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The fight against corruption in China

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The fight against corruption, officially launched six months ago by President Xi Jinping in all the Chinese government’s and Party’s apparata is a strategic and geopolitical fact of extraordinary importance.

The CPC General Secretary Xi Jinping wants a radical war against corruption especially for some important reasons, which regard both China’s current position in the world and its unity and stability.

Let us analyze them: a) all corrupt power networks, in China and elsewhere, distort the fundamentals of the economy and facilitate the penetration of foreign speculative capital, as well as the transformation of incomes in speculative, unearned and unproductive rente.

In addition, b) corruption makes the various peripheral or secondary power circles autonomous from the national and Party central leaderships. Corruption is the expression of an illegal rebellion of peripheries against the political and administrative Centre.

As always happens in these cases, every corrupt Chinese leader is a power autonomous from the Party’s and State’s chain of command.

Moreover, each corrupt network creates hidden power centers which do not respond to the Chinese Party’s and State’s normal channels of communication and control.

Finally, c) the corrupt networks deplete the Chinese cash reserves because, as always happens in these cases, they are interested in the outflow of their illegal funds from the country as quickly as possible, by also bearing high costs.

Every kind of corruption generates an uncontrollable irrationality in the cost-benefit analyses.

Moreover, China’s public accounting is based on Leontief’s cycles – namely the criteria of general equilibrium and input-output analysis – and each hidden or illegal transaction distorts this type of calculations.

Therefore President Xi Jinping really wants to free China from its ancient tradition of confusion between private interest and public offices. A country where the Centre does not know its peripheries and hence is bound to weaken ever more, as in the traditional imperial dynasties.

Mao Zedong – of whose political choices even a reformer like Deng Xiaoping used to say that “70% of them were right and 30% wrong” – was a staunch supporter of centralization, along the lines of the Emperor Shi Huangti, whom the Great Helmsman liked very much – the Emperor of the “Terracotta Army”, the first who unified Han China under one Empire after the “Warring States” period.

President Xi Jinping does not want China’s fragmentation and this is the reason why he fights so hard against corruption.

President Xi Jinping wants to fight corruption because he wants to build a united and strong political system, capable of facing the economic and political-military tensions looming on the horizon, in Asia and in the rest of the world, operating with a streamlined and centralized chain of command, without personal economic interests which may be used and exploited by China’s competitors or opponents.

For President Xi Jinping fighting corruption means above all to restore the primacy of national interest.

As the current economic theories – from Lambsdorff to Wade – teach us, each corrupt action leads to a dangerous and irrational allocation of the resources available, which pushes the best options and the most rational investment out of the market so as to favour the “intermediation and brokerage costs” and, finally, unearned and unproductive income and rente.

Hence every economic and political system generating a high level of corruption is doomed to self-destruction.

Obviously President Xi Jinping unites both struggles, namely the one against corrupt bureaucrats and the other against his enemies within the Party and the State.

Probably only Mao Zedong, during the “Cultural Revolution”, had succeeded in concentrating in his hands as much power as Xi Jinping’s today.

It is a phase in which China is ready for finally opening to the market-world and, as evidenced by what happened in Italy after 1992, corruption favours bad globalization as against “good” globalization”, the one which fosters nations’ economic and productive expansion.

Hence the more China shall open to the market-world, the more it shall build a reliable and centralized political system, not influenced by blackmail, bribes, corruption attempts, as well as autonomous centres of legal or illegal power.

The survival of the State and, above all, of the Communist Party of China depends on it.

President Xi Jinping’s policy line was made explicit in his recent year-end speech: to ensure the success of economic reforms which enhance the interaction between China and the West; to stabilize the yuan as a global reference currency; to reduce the Chinese economy’s dependence on public and private debt, as well as support the Asian Infrastructure Investment Bank.

Clearly none of these objectives can be achieved without a strong and continuous fight against corruption.

Corruption increases the economic activities’ dependence on public and private debt, stultifies the infrastructure investment which will be decisive for making China come out of its geostrategic isolation and finally does not allow to exert a joint and vertical control over the country, which will be essential to prevail within the Shanghai Cooperation Organization and over the West.

The “Twenty Years of Opportunities” proclaimed by Deng Xiaoping are now over and, if corruption were to permeate society, China’s politics and economy would go back to the “hundred years of national humiliation”.

The data and statistics of the anti-corruption campaign launched by President Xi Jinping are already remarkable: over 100,000 Party’s and State’s officials have already been inquired and investigated. In 2014 the share of cadres against whom sanctions and penalties were applied amounted to 3.14% and this means that 232,000 local and central officials were judged corrupt.

