China-US Focus has just released a new edition of our journal "Focus Digest," which contains analysis on developments in the world's most consequential bilateral relationship.

Coming at a critical point in China-U.S. relations, our contributors in the latest edition weigh in on the trends likely to shape bilateral relations in 2018, including commentaries by renowned scholars such as George Washington University Professor David Shambaugh, who argues that 2017 was a banner year for China's diplomacy, and by analysts and policy-makers such as Chinese Foreign Minister Wang Yi, who writes about China's goal to foster a global community of nations.

China-US Focus Editor Zhang Ping writes in his Editor's Note: "The newly released U.S. National Security Strategy labeled China as a rival competitor that seeks to challenge American interests. The Trump administration is said to be pursuing tougher trade penalties against China. These developments underline the complexities of the world's most consequential bilateral relationship. Labeling China a 'competitor' ignores the complexity of the relationship and does not change the fundamental drivers of bilateral ties. The two economies have become so connected and interdependent that the need for joint efforts to address regional and global flash-point issues is imperative. When facing this reality, it is hard to envision a relationship characterized by rivalry. Neither country, nor the world, can afford for this relationship to be disrupted."

The online magazine can be accessed here.

At the World Economic Forum this week in Davos, Switzerland, one of President Xi's key economic advisors, Liu He, made a speech on China's economic policy. Liu, who was appointed to the Politburo in October last year, is a 65-year-old Harvard-educated financial expert, who has been called "the brain" behind supply-side reforms. He was the only policymaker who is not a state leader to speak in the ten sessions hosted by the World Economic Forum Executive Chairman Klaus Schwab, highlighting his growing political influence.

In an echo of President Xi's speech at Davos last year, Liu reiterated China's dedication to globalization and opposition "against all forms of protectionism." China's opening up and continued reform process was the focus of a significant portion of the speech, as well as a follow up question by executive chairman Schwab, who probed Liu for specific policies. Liu mentioned that China's new opening up policies would be launched to celebrate the 40th anniversary of the original reform and opening up policy, and would "exceed the expectations of the international community."

In his speech, Liu also spoke of the "three critical battles" China's economy faces. The first of these, the transition from rapid growth to high quality development, he characterized as a change from "Is there enough?" to "Is it good enough?" China has already lifted millions of people out of poverty, and this year aims to lift 10 million more people from absolute poverty, partly through relocating 2.8 million people from areas "suffering from harsh conditions" to urban centers. "Such efforts embody the Chinese approach to human rights," he said.

His speech was also welcomed by those who are concerned about China's growing debt bubble. It was "the latest sign that the Chinese government would de-emphasize debt-fueled growth in the coming years," The New York Times wrote, "a public message that many in the financial world have been eager to hear."

The Chinese government has just released its first ever official white paper policy document on the Arctic. Titled "China's Arctic Policy," the document outlines China's plans to expand the already ambitious Belt and Road Initiative to the Arctic. China's massive infrastructure project is set to connect China to Europe, the Middle East and South Asia, and now it may very well include the expansion of shipping and trade routes to the region surrounding the North Pole.

While China is not an Arctic country, it claims that it is an "important stakeholder" of the region. The paper, issued by the State Council Information Office, states that China would like to "jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative." China is seeking to incorporate the Arctic into the project by installing a "Polar Silk Road," in order to foster the sustainable economic and social development of the Arctic.

Currently, the Arctic is governed by the eight Arctic states — Canada, the United States, Russia, Norway, Denmark, Iceland, Sweden and Finland — and consequently it primarily falls under the domestic laws of these eight states. China's intention to participate in the shared development and governance of the Arctic is a clear sign to the world that they intend to be a major player in global governance. This "turn towards the north" is the latest in a series of movements President Xi has made in order to expand China's participation in this area.

However, there are also some important economic motivations to consider. China, with its expanding economy, has continued its hunt to secure energy resources to meet growing domestic demand. The Arctic contains 30 percent of the world's undiscovered natural gas and 13 percent of its undiscovered oil reserves. One section of the new policy paper focuses on how China can use the Arctic's resources, including fuel and fisheries, while another section mentions that China will boost polar tourism. Chinese officials have, however, made clear statements in response to concerns that this new planned development could damage the Arctic's already vulnerable environment. Vice Foreign Minister Kong Xuanyou stated that China would not challenge or interfere in the affairs of regional players, nor bring harm to the environment, as quoted by The South China Morning Post.

"Focus Recommends" highlights influential new book releases that the editorial team of China-US Focus recommends. In this week's post, we feature How China Escaped the Poverty Trap by Yuen Ang, published by Cornell University Press, which was a Foreign Affairs 2017 Best Book of the Year.

China's astonishing revolution from an impoverished planned economy pre-1978, to the world's second-largest economy today with strong annual growth figures and booming e-commerce and innovation industries, is the subject of Yuen Yuen Ang's book. The author lays out a new conceptual framework for understanding successful development, which she argues is a coevolutionary process in which markets and governments mutually adapt to each other. As well as charting China's remarkable development "makeover," Ang also touches on the challenges and development problems China faces today, both politically and economically. To provide context for China's development, Ang uses late medieval Europe, antebellum United States, and Nigeria today as development case studies, finding unusual parallels between these otherwise dissimilar cases.

Ang's book is essential reading for those interested in development economics, especially as it relates to China's remarkable transformation from a country with few resources, social services, and public education to the engine of the world's global economic growth. How China Escaped the Poverty Trap challenges previous thinking on development and points to an alternative path out of poverty traps. For more of our recommended reading, see Focus Recommends.