The Chinese remember something that has been mostly forgotten by other nations. Namely, that is only these last 150 years that the country has had the status of what we would call today a ‘developing’ or ‘emerging’ country. Therefore, from the point of view of both the government and its simplest citizens, the country is simply regaining its previous status of one of the world’s largest – if not the largest – economy and the world’s largest exporter.
Since it has done so, in part, by flooding the market with products sold at cut-throat prices, it has led to the destruction of millions of jobs in the ‘developed’ countries just as the Industrial Revolution destroyed millions of jobs in China and India.
Among its present accomplishments, China has the world’s largest population. Population growth has been a traditional characteristic of the country and has led, in the past to famines and the consequent social unrest. The one-child policy, now becoming a two-child policy with the long-term objective of becoming a three-child policy, is a direct result of this chequered history. Even with the present low-growth population, the country needs to create 30 million jobs per year to maintain the rate of economic growth it has known over the last 20 years. The inability of the economy to grow may well revert the country to social unrest which the government could attempt to prevent through the encouragement of nationalism, perhaps to the extent of starting a conflict.
China’s growth has been fostered essentially by the availability of abundant cheap labor which has attracted massive investments from foreign corporations. The salary increases, particularly in the coastal areas, and the migration of some of its workforce to Africa, have led both Chinese and foreign companies to either move their production sites inland, where salaries remain low, or to invest in Southeast Asia.
The Chinese economic model stands in a category by itself as state-run companies stand side by side with private enterprise. Both are export-driven and benefit greatly from the opening of world-wide markets that the United States and its economic allies put in place by fostering the globalization process through the GATT and later the WTO. One may wonder, however, if the model chosen – i.e. exporting low cost goods while importing raw materials at ever rising prices – is sustainable. Unless China will be able to innovate, particularly in high tech products, it will see a stunting of its growth. If, however, its industry does evolve into a high tech industry, it may face import limitations from countries that may suffer of a negative impact on their employment statistics.
President Xi’s ‘China Dream’, with a first time horizon of 2021 followed by a second one of 2049, is, in a first stage, to raise income levels to those of middle-income countries, and, in a second stage, to that of the most advanced economies. 2013 per capita GDP was of USD 6’800, about 20% of US GDP. This figure, however, hides a middle class of 200 million persons.
The country also suffers from a banking system burdened by bad debts estaimated to represent 60% of all outstanding loasn. Loans of government, central and local, represent 45% of GDP.
China’s economic power is felt throughout Asia, with all the countries of the continent economically linked to it and dependent on China’s sustained economic growth.
The present recession, leading to a major decrease in exports, has led voices to claim that the economy is on the verge of collapse due to a forthcoming banking crisis and a bursting property bubble. Should it coincide with a massive epidemic, it would grind the economy of the country, together with that of many of its trade partners, to a halt.
China has also become the world’s biggest lender with figures in the billions of dollars. Its lending activity in a large number of countries stretching from Africa to Europe while passing through Central Asia and Latin America, shows its ambition of replacing the domination of US and European institutions in the financing of infrastructure. Perhaps its most ambitious moves have been the creation of a banking initiative with Brazil, Russia, India and South Africa and an Asian Development Bank. The latter with a capital of USD 50 billion and will be in direct competition with the official Asian Development Bank and even with the World Bank. China will contribute 50% of the capital, the remaining 50% being paid by 21 other countries including India, Singapore, Vietnam and Qatar.
President Xi has also put a proposal called the SREB, for Silk Road Economic Belt, which is a model for South – South development. While centered on Central Asia, it involves a large number of countries, including some in Europe.
Countries may have to make the difficult choice between Chinese capital and Western technology.
China also runs the world’s second largest military budget, with an emphasis on developing its naval capabilities – including submarines. It to not only wants to secure the hydrocarbon supply routes, but also aims to counter the US naval presence around its maritime borders. For the time being, however, it is not a credible threat to the US, particularly considering the latter’s nuclear capabilities.
