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The forthcoming meeting between Kim Jong-Un and Donald J. Trump

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 The meeting between the leader of the Democratic People’s Republic of Korea, Kim Jong-Un, and the President of the United States, Donald J. Trump, will be held in Hanoi, Vietnam, on February 27-28, 2019.

 The primary aim, as stated by both Heads of State, is the solution of the North Korean and US nuclear issue in South Korea.

 The news of the meeting had initially been delivered by President Trump, in his speech on the State of the Union, but also in a long series of now inevitable Twitter messages.

 Indeed, after the Singapore Summit between Kim Jong-Un and Trump, in the first half of June 2018, the negotiations between the two countries had clearly stalled.

 The results reached in Singapore, however, were very significant: the US Armed Forces’ cessation of the joint exercises with South Korea’s military structures; the certainty – as stated by President Trump – that Kim Jong-Un would dismantle his nuclear system “very quickly”, but also the continuation of US economic sanctions against North Korea, unless “quick and new” choices were made by Kim Jong-Un.

 It should also be noted that the decision to suspend the joint military exercises with South Korea was a real bolt from the blue for the country, above all while President Trump enabled North Korea to use the nuclear and conventional IAEA “safety measures” – an unavoidable and necessary factor of a future and quick disarmament.

 Since the Singapore Summit the denuclearization of the whole Korean peninsula has been the aim of both Heads of State, but with a too generic approach on the procedures and time schedule of the checks on disarmament.

 For the time being, however, while from the beginning of its autonomous negotiations with South Korea, North Korea has always avoided carrying out nuclear or missile exercises and tests, certainly no one has declared or shown interest in really endeavouring for denuclearization in both Koreas.

 However, why has Hanoi been chosen as venue of the meeting?

 The choice has been made precisely by President Trump because the capital of Vietnam, which is still a painful symbol for the United States, has managed to become a great pole of international economic development, after its reunification with the Communist North Vietnam.

  In a Twitter message President Trump wrote: “Under Kim Jong-Un’s leadership, North Korea will become the great economic powerhouse of Southeast Asia, considering that I have gotten to know Kim and fully understand how capable he is as a politically rational leader”.

 It is not just flattering. Probably President Trump has been fascinated by this young North Korean leader, heir to an extraordinary ancestry, who  studied in Switzerland, followed his cursus honorum in the true control rooms of North Korea’s power, and was modest while he was learning and is now assertive, without rhetoric, when he rules.

 Pending his visit to Vietnam, the North Korean leader will visit the factories of the Bac Ninh Province, northeast of Hanoi, with a view to probing the concrete possibility of building a smartphone factory jointly with the South Korean company Samsung.

Most likely, there will also be a visit by the North Korean leader to Ha Long Bay, a popular tourist area near Haiphong.

 If we do not think about quality tourism, we cannot properly imagine the future development of North Korea, which will also fit very well in the new global food chains.

 It should also be noted that this visit by Kim Jong-Un is the first one he pays to Vietnam.

 It is also worth recalling that North Korea sent some of its air forces to fight alongside the VietMihn of the Vietnamese Communist “resistance”, as well as Russia and China. Currently, however, Vietnam’s primary economic partner is, coincidentally, South Korea and this has certainly not contributed to preserve good relations between North Korea and Vietnam.

 The meeting between the Head of US negotiators, Stephen Biegun, with his North Korean counterpart, Kim Hyok-Chol, has already taken place in Hanoi and Pyongyang – a meeting always focused on topic number 1, namely denuclearization.

  Before this assignment in relation to North Korea, Stephen Biegun was responsible for Ford Motor Co’s international relations.

 He knows Russian and Moscow’s economic and political circles very well. He is member of the Board of the U.S. Russia Foundation and of Ford Sollers, the joint venture of Ford Motor Co.in the Russian Federation.

 Kim Hyok-Chol had met Biegun also in Pyongyang, where they had already talked about “complete denuclearization”.

  The denuclearization that will probably emerge in its already final form at the end of the Hanoi talks between the two leaders.

 We can already predict it will envisage the dismantling of the Yongbyon reactor and some funds to support North Korea’s economic growth, with a very “long-term” loan for funding the nuclear decommissioning of the Democratic People’s Republic of Korea.

 In fact, the latest satellite images of the North Korean reactor Yongbyon show a still active and well-maintained site, while the main structures of the reactor seem to be still unused to date.

 Kim Jong-Un has already decided that Yongbyon will be the start of the great North Korean denuclearization process.

 Both symbol and substance.

