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The US Trade War: How China Should React

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During the presidential campaign 2016, Donald Trump had made more than 280 promises. However, the pollpromises were formalized through the “Contract with the American Voter,” on October 22, 2016, listing out about the 60 promises for action, the day President would be in office. Out of these promises, currently the plan to curtail Chinese trade was put in practice by the initiating the trade war with China to bridge up the trade deficit with China. In this context, the new trade war has already been set in by imposing a higher tariff against China, particularly its steel and aluminum. It will remain interesting to see how the trade war will unfolds and how China would react?

Out of the  280 poll promises made during the presidential campaign (2016), Donald Trump formalized the same through the “Contract with the American Voter,” issued on October 22, 2016. Realizing the drastic consequences out of trade deficits with China, Trump rolled out a  plan to curtail Chinese trade was the key plank of “Make US Great Again” policy. At the domestic front, the US administration has repeatedly acknowledged that economic slowdown and unemployment in the country are attributed to the trade deficit with China.Trump criticized frequently the North American Free Trade Agreement (NAFTA). He has taken it as, “the worst trade deal the US has ever signed.” He has also called Trans-Pacific Partnership (TPP) as “the death blow for American manufacturing.” Donald Trump in a video message (November 21, 2016), introduced an economic strategy of “Putting America First.” The main focus of the strategy would be to negotiate  the “fair, bilateral trade deals that bring jobs and industry back to American shores.” Only after the three days after becoming president (January 23, 2017), the President Trump withdrew the US from theTrans-Pacific Partnership with the conviction to strengthen the U.S.economy.

The most serious concern for Donald Trump is China and hence he avowed to turn the trade balance in the US favourby imposing high tariffs and other non-tariff trade barriers to resuscitate its economy and creation of job opportunities.

Trade Between the US and China

As per the office of US Trade Representative (USTR),China is the largest trading partner of the US. China is the largest goods trading partner of the US, the quantum of whichwas standing at $578.2 billion in two way during 2016. The trade in services between the US and China is stood at an estimated quantum of  $70.3 billion (2016). The exports of the services on part of the US is $54.2 billion while the imports of the same were $16.1 billion having services trade surplus in its favour of the value of $38.0 billion (2016).The exports of goods on part of the US is totaled at $115.6 billion, whereas the imports of the same is  $462.6 billion. Therefore, as far as the trade balance is concerned, it is in favour of China,totaled at  $347.0 billion in 2016.

As far as the US export of goods is concerned since 2001, it has shown exponential growth i.e., 503%. In 2016, it was reached to $115.6 billion, however, the same has shown somewhat minor slump i.e., 0.3% ($330 million) during the year of 2015. The top goods include in the export category are agriculture ($ 21 bn); grain, seeds, fruit ($15 billion); aircraft ($15 billion); electrical machinery ($12 billion);  machinery ($11 billion) and vehicles ($11 billion). In the services category, the export was estimatedat$54.2 billion (2016). It is said that it was increased roughly 908% since 2001. The leading services exports from the U.S. to China are intellectual property (trademark, computer software),travel, and transport sectors.

The US is the largest destination for Chinese exports. The Chinese goods export to the US is totaled $462.6 billion (2016). However, it has shown somewhat decline at the rate of 4.3% ($20.6 billion) from 2015, but it has shown continuous increased growth at the rate of  60.8% since 2006. The Chinese contribution in the overall US goods import accounts for 21.1% (2016). The Chinese goods export list included electrical machinery ($129 billion), machinery ($97 billion), furniture and bedding ($29 billion), toys and sports equipment ($24 billion) and footwear ($15 billion). China is the 3rd largest agricultural goods exporter to the US i.e., $4.3 billion (2016).

The major concern on part of the US is the trade deficit, which is in favour of China. In 2016, the same was stood at $367 billion (2015), however, it was decreased at the rate of 5.5% decrease ($20.2 billion) totaling at $347 billion in 2016. Again, the trade deficit reached $375 billion (2017). The US exports to China were only $130 billion, whereas its imports from China were $506 billion. Moreover, China is the largest lender to the US. The debt of the US from China as of January 2018, is $1.17 trillion. The leadership of the US percieved that it gives a massive political leverage to China over the US fiscal policy.