The “Eight-point Regulation” stipulated and announced by President Xi Jinping is now well-known throughout China: it imposes restrictions on the excessive use of funds for food and beverages; on the use of public funds for private travels, in China or abroad; on the improper use of vehicles made available and supplied; on unauthorized construction of buildings; on improper payments or illegal advantages and benefits; on luxurious gifts made or received; on too expensive weddings or funerals; on the breach of discipline and rules at work.

These are the guidelines used by the Central Commission for Discipline Inspection (CCDI), the CPC’s agency which operates autonomously and independently, but following the directives of President Xi Jinping’s leadership team.

Without a firm and definitive fight against corruption, China’s globalization will mark the end of its national autonomy and of government’s ability to manage its economic choices. As at the time of the “Opium War”.

As we have witnessed also in Italy, it is worth reiterating that corruption makes a country leave “good” globalization and pushes it into bad, self-defeating and self-destructive globalization.

But what is the extent of corruption in China? It arises from the fact that the development resulting from the “Four Modernizations” was driven by public bodies and by government spending, the only available in China at that time.

In the 1980s some economic analysts even maintained that corruption itself was a kind of stimulus for the economy, since it obviously increased the aggregate demand and the level of consumption.

Nevertheless corruption blocks stable growth, while favouring unproductive spending and accelerating economic and business cycles.

According to most Western experts, corruption in China accounts for 3% of the current GDP.

Hence President Xi Jinping is right in fighting to eradicate corrupt practices inside and outside the Party because, considering the size of the phenomenon, they are carried out both by high-raking officials (the so-called “tigers”) and by the low-ranking ones (the so-called “flies”) who lurk in the apparata and, in all likelihood, are the cause of the recent decline of the GDP growth rate.

Therefore if the growth rate of the Chinese economy were to decrease further, also due to the 6% fall in foreign direct investment recorded in recent months, the very legitimacy of the CPC to rule China may fade away: it is precisely thanks to its extraordinary economic growth that the Party retains its large base of popular support, which could shrink if corruption were to block the rapid expansion of China’s GDP.

Hence, for President Xi Jinping, the fight against corruption is the most important part of the current reform of the Chinese economy and of China’s integration into the market-world.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Considering the Continental Dimension of the Indo-Pacific: The Mongolian Precedent

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The Indo-Pacific is now the site of global great-power competition and contestation. And, as a reflection of its growing importance in international discourse, a number of extra-regional actors adopted the concept last year. Among those adoptees, Mongolia set a unique precedent for the regional security discourse to actively consider the continental dimension of the Indo-Pacific by highlighting geopolitical convergences with other regional actors, and the strategic threat posed by Beijing’s “Silk Road Economic Belt”.

Mongolia in the Indo-Pacific

Actors who have adopted the Indo-Pacific concept vaguely define it as beginning in the Arabian Sea and ending in the Western Pacific Ocean. Much of the discourse is also driven by the US-China strategic competition in Southeast Asia, and the US’ attempt to counter Chinese influence in the Indian and Pacific Oceans, along with its regional partners and allies, e.g the India-Australia-Japan-US ‘Quad’. As a result, actors in the Indo-Pacific have generally focused on the development of maritime military and economic measures.

In early October, during a Japan-Mongolia Foreign Ministers’ Meeting, both sides agreed to continue consolidating their efforts in pursuing a “Free and Open Indo-Pacific”, in line with the promises of the 2018 Japan-Mongolia Summit.

Mongolia’s participation as a continental, extra-regional actor with limited maritime significance, shifts the geopolitical locus of the theatre, ever so slightly, north of Southeast Asia (the current focus). Ulaanbaatar’s adoption of the geostrategic theatre appears to be driven by continued Chinese antagonism, and a result of its “third neighbour” policy.

China continues to threaten Mongolia’s territorial sovereignty by claiming Inner Mongolia,clamp down on its cultural identity, and impose costs on Mongolia’s export-oriented economy. The last issue is critical, since Mongolia’s largest export partner, approximately92.78 percent of overall exports, is China. Enclosed between two large countries, Russia and China, Mongolia has traditionally maintained a “third neighbour” policy approach: building political and economic relationships with actors other than the aforementioned.

Given the continued animosity with Beijing, Ulaanbaatar has increasingly emphasised these other relations over the years. e.g. with the UK, the US, Japan, etc. In 2019 President Khaltmaagiin Battulga visited New Delhi to develop deeper ties with another “third neighbour” state. Mongolia also shares the “like-minded” characteristics – a liberal democracy – to maintain and preserve a “free, fair, open and rules-based” order in the US-Japan Indo-Pacific strategy.