 An image to be shown the world and a credible subject of negotiation.

 Kim Jong-Un has always said – also to his South Korean counterpart – that it would be Yongbyon to be closed down, at the beginning of negotiations, “if there were corresponding actions by the United States”.

 Which actions?

 It is easy to imagine them: the “sincere” measures envisaged by Kim Jong-Un, in his last New Year’s speech, are the removal from South Korea of the US military and nuclear structures that can allow a response to the first nuclear attack from the North.

 In 2018 alone, North Korea also destroyed both a nuclear base and a missile structure, but the United States said that these operations had not been fully accomplished and, in any case, they could be easily reversed.

 According to some US nuclear disarmament experts, Kim Jong-Un could reach a level just at the limit of complete nuclear disarmament, but such measures would be such as to clearly regionalize North Korea’s nuclear (and hence  missile) threat.

 In short,Kim Jong-Un “rescues” the United States from its missiles.

 This also means that, in a military or geopolitical regional crisis, Kim Jong-Un could also “involve” both China and Japan in the negotiations, thus multiplying both the effect of his threat and the strength of his final resigning to continue the attack.

 The other factor will be the “new and soft phase” of relations between North and South Korea, with a significant reduction in the number of guard posts and internal weapons within the Demilitarized Zone.

 For the North Korean leader the next step will be to almost completely put an end to the old alliance between South Korea and the United States which, in his opinion, is always a harbinger of dangerous military (and, in the future, also economic) presences that would push a de facto unified  Korea to get out of the triangle which will effectively replace the North Korean nuclear system, i.e. the North Korean strategic integration with China and the Russian Federation.

Even the planned dismantling of Yongbyon, however, would leave North Korea with a substantial amount of nuclear weapons, and the possibility of producing enriched uranium elsewhere.

 Nevertheless, there would anyway be a definitive stop to the production of plutonium by North Korea, which is a very important political and strategic result.

 It should be recalled, however, that even the sole dismantling of Yongbyon is a remarkable technological, financial and political operation.

 A stable connection would be needed between the United States, the Russian Federation, China and, probably, South Korea, and even the now residual European Union.

 In addition to IAEA, of course.

 It will take many years and huge funds to achieve this result. Needless to cherish the fond hope.

 Just to give an example, the Rocky Flats US headquarters used for storing plutonium, was dismantled in 14 years at a cost of 9 billion US dollars.

 In Belgium, Eurchemic was decommissioned and dismantled in 25 years at a cost of 333.75 million US dollars.

 Probably the most rational and quick choice will be to entrust the decommissioning of Yongbyon to a joint political and financial organization between the United States and North Korea.

 Nevertheless, how will North Korea afford it? Obviously it will not want to have external support – and rightly so – but, hence, how can the issue be solved?

 The huge cost of decommissioning the site must anyway be shared by a sufficient number of actors. North Korea cannot materially bear 50% of all costs.

 Hence support will be inevitably needed from South Korea, the Russian Federation and China, but also from Japan and, probably, an axis between Vietnam and Thailand, for example.

 It is impossible for the United States and North Korea alone to bear all the costs.

 We could also think about an ad hoc investment bank which, at international level, would be entrusted with the task of funding the operation, at least partly, so as to later organize business projects in North Korea, in full agreement with Kim Jong-Un’s leadership.

 Once clarified the financial framework, the technical operations of decommissioning could also be very quick: reinforced concrete “containers” to be filled with nuclear N materials would be used. Then the reactor (and the iodine selector filters) cells would be emptied, but what is left would be covered again with much reinforced concrete, without further removals that could be postponed to economically better times.

 The plasma torches and all the other current techniques could almost immediately stop the action of radioactive materials, but with a maximum amount of staff that could be about 150 technicians and at least 70 elements, all selected among North Korean experts.

 In short, if all this can happen in the future, the solution for Yongbyon will be found in less than a year and at a predictable cost of 6 million US dollars.

  The 5 MWe reactor defueling is a further problem.

  This is the primary source of plutonium.

 The defueling would cost approximately 3 million US dollars, all inclusive, while the real dismantling would cost about 30 million US dollars.

 Hence the total cost for dismantling the plutonium and uranium networks, the centrifuges and the reactor will range between 300 million US dollars, in an initial and scarcely effective phase, and as many as 1.6 billion US dollars.

Under IAEA sole control, the dismantling of all North Korean facilities will last at least twenty years, at the aforementioned cost of 1.6 US dollars, but without IAEA supervision it will take at least ten years and almost one billion US dollars.