Trade War Between the US and China

The major root of the trade war been the US and China has been embedded in the trade deficit. Even being a major power, the US has not been able to bridge up the gap of trade deficit. It has been argued that trade war originates from Chinese trade and industrial policies. Apart from these policies, Chinese currency manipulation has further put the both countries on confrontational mode. However, Trupms’s being one plus year in office, the trade deficit has not been showing any positive sign in the US favour. Ultimately, hehad  to launcha salvo of tariffs against China as in the year of 2017, the U.S. trade deficit with China is stood at US$   375 billion in 2017. The  U.S. exports to China is only $130 billion, whereas it imports stood at $506 billion.

The trade deficit of the US vis-a-vis China has been percieved as a consequence of the latters’restrictive trade practices. The restrictions include a wide array of barriers to foreign goods and services. Although, China has introduced its open market economy in 1978 and even expanded the scope of the same after becoming the member of the WTO (2001). However, China  has introduced the market economy but its trade and industrial policies are aimed at protecting the state-owned enterprises by levying the high tariffsover the imports. Moreover, the other restrictions such as theindustries required special permission to import goods, inconsistent application of laws and regulations, transfer of technology from the foreign firmsfor the Chinese market access etc. Apart from these restriction, the lack of transparency and currency manipulation on part of China have been emerging as major concerns for the Trumps’regime. Therefore, it has become a major compulsionon part of the Trump regime to take a hard-line stance against China.

Within the seventy-day in administration, the President Trump  in his administration’s annual trade policy report to Congress (March 2017), had openly challenged the World Trade Organization (WTO)particularly for “China’s unfair advantage.” He went further with the accusation of  Chinese dumping of  steel,  aluminum and chemical products. In the same month, the US Department of Commerce had announced two antidumping (AD) and countervailing duty investigations (CVD)against China. Even the pre-Trump regimes have also been engaged with China over the dumping casesin the WTO. The Obama administration had become frustrated over Chinese economic reforms and increasingly skeptical about the prospect for future reforms. Till date, the US has registered 16 cases against China, to address its concerns such as Chinese Ads, CVDs, industrial policy and the dominance of state-owned enterprises.In this background, China has turned to the Dispute Settlement Mechanism (DSM) of the WTO to address such perceived unfairness use of such investigations. China had filed 11 cases against the US at the WTO as the former percieves per se the leading target of the USs’ AD and CVD investigations. Robert ELighthizer (United States Trade Representative) has also givenan indication that the U.S. may take action against the WTO for its alleged failures not to check the Chinese unfair trade practices.

President Trump has aired portentous signals with the beginning of the year of 2018. The salvo of high tariffs had launched against its trade deficit with China. President Trump by using the Section 301 of the US Trade Act of 1974, had unilaterally imposed trade tariffs on China. In January, he imposed tariffs on solar panels and washing machines. In a tweet issued on March 2, 2018, Trump asserted that “Trade wars are good and easy to win.” President Trump had signed an executive memorandum on 22 March 2018 to enforce  25 percent tariff on steel and a 10 percent tariff on aluminum imports. The measures have been designed to counter the Chinese unfair trade practices as the administration believes that it involves stealing of the US companiesintellectual property. Trump gave signals that the tariffs would cover at least cover  $60 billion in tariffs on Chinese goods.

Chinas Reactions

China has reacted very aggressively to the US’s new trade war. It has been seen that China is in assertive mode and not going to budge to the US pressure. The Chinese Foreign Ministry spokeswoman Hua Chunying said, “We don’t want a trade war, but we are not afraid of it.”If we unfold the statement, it clearly conveyed the message to the US, how China is likely going to take the sanctions? Moreover,  the Chinese Commerce Ministry has  also used the same tone and tenor while asking  the Trump regime on 28 March not to go ahead with such planned tariffs. It can be taken as a warning signal to the Trump regime as China could set off a same chain of  reactions. Moreover, the Xi governemnt has given clear signal that China would,“fight to the end.” Although, the US economically and militarly is in stronger position but at the same time China has also been following the suit. China has been emerged a stronger economy, moreover, it is a major lender to the US which gives its stronger position vis-a-vis the US. If the trade war lingers on, the losses or gains are not unilateral. One can percieve  that the US has to suffer more losses as compared to China. The developing countries have already opened up and messed up their economies under the global instituions’ pressure. In this milieu, loss of employment opportunities, health services and education, suicides of the farmers, loss of local industries and many more challanges have become the part and parcel of the people’s life.  In this miliu, it should be left to the individual countries’ decision, how much its economy is to be opened? Moreover, if any country is asked for the same, it should be under the international laws, not as per the invidual countries’s whimsical and impulsive actions.

