the fastest-growing market segments rather than stagnant ones.

The Belt and Road Initiative is a mutual benefit – it's a win-win situation. China benefits from the Global South's faster economic expansion, and the economies of the Global South benefit from China's role as the world's fastest-growing major economy. This initiative is about mutual growth. It's got nothing to do with opposing the United States.

If the United States were to adopt a more rational policy, it would focus on expanding trade with the Global South to also reap the rewards of their burgeoning development. But if the United States aims to concentrate economic growth within its own borders and among its closest allies, such as Europe, it should be aware that these economies are experiencing sluggish growth. Naturally, concentrating efforts on economies with slow growth rates is unlikely to yield positive outcomes.

Therefore, the United States' claim that China's actions are aggressive is absolutely stupid. What the U.S. trying to do is attempting to reverse the general trend in the world economy, but it has been largely unsuccessful in doing so.

This only reveals the folly of U.S. policies, which are causing harm to itself. This has nothing to do with China; rather, the root of the problem lies in Washington, not Beijing.

Capital News: We have noticed that the United States accuses the Initiative of pushing countries along its route into a "debt trap." What your opinion regarding to the “debt trap,” do you think the Initiative pushing countries along its route into a "debt trap"?

John Ross: I think this is one of the most stupid economic arguments I've ever heard.

When examining the development of any company, it becomes clear that no company can fund all of its investments solely from its cash flow – it's simply not feasible. If  it werethe case that companies must not borrow, every company would remain small in scale. Many companies adopt a logical strategy: they secure loans to finance their investments. Their calculation is based on the understanding that the growth in production resulting from these investments will generate returns higher than the interest rate on the borrowed funds. This is how every single major company in the world operates.

Imagine if the United States were to propose to every country globally and to all American companies that they must eliminate borrowing. The U.S. economy would be wrecked. Any CEO of an American company would outright reject such a proposition. Instead, it's understood that borrowing is often necessary. The key lies in selecting projects that will yield returns greater than the interest paid on the borrowed funds.  That's just a normal commercial decision.

If a company borrows money  to invest in projects and the resulting returns are lower than the interest paid, the problem stems from selecting the wrong project, not from the mere act of borrowing itself. So, the so-called “debt trap made by China” is an absolutely ridiculous type of argument.

Also, the U.S. doesn't even apply this logic to itself. It has never objected to the IMF or World Bank providing loans. What is it doing about American banks? Are they considered unsafe due to all the lending they facilitate? Has there been a call for American banks to halt lending? This is absolutely ridiculous.

This is one really, I can't emphasize enough how utterly stupid this perspective is. The notion that borrowing money is inherently wrong is baseless. The crux of the matter is ensuring that borrowed funds are invested wisely. If an investment turns out poorly and doesn't yield profits, it's because of a misguided business decision regarding the project chosen, not because the company or bank borrowed money.

Capital News: Looking ahead to the next decade, how do you think the Belt and Road Initiative will evolve? What are your recommendations for the development of the Belt and Road Initiative?

John Ross: I think that it will continue to strengthen. Because the development of the Global South, as a rapidly growing part of the world economy, is set to gain more momentum.

When viewed in terms of PPPs, the measurement method preferred by the IMF to gauge the world economy, developing economies are  already larger than advanced economies in size. This is evident even during market crises.

Although developing economies might not yet match the advanced economies in sheer size, if measured at current exchange rates, their rate of expansion is significantly more rapid. This phenomenon is exemplified by the considerable interest surrounding the BRICS summit. Why is there such widespread attention? Why have around 60 countries been invited to the BRICS summit, and why have over 20 countries formally applied to join BRICS? Why is this taking place? This interest stems from the fact that the Global South is outpacing the growth of the global North – the advanced capitalist nations. This trend is going to continue and strengthen.

To illustrate, considering the cases of China and India alone, they are expected to contribute to nearly half of the world's economic growth in the coming period. This trend extends to many other countries as well.

The BRI is profoundly aligned with this trajectory. Through strategic infrastructure investments, it offers a logical approach to fostering the growth of Global South economies. Given that these economies often face capital shortages but possess abundant labor resources and high growth rates, such investments are highly advantageous to them.

As a result, the BRI is slated to further strengthen over the next decade. It seamlessly dovetails into the predominant trajectory of the world economy.

Russian special military operations

Capital News: Since the outbreak of the Russia-Ukraine conflict, Western countries such as the United States and the United Kingdom have been consistently supplying arms and ammunition to Ukraine. Do you consider continuing to provide military support to Ukraine a wise decision? Are there risks of further escalating the situation?

John Ross: It’s not a wise decision, and it exacerbates the situation. The conflict between Russia and Ukraine has its roots in the expansion of NATO into Eastern Europe and Ukraine.

The majority of experts in Russia warned the United States not to expand NATO into eastern Europe. They said that the decision to expand NATO into these regions crossed a red line for Russia, the United States should be able to understand it very clearly.