 Why confining the negotiations for peace and inclusion of the Democratic People’s Republic of Korea into the world market only to the nuclear issue?

 It is most likely that the North Korean chemical weapon warehouse is “old”, but there are certainly still VX and CW agents, G-series and V-series nerve agents that are certainly not negligible in any confrontation capable of endangering North Korean stability and political identity.

 What about discussing it in the Summit, at least in an initial phase? What about establishing a rational military balance between the United States, Russia and China in the whole Asian continent?

 Kim Jong-Un could – and certainly will- be a fully rational actor, who will know how to evaluate the best potential for the defence of his country, but without the silly memories of the Cold War.

 This also applies to North Korea’s chemical weapons, which Kim Jong-Un will deal with the necessary flexibility, but also with a compensatory criterion with respect to his nuclear system.

 Hence the prospects for the North Korean leadership could be the following:

a) keeping a minimum share of chemical, bacteriological and even nuclear weapons to effectively react to any North Korea’s political crisis. The calculation of the Minimum that a statesman must always be able to do. A possible solution could be an official statement, just before or even during the forthcoming Hanoi Summit, that there will be a mutual and official recognition between the United States and North Korea – a definitive document dealing with borders, the political personality, the regular exchange of ambassadors and cultural, commercial and financial relationships.

b) An agreement for the transfer of nuclear and bacteriological-chemical stocks to a third country, under the supervision of the international Agencies responsible for the operations. An already possible agreement could be  separating and dividing stocks between China, the Russian Federation, South Korea, Japan, the United States and even the irrelevant EU.

c) Support to the military police and security forces of the Democratic People’s Republic of Korea for monitoring staff, stocks and their political use by unreliable elements of Kim Jong-Un’s regime. A relationship between intelligence services that is unavoidable, considering the future commitments.

Hence North Korea must know very well that if there is someone interested in the stability of the regime, this is precisely the axis of Western powers that are accepting Kim Jong-Un’s openings, with laborious rationality.

  It will therefore be essential to envisage – with the figures and costs already mentioned above, as well as the respective allocations and breakdowns – a refinancing project, especially in the short term, of the Democratic People’s Republic of Korea which shall mainly concern:

1) the prevention of humanitarian disasters, also with the same UN Agencies that have been supporting North Korea on these issues for over 23 years. Once again, there is no problem in this regard. Apart from China that, in fact, currently supports – almost alone – North Korea against international sanctions, it will be necessary to stabilize aid and organize it in a different way, considering the costs of the large nuclear decommissioning.

2) How can it be done? It is simple, after all. It could be done by immediately establishing an International Bank for Korea and Asia in the South-West, which would collect aid, deal with investment in North Korea, support the population and, above all, submit to the North Korean government the new industrialization projects, mainly in the tourist, environmental and food chain sectors, but also in fine technologies. The entry of a great country, such as North Korea, into the world market will be the real great deal of the century and the true and stable guarantee for future peace. It will be good to jump at the chance, without making a fuss about it.

3) Finally we should help North Korea to become what it already is, namely a rich country. Certainly, with its “parallel” liberalizations, North Korea’s current leadership has already done much, but here very strong liquidity injections will be needed, as well as new and effective projects to be quickly submitted to Kim Jong-Un’s government.

4) The origin of this North Korean small economic boom is still bilateral trade with China. Hence we need to preserve and strengthen it. Indeed, as has already been envisaged in China, we need to imagine a rational inclusion of North Korea in the Chinese Belt and Road Initiative towards the West. The maritime networks, currently already present in an eminently maritime country, such as North Korea, would be perfect for managing the Chinese networks that already start from Gwadar.

5) It would therefore be silly to do what some US leaders suggest, i.e. to force North Korea to choose between nuclear weapons and economic support. Kim Jong-Un has studied Marx very well, when he was in Switzerland, and knows all too well that aid never comes “without strings attached”.

6)Hence the real costs of the great nuclear decommissioning must be calculated accurately, with an initial dismantling of the chemical and bacteriological arsenal, to which the evaluation of social and economic impact shall be added. Finally, this shall also be matched by an initial, rational and credible support for starting a new industrialization of the North Korean economy, which cannot obviously be only the result of South Korean investments.

Hence, besides defining a good policy line for intervening on nuclear decommissioning, we shall also do a rational and economic calculation of future costs and investments.

  This is needed to make Kim Jong-Un’s relinquishment of his nuclear system not coincide with an economic crisis and a weak integration of the country in the future world market, which will however be very different from the current one.