And so, actors looking to potentially partner with Mongolia or others with similar economic and connectivity deficits in Central and West Asia, will have to include, within their Indo-Pacific approaches, measures that involve non-littoral actors.

The BRI and Continental Asia

China’s rise as an expansionist Asian military and global economic power is at the core of the  Indo-Pacific security discourse. Beijing’s claims in the South China Sea (SCS), China’s growing naval power, and the colossal Belt and Road Initiative (BRI) form the major strategic threats to regional multilateralism and collective security.

The most long standing threat among them, the BRI, is divided into the transcontinental “silk route” and the maritime “silk road”. However, much of the Indo-Pacific discourse is dominated by the silk road, especially those projects directed towards the Indian Ocean Region (IOR). BRI projects in the IOR are crucial to Beijing’s expanding influence in South Asia and control on international energy and trade supply routes. Also hidden among the maritime/trans-continental connectivity and infrastructure projects, is China’s growing security presence in the region.

However, Mongolia’s entry directs attention to a dimension unique to the current maritime Indo-Pacific discourse –the silk route, that cuts across Central Asia, towards Europe and South Asia, with a similar number of projects in Southeast Asia.

Among the six ‘silk route’ projects, Mongolia’s concern is the China-Mongolia-Russia Economic Corridor (CMREC) that cuts through Eastern Mongolia, beginning in Ulanqab (or “Jining”) in Inner Mongolia, and ending at Ulan-Ude, in BurYatia, Russia. Similar projects include the China-Pakistan Economic Corridor (CPEC) and the China-Central Asia-West Asia Economic Corridor (CCWAEC).

Connecting the continental to the maritime is the main goal of the BRI. In fact, the project was first announced during a Chinese state visit to Central Asia in 2013. President Xi Jinping proposed the “Silk Road Economic Belt” with a vision to connect the Pacific Ocean to the Baltic Sea. Beijing’s vision of comprehensive global economic and military power requires a built path to various regions of the world, i.e infrastructure to facilitate dual-use logistics. Given the recent spate of BRI loans going bad, this vision continues to remain unfulfilled.

The continental dimension, Asia, is what makes the Indo-Pacific a theatre of global concern. Trans-continental connectivity, between and within Europe and Asia, narrows the distance between actors, and the shared interest in maintaining regional multilateralism and collective security ensures their continued participation in the Indo-Pacific. As more actors like Mongolia adopt the Indo-Pacific concept, connecting the continental to the maritime and vice versa, sans BRI, will become a strategic concern.

Mongolia’s entry into the theatre offers a unique precedent for those involved in maintaining and preserving a “free, fair, open and rules-based” Indo-Pacific to evaluate and initiate relationships between non-littoral actors and the maritime dimension.

The On-Ground Reality

However, there are a number of obstacles to actively consider continental Asia in the Indo-Pacific discourse. The two most important are geography and geopolitics.

Mongolia for example, is completely enclosed by two actors – Russia and China – who are averse and hostile to the idea of the Indo-Pacific. And, any “counter-BRI” connectivity project envisioned by other regional actors will have to go through their territories. The case of Afghanistan is similar. Divergences in geopolitical interests and ties with actors in the Arabian Sea, particularly with regard to Iran and Pakistan, stays the idea of trans-regional connectivity between Kabul and the world.

The geopolitical obstacle here is the dependent economic relationships that non-littorals in Asia have with Beijing. Mongolia is just one among many Central and West Asian states that have local economies indelibly tied to the political whims of Beijing. During the coronavirus pandemic, a period that saw considerable anti-China sentiment in the international community, Beijing has managed to maintain a level of trust and shared security with many Indo-Pacific states. National vaccination plans are based on the delivery of Chinese vaccines.

There is another reason why the security discourse on the Indo-Pacific is focused on maritime measures – maintaining and preserving the integrity of international Sea Lines of Communication (SLOC) and the respect for territorial sovereignty. In that endeavour, multilateral platforms like the Quad allows members to share historic and strategic advantages in the IOR and Pacific Ocean to counter Chinese expansionism in the Indo-Pacific’s various sub-regions.  On land however, in Central and South Asia, for example the clash in the Galwan river valley last year, Chinese incursions provoke bilateral responses giving it leeway to act with relative impunity.

