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Reality of myths about modern China

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China’s polity and society is shrouded in a cobweb of myths. Several countries with whom China has trade surplus suffer from an understanding deficit. Let us review some of the myths heretofore.

Myth 1: China has no religion: During the 1920s, a Chinese intellectual Hu Shih proclaimed that China is a country without religion, and Chinese are a people who are not bound by religious superstition. Religion in China could never be eliminated. It has however seen periods of tolerance and persecution. Qing dynasty built schools in place of temples, churches, shrines and spirit writing altars. The present government believes that secularism would rise pari passu with economic progress. Modern China since its establishment in 1949 has granted right to religious belief. As such, China, now, has Buddhist association (since 1953), Protestant Church (1954) Islamic Association (1954), Daoist Association (1957), Catholic Patriotic Association (1957).

Chinese are traditionally obsessed with survival, not eternity, or higher spiritual values.  Chinese philosophy of Daoism, Confucianism, and legalism are mechanistic. They are concerned with values as a means to an end. Pragmatism is the key attitude. Buddhism stands secularized to align gods with wealth and kitchen not spiritual alignment.

The Chinese society is in transition. Materialism now means faith in a bright future. Even spread of Christianity in both rural and urban areas is not tantamount to rejection of traditional values. During the Tang dynasty, Buddhism emerged as complement to, not repudiation material secularism.

Myth 2: Uyghur’s persecution and social issues: The Uyghurs, alternately Uygurs, Uighurs or Uigurs, are a minority Turkic ethnic group originating from and culturally affiliated with the general region of Central and East Asia. The Uyghurs are recognized as native to the Xinjiang Uyghur Autonomous Region of the People’s Republic of China. The Uighurs are the people whom Old Russian travellers called Sart (a name which they used for sedentary, Turkish-speaking Central Asians in general), while Western travellers called them Turki, in recognition of their language.

The Uighurs are the people who old Russian travellers called Sart (a name which they used for sedentary, Turkish-speaking Central Asians in general), while Western travellers called them Turki, in recognition of their language. They are mentioned in Chinese records from the 3rd century. They first rose to prominence in the 8th century, when they established a kingdom along the Orhon River in what is now north-central Mongolia.

Insider dated December 24, 2019 reported that China has initiated a “Pair Up and Become Family” program to dilute Uyghur minority. Han Chinese men are sent to live with Uighur women in China’s western region of Xinjiang. “Neither the girls nor their families can reject such a marriage because they will be viewed [by Chinese authorities] as Islamic extremists for not wanting to marry atheist Han Chinese. They have no choice but to marry them.  It is alleged that the Han Chinese have been raping Uighur women in the name of marriage for years. China denies the allegation.

Be it observed that the Uighurs is not like Orthodox Muslims. Both Pakistan and the Uighurs criticise each other. Andre Small (p.80, ibid.) states `Pakistan’s criticism of the Uighurs’ irreligiousness or fondness casts aspersions on their standing as Muslims’. It is said that `Turkistan separatists are supported by the United States or India in order to drive a wedge between China and Pakistan.

Chinese concept of Social evils differs from Pakistan’s. Divested of morality, an ordinary Chinese consider it just normal to give or take `body pleasure’ for money. In Khanewal some Chinese engineers scuffled with police when it tried to prevent them from going to a `red-light area’. Recently some Chinese gangs have been busted at Faislalabad, Lahore and Rawalpindi for fake marriages with Pakistani girls including some underage and later exploiting them as sex slaves (Dawn, Tribune, etc. dated May 9, 2019). The police recovered illicit aphrodisiac `drugs’, `gold ornaments’, `dowry’, Chinese passports and weapons. It is generally believed that the arrests are just a tip of the iceberg. In some Karachi areas, Chinese have rented congested adjacent housing units in various Karachi areas and turned them into `out of bound’ to Pakistanis. What they do there is anybody’s guess. Traditionally, Chinese prefer to develop and live in China towns wherever they go on the globe. In Pakistan, they have avoided doing so as what they eat (cats, dogs, monkey brains, insects) may sound revulsive and non-kosher.

Myth 3: Corruption almost eliminated: Xi Jinping  began anti-corruption campaign immediately after becoming general secretary of Central Communist Party in November 2012.The government arrested 184 ‘tigers’ besides tens of thousands of `flies’ (lower-rank officials).

XI constantly admonished Chinese not to divide history into the history of the People’s Republic of China into a Maoist period and a reform period. The latter period is distinguished austere Maoism by slogan `to get rich is glorious’.

This slogan led to widespread corruption in bureaucracy. People had muffled resentment against corrupt bureaucracy. They hold CCP responsible for it.