Dr. Bawa Singh is teaching in the Centre for South and Central Asian Studies, School of Global Relations, Central University of Punjab, Bathinda, India-151001. bawasingh73[at]gmail.com

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East Asia

Quad Infrastructure Diplomacy: An Attempt to Resist the Belt and Road Initiative

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Over the years, the competition between the great powers in the dual space of the Indian and Pacific Oceans has been rapidly increasing. In the face of the aggravation of relations between the PRC and the United States, the defence dimension of the rivalry between the two contenders for global leadership traditionally comes to the forefront. However, in today’s context, the parties will most likely not engage in military action for the strengthening of their dominance in the region, but they will try to achieve the goals by expanding of economic influence. In this context, along with the well-known trade wars, there is an infrastructure rivalry in the region, which is enforced on Beijing by Washington and the Quadrilateral Security Dialogue (Quad).

The role of Infrastructure in Indian and Pacific Oceans’ countries

The countries of Asia traditionally drawing the attention of the world community due to the high rates of economic, technological, and social development. In less than three decades, their per capita income has increased by 74%, millions of people have been lifted out of poverty, as well as a growing middle class has emerged in the region. All this became possible due to the multilateral cooperation institutionalization and the integration of the economies of the Indo-Pacific. However, the strengthening of trade and economic ties and the future prosperity of Asia largely depends on the infrastructure (ports, highways and railways, airports, pipelines, etc.), which contributes to a more active movement of goods on a regional and global scale. Moreover, back in 2009, the Asian Development Bank (ADB) published a report according to which collective investments in infrastructure in the amount of US$8 trillion will be required to maintain rapid economic growth in Asian countries.

The most prominent infrastructure initiative in recent years is the «Belt and Road Initiative» (BRI), which was launched by China’s leader Xi Jinping in 2013. The BRI helped to fill numerous infrastructure gaps, but the United States and its partners increasingly paid attention to the geostrategic aspect of China’s actions. It’s no secret that the Belt and Road plays an important role in the development and integration of China’s provinces with neighboring countries. However, with the growing number of countries participating in the BRI, as well as the strengthening of China’s influence on a regional and global scale, criticism of the strategic tools for expanding Beijing’s economic influence gradually increased. The Belt and Road has faced a number of critical remarks, including those related to accusations of purposely involving the regional countries in the so-called «debt traps». Regardless of the degree of truthfulness or study of the issue, from year to year, media reports have contributed to the building of a contradictory attitude to China’s BRI among the residents, experts, and political elites all over the world.

Moreover, as soon as Donald Trump became the U.S. President in early 2017, Washington modified the nature of its policy towards China to greater confrontation. This trend has become a direct expression of the intensified great powers’ rivalry and their struggle for hegemony in the Indo-Pacific, as well as a motivation for the revival of the Quadrilateral Security Dialogue (Quad), which includes the United States, Australia, India and Japan. However, the interaction of the Quad has long been built on the basis of defence.

This trend continues nowadays, as evidenced by the frequent exercises and the growing Quad naval presence in the Indo-Pacific but in 2021 the Quad countries expanded their range of issues on a multilateral basis. Now the agenda includes vaccine diplomacy (providing 1 billion COVID-19 vaccines to Indo-Pacific countries, climate change, technological cooperation, maritime security, cybersecurity, and external development assistance. According to Kurt Campbell, Indo-Pacific policy coordinator at the National Security Council, Washington is looking to convene an in-person fall summit of leaders of the Quad countries with a focus on infrastructure in the face of the challenge from China.