China feels constrained on its naval borders by the presence of the US Navy as well as by that of Taiwan, a US ally which the US has repeatedly stated it would protect in case of an attack. The only possibility for China to successfully conclude a military invasion of the island would be for it to move extremely rapidly so as to reach its objective before the US would have time to intervene. It would have to hold US naval power at bay with the precision weapons it is presently acquiring.
Taiwan is not the only country with which it is possibly in a conflictual situation. It has extended its maritime sovereignty, in the hope of finding hydrocarbon deposits on a string of small islands and rocks. It has thus taken a threatening position with Japan, Korea, the Philippines and Vietnam.
On its Northern border, lie the Central Asian states that were part of the Soviet Union. Their small population lies, for some of these countries, on major hydrocarbon reserves. They are natural suppliers of China and do not carry the risk of transport disruptions as is the case with the maritime routes. At least half of Kazakhstan’s oil sector is now owned by China which has also built a pipeline connecting to Turkmenistan with the potential of extending it to Iran.
Further north, Russia is a major oil and gas supplier. Russia uses this growing major partnership as a threat to the European Union that has applied biting sanctions.
Extending its reach even further, China has become a shareholder of Total, the Franco-Belgian oil and gas producer.
President Xi sees the rise of China as inevitable in view of what he sees as the irreversible decline of the West. China’s youth sees their future as ever brighter. Will the future include the Communist Party, at least in its present form?
Does a brighter future mean also the status of a world power and the demise of the United States as the hegemon?
Suga Faces A Tough Road Ahead Without Enough Political Juice
Authors: Alexandre Uehara and Moises de Souza
The quantity and dimensionality of problems inherited by a sober and discrete Yoshihide Suga as the first new Japanese Prime Minister in almost a decade will demand that “Uncle Reiwa,” as the statesman is known, employ the skillst hat he has so amply demonstrated in the past: the ability to negotiate and find elegant solutions to complex questions. Suga’s competence as a negotiator was recognized as an important factor behind the success of the Trans-Pacific Partnership (TPP), which entered into force on December 30, 2018. This agreement—considered doomed to failure after US President Donald Trump signed an executive order withdrawing the United States from the TPP in January 2017—succeeded largely thanks to the vital leadership and tenacity of Japan, with Suga playing a key role behind the scenes. Suga also took the lead during the EU and Japan’s Economic Partnership Agreement signed in 2019, considered by many as another example of outstanding negotiating performance. With such a resumé, these skills and experience proved critical in Suga’s victory in the Liberal Democratic Party (LDP) leadership race, enabling him to garner support from a wide array of sources, ranging from LDP Secretary-General Toshihiro Nikai to various factions within the Komeito, a partner in the coalition government.
The question now is whether his past performance can be replicated as Suga targets the current challenges that so recently have fallen into his lap. He is taking the helmata delicate moment for Japan, with uncertainties that will force him to show, domestically and abroad, what kind of leadership Japan will enjoy after a larger-than-life figure like Abe Shinzo steps down. And these challenges are coming from all quarters: the economy, public health, and regional security, just to name a few. Each of them has the potential to shape the future of the nation and the reputation of its prime minister, and certainly Yoshihide Suga is no exception. On top of that, legacy problems remain. On the one hand, the implicit promise of continuity with Shinzo Abe’s policies played a crucial role in winning the LDP the elections: on the other, this very factor is an element of concern, since opinion polls were already detecting signs of decline in the popularity of Abe’s cabinet. If Suga has any political ambition left, he cannot afford to make any mistakes in the short- and medium-term.