XI instructed officials to remove their children from foreign universities. But, her own daughter, then an undergraduate student at Harvard did not come back. During 2005-2006, there were 62,500 Chinese students in foreign universities. By 2015-2016, their number rose to 3, 28,000.

Myth 4: Sino-US relations stable: China is, at once, feared and envied by many countries, the United States of America in the forefront. Its sheer size and population is awesome. China’s economic progress has engendered apprehensions that it may overtake the USA and emerge as the new hegemon. The USA harbours a love-hate relation with China dragon. The relation reflects distrust, fractiousness and tension coupled with watchful competitiveness.

The USA looks upon China as a copycat out to obtain economic advantage for its state-owned enterprises through cyber-espionage. Cognitive dissonance in US-China relation is obvious. The USA likes China’s economic progress, as long as it suits American interests. But, it abhors China’s efforts to occupy more strategic space in the region around it, particularly the South China Sea.

China, too, wants to keep an eye on the USA. Its universities and think tanks teem with specialists on the USA, European Union and the rest of the world. There are 150 think tanks focusing on Australia alone. The mutual suspicion may result in unintended confrontation.

Myth 5: Chinese loans are predatory: The US has expressed its apprehensions about Chinese investment in Pakistan, Sri Lanka as elsewhere. For the US, the investments are a predatory debt trap that could lead to ‘asset seizures’ like Hambantota port of Sri Lanka.

The factual position is that Chinese infrastructure loans have not led to the forfeiture of a single valuable asset abroad. The US view is based on Rhodium Group study, which mentions only Hambantota port as the lone instance of seizure. The claim of forced lease or seizure is questionable. The Hambantota port lease, held jointly by the Hong Kong-based China Merchants Port and the Sri Lanka Ports Authority, was negotiated over 2016-2017.

Payments of the principal and interest for the port loans included only about 1.5 per cent of Sri Lanka’s external debt repayment obligations. The Sri Lanka Ports Authority promptly paid dues using revenues from Colombo port, which includes a container terminal run by China Merchants Port.

China holds an estimated nine to 15pc of Sri Lanka’s low-interest external debt. It owes high-interest loans to Western commercial banks. International sovereign bonds account for about half of the external debt, with Americans holding two-thirds of their value and Asians only about eight per cent.

Sri Lanka is liable to pay interest averaging 6.3 per cent on international sovereign bonds and the principal must be fully repaid in about seven years. In contrast, more than two-thirds of the value of Chinese state funds lent to Sri Lanka from 2001-2017 (including two-thirds of the Hambantota port loans) were at two per cent interest, and mostly repayable over 20 years.

Media reports about Sri Lanka’s government being forced to sign the port away on a 99-year lease after failing to repay Chinese loans at 6.3pc are untenable.

The Sri Lankan government still owns the Hambantota port and funds received for the lease were used to pay off expensive Western loans. There is no Chinese military base at Hambantota

Myth 6: China wants to colonise Pakistan: China never harboured any such ambition. History tells that China did its best to ensure protection of Pakistan’s sovereignty. A strong Pakistan is a bulwark for C china’s security as well. Andrew Small, in The China-Pakistan Axis (page 34) tells `In 1982, a C-130 Hercules transport aircraft belonging to the Pakistan military left Urumqi, capital of the North-Western Chinese province of Xinxiang, headed for Islamabad, carrying five lead-lined, stainless steel boxes, inside each were 10 single-kilogram ingots of highly enriched uranium, enough for two atomic’ bombs. He adds, `China began supplying both M-11s and M-9s in unassembled form, which required development of a dedicated missile assembly facility near Rawalpindi’ (p. 40, ibid.).

There are marked differences between China and Pakistan that rule out Pakistan as a colony for China. China’s pragmatism as `religion’, now dollar-orientation, obedient labour force, enlightened leadership with a world vision, and hard work ethos is different from Pakistan’s.

Take water aspect alone. Our lethargy marks a contrast with China’s history. There are more than 22,104 dams in China over the height of 15 m (49 ft.). Of the world’s total large dams, China accounts for 20 per cent of them, 45 percent for irrigation. The oldest dam in China Dujiangyan Irrigation System dates back to 256 BC. In 2005, there were over 80,000 reservoirs in the country and over 4,800 dams completed or under construction that stands at or exceed 30 metre (98 ft) in height. As of 2007, China is also the world’s leader in the construction of large dams. The tallest dam in China is the Jinping-I Dam at 305 metre (1,001 ft), an arch dam, which is also the tallest dam in the world. The largest reservoir is created by the Three Gorges Dam, which stores 39.3 billion m3 (31,900,000 acre feet) of water and has a surface area of 1,045 km2 (403 sq mi). Three Gorges is also the world’s largest power station.