Quadrilateral infrastructure diplomacy as the continuing vector of the Trump’s administration

The infrastructure agenda also became an important part of the last summit of the G7 countries’ leaders, during which the parties expressed their willingness to establish a BRI counterpart called Build Back Better World (B3W). In total, there are 22 mentions of infrastructure in the final G7 Summit Communiqué. Even despite the traditionally restrained position of India, which took the time to «study the specifics of the proposal», infrastructure diplomacy of Quad is becoming a new area of geostrategic competition in the Indo-Pacific.

There’s one exception: the activities on the infrastructure track are not a new trend of U.S. President Joe Biden’s administration, but a continuation of the foreign policy vector set during the presidency of Donald Trump. It was he who turned Sino-U.S. rivalry into a geo-economic level. Back in 2017, the Foreign Ministers of the Quad countries stated the need for high-quality infrastructure development in order to ensure freedom and openness of sea routes, as well as improve intra-regional ties. In 2018, MoU was signed between the US Overseas Private Investment Corporation (OPIC), the Japan Bank for International Cooperation (JBIC) and the Ministry of Foreign Affairs and Trade of Australia, aimed at implementing major infrastructure projects in the Indo-Pacific. Moreover, the Quad countries raised the question of the BRI countries’ growing debt during their official meeting in Singapore.

It was clear that the Belt and Road Initiative is perceived by the Quad countries as the main factor in expanding the economic and political influence of the People’s Republic of China, as well as China’s influence of the domestic political processes in the countries of Indo-Pacific. At the same time, the combination of economic and defence rivalry enforced on Beijing by Washington, as well as Quad’s efforts to build a balance of power in the region actually indicates the explicit anti-​China nature of the Quad.

In this case, it’s important to note that each of the Quad countries has its own levers of influence, which they can combine in infrastructure competition with Beijing. For example, in 2015, in response to the implementation of the Belt and Road Initiative and the establishment of the Asian Infrastructure Investment Bank (AIIB) by China, Japan made the Partnership for Quality Infrastructure (PQI). The United States, in turn, announced the infrastructure project Blue Dot Network (BDN), as well as the Ministry of Foreign Affairs and Trade of Australia established a new Partnerships for Infrastructure (P4I). All these initiatives are united by a commitment to inclusive economic growth, «quality infrastructure», climate change, disaster response, and social development. The capitalization of the Japanese, American and Australian initiatives is US $110 billion (US$50 billion from Japan and over US$50 from the Asian Development Bank), US$30-60 million, and US$383 thousand (including access to US$4 billion of foreign aid and $US2 billion from the Australian Infrastructure Financing Facility for the Pacific), respectively. Given the ongoing discussions about debt traps, the emphasis on «high-quality infrastructure» may give special features to the initiatives of the Quad but even the total amount of funding will not be able to compete with the US$770 billion investments already made in 138 countries of the world and announced by China.

Anyway, Quad is stepping up its infrastructure diplomacy in at least three areas, including Southeast Asia, Oceania, and the Indian Ocean. For example, Australia, Germany and Switzerland have already allocated US$13 million to the Mekong River Commission For Sustainable Development (MRC) to assist Cambodia, Laos, Thailand and, Vietnam «to respond to pressing challenges while safeguarding the ecological function of the Mekong River and improving people’s livelihoods».At the same time, Australia signed US$300 million MoU with Papua New Guinea, aimed at the ports reconstruction in the major state of Oceania (the ports of Vanimo, Kimbe, Motukea, Lorengau, Oro Bay, Daru, Lae, etc.). It is important to highlight that the increasing economic and infrastructural presence of China in the countries of Oceania, energize Australia’s policy in the South Pacific, which is a traditional zone of influence of Canberra. At the same time, the expansion of Australia’s aid and investment to the broader Indo-Pacific is due to the commitment of the current Australian government to the U.S. foreign policy.

In turn, the reaction of the Southeast Asian countries to the intensification of Quad infrastructure diplomacy will be more restrained. According to the latest Pew Research Center survey, the most unfavourable view of China is in the United States (76%), Canada (73%), Germany (71%), Japan (88%), Australia (78%), and South Korea (77%), while in Singapore — the only country representing ASEAN in the survey — the percentage of unfavourable views on China is at a low level (34%). Moreover, considering the aspects of infrastructure diplomacy in the region, we should definitely refer to the survey of the Center for Strategic and International Studies (CSIS) of the political elites of the region «Powers, Norms, and Institutions: The Future of the Indo-Pacific from a Southeast Asia Perspective», published in 2020. Despite the intentional exclusion of Russia from the survey, it approximately reflects the trends in the Indo-Pacific countries at the present stage. Thus, as a result of the survey, American experts revealed that the political elites of Southeast Asia positively assess China’s activities in the field of infrastructure development, which has brought tangible benefits to most Southeast Asian countries.