On the domestic front, there are two important and interrelated problems: The COVID-19 pandemic and the upcoming Tokyo Olympic Games. These coterminous phenomena essentially represent a contradiction between uncertainty and reality. While few in Japan are clear about whether the current pandemic will turn into an ongoing ebb-and-flow in terms of virus contagion rates, the economic impact as a result of the response measures is already real. The profound effects have been translated into a new period of recession this year, an experience with which the Japanese a real ready very familiar, given their recent past. To make matters worse, the medicine intended to heal the wounds of economic recession was neutralized by the virus. Operating under the old adage that you have to spend money to make money, Tokyo expended over US$5 billion, with plans to spend US$2 billion more in 2020,to prepare the city to host the Olympic Games. Prospects showed that these investments would pay off. According to a report published in June 2020, it was projected that the Olympics would impact the Tokyo economy alone to the tune of almost US$190 billion, with a spill over effect on the overall Japanese economy of nearly US$300 billion and a potential impact of 0.2% of its GDP.Based on the same prospects, Japan signed an accord in 2013 with the International Olympic Committee (IOC), assuming total responsibility to bear all the costs alone in the (at that time improbable)event that the games would have to be postponed. Well, in what one might call the Forest Gump Effect, to wit: “life is like a box of chocolates: you never know what you’re gonna get,” the games were indeed postponed. Investors, according to reporting by Bridgestone, reported losses of around US$3 billion so far as a result of the postponement. It also affected the IOC, which registered losses of more than US$800 million. For Japan’s economy, Goldman Sachs is calculating losses of about US$5.1 billion in terms of domestic consumption alone. Suga will have to find a solution for this imbroglio, which even Abe could not or did not have time to figure out.
In the international arena, Suga—like all Japanese Prime Ministers before him—will have to walk a tightrope, executing a delicate balancing act between Beijing and Washington. So far, his biggest challenge is to find his place amid the rising tensions between Japan’s two most important trading partners. On paper, the logic is simple: Tokyo has developed initiatives to strengthen its alliance with Washington concerning security, without hurting its bilateral trade with Beijing. In recent decades, the latter has become increasingly economically important to Japan. In practice, this is not an easy job for two reasons: First, the erratic temperament of Donald Trump and the tendency of his administration to play hardball even when negotiating with partners. The trade deal negotiated in 2019 stands as a case in point: Essentially, Japan walked away from the negotiating table with a commitment to give the United States access to its agricultural market in exchange for a vague promise that the Trump administration would not consider Japanese auto imports a “national security threat.” On top of that, Trump made it clear that he still wants Japan to pay for the American military bases on Japanese soil.
The second reason comes from Japan’s powerful neighbour, with an increasingly assertive China under Xi Jinping. In November 2019, after China proudly displayed its new ballistic and hypersonic cruise missile system, Taro Kono (then foreign minister and now the minister for administrative reform and regulatory reform) publicly demanded that Beijing make its military budget and strategic goals transparent, to avoid raising the level of alarm and anxiety in the region.In addition, a few weeks after taking the center seat, Suga had to deal with the presence of two Chinese ships in the disputed waters of the East China Sea—a practice that has been taking place more and more frequently since Xi became chairman of the Chinese Communist Party in 2012. It is exactly these episodes of Chinese assertiveness that motivated Yoshihide Suga to choose Vietnam and Indonesia as the destinations for his first official diplomatic trip as prime minister. As much as Abe did, Suga intends to strengthen security ties with both Southeast Asian nations. This, tempered with a degree of restraint in the use of strong anti-Chinese rhetoric, is intended as a clear signal to Beijing: the rules of the game haven’t changed, with or without the presence of Abe Shinzo.