China’s Marxist-social metamorphosis defies our religious moorings. China was able to bridge the stark differences that existed between rural and urban lifestyles. The hukou system was designed to prevent rural to urban migration.

Our banking sector has consumer orientation. The Chinese system with about 37 tiers has investment orientation. China `entertained’ foreign investors in every possible way. `In 2001, a count of the out-of wedlock children produced by Shenzhen’s working women and mistresses over two decades numbered 5,20,000…the sex industry is one of the few robust conduits of money backs to China’s impoverished areas (Ted C. Fishman, China Inc. 2003, p. 98). There are karaoke clubs to entertain burly foreign investors.

Aside from Tiananmen Square political protest, China has no tradition of industrial protests. `A fundamental problem with the Chinese working class is that it was disorganized and its protests were often leaderless (Alvin Y.So and Yin Wah Chu, The Global Rise of China, p.144).  The so-called unions just collected funds to organise birthday parties and recreational events. In November 1999, the government announced new rules for public gatherings regarding assemblies larger than 200 to obtain approval from local public-security authorities.

Pakistani onlookers.  Chinese leaders have a world vision Weltanschanschauung.

Pakistani sand-dune `leaders’ have none.

Myth 7: Chinese to be Pakistan’s second language: The popularity of a language rises or falls pari passu with a country’s place in the comity of nations. Historically, English, French, Russian, Arabic and mandarin were the languages of imperialistic or conquering states. Shifts in power triggered shifts in the status of languages. English continues to hold sway as it has dominated the commercial, scientific, commercial, scientific and technological fields.

Sir Syed understood the link between power and language. Britain and France insisted upon enforcing English and French in their colonies. During the heyday of the Soviet Union, Russian was the lingua franca from Prague to Hanoi.

After the demolition of the Berlin Wall in November 1989, the Germans began to take pride in speaking German at international forums. People follow language of the dominant power. In the subcontinent, the English language supplanted Persian, the language of the Moghuls. So much so, that that Persian is now archaic in South Asia.

Hong Kong’s effervescence for mandarin is due to the rise of China. When, around 2050, China displaces the USA as the world’s premier economy, English is likely to give way to mandarin as the world’s new lingua franca.

In Pakistan, Sindh set the trend. The NED Engineering University and many private school systems have started teaching mandarin. The Technical Education and Vocational Training Authority, Punjab, offers free language courses for students of all ages.

To attract, Chinese investment in our country, we should say Ni hao to Chinese language.

Myth 8: The 21st Century will be China’s, not America’s: The fear is that China will surpass the USA within next 10 to 20 years. Cash-rich Beijing with over US$ 30 trillion in foreign capital-reserves will be increasingly uncompromising diplomatically. To entertain a rising Chinese middle class, the world would become more and more `Sinicised’.

The truth is that the Western view of China is a bit too alarmist. The world will have to compromise with China’s economic and cultural heft. The two world views can coexist. One is based on protection of individual self-interest, and the other is top-down Confucian patriarchy. Yet, the diarchy may co-exist peacefully without a Manichian struggle of the ilk of good and evil, darkness and light. Be it observed, aside from hype China has so far been non-hegemonic at heart. It has no desire to spin existing geo-politico-economic order out its axis. China will move on its peaceful trajectory for another thirty years. China is unlikely to replay misadventures of the Great Leap Forward’ and the `Cultural Revolution’ to re-shape the nation in Mao Zedong’s image.

The people are becoming more and more resentful against bureaucratic control, lethargy and even perceived corruption. On average over 150000 `public disorder events’ occur each year. Massive abuse of `eminent domain’ is conspicuous from compensating owners of seized lands at fire-scale prices. Restructuring led to dislocation of workers. Internet is an outlet to fan concerns about government’s impartiality and favouritism. People are sick of fat-cat-like bureaucratic lifestyle. Chinese ministry of state security has about 100,000 employees who employ sophisticated algorithms to monitor and censor sensitive online chats, and micro-blogs. Mao Zedong is still revered as `70 per cent positive and 30 per cent negative’.

Myth 9: Ascendancy of American-style individualism: Chinese are becoming better off with a rising middle class and concomitant changes in cultural outlook. Yet, they are far off from American ethos of `life, liberty, and pursuit of happiness’. The cultural wave is manifest from China’s role rock scene, loaded with a rebellious spirit, and bands like Hutong Fist, Tomahawks, Catcher in the Rye, Twisted machine, Queen Sea,  Big Shark and Wild Children. Surely people have abandoned colorless conformity in favour of individualism.

Yet, the brutal; truth is family life discourages individualism. `Pursuit of happiness’ is at best an adolescent fantasy. It is soon forsaken under stress of marriage mortgage, mother-in-law and motor car ownership.