Beijing’s Response

China is actively reacting to verbal attacks from the United States and Quad. The infrastructure agenda was no exception, but China responded by modernizing its global Belt and Road Initiative. In response to criticism about the involvement of the countries in debt traps, Beijing has developed a new Foreign Policy White Paper «China’s International Development Cooperation in the New Era». The document was published in early 2021. According to the provisions of the new White Paper, China will pay closer attention to the process of implementing projects within the aid framework, take an active part in evaluating projects in order to monitor their quality, maintain an appropriate level of confidence in its projects to China, as well as conduct bilateral consultations to identify difficulties with debt repayment and make sure that partners do not fall into a debt trap. It’s possible that the new vision of the PRC will appear especially quickly in countries where the Quad will primarily try to implement their infrastructure projects.

China is the first country in the region, which pays significant attention to the issues of large-scale infrastructure development. Moreover, Beijing has a number of advantages over its opponent — Quad. First, the Belt and Road initiative is more structured and aimed at intensifying trade, economic, cultural and humanitarian cooperation with neighboring countries, while the emerging Quad infrastructure agenda is «dispersed» among numerous individual initiatives, doesn’t have the same level of stability as the BRI, and even after 3.5 years of building the agenda is considered through the prism of expectations.

Second, China’s initiative is aimed at a single infrastructure connection between the PRC and the rest of the world and acts as a potential basis for the intensification of global trade in the future. At the same time, today’s projects of the Quad are of a “sporadic» nature and can’t contribute to the infrastructure linkage between Europe, Africa, South and Southeast Asia on a global scale.

Third, China can already offer the Belt and Road members not only logistics infrastructure but also the opportunities in the field of green energy. At the end of 2019, China produced about a third of the world’s solar energy and retained a leading position in the number of wind turbines. Within the foreseeable future, the Quad countries, and especially the United States, will have to compete with China even in the field of the climate agenda, which is so close to the new administration of the U.S. President Joe Biden.

Finally, during his recent speech on the occasion of the 100th anniversary of the Chinese Communist Party (​CCP), PRC’s Leader Xi Jinping confidently declared the great revival of the Chinese nation, its contribution to the progress of human civilization, and its readiness to build a new world, which undoubtedly indicates China’s decisiveness to respond to challenges to its address, including from the Quad.

Conclusion

The ongoing transformation of the regional architecture in the Indo-Pacific, both in the defence and economic areas, will be an important aspect in the post-pandemic era. China has repeatedly stated about the «covered» Quad activities to deterrence Chinese policy in the region, but the expansion of the Quad’s agenda by infrastructure diplomacy allows us to speak about the evident vector of the Quad strategy against the PRC.

However, nowadays the Quad countries had been left behind. China already has the world’s most numerous land forces, the largest navy, as well as an ambitious global Belt and Road initiative that includes almost 140 countries and a capitalization approaching US$1 trillion. Of course, Quad is moving towards the institutionalization of its infrastructure cooperation and the potential expansion of the number of participating countries to the Quad Plus format. However, to reach China’s achievements for the period 2013-2021, the new alliance will need at least a decade.

At the same time, the rivalry of the Belt and Road with the Quad’s infrastructure initiative will help the countries of the region to diversify their infrastructure ties but will make their choice even more difficult, since it will primarily be regarded as support for the foreign policy vision of one of the parties, and not a pragmatic estimate of economic benefits. All this makes the regional environment in the Indo-Pacific increasingly complex and forces middle powers and smaller countries to adapt to new geostrategic realities.

From our partner International Affairs

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Bushido Spirit Resurrected? Japan publicly bared its swords against China

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Recently, Japan’s Deputy Prime Minister Taro Aso declared that Japan will join forces with the US to “protect Taiwan.” There has been a lot of turmoil, but even though the US directly announced that it will follow the “One China policy,” Japan has not given up its secret intentions. Japan’s new “Defense White Paper,” which was just approved, not only continued to link the US, but also displayed greater animosity toward China.