Conclusion

While there are a number of real obstacles to consider the continental dimension of the Indo-Pacific, Mongolia sets a geopolitical precedent for a comprehensive geographic definition, one that includes both the maritime and continental. From this year on, states participating in the Indo-Pacific now have a reason to approach and include non-littoral actors in the Indo-Pacific.

This precedent also highlights the need to include the continental ‘silk route’ in the Indo-Pacific security discourse. Devising such a definition will be a similar exercise as to the amalgamation of the terms “Indo-Pacific” and “Asia-Pacific” to form the “Indo-Asia-Pacific”; now used at times in geostrategic discourse.

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Time to play the Taiwan card

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At a time when the dragon is breathing fire, India must explore alternative tactics, perhaps establishment of formal diplomatic ties with Taiwan can be a landmark step

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The standoff on the Ladakh border between the Indian Army and the PLA (People’s Liberation Army) continues amid failing talks and casus belli measures being unleashed by the Chinese regime. While the union government and the armed forces make it clear that they will do whatever it takes to protect India’s sovereignty and integrity, precious little has been done on the foreign policy front. While India and its democratic allies which comprise the Quad security grouping declare their intent to form the ‘Asian NATO’, the Quad continues to suffer from indecisiveness which was pretty much evident when the Quad did not even issue a joint statement to condemn China at the foreign ministers meeting held last year, only America publicly called out China.

In such a situation, it is imperative that India explore alternate diplomatic and militaristic routes to tame the dragon.

Recognizing Taiwan

Establishing formal diplomatic ties with Taiwan after recognizing should be vigorously pursuing by South Block. Indo-Taiwan ties date back to the early 1950s when Chiang Kai Shek, the ex Chinese president and former head of state fled to the island of Formosa following the victory of Mao Zedong in the long drawn out Chinese civil war called on Nehru to establish and further ties with Formosa, however Nehru believing that Chiang was nothing but a “peanut” decided to ignore his call, choosing instead to concentrate on building ties with People’s Republic of China (PRC).

Seven decades on, plethora of changes has taken place on the foreign affairs front, while both China and India have developed considerably both militarily and economically the dragon has surpassed elephant to become an economic powerhouse in its own might. It has now embraced aggressiveness to enforce its 5th century vision of the ‘Middle Kingdom’. In such a situation providing legitimacy to the existence of Taiwan is a necessary first step.

Paradigm shift in policy

Establishing formal diplomatic ties with Taiwan will bring about a paradigm shift vis-à-vis India’s foreign policy. It will enforce the idea that liberal democracy is the last word in the battle of ideologies as Francis Fukuyama had visualized in his landmark book ‘The End of History and the Last Man’ and that there is no alternative to human rights and liberties, not even the Chinese model of ‘authoritarian development’. It will be the boldest step that any global leader has taken, not even the mighty US which has no formal diplomatic relations with Taiwan has taken this step.

Recognizing Taiwan will entail a lot of benefits for the mandarins of India’s foreign policy regime- firstly, Taiwan is a robust democracy with a booming economy, it will prove to be an alternative to China albeit in a relatively less proportion, secondly, India can bolster the legitimacy as the leader of the democratic world at a time when the democratic institutions in the US-often regarded as the cradle of democracy has been undermined.

Thirdly, India can get the support of another powerful ally in its attempt to carve out a new supply chain alliance which India-Japan-Australia formalized recently. Fourthly, recognizing Taiwan will make it clear to China that India means some serious business and if the need arises then India will not back down from sending dedicated naval and air assets in the disputed South China Sea region to enforce freedom of navigation principle in the resource rich region. Lastly, the Quad security grouping will be institutionalized which in the near future can even be extended to include new members, it will be the first time that India will be a part of any dedicated military and economic alliance which will deter the aggression of the Chinese war machine in the strategic Indian Ocean and Indo-Pacific Region.

Caveats remain

However the recognition may invite severe ramifications for India. China will be infuriated and can choose to ratchet up tensions with India. India must be extremely careful while dealing with China as China is our second largest bilateral trade partner and a key export partner of India with regard to raw materials and goods. According to a FICCI report, India imports more than 40% of several important goods like the API (Active Pharmaceutical Ingredients), television, chemicals, chips, textiles and many more.

The dragon will as a possible retaliatory measure can activate its propaganda machinery to wage psychological warfare with India. It can also activate its terror financing networks which for years remained a chronic internal security for India in the northeast of the country. China will also collaborate with its ‘iron brother’ Pakistan to try and deter India by intensifying terrorism in the Kashmir valley and elsewhere. Further, China can use its potent disinformation empire to try and peddle fake news about the credibility of India’s indigenous vaccines at a time when the light at the end of the tunnel of a pandemic stricken world has appeared.