Parents teachers bosses never encourage defining oneself independent of society. The clan, not society is the primary productive unit of society. Ego gratification is not synonymous with individualism,. Success with societal acknowledgment is the norm, not sol flights.

Myth 10: revolutionary influence of Internet: China is a country in East Asia and is the world’s most populous country, with a population of around 1.428 billion in 2017. As of July 2016, 730,723,960 people (53.2% of the country’s total population) were internet users. They are free to play violent computer games, indulge in free music-downloads access to boot-legged movies, and e-commerce. Too, gap between rulers and the ruled have been narrowing. Anonymous sentinels (Weibo, China’s Twitter clone) relay reports of corruption in real time.

Yet, internet is unlikely to upend people-to-government relationship. Internet chats do not crystallise into massive organised dissent. Pre-occupied with welfare of their families few would dare risking trouble with authorities. Very few people knew of dissident Liu Xiabo’s arrest, or his Noble Peace Prize..

Chinese cyberspace is like a walled crystal-globe. People can gaze through it over the world around but they can’t take part in violent agitation. The government cleverly uses cyberspace in advancing social harmony. It facilitates e-commerce platforms. They expand supply and improve quality of consumer goods available in lower-tier markets, down to the rural fringe.

Digital technology has improved Party’s responsiveness. There are over 50,000 net-police monitor-bulletin-boards which alert leadership about discussion on sensitive topics and unharmonious rumblings before they flare up into untoward incidents.

Myth 11: Chinese people are akin to Europeans: Not so. Average Chinese values stability in family above individualism. There are no political or religious divides as in Europe: lackadaisical Italians versus industrious Germans, anti-institutional Protestants versus statist Catholic.

China displays differences in the north, dominated by bureaucratic state-owned enterprises and the south close to the sea, encumbered by governmental hierarchy. Generally, the Chinese have an identical world view.

As of November 2019, China’s population stands at 1.435 billion, the largest of any country in the world. According to the 2010 census, 91.51% of the population was Han Chinese, and 8.49% were minorities. China’s population growth rate is only 0.59%, ranking 159th in the world.

The major minority ethnic groups in China are Zhuang (16.9 million), Hui (10.5 million), Manchu (10.3 million), Uyghur (10 million), Miao (9.4 million), Yi (8.7 million), Tujia (8.3 million), Tibetan (6.2 million), Mongol (5.9 million), Dong (2.8 million), Buyei (2.8 million), and Yao (2.7 million), Bai (1.9 million). The identified 56 minorities remain outside Han cultural fold.

Myth 10: Inscrutable Chinese consumer: Usually reticent, Chinese evince warmth once trust has been established. They are not complicated and display warmth and directness in everyday attitude. They are attracted to Western brands just as any other consumer.

Myth 12: China growth bubble is about to burst: Beside COVID19 impact on economy, critics outline a host of challenges to Chinese growth model. They include rising inflation and commodity prices, wage increases inimical to low-cost manufacturing, bureaucratic hurdles to bold structural reforms, urban-rural income militating against social harmony, and an education system that squelches harmony. The fact is that resilient Chinese economy is not over-heating. The economist noted that China’s accumulated investment in fixed assets is still low and real wages have been rising strongly, which should help boos consumption in the medium term. Talk of popping bubbles is confined to high-end neighbourhoods in coastal capitals.

China is emulating American experience in becoming an industrial powerhouse in the twentieth century. Formation of supplier-and-producer clusters is facilitates through cost-slashing in different regions now specializing in different sectors. The middle class has completed a successful production-consumption circle akin to the USA.

Myth 13: Burgeoning poverty due to unbalanced growth: China was able to bridge the stark differences that existed between rural and urban lifestyles. The hukou system was designed to prevent rural to urban migration. In China today, poverty refers mainly to the rural poor, as decades of economic growth have largely eradicated urban poverty. The dramatic progress in reducing poverty over the past three decades in China is well known. According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty. China’s poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms.In 2017, China lifted 12.89 million rural people from poverty which put the poverty rate at 3.1 percent compared to its 4.5 percent the previous year. Around 500 million people, or 40 percent of the population within China, survive on $5.50 per day or less.

Productivity has overpowered lack of innovation, creaky distribution networks, patchy tax collection, and even corruption…

Myth 14; China is militarily aggressive: China is accused of harbouring outlandish territorial claims in South China Sea, confronting Japan on the high seas and the Philippines.  Over 1000 ballistic weapons aim at Taiwan.

Its annual defence spending has been increasing by 13 per cent since 1989. The Stockholm International Peace Research Institute (SIPRI) estimates the overall 2018 figure at $250 billion and the International Institute for Strategic Studies (IISS) puts the number at $209 billion in 2017. The US Department of Defense concludes that China’s 2018 defense budget likely exceeded $200 billion. In 2017, the magazine Popular Mechanics estimated that China’s annual military spending is greater than $200 billion, around 2% of the GDP.