The Japanese government just finished the 2021 version of the “Defense White Paper,” according to the Global Times, but both the cover and the substance of the white paper are full of “provocative” meaning. The first is the front cover. According to the image released by Japanese media, the cover of Japan’s new “Defense White Paper” is an ink drawing of a warrior on horseback. According to a spokesperson for Japan’s Ministry of Defense, the horse samurai on the cover represents the Japanese Self-Defense Force’s commitment to defend Japan. However, after seeing it, some Japanese netizens said that it was “extremely powerful in fighting spirit.”

From a content standpoint, the white paper keeps the substance of advocating “China menace,” talking about China’s military might, aircraft carriers, Diaoyu Islands, and so on, and also includes the significance of “Taiwan stability” for the first time. A new chapter on Sino-US ties is also included in the white paper. According to the Associated Press, the United States is expanding its assistance for the Taiwan region, while China is increasing its military actions in the region. This necessitates Japan paying attention to it with a “crisis mindset.”

Japan has recently grown more daring and rampant, thanks to a warlike cover and material that provokes China and is linked to the US. Japan has recently bared its swords against China on several occasions.

Not only did Japanese Prime Minister Yoshihide Suga take the lead in referring to the Taiwan region as a “country,” but after meeting US President Biden, he issued a joint statement referring to the Taiwan region, and tried his best to exaggerate maritime issues such as the East China Sea and the South China Sea, and Japanese Deputy Prime Minister Taro Aso, Defense Minister Nobuo Kishi, Deputy Defense Mizuho, and Deputy Defense Mizuho. It has all made inappropriate statements on Taiwan and publicly attacked the “One China Principle.”

After China clearly voiced its disapproval, Japan not only refused to be constrained, but actively increased its antagonism toward China. Do they truly believe China is simple to provoke? The tensions between China and Japan will undoubtedly worsen as a result of Japan’s publishing of this white paper. Although Japan has the bravery to provoke, it lacks the guts to initiate an armed war with China. After all, even the United States, on which they have traditionally counted, would not dare.

It is simple to employ force against China, and if the Japanese Self-Defense Force want to fight the People’s Liberation Army, it is preferable for them to be prepared for any catastrophic outcomes. Furthermore, China has long been Japan’s most important commercial partner. Even with Japan’s sluggish economy, they should be wary of challenging China. If they refuse to examine this, China may let them face the consequences of economics and trade.

Furthermore, the US has declared unequivocally that it will pursue the “One China Policy” and has intimated that it will not “protect Taiwan” with Japan. The stance of the United States demonstrates that, despite Japan’s determination to constrain China on the Taiwan problem and invitation to the United States to join in “safeguarding Taiwan and defending Japan,” the United States is hesitant to offer such refuge to Japan. As a result, Japan should be clear about its own place in the heart of the United States and attach itself to the United States, although it may be beaten by the United States again in the end.

In reaction to this event, the Hong Kong media stated that Japan should focus on making friends and generating money rather than intervening in Taiwan’s affairs, saying that “provoking Beijing is a fool’s errand.” As a result, if Japan continues to challenge China, they will be exposed as a total fool. And how good will a fool do in a game between countries?

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Hong Kong Issues & the Impact on China’s Domestic Politics

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Hong Kong after years under British colony was handed over to China after the leash period was over and China being the governing state swore that it will protect the uniqueness of Hong Kong and let it function under its established capitalist system under “one state, two system” policy for the period of 50 years. These 50 years ensure Hong Kong to enjoy the freedom under the China security Umbrella. In contrast to China, the Hong Kong political system consist of multiple parties. Some of these political parties fall under the Pro-democratic camp as they supports the positive reforms in democracy. The other camp is of Pro-establishment, they are known for their support for the mainland China as they consist of basically people from the business sector. In the Hong Kong the Pro-Business supporter or pro establishment are known to be more of the dominant group because of their relation with the China but they have less support of the voter in contrast to the Pro-democratic camp.