Using the same logic, Suga did not alter the basis of Japan-Taiwan relations that developed so fruitfully on Abe’s watch. In fact, besides workingfor close relations with Taipei, Abe also developed a friendship with Taiwan’s current President Tsai Ing-wen. Suga’s decision to appoint Abe’s brother, Nobuo Kishi, as defense minister was a clear signal to China that, with regards to Taiwan, it will be business as usual in Tokyo despite the transfer of power. It a secret to no one in Japan (orin China, for that matter) that Kishi enjoys close ties with Taiwan, a place he has visited several times over the years, including meetings with President Tsai, as representative of the ruling Liberal Democratic Party (LDP). The last visit took place on the occasion of the funeral of former Taiwanese President Lee Teng-hui in August 2020. Such proximity makes Kishi the most trustworthy channel of communication between conservative Japanese leaders and Tsai, as well as with the Taiwanese elite itself. In response to Nobuo Kishi’s appointment, the Chinese Ministry of Foreign Affairs spokesman Wang Wenbin saidin a statement that the new minister of defense of Japan must “abide by the one-China principle and refrain from any form of official exchanges with the Taiwan region.”
Few specialists in Japan believe that Yoshihide Suga will have as long a mandate as his predecessor Abe Shinzo. Despite being technically qualified, Suga still lacks enough political juice to retain the position of prime minister beyond the general elections that must take place in one year’s time. The tide may eventually turn in favour of Suga-san, depending on how well he and his new cabinet manage the daunting challenges that they inherited from the previous administration. More than mere negotiation skills are needed, however, and there is no doubt that Suga will have to make some tough decisions that will come to define, in a large measure, his political future post-2021.
Nepal-China Boundary Treaty: An example of peaceful Himalayan frontiers
Chairman Mao: How is everything with Your Excellency? Have all the problems been solved?
King Mahendra: Everything is settled.
Chairman Mao: Fair and reasonable?
King Mahendra: Yes. We all agree.
Chairman Mao: It is good that we agree. There is goodwill on both sides. We hope that will get along well, and you hope we shall get along well too. We do not want to harm you, nor do you want to harm us.
King Mahendra: We fully understand.
Chairman Mao: We are equals; we cannot say one country is superior or inferior to the other.
King Mahendra: We very much appreciate the way of speaking.
This was a snippet of the candid conversation between founding father of People’s Republic of China Mao Zedong and Nepal’s the then king Mahendra on the historic Nepal-China Border Treaty day of 5 October 1961. A book titled ‘MAO ZEDUNG ON DIPLOMACY’ has detailed this conversation. The conversation is mentioned under the topic of ”Talk with Nepal’s king Mahendra Bir Bikram Shah Deva and the queen’ (page 366 and 367) in the book.
This famous diplomatic book of Mao was compiled by The Ministry of Foreign Affairs of the People’s Republic of China and the Party Literature Research Center under the Central Committee of the Communist Party of China and was published by Foreign Languages Press Beijing on 1998.
This conversation, from the verbatim records, speaks volumes about the level of trust and the height of friendship between two neighbors Nepal and China.
Nepal-China boundary: An example of speedy settlement
Nepal and China boundary settlement has reached 59 years of its signing ceremony at Beijing. It is an extraordinary example of speedy settlement. Nepal and China formally established diplomatic relationship on 1 August 1955.
Few years later on 21 March 1960, Nepal and China signed Boundary Agreement. Nepal’s first democratically elected Prime Minister Bishweshwar Prashad Koirala signed it during the official China visit. The friendly diplomatic dialogue of Koirala and Mao is also included in the book ”MAO ZEDUNG ON DIPLOMACY’ under the topic of ”The Sino-Nepal Border Must be Peaceful and Friendly Forever.”
On 5 October 1961, Nepal and China signed Boundary Treaty at Beijing during the state visit of the then king Mahendra. The 1414-kilometer-long border treaty protocol was finally inscribed on 20 January 1963.
The adjustment was made on equal footing by land-swapping with Nepal gaining more land than it gave. According to a working paper presented at ”International Cross-Border Conference on Border Regions in Transition (BRIT)-XII Fukuoka (Japan)-Busan (South Korea) 13-16 November 2012” by Nepal’s former Director General of Survey Department and the author of the book titled ‘Boundary of Nepal’, China had given 302.75 square kilometer more land to Nepal.