But, be it noted that the U.S. spent $649 billion on its military to 2018, according to a report published in 2019 by the Stockholm International Peace Research Institute. That’s significantly more than China, second on the list of top military spenders. Of course China is now making aircraft carriers and missiles with range over 900 kilometers. Still, China is nowhere near the USA in military capability. Nor does it have any ambition to invade other countries or challenge USA’s military supremacy in any way.

Temperamentally, Chinese shield themselves from danger (The great Wall). But, they have no itch to wage a war.

India unilaterally `annexed’ Chinese territory in her maps. China did nothing more than protesting verbally or sending emissaries to India for talks.

Conclusion: Though China wants to overcome present and future challenges, it has no manifesto detailing goals for the next two decades. The alarmist or envious view of a rising China engendered many myths. Once could however peek through XI Jinping’s pronouncements, or his predecessors, to sift his `benchmark vision’. There are three benchmarks.  In the first ten years, the goal was to provide adequate food and clothing to Chinese population (already achieved). In the second phase, the plan is to build a moderately-prosperous country by 20120 with a per capita gross Domestic Product of around US$ 13,000. The final phase, 2020 to 2050, envisions complete modernization of both rural and urban parts of China.

Since early 2013, XI has been talking about `fuqiang guojia’ (`rich, strong, powerful country’). To realise his dreams, he need to stay in power. Yet, his dream is threatened by emerging challenges to China’s stability and development. The most potent challenge emanates from US machinations to destabilize China (tariff and trade war, religious concerns, BRI/CPEC concerns).  True, there are social issues involving China’s unity, need for political reform in view of the Party’s long continuation in power and economic or political deterioration in the international environment. How Indian forces torture them?

Mr. Amjed Jaaved has been contributing free-lance for over five decades. His contributions stand published in the leading dailies at home and abroad (Nepal. Bangladesh, et. al.). He is author of seven e-books including Terrorism, Jihad, Nukes and other Issues in Focus (ISBN: 9781301505944). He holds degrees in economics, business administration, and law.

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East Asia

The ‘Multiplier Effect’ of BRICS+

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The main hallmark of China’s chairmanship in the BRICS grouping in 2022 has been the unveiling of plans to institutionalize the BRICS+ format and to explore the possibilities of expanding the core of the BRICS bloc. The current debate regarding the future trajectories of the BRICS+ format centers on whether the expansion of the bloc is to proceed one by one by adding new countries to the BRICS core, or via the format of “integration of integrations”, namely the creation of a platform for the cooperation of regional arrangements in which BRICS countries are members. At this stage, it appears that both tracks are possible and have their pros and cons. But there is one factor in the regional “integration of integrations” model that has particular merit – it is the “BRICS+” multiplier that allows for a significant extension in the outreach undertaken by core BRICS economies with respect to the rest of the Global South.

In terms of scale, the effects of the two formats of BRICS expansion may be mathematically illustrated by the difference between the arithmetic and geometric progression. If the one-by-one expansion in the core of the BRICS grouping represents the minimalism of the arithmetic progression, the BRICS+ format of integration of integrations can be seen as a far more extensive and ambitious undertaking characterized by a geometric progression. With respect to the arithmetic progression, the waves of the expansion in the BRICS core may involve a sequential addition of one or several countries representing the most significant heavyweights (possibly members of G20 from the Global South). The alternative is the aggregation of the regional integration blocs of all of the five BRICS members – represented by the BEAMS platforms consisting of BIMSTEC, Eurasian Economic Union, the ASEAN-China FTA, Mercosur and the South African Customs Union – leading to the addition of up to 25 members (the 5 times 5 geometric progression – or the 5 BRICS taken to the power of 2) of the BRICS+ circle that are the regional neighbors/partners of BRICS economies.

This BRICS+ geometric progression can be taken further to the next level whereby a wider circle of countries is included into the enlarged platform that comprises the African Union in Africa, CELAC in Latin America and the Eurasian economies from the Global South. The Eurasian constellation of developing economies can be formed on the basis of the aggregation of the main regional integration blocs such as the Shanghai Cooperation Organization (SCO), the Gulf Cooperation Council (GCC), ASEAN, SAARC, EAEU. Such an extended platform across all three continents of the Global South may be termed as TRIA (Trilateral Intercontinental Alliance) and it comprises nearly 125-130 developing economies (depending on the exact methodological approach of including the Eurasian economies). This second sequence of extending the BRICS+ platform results in a “5 times 5 times 5” geometric progression – or the 5 BRICS economies taken to the power of 3.