Let's go back to the time of the Cuban missile crisis in 1962. Given the proximity of Cuba to the United States, the U.S. was not willing to allow the Soviet Union to deploy missiles in Cuba under any circumstances, no matter if it is necessary to have a world nuclear war to stop it. Now, the distance between Kiev and Moscow is only half the distance between Havana and Washington. If the United States were to say that we are not going to have Soviet missiles in Cuba, because they're too close, you can imagine what Russia's position would be on the question of NATO in Ukraine. This was a total provocation, and that's what created the war.

Therefore, the continuation of this policy of supplying weapons is just a continuation of this situation. They are part of the U.S. policies. The war has also slowed down the European economy. We now get high inflation and high gas prices amidst a big war. This is an absolutely disastrous policy that has been pursued and won't come to a stop until the United States refrains from its attempt to bring Ukraine into NATO.

Another point is that within Ukraine, the United States supports various actions against the rights of the Russian-speaking population. This group constitutes a significant portion, approximately 25%, of the country's population, and Russian is their first language. Ukraine even bans them from using Russian as an official language.

Allow me to draw a comparison with Canada. Canada has a strict bilingual policy; both French and English are used across the country. If, hypothetically, they banned the use of the French language, there's no doubt that French speaking Quebec would have voted for independence.

The United States' policy in Ukraine has been an absolute disaster, a catastrophe for Europe. The supply of weapons is merely a continuation of this trend. Instead, what should be done aligns with China's proposal. A ceasefire should be established, and the pertinent issues, such as Ukraine's involvement in military alliances, should be addressed. The focus should shift towards the absence of Ukraine from military blocs. Furthermore, the rights of the Russian-speaking minority in Ukraine should be discussed at the negotiating table, not on the battlefield.

However, the United States does not appear to be moving in this direction. At the moment, things are not progressing well for the U.S., as the Ukrainian offensive seems to be leading nowhere.

Capital News: After one year of fighting, Western countries have imposed a series of alternating sanctions on Russia. In response, Russia has implemented counter-sanctions. What impact do these sanctions have on the stability of global economic development and trade?

John Ross: But their impact isn't significant on a global scale due to the majority of countries in the world refusing to go along with the U.S. sanctions. About 85% of the world's population resides in nations that have refused to enact U.S. sanctions. These sanctions are, in practice, only being enforced by a handful of the United States' closest allies. The majority of other countries are choosing not to cooperate, which even includes some traditional allies of the United States.

Unfortunately, the sanctions are having a notably acute effect in specific sectors. For instance, they have hit the agricultural and fertilizer industries hard.  Because Russia is the largest global supplier of fertilizers, and both Russia and Ukraine are significant exporters of agricultural goods. Therefore, the repercussions are being felt in terms of food supplies, particularly in regions such as Africa and some developing countries, and it's here that the negative effects of the U.S. sanctions are most apparent.

In terms of the broader world economy, the U.S. sanctions aren't yielding substantial consequences due to the widespread refusal by most nations to implement sanctions.

Capital News: Has Europe’s economy been affected by the Russia-Ukraine conflict? How badly has the war hit Europe’s economy?

John Ross: The impact has been profoundly negative, both in the short term and from a strategic standpoint. To comprehend this, it's important to consider the broader situation of Europe. If we define Europe in its broader geographical sense, which includes Russia, with its significant size and population, it forms a balanced economic system, although not uniformly distributed. Western Europe has a strong concentration of manufacturing industries, while Eastern Europe and particularly Russia is rich in raw materials – somewhat akin to the division between Texas and the rest of the United States, if you want to put it that way.

When good relations exist between Eastern and Western Europe, the European economy does very well. But the United States doesn't like that. For its own reasons,  it wanted to drive a wedge between the two regions, which has inflicted substantial harm on Europe.

If you took Texas out of the United States, then you take out its biggest oil suppliers and primary raw materials, this is a huge damage to the U.S. economy. The United States’ policy to split western and Eastern Europe has also caused structural damage to the European economy.

Moreover, the immediate consequences of the conflict, such as elevated natural gas prices, have compounded the negative effects.

Over the last four years, the European economy has barely grown, particularly since the initiation of the Ukraine war. This contributes to the broader disaster that the United States has effectively imposed upon Europe.

In Asia, there exists an alternative model that has proven effective. Look at the situation in Asia. A diverse array of political regimes coexists, including socialism in China and Vietnam, monarchies like Thailand. There are all sorts of republics. Nobody is pushing for political uniformity or attempting to create military blocs there. While the United States is attempting, but almost nobody will go along with it.

Despite the historical backdrop of major wars during the Cold War era, East Asia has transitioned from conflict to peace and has become the world's most rapidly developing economic region. This is achieved not by imposing political uniformity or military blocs, but through peaceful economic development.

Unless Europe takes steps to regain its independence from U.S. influence, it's unlikely that the situation will improve significantly.