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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Chinese State Council report on human rights violations in the U.S. and around the world 2023

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On Tuesday, March 28, 2023, the Chinese State Council Information Office issued a report on human rights violations in the United States of America during the year 2022, following the hosting of the United States of America and US President “Joe Biden” for the (Second Democracy Summit) activities on Tuesday, March 28, 2023, at the invitation of many countries of the world, with the exception of all Arab countries except Iraq, Russia and China. Therefore, the report of the Chinese State Council issued by its Information Office on the same day issued a stern warning to Washington to promote democracy with concrete measures instead of dividing the world into opposing camps.  The Chinese report issued by the State Council, under the title: Headlines of Human Rights Violations in the United States of America in 2022, said that the year 2022 witnessed a historic setback for human rights in the United States, according to a report broadcast on the “Chinese CGTN news channel” on its website.

 Here came the comment of the spokeswoman for the Chinese Foreign Ministry “Mao Ning” calling on the United States of America to stop interfering in the affairs of other countries, under the pretext of what is called democracy.  Confirming China’s completely rejecting position regarding the so-called (American Democracy Summit) that was held in December 2021 and Washington’s division of the world into two camps according to its whims between a democratic ally of Washington and an authoritarian ally of Russia and China, while the United States ignores its shortcomings, especially with the insistence of the United States once again.  To hold the so-called (democracy summit) under the slogan of supposed democracy, laying openly ideological lines to divide the whole world, and at the same time pushing towards division among the countries of the world, by not respecting the spirit of democracy.  The thrust of the Chinese criticism of the first and second American Democracy Summits was the rejection of this American model prepared in advance for democracy, for the absence of a single approved democratic model. The most accurate Chinese and all other countries excluded from the Conference of American Democracies, especially all Arab countries, is that there are many different models of democracy according to the circumstances of each country separately, as well as everyone’s agreement at the present time that development is everyone’s top priority.  Hence, the democratic process promoted by Washington and the current Biden administration should not necessarily follow a specific model, as there is no single model that can be followed for this democracy.  Also, according to their point of view, American-style elections do not make democracy. It is important that elections accompany the development of civil society, besides the democratic process needs a long time that may reach decades, or even generations, and that democracy needs education and knowledge, economic modernization, responsible and independent media, and support for children’s and women’s rights.  Here, although democracy can be encouraged from the outside according to the American perception itself, it is better to build it from within and from its children in order for it to continue and grow.

 The Chinese point of view is that the principle of promoting American democracy does not take into account any reliance on the cultural, political and religious specificities of China and countries, and therefore what applies to China in its rejection of American democracy applies to the rest of the other regions, such as Latin America, Eastern Europe, and East Asia and others.  Here came the confirmation of the (Chinese State Council) report on the pseudo-American democracy, that it interferes in the internal affairs of other countries under the pretext of pseudo-democracy. The United States of America must understand that we need to implement real democracy, reject pseudo-democracy, and promote the democratization of international relations.  Also, what the world needs today is not the so-called (American Democracy Summit), which creates problems and confrontation internationally, but we need solidarity and cooperation that can actually solve the problems facing the entire international community.  Hence, China called on the United States to stop directing accusations against other countries and to stop interfering in the internal affairs of others under the banner of what is called democracy. Especially since American interests have become the first determinant of the American vision of spreading democracy in the world, especially the Middle East region and the Arab world, and not according to an objective or rational American vision.

   Accordingly, the success of the democratic transition in a country like Spain, for example, did not eliminate terrorist operations by separatist organizations from the Basque region, just as the Israeli claim to democratize its political system did not prevent extremists and settlers from attacking the Palestinians, and their democracy was not a deterrent when their former prime minister was assassinated.  Yitzhak Rabin, and that democracy did not prevent them from attacking the Palestinians or interfering in intelligence, through the Israeli Mossad itself, in the affairs of other neighboring countries, just as many bombings took place in the United States of America, London, New Zealand, France, and other democratic Western countries through terrorist elements that arose under a purely democratic system, according to the same American and Western perception.  Also, despite the liberation of Iraq from the dictatorial regime according to the concept of American military intervention in Iraq or Afghanistan to spread the American system of values, many incidents, terrorist acts and explosions occur there continuously.  Also, the real reason for the spread of terrorist acts in Iraq, Afghanistan and many countries of the whole world is the same rejection of the American presence and interference in these countries and their internal affairs.  This confirms the failure of imposing American democracy according to its suspicious purposes and perceptions around the world.