The paper says, ”the adjustment was made on the basis of ‘give’ and ‘take’ and the inclusion of some pasture land within Nepalese territory. With this principle, Nepal had given 1,836.25 square kilometer of land to China and Nepal had taken 2,139.00 square kilometer, as it has been added 302.75 square kilometer of Chinese territory into Nepal.”
Nepal-China border settlement is an excellent example of speedy border settlement compared to Nepal’s southern neighbor India. Since the formal diplomatic engagement of 1955, it just took around eight years to ink full-fledged technical border adjustment between Nepal and China.
Tragically, Nepal and India are at odds over the border demarked by 204-year-old Treaty of Sugauli. The recent issue of Lipulekh, Kalapani and Limpiyadhura and new political map of Nepal unanimously approved by lower and upper houses of the federal parliament point to the long-pending friendly border settlements between Nepal and India.
Media myths on China’s encroachment of Nepal’s territory
Nepal and India has not resolved much of their border tensions since long. Lately, there are some media reports, mainly from India, about so-called Chinese ‘encroachment’ of Nepal’s territory. There was report about missed pillar number 11. However, it came out to be untrue with the finding of the pillar. After field inspection and technical studies, Chief District Officer of Humla district, Chiranjibi Giri, made it clear that the rumored border encroachment from China was not the fact.
Similar incident was reported few weeks ago when Nepal’s leading daily Kantipur claimed China’s encroachment of Nepal’s territory citing unverified Ministry of Agriculture, the ministry that has nothing to do with border issues. However, after formal clarification from Nepal Government, the report was found to be false and the biggest daily of the nation apologized.
There is a section in Nepal that desperately wants to draw parallel between factual Nepal-India border tensions with fictitious Nepal-China border rows. However, so far, this mission has proven wrong at times.
Nepal does not have any serious border tension with China. The only concern Nepal has it about China-India agreement to ‘boost border trade at Quiangla/Lipu-Lekh Pass’ as said in the 28th point of the joint communiqué issued by visiting Indian Prime Minister Narendra Modi and his Chinese counterpart Li Keqiang on 15 May 2015.
Nepal has diplomatically protested about this agreement by two countries as Lipulekh falls in Nepali territory not only based on the Treaty of Sugauli of 1816 but also the Nepal-China Boundary Treaty of 5 October 1961. Given China’s generosity and friendliness towards Nepal, it is not a big issue to address. Nepalese citizens are optimistic on China’s support on Nepal’s sovereignty over Lipulekh.
Why doesn’t China take India seriously?
India needs to formulate a long-term strategy on China, lest it be lurching from one crisis to another.
Amid rising anti-China sentiment in the aftermath of the bloody border clash with China, India has announced a slew of measures to curtail Chinese presence in the Indian economy. Building on previously imposed restrictions on foreign direct investment (FDI) from China, the latest round of regulations constitute banning over 200 Chinese apps and clamping down on Chinese investments in Indian startups. These measures, while drawing applause from Western governments such as the US and helping massage the nationalistic ego, have seemingly failed to irk the Chinese administration as much as India would have intended, let alone compel the PLA to pull back from the disputed areas along the long and undemarcated Indo-China border. In previous instances as well, India’s signalling to China of allying more closely with the United States in response to China’s aggressive posture on the border has failed to yield desirable results. This begs the question: why does not China take India seriously? The answer may lie in India’s China policy which can be described as reactive at best and incoherent at worst.
India’s Policy Conundrum
Although its geopolitical rise has been significant – next only to China, India still finds itself bereft of a world order concept or a guiding foreign policy framework. The lack of which, when it comes to dealing with China, has translated into a foreign policy muddle. Mohan Malik, for instance, points out that there are three schools of thought in India’s policy-making with regards to China – pragmatism, hyperrealism, and appeasement. Pragmatists maintain that India should balance China both internally (increasing its economic and military strength w.r.t. China) and externally (by forging alliances and enhancing interstate cooperation with other powers) while mitigating differences through economic and diplomatic engagement. Hyperrealists decry pragmatists’ optimism that increased trade and economic engagement can win over a territorially unsatiated China and instead argue for an unabashed encirclement strategy towards it with other China-wary powers. Appeasers posit that China is a benign and friendly power, meaning no harm to India and that it should be enthusiastically engaged. In trying to accommodate such plethora of views in dealing with China, successive Indian governments have found themselves muddling through one approach to another.