Exercising caution

Keeping all the dangers in mind, the Modi government must keep national interests in mind. Despite all the risks, it must work with all the like- minded countries to take own the mighty dragon responsible for unleashing a deadly virus which has wrecked havoc on humanity. For the sake of the free world, India must take the hard step which will reinforce India’s position in cementing its place as the leader of the free world.

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Pro-Communism warping Hong Kong

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The latest turmoil in the Covid-ridden strata of mainland China is not servile to any pandemic, however, the issue has been one of the most queer and rare kinds, enough to be classified as one of the endemic issues in the global affairs. The tension at helm is the chaos following the announcement of a “New Security Law” by the Chinese regime which is being eyed as one of the monumental events of this decade; slicing off a sliver of attention from the deadly Corona virus that continues to exponentiate around the world in its second wave and sporadic variants.

The law that set out by the Chinese lawmakers back on 22nd May 2020, threatens the liberties of subversion and sedition enjoyed by the citizens of Hong Kong under a constitution. Simplistically named “Basic Law”, it aims to tame the country scaffolded by the “One country, Two systems” framework since the power handover by the former colony to China back in 1997. This act came around amidst strained economic relations between the two superpowers of the world; China and USA, each passing the baton in the blame game of who sustains the blood-crown of the catastrophe impending on the world courtesy of the lethal virus that engulfs every periphery in each continent on the globe. The matters seem complex at sight and a glimpse to the historical timeline of how riddled the relations were could hint at how strained they could reach.

The colony, known as ‘Hong Kong’ today, had been the battle ground, figuratively, to the major competitors of the 20th century: The Great Britain and China. The British dominated the colony for more than 150 years, tracing back to the late 19th century; leasing the territory for the span to morph it into the modernised metropolis marking it as the hub we know today. In 1997, an agreement was reached via an accord, ‘The Sino-British Joint Declaration‘ between the two sides. The treaty allowed Hong Kong a semi-autonomous status, that is, relaying self-sufficiency in all the national domains except in defence and foreign affairs. The allotted autonomy arches under the sovereignty of China until year 2047, henceforward melding into the mainland China as harkened by the Chinese hegemony over decades.

Despite of the granted protection of Hong Kong’s own legislation, borders and freedom of speech, the liberties have been trampled on by the Chinese government over the last couple of decades. A similar law abolishing the right to sedition was initiated in 2003 yet mass protests calling out up and about 50,000 citizens impeded the efforts that went futile and drastically ended up being shunned for good. The Communist party under the wings of Chinese president Xi Jinping have expounded further in tightening their talons on the city since 2012 as efforts were made to corrode the educational system of the country via meddling with the curriculum, biasing the foundation to hail Chinese communism. These acts were proactive reactions to the advances of the United States forging relations with the city. China even tried to manipulate the elections in 2014, tampering with the selection their Chief Executive leading to a 3-month long protest known as the ‘Umbrella movement’ and ultimate downfall of Hong Kong’s autonomous political system.

The security law falls in tandem to the events of 2019; the legislation allowing the convicts from Hong Kong to be extradited in China causing a rave of fear of a massive tactical crackdown of the Anti-communist activists of Hong Kong, sighting it just as ruse to underwhelm the right of sedition of the people of Hong Kong. The Law passed by the parliament notions to only one thing; The ultimate end to Hong Kong. The lawmakers in China, hailing from the National People’s Congress (NPC), sight this move as extricating a threat to the national security and stability of the country while many of the pro-activists in Hong Kong deem the law as betrayal, accusing China of walking back on its promise of high-degree autonomy and freedom of speech, marking it as the final straw, the last struggle before the country could override the laws in the city and indirectly, transition from the entity holding the right to veto the laws to now gripping the law altogether.

Despite of the speculated protests to spark like the history dictates, many of the sage minds predict either a relatively dormant demonstrations or none at all, having a tint of finality in the statement shote the protests are “high stake in risk and repression”. The recent arrest of the leading activists of Hong Kong standing up to voice their disdain to the separatist efforts of China further solidify the notion. Despite of a global condemnation to the new law, the efforts of China resume to subdue any opposition in Honk Kong no matter how sparse. Foreseeing no way out for Hong Kong this time; the Covid-19 paralysis the United States in its own crisis and the legislature inclining towards the Chinese pressure, a complete erasure of Hong Kong is sighted and could not be restrained- for better or for worse.

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