 Here, we must respond strictly here to the United States of America regarding its interference in the affairs of other countries under the pretext of democracy by using the mechanism of American violence that is internationally criminal, which is known as the case of “Abu Ghraib prison in Iraq” by leaking pictures and videos from inside it related to the heinous crimes committed by the Americans in the name of democracy.  What really stopped me in this regard were the investigations launched by the European Parliament against the United States of America to verify the existence of secret prisons affiliated with the CIA in several European countries. Indeed, an official European report was issued on June 7, 2006, accusing 14 European countries of complicity in a way  Directly or indirectly with the CIA to detain individuals and forcibly imprisoned by Washington in the heart of secret prisons inside Europe or illegally transfer them to other countries when the truth about American crimes is discovered and exposed.

 Perhaps what can be seen in this context is that the American intelligence game to interfere in the affairs of other countries through the game of democracy, i.e. dividing countries into democratic and authoritarian ones, such as (the game of periodic statements provided by the US State Department through its embassies around the world regarding the state of democracy in countries  the other), and providing the American diplomatic missions with new elements related to propaganda for the American-style democratic transition by following intelligence methods to recruit some to spread and promote that American democracy by spreading chaos in those countries through American recruited elements.  As well as the mechanism of using international conferences by the United States to put pressure on non-democratic countries.  Here, the US Information Agency, which was merged years ago with the US State Department itself, is one of the most prominent bodies that promote American democracy, in addition to using other economic means and mechanisms, such as linking between democratization and aid.

 Also, my strict and sharp response to the United States of America – and as a living witness internationally to what was done against me by Washington, because I am one of the most public critics of those American policies – is the United States of America’s use of the mechanism of preventing media or media appearances and following the American policy of silencing the mouths of all  Critics of it, the United States of America is working through its embassies to periodically and comprehensively list all critics of those American policies in the various media in their countries, especially specialists in Chinese and Russian affairs around the world who are close to the countries of China and Russia to prevent them from appearing in the media and muzzling their mouths, or trying to hold  Deals with them to change their convictions and thinking in terms of China or Russia in order to criticize them according to a pre-prepared American agenda, which I was a living witness to, while keeping the names of all its parties who exerted pressure against me in favor of Washington.

  The game of American interests in spreading democracy in the Arab region also stops me here, by exerting pressure on many Arab countries to take fundamentally non-democratic measures, whether military or security, against certain forces, parties, elements and groups that Washington does not want.  With the various American embassies asking some Arab governments and others around the world to intervene to prevent their newspapers from directing criticism of the United States of America – just as it happened and is constantly happening to me and many of my colleagues from China’s friends around the world – and to give direct American directives through their respective embassies, to limit its critics in the Arab region, as a witness to what they did specifically, to force their regimes to stop publishing what the US administration considers incitement to violence and hatred, in reference to the criticisms directed by the Arab media of the aggressive Israeli policy in the region and the fact that Washington turned a blind eye to it in the first place.

  Accordingly, any Arab or Islamic country that raises the slogans of freedom and democracy as it wants and that Washington promotes does not intercede for it, because of the pressure of the United States of America on it mainly in order to reduce the margin of freedom of opinion and expression in order not to criticize the American and Israeli interests, which is what is happening realistically and practically in the homeland  The Arabs turn a blind eye to the practices of the Israeli occupation and its aggressive policies regionally and internationally. This proves Washington’s neglect of any freedom of expression or democracy when it comes to its utilitarian and narrow interests, or the interests of Israel. This is what happened to me personally and many of my colleagues who specialize in Chinese affairs around the world, mainly friends of China and its ruling Communist Party, have been subjected to. This proves the American policy of silencing mouths towards researchers and academics around the world who are not loyal to the interests and claims of American democracy.

  Finally, the note worth mentioning to me and the Chinese remains, is the refusal of the State Department of the United States of America to comment on the approved criteria for inviting some countries or excluding others, with the statement of the US State Department contenting itself with saying that “Washington does not seek to determine which countries are democratic or not”. This in itself is absurd.  Also, international relations are not based at all on morals and values ​​as promoted by the US administration and President Biden, but rather are based on power and interests. Therefore, the adoption of US policy for the issue of spreading democracy worldwide may impose restrictions on its foreign policy and national interests globally.  Also, working through the United Nations to support democracy should be the only international criterion for judging the success of any democratic transition experience or not, so the goal of the United Nations, as an intergovernmental organization representing all countries of the world, should be to support democracy in the world away from the  utilitarian and narrow interests and policies of American.