Current Government and Policy Flip-Flops
Following the Galwan clash, India appears to be hinting at a change of tack as evinced by India’s External Affairs Minister S. Jaishankar’s repeated assertions that realism should shape India’s China policy and that peace and tranquillity on the border cannot be separated from the overall architecture of bilateral ties. India’s slashing of Chinese presence in the Indian economy suggests a move in that direction. China’s rather staid response to India’s manoeuvres stems from a general under appreciation of Indian resolve to follow through on such a policy initiative. China’s belief in Indian irresoluteness is not without basis either. The new dispensation led by Narendra Modi started off by trying to bring the “pragmatic” element more into play in India’s dealings with China. To this end, it resorted to a two-pronged strategy of bolstering strategic ties with other regional partners alarmed by China’s newfound boldness such as Vietnam, Japan, Indonesia, Australia among others and spurred up defense and strategic ties with the US, while simultaneously trying to improve relations with China by enhancing bilateral trade (which was already heavily-tilted in China’s favour). However, relations nosedived with the Doklam standoff in June 2017 which lasted for over three months. Cognizant of its power differential with China, and therefore not keen on antagonizing it any further, India broached the idea of organizing an informal summit between Chinese President Xi Jinping and India’s PM Narendra Modi. As the two leaders met in picturesque Wuhan, India had by then made up its mind to drop the “pragmatic” yet somewhat “confrontational” approach and decided in favour of going full throttle with appeasement vis-à-vis China. Following the summit, the Indian government scaled down its contact with the Tibet’s India-based government-in-exile and refused to back Australia’s bid to participate in the annual Malabar exercise. What exactly did India hope to achieve with such tactics is anyone’s guess as China continued to brazenly oppose India’s membership to the Nuclear Suppliers Group (NSG) and block India’s efforts to get Pakistan-based terrorist Masood Azhar admitted to the UN Sanctions list – eventually relenting on the latter (courtesy of US pressure) while continuing to hyphenate India’s cause with Pakistan’s in the case of former.
A Long History of Fluctuating China Policy
As a matter of fact, the blame for such a vacillating policy cannot be squarely put at Modi’s doorsteps. Historical precedents abound where previous Indian governments too have struggled to come up with a comprehensive and coherent strategy on China. Notable examples include Jawaharlal Nehru’s flip-flops on China threat which not only cost India loss of territory but also resulted in a personal loss of face for Nehru. Some twenty-five years later, Rajiv Gandhi who showed remarkable courage in standing up to the Chinese challenge in a serious military provocation along the eastern flank of the LAC let go of the chance to articulate India’s long-term strategy vis-à-vis China and instead sought a quick return to normalcy in bilateral ties following his visit to Beijing in 1988. A decade later, AB Vajpayee, after having justified India’s nuclear tests as a response to Chinese nuclear weapons, ended up describing China as a “good neighbour” in his address at the Peking University only a couple of years later. Indeed, India’s foreign policy history is riddled with complacency on the part of successive Indian governments in dealing with its largest neighbour, and a continual cause of strategic concern.
It is clear that unless India does away with policy ad-hocism and sticks with a clear, long-term China policy,it would not be able to effect a change in China’s attitude towards itself. In this regard, Jaishankar’s recoupling of economic and trade ties with the larger border question is a welcome move, but a lot would depend on how determined India is to persevere through the demanding nature of realpolitik.
- Mohan Malik’s article on three schools of thought on India’s China policy: accessible at: https://apps.dtic.mil/dtic/tr/fulltext/u2/a591916.pdf
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