These stages of progression in the extension of the BRICS+ circle can be taken to an even higher level if one is to account for all of the bilateral/plurilateral trade deals, digital alliances and other accords that may be multilateralized on the basis of the BRICS+ platform. For example, the Israel-Mercosur FTA or the SACU-EFTA FTA could be extended to include more developing countries from the BRICS+ circle. At this stage the combinatorics of matching and aggregating the multitudes of alliances along the BRICS+ platform kicks in – each of the main regions and regional integration grouping from the Global South has its own cob-web of alliances that can be shared throughout this extended network of Global South.

Such additional multiplier effects will be all the more powerful, the greater the openness and inclusiveness of the aggregated BRICS+ platform and the more connectivity there is across the alliances concluded by developing economies with their partners from across the globe. In other words, in order for the multiplier effects to be increased the BRICS+ platform of integration of integrations needs to be predicated on alliances that are scalable and capable of connecting with other regional blocs (regional alliances that can be “globalized”). This in turn may be facilitated by particular emphasis placed on building platforms for regional development institutions (with standardized protocols for investment projects, including with respect to PPPs); greater scope for digital economic alliances that may be particularly amenable to scale and replication.

Potentially this sequential approach to building alliances across the Global South on the basis of the BRICS+ “integration of integrations” could become a basis for re-starting the globalization process in the world economy bottom-up (from the level of countries and regional blocs) rather than top-down (solely from the level of global organizations). In fact, this “integration of integrations” sequence may prove superior to the previous attempts at top-down wholesale liberalization via “Washington consensus” for the following reasons:

  • Greater gradualism and connectivity of country and regional integration roadmaps with the resulting global pattern of liberalization
  • Greater flexibility: there may be room for revision and corrections to the resulting global pattern at the local level
  • Greater accordance of the global pattern of alliances and integration with local/country-level and regional peculiarities and exigencies
  • Greater political sustainability and feasibility of the resulting global pattern of alliances that is predicated on the cooperative network of regional alliances

This greater sustainability and flexibility of the bottom-up globalization process as a network of alliances rather than a rigid framework that is to be implemented across the globe without due account of the regional and country-level peculiarities argues in favor of looking for ways to render such a model of globalization more feasible and effective.

Under this scenario of a network-type globalization what would be the role of global institutions such as the WTO, IMF, World Bank? In many ways it would remain crucial for the sustainability of the construct of the reshaped global economic architecture. The global institutions would receive the additional mandate of coordinating the regional networks and development institutions:

  • IMF: coordination of regional financing arrangements (RFAs)
  • World Bank: coordination of regional development banks
  • WTO: coordination of regional integration arrangements

There will also be a need for global institutions to focus more on resolving global issues, including global imbalances. This in turn would allow the global economic system to overcome the current problem of regional and global institutions/organizations operating frequently as substitutes rather than mutually reinforcing complements.

In sum, the BRICS+ track of country-by-country additions to the BRICS core if pursued solely on its own without building a broader network of alliances may result in minor alterations to the status-quo and a missed opportunity for the Global South and the broader global economy. At the same time, the possibilities offered by the “integration of integrations” track for BRICS+ are substantial, provided that such a platform is open, inclusive and ensures connectivity across regional integration arrangements – this will deliver the much needed “multiplier effect” in the process of economic cooperation and can set off a new process of globalization that connects regional arrangements in the developed and the developing world. Such a paradigm may be the real mission of BRICS after all – the value of BRICS is not in each of them taken separately, but rather in them being connected together to form a construct that supports the edifice of the global economic architecture.

From our partner RIAC

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Ukraine’s losses are China’s gains

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A woman walks past sandbags piled for defensive protection, in Odessa, Ukraine. © UNICEF/Siegfried Modola

The conflict in Ukraine will have major strategic consequences for Chinese foreign policy in the Indo-Pacific. It will promote the deepening of Russian–Chinese economic cooperation that will make both countries more resilient to Western economic pressure. Long-term instability in Europe will make it more difficult for the United States to boost its Pacific presence for years to come with significant US financial and military resources being drawn toward supporting Ukraine.

The conflict has demonstrated that the West is not able to impose sanctions on a major economy without damaging its own stability. The war has also shown the effectiveness of the Russian nuclear deterrent, making even a limited Western intervention unthinkable.

China will be the main beneficiary of the Ukraine crisis. But this is not reflected in China’s political rhetoric which has been carefully calculated to avoid any major fallout with the European Union and other developed countries, while also maintaining close cooperation with Russia.

The official Chinese position has remained consistent with the statement made by Chinese Foreign Minister Wang Yi in February 2022 at the outbreak of the war: China is concerned with the violence and wants it to stop. It maintains that the territorial integrity and security interests of all parties need to be respected. China also maintains that NATO enlargement is partially responsible for the crisis.