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Japan-Indian Equalizer of China’s Rise

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Image source: twitter @kishida230

The two-day visit of Japanese Minister Fumio Kishida to New Delhi on March 2023 suggests that political and geopolitical events are actively performed in the Indo-Pacific region. A military-political alliance or at least close, deep cooperation in the political, economic and military-technical areas is gradually and very systematically developing between Japan and India. The parties have a long history of connections, and we witness an incremental systematic deepening of these contacts. Now we are talking about interesting agreements in the infrastructure of the economy, trade and military-technical cooperation. It is especially worth mentioning the general military training, which is still in an air format. Still, I think it will soon be in other military cooperation areas. It has been said in commentary by Georgi Asatryan, Ph.D., political scientist, expert for ASOF (California), former associated professor for the Moscow State University, and senior lecturer for Plekhanov Russian University of Economics, political scientist Georgi Asatryan.

Of course, we need to say that India and Japan have certain competitive relations with the Asian superpower China. And in this regard, they are deepening cooperation to restrain the ambitions of a growing China. Here again, it is worth mentioning Japan’s security strategy, which was adopted in December, and as many as three key instruments were revised. This is the national security and defence strategy and the Japanese military construction program. A big part is given to cyber security, economic security, diversification of economic relations, and infrastructure relations.

And, of course, neither India nor Japan calls China an enemy or a threat. But there is an understanding that we are talking about a strategic challenge, and all this is aimed at preventing China. It is also worth noting that the USA is invisibly present in this group, and Japan has a significant agreement with the USA. In fact, it is a military alliance outside of NATO.  In January 2023, Biden and the Japanese minister met. A complete joint statement was published where it was noted that this union does not have certain borders and that the union of the USA and Japan is ready to resist any threats these countries face. And, of course, Taiwan’s sovereignty is important for Japan.

For India, this is less essential. But in any case, the parties are actively building advanced relations within international organisations such as QUAD, which includes Japan, India, Australia, and the United States. Within this framework, a particular security structure is being created in the Indo-Pacific and the Asian region, which should restrain the excessive ambitions of a growing authoritarian China. It should be noted that the Indian and Japanese leadership are achieving some success in this matter. There is quite serious progress, which is permanent and visible in all areas of relations between these countries.

The goal of India-Japan cooperation is to stabilise the Indo-Pacific region by restraining Chinese behaviour. Geography shapes their responses differently, with Japan focusing on maritime capabilities, and India on the land. There are differences, too, in the fact that fellow Quad members Japan and Australia are formal military allies of the US, while India is not. But what is shaping the new initiatives and orientations are fears of China and in this, Japan and India provide the two key lynchpins of the free and open Indo-Pacific.

In December, the Kishida government revised three key documents relating to its security perspective in the region. These were the new National Security Strategy, the National Defense Strategy and the Defense Buildup Program. Taken together, these are addressing new domains and challenges, including space, cybersecurity and economic security. The new documents said that Japan was “facing the most severe and complex security environment since the end of World War II.” A major concern was that China could attempt to reunify Taiwan by force in the coming decade. Tokyo does not quite yet designate China as a “threat”, its chosen designation is “the greatest strategic challenge that Japan has ever faced.”

But perhaps the most significant development was the sentence in the Biden-Kishida joint statement January 2023 which said that not only had the alliance never been stronger but that the allies “strongly oppose any unilateral attempts to change the status quo by force or coercion, anywhere in the world.” More than anything else, this statement marks the change in Japan’s global posture. But ties between the two on the economic front are way below their potential and India has a lot of catching up to do with China. As The Economist has pointed out, China accounted for 24 percent of Japan’s imports and 22 percent of its exports, while India accounted for 0.8 percent of Japan’s imports and 1.7 of its exports.

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Will Xi Jinping Continue the Wealth Crackdown in his Third Term?

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Of the  445 people who lost their billionaire status last year, the majority, almost 230 were from China, According to the recently released Hurun Global Rich List for 2023. Beijing’s crackdown on major tech companies which began in 2021, continues to hurt the country’s super rich. Tencent owner Ma Huateng lost three points and was placed at 31 on the list. Jack Ma Yun, founder of China’s e-commerce giant Alibaba Group Holding, dropped 18 points to 52nd place from 34th a year earlier. ByteDance owner Zhang Yiming is down by 11 points alongwith CATL chairman Robin Zeng Yuqun whose worth dropped by 13 points.  Others leading Chinese entrepreneurs to drop on the superrich list included Netease CEO Ding Lei who was down 9 points and placed at 46th place tying with He Xiangjian co-founder of Midea, one of China’s largest appliance makers who fell 11 points.