Though in the wake of the recent Issues and the conflict with the mainland China it seems that the promises that were made at the time of handover are just fading away. Recently China decided to take some bold steps as it decided to intrude and intervene in the political system practiced In the Hong Kong which seems to a crackdown by Mainland China against its opposition. These audacious step of China triggered the massive protest in the Hong Kong driving international attention and Condemnation. What prompted and highlighted the situation more was when China in 2020 passed a national security bill and implemented an extremely comprehensive definitions for crimes such as terrorism, subversion, secession, and collusion with external powers. This bill was said to be controversial as it was a strain for the Hong Kong to establish itself as a full democracy. China also further accelerated the situation by arresting many pro-democracy activist and lawmakers which were protesting against the bill. What factors lead China take such steps was when the political groups in Hong Kong became more radical and formed Anti-Beijing parties threating the China Position and its control over the Hong Kong?  Student and youngster took the street to protest for the establishment of the political system that is more democratic in nature, starting to call themselves Hong Kong Nationals rather than identifying themselves as Chinese National.  Several of these groups separated in 2020, as Beijing cracked down on political opposition. This all threaten the Chinese position and control over the Hong Kong and its political setup. These steps by Mainland China have hushed many Hong Kong citizens who was fighting for democracy and encouraged others to abandon their lifestyle and escape the city.

If we see the motivation of the China Communist Party after consolidating power was to ensure and invest on the stability, CCP does everything and take every measure they have to in order to preserve the Stability of the Country so for this purpose most of the spending by the party was for the stability that is on the police system, training centers and national defense system that ensure the preservance of stability internally. If we study the CCP history, the power tenure of Xi Jinxing was clearly marked with the same preservance of stability as well as consolidation of power. He did it by benefitting those who were loyal to his leadership for example the pro-business man group in Hong Kong or Pro establishment camp. He sidelined those who were in the opposition as he did with the Pro-democratic wing that were protesting in the Hong Kong. China while introducing the National Security bill right after the massive protest did fuel the situation but it is also clear that China was somehow successful in inflaming the nationalism among people and pitting it against those who ever criticizing in and out of the country. China used the coincidental and the inflamed nationalism for its own benefit. Xi Jinxing handling of situation by doing massive arrest and crack downs on the opposition clearly reflects that regardless CCP and the XI jinxing knowing that such move will prove to be disastrous either seen from the diplomatic, geopolitical of economic lenses still go for it. It shows that the leaders only cared about the political requirements and reinforce inner control ignoring the damages it can have on the geopolitical or the economic situation of the country. All over in the history it had been debated that one day Chinese leadership might implement an aggressive foreign policy or even go for a war just for the sake to distract the public and international attention from their domestic issues. Hong Kong offered that very opportunity that could benefit the Chinese leadership, but without the risks and costs of a war. So I must say the situation handled by the Xi Jinxing was merely motivation but the thirst for consolidating power over Hong Kong rather than benefitting either of the mainland China or Hong Kong.

This situation had also impacted the internal politics of the China both diplomatically as well as economically. Diplomatic in a sense that the world had witnessed the massive protest in Hong Kong and a little later China decided to implement the National security Bill just gathered the Attention of the supranational actors and countries. Due to the Pandemic and its origination from China, it was exposed to the world and all the things happening in China was keenly observed. In such a scenario taking such rigid steps brought the world Attention not in the favor of the Country. Admits the Pandemic as well as the crackdown many countries including USA start to reinvent their policies for China. It was a great chance for the Rivals of China to hit it where it hurts. As Hong Kong served as a great technological hub for the China, deteriorating situation and implementation of such broad definition of terrorism compel many business to close down or relocate themselves thus negatively impacting the already crumbling economy due to pandemic. For example the head office of New York Times announced its relocation to Seoul amidst the deteriorating situation in the Hong Kong. Other than that many technological firms relocated themselves as there were facing restriction and censorship in their activities from China.  This happened due to the constant threat of arrest if they did not comply with the demands and the instruction given by the authorities. So Hong Kong issue and the handling of it by the Chinese Government did have many repercussion for the domestic politics of the China. If China keep following on this step and keep seeing Hong through thorough the Nationalist perspective it will Sabotage China Fight for freedom at the larger scale and Hong Kong will time to time rise up again to mold the domestic narrative build by the China and to break its monopoly, which will be a constant threat to China.

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