On the economic front, China has seized the major strategic opportunities provided by the war. During the first four months of 2022, trade between Russia and China increased by 25.9 per cent. Russian exports to China grew by 37.8 per cent, to US$30.85 billion. The physical volume of natural gas exports also jumped 15 per cent.

China is in line to supplant the European Union as Russia’s main economic partner. The Chinese Ambassador to Russia Zhang Hanhui has called upon Chinese businesspeople to ‘fill the void’ left in the Russian market by outgoing Western businesses. Cooperation with China has contributed to Russia’s federal budget surplus between January–April 2022 despite the war. Maintaining this financial and economic stability appears to be Russia’s strategy as it continues to press in Ukraine.

By 2023, most or all bilateral trade is expected to be conducted in renminbi. Chinese companies and brands will likely dominate large segments of the Russian consumer market and will become Russia’s key industrial and technological partners. There is also a growing trend towards a large part of Russian trade being conducted with third countries in renminbi.

With the expected expansion of the logistical infrastructure, China will obtain a major source of strategic commodities. China will be able to procure these commodities at significant discounts because Russia will be isolated from many other markets and China will be using its own currency. This will significantly reduce the West’s ability to leverage economic pressure points against China.

Some of China’s top-tier global companies are visibly reducing their presence in Russia because secondary sanctions could affect their operations in international markets. But cooperation in many areas will be overtaken by second-tier corporations with limited or no global exposure. Such companies will still be powerful enough to operate in the Russian market. Their operations will be serviced by specialised banks with no exposure in the West, like in Iran.

Strategically, this transition — coupled with deep internal changes in the Russian political economy — will make Russia largely immune to economic warfare. For the foreseeable future, the West will have no other means to deter Russia in Europe except for costly military options. In turn, this will provide major strategic opportunities for China in the Pacific.

The military lessons of the war for China are too early and too difficult to assess based on available data. One characteristic of the Ukrainian conflict is an unprecedented scale of propaganda and misinformation from all sides.

But two clear lessons have emerged from the war so far. First, US and NATO allies will always try to avoid a direct military confrontation with a major nuclear power. Even if a power is fighting a full-scale war at their doorstep. Second, economic war on Russia has caused significant problems for Western economies, including rising inflationary pressures and falling growth rates. Any comparable actions against China, an economy ten times bigger, will devastate much of the world economy. This makes any such action extremely unlikely.

From our partner RIAC

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Taiwan dispute, regional stability in East Asia and US policy towards it

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In the 1950s, armed confrontation erupted between the People’s Republic of China (PRC) and the Republic of China (ROC) over vital islands in the Taiwan Strait. ROC-controlled islands were bombarded by the PRC on two distinct occasions in the 1950s. The US retaliated by acting actively on favor of the ROC. Tensions in the Taiwan Strait were exacerbated by US policy toward East Asia during the early Cold War. In late 1949 and early 1950, American authorities were prepared to allow PRC forces to cross the Taiwan Strait and defeat Chiang, but when the Korean War broke out in June 1950, the US moved its Seventh Fleet into the Taiwan Strait to keep the conflict from expanding south. The advent of the Seventh Fleet enraged the Chinese Communists, who moved soldiers from Taiwan to the Korean front in preparation for an attack. This served to postpone military conflict in the Strait until after the Korean War, when the US withdrew its fleet.

Beijing claims there is only “One China,” of which Taiwan is a part. It considers the People’s Republic of China to be China’s only legitimate government, a position it refers to as the “One-China concept,” and desires Taiwan’s eventual “unification” with the mainland.

China, Mongolia, Taiwan, Tibet, and the South China Sea remain part of the ROC, according to Taiwan’s KMT-drafted constitution. The KMT opposes Taiwan’s independence and has repeatedly advocated for tighter ties with China. However, in light of recent election setbacks, KMT leaders have pondered whether the party’s position on the 1992 Consensus should be changed. The Democratic Progressive Party (DPP), the KMT’s main adversary, has never supported the 1992 Consensus’s understanding. President Tsai, who is also the DPP’s leader, has refused to recognize the consensus in writing. Instead, she has endeavored to find a different formulation that Beijing will accept. Tsai declared she was “Elected President in accordance with the Constitution of the Republic of China,” which is a One-China document, and that she would “Safeguard the Sovereignty and Territory of the Republic of China” in her 2016 inaugural address. Tsai also promised to “Handle Cross-Strait Affairs in accordance with the Republic of China Constitution, the Act Governing Relations Between People of Taiwan Area and the People of the Mainland Area, and other applicable legislation.” Beijing, on the other hand, rejected this statement and severed ties with Taiwan.