Earlier this month Xi Jinping formally began his term as President for an unprecedented third time. Frustrations over lingering COVID-Zero policies, censorship, economic stagnation and hardships, led to rare yet legitimate protests in China which ultimately only led to a deepening crackdown on dissenters. Amidst increasingly antagonistic international relations, wherein Chinese companies are facing harsh scrutiny both domestically and by the US had curbed corporate enthusiasm .

Pursuit of Common Prosperity:

A central pillar of the economic miracle that took place in China in the past decade was the conscious decision to unleash the entrepreneurial energies of its business class by destigmatizing the accumulation of wealth. During the years of China’s market reforms (1978-2005) GDP rose by ten times, average wages grew six fold. By 2020 GDP per capita was averaging about $10,000 and China entered an era of wealth and prosperity. This led to a concentration of massive personal wealth. In 2020, mainland China had 626 billionaires, and the total wealth of China’s 400 richest soared to $2.11 trillion, from $1.29 trillion a year earlier. Advancements by technology brands like Alibaba, Huawei, Tencent were driving the global economy.  But the Chinese government’s business-friendly record has wavered under leader Xi Jinping and his regulatory crackdowns on private enterprise, as he pursued a campaign of ‘Common Prosperity,’  aimed at driving down inequality by spreading wealth.

The tech sector’s breakneck growth worth some $4.5 trillion exposed market behaviours that raised the eyebrows of the Chinese leadership. Xi Jingping trained his eye on China’s class of billionaire CEOs. China’s cyberspace regulator fined ride sharing app Didi Global just over $1.2 billion for violating cybersecurity and data laws. Aside from this, a personal fine of $147,000 was imposed on Didi’s chairman and CEO Cheng Wei and president Liu Qing, respectively. Didi also saw its plans to list on the New York stock exchange go up in smoke. Regulations imposed on food delivery app Meituan, eroded over $25 billion its stock value. In the financial sector China has resorted to sporadic crackdowns, on cryptocurrency, on peer to peer lending and on fintech giants. Jack Ma, once the poster boy for the rapid rise of China’s technology industry delivered a now infamous speech on October 24, 2020 criticising the government’s financial regulation, claiming that these would stifle innovation. The government responded by suspending the Ant Group’s US$37 billion IPO in Hong Kong and Shanghai. Through 2022 Tencent, which owns 17% of Meituan, was engaging with financial advisers to execute a potentially large sale of its Meituan stake. Recently the Chinese government acquired the “golden share” in units of Alibaba and Tencent Holdings, to gain decision making control.

China also used the now scrapped zero-Covid policy to invade the private spaces of the elite class. Added to the tech crackdown are global monetary tightening, COVID-19 disruptions, a complex political climate resulting in many wealthy Chinese physically relocating to other countries. Platforms such as GitHub are swarming with chat groups discussing exit from China. Singapore,  known for its tax-friendly regime, political stability, and widespread use of Mandarin has become a preferred destination. And although Japan doesn’t have the best of relations with the PRC it has welcomed wealthy Chinese with its attractive business investment visas. After his fallout with Chinese authorities Jack Ma moved to Tokyo and was only recently seen in Bangkok. Since the Jack Ma incident several CEOs like TicTok and ByteDance founder Zhang Yiming, online retailer JD.com billionaire founder Richard Liu, founder of e-commerce giant Pinduoduo Colin Huang.

Last year’s rare protests against Chinese leadership in the wake of  Xi Jinping’s imposition of a zero-Covid policy that kept many urban residents under strict lockdown were an indication of how difficult life was becoming for ordinary Chinese, to say nothing of businesses operating there. 

Growth Target set at 5%:

In 2022, the Chinese economy grew just 3%, missing its expansion goal of around 5.5% by a wide margin. Covid control policies took a heavy toll on a wide range of businesses and activities. At the National People’s Congress, the country’s annual parliamentary gathering, earlier this month a modest GDP target of 5% was announced. In his first press briefing, Chinese Premier Li Qiang,  acknowledged China won’t find it easy to meet the goal of expanding GDP by about 5% this year, as the government focuses on delivering stable prices, creating jobs and supplying ample housing. Managing director of Beijing-based boutique investment bank Chanson & Co, Shen Meng feels that the 5% goal is more reasonable as it is “more in line with downward pressures including a weakening in exports and consumption.”

But with economic indicators not looking up, the possibility of achieving the relatively conservative target of 5% growth in 2023 looks difficult. Chinese exports slid by 6.8% by January and February, and imports were down by 10.2% during the same period. Meanwhile, the yuan lost about 8% of its value against a surging dollar in 2022, the biggest annual drop since 1994. In addition to the slowing economy this is also largely due to the Federal Reserve’s aggressive rate hikes. In the past year to end-January, in China, the benchmark Shanghai Composite index lost nearly 11%. The pace of the recovery in Chinese consumer demand has not been as strong as expected.

Declining Revenues In Property Sector:

The finances of local entities are already stressed from the burdens of financing years of COVID containment. Although the Chinese government has doled out generous fiscal stimulus, property investment has dropped by 5.7%. China’s crackdown on the property market, meant that the industry shrank 5.1% in 2022. The government sensed that the property sector had become one of the biggest drags on the wider economy. Although it has recently eased funding access for many real estate companies, Moody’s Investors Service forcesats that nationwide sales are likely to decline again in 2023 due to continued sluggish demand.  Chinese conglomerate Fosun International, has total liabilities worth $90 billion, an increase of 8% from last year. Amid declining revenues from property sales, it remains to be seen how long the government coffers can float the economy.

Celebrities Under the Scanner:

Even some of China’s most popular media stars find themselves under the scanner of the  “common prosperity” campaign to correct wealth inequality. In an effort to rein in the prevailing consumption culture in China, stars like Zheng Shuang, Zhao Wei, internet celebrity Viya, find themselves facing financial penalties and even arrest as in the case of Liu Xiaoqing, one of the most famous actresses in China. Such relentless targeting of media stars who draw traffic and drive up consumption, is making merchants and brands at Alibaba and across a number of its rivals’ platforms nervous.

Tencent Holdings which has spent most of 2022 reeling from the crackdown on the technology sector has seen two quarters of falling revenues.  As authorities were focused on solving social problems like gaming addiction among the country’s youth, Tencent suffered from the lack of approval to gaming licences. Although the withholding of licences is now withdrawn, Tencent remains cautious about its posture. As if mindful of the President Xi Jingping’s posture towards technology billionaires, Tencent co-founder President Martin Lau said “We will definitely not reverse back to the relatively unrestrained development path prior to the pandemic,..We will improve efficiency in a discipline-oriented way,” at a recent media event. 

Antagonistic International Relations:

The China-U.S. has intensified, with President Joe Biden administration seeking to curb tech exports to undercut the progress of Beijing’s technological and military advances. With several Chinese companies and other organisations on the US Entity List, prohibiting them from using strategic American technologies, the crackdown on China’s chip industry is beginning to bite. A subsidiary of ByteDance TikTok which has over 150 million American users, is under greater scrutiny accentuated by the dramatic congressional hearing of its  CEO Shou Zi Chew last week.

Chinese companies are facing equally harsh scrutiny and consequences in other destinations. Amid concerns over China’s involvement in critical UK infrastructure, the UK government has removed China’s state nuclear company out of the nuclear power plant project on the Suffolk coast.  In his speech to the Lord Mayor’s Banquet, Prime Minister Rishi Sunak announced that the UK needs to evolve its approach to China and that the “golden era” of relations with China had to end as close economic ties had proved to be naive.

Xi Begins his Third Term:

After receiving a unanimous endorsement from the National People’s Congress, President Xi Jinping was re-elected as president for a third term on March 10, effectively cementing his status as the country’s most powerful leader since Mao Zedong. This was a certainty after the 20th National Congress of the Communist Party of China elected Xi Jinping as party leader for a third term last October. But even as Xi Jinping began his unprecedented third term, the political climate in China remains uncertain. A mix of economic slump and complex policies is making the wealthy rethink their stay in the country. The drive to reign in the economic influence of China’s private sector has diminished private sector expansion and business confidence. The regulatory policies unleashed in the past two years are unlikely to be relaxed anytime soon. Speaking to delegates on March 6, he reminded business leaders of their responsibilities to adhere to the law and support “common prosperity,” clearly indicating that in the campaign to makeover the economy the wealthy might yet be unsparingly targeted. Under President Xi Jinping’s stringent wealth crackdown, there are fears of arbitrary detention, expropriation, or at the least trumped up charges. These anxieties are fueling an emigration trend among the Chinese ultrarich. It is unlikely that with the current economic slowdown the common prosperity campaign will help bridge the gap between the rich and the poor. But  meanwhile the brutal crackdown by Xi Jinping will have lasting effects and cause further damage to its economy.

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