UN Membership Status for Taiwan

China directly rejects the participation of Taiwan in other international organizations that only allow governments to join. Taiwan complains its absence on a regular basis, while the US advocates for Taiwan’s meaningful involvement in such groups. Taiwan, on the other hand, is a member of over forty organizations, the most of which are regional in nature, such as the Asian Development Bank and the Asia-Pacific Economic Cooperation Forum, as well as the World Trade Organization. On several additional bodies, it has observer or other status. Only fourteen countries have formal diplomatic relations with Taiwan. No government has ever maintained formal diplomatic relations with both China and Taiwan at the same time.

Economic Situation of Taiwan

Taiwan’s economy is still based on trade with China, the island’s most important commercial partner. However, their economic relationship has been strained in recent years, partially as a result of Beijing’s pressure on Taiwan and Taiwanese leaders’ rising concerns about the island’s overdependence on Chinese trade. President Ma, who served from 2008 to 2016, signed over twenty agreements with the PRC, notably the 2010 Cross-Straits Economic Cooperation Framework Agreement, in which the two countries agreed to remove trade barriers. Direct sea, air, and mail ties between China and Taiwan were reestablished after decades of prohibition. They also agreed that banks, insurers, and other financial service providers would be permitted to operate in both markets. Tsai’s main program, the New Southbound Policy, has had some success in increasing trade and investment with Southeast Asian and Indo-Pacific countries. Between 2016, when the project was announced, and 2021, trade between Taiwan and the eighteen nations increased by more than $50 billion. Nonetheless, Taiwan’s exports to China reached an all-time high in 2021. Beijing has exerted pressure on other countries to refrain from signing free trade deals with Taiwan. Only a few nations have signed free trade agreements with the island, with New Zealand and Singapore being the only industrialized economies to do so.

US-Taiwan Relations

The United States and the People’s Republic of China established formal diplomatic ties in 1979. At the same time, it cut diplomatic ties with the ROC and terminated their mutual defense treaty. However, the US maintains a strong unofficial relationship with the island, selling defense weapons to its military. Beijing has frequently pushed the US to stop sending weapons to Taiwan and to cut ties with the country. The United States’ strategy is guided by its One-China policy. It is based on a number of documents, including three US-China communiqués issued in 1972, 1978, and 1982; the Taiwan Relations Act, passed by the US Congress in 1979; and President Ronald Reagan’s recently disclosed “Six Assurances”, which he delivered to Taiwan in 1982. According to these documents, the United States:

“Acknowledges the Chinese stance that there is only one China and Taiwan is a part of China” and that the PRC is the “only lawful government of China”

Disposes the use of force to resolve the conflict; maintains cultural, commercial, and other ties with Taiwan through the American Institute in Taiwan (AIT), commits to selling arms to Taiwan for self-defense and maintains the ability to come to Taiwan’s defense while not committing to do so, a policy known as Strategic Ambiguity was created.

The major purpose of the United States is to maintain peace and stability in the Taiwan Strait and it has urged both Beijing and Taipei to do so. It declares that it opposes Taiwanese independence. For decades, the US has tried to strike a careful balance between backing Taiwan and avoiding a confrontation with China through its policy of strategic ambiguity.

Over Chinese protests, the US strengthened ties with Taiwan under President Donald Trump, selling over $18 billion in armaments to the military and erecting a $250 million facility for its de facto embassy in Taipei. Tsai and Trump spoke by phone before Trump’s inauguration, the greatest degree of engagement between the two since 1979. He also dispatched several top administration officials to Taipei, including a cabinet member, and the State Department lifted long-standing limitations on where and how US officials can meet with their Taiwanese counterparts during his final days in office.

Biden’s Administrative and Military Relations with Taiwan

The Biden administration has taken a similar approach, maintained arms shipments and endorsed Trump’s decision to allow US officials to meet with Taiwanese officials more freely. Biden was the first president of the United States to invite Taiwanese officials to the inauguration. The US regularly sails ships across the Taiwan Strait to demonstrate its military presence in the region, and it has encouraged Taiwan to raise its defense budget. The United States has been more supportive of Taiwan in recent years than it had been before China adopted a rejectionist stance toward the current Taiwanese government. On cross-strait problems, Tsai has been noticeably and consistently moderate. The fact that she would push the limit by declaring full formal independence is not a risk Beijing has to be concerned about. During Tsai’s presidency, Washington has increased its support for Taiwan, primarily in response to Beijing’s increasing pressure on the island. The Biden administration has a variety of grievances about Chinese behavior and its coercion of Taiwan has been towards the top of that list, as seen by congressional legislation and presidential and administration policy comments.

U-S Implications for Strategic Stability over Taiwan Issues

Strategic stability refers to a condition in which both the United States and China can pursue their key national interests without jeopardizing, if not increasing, regional and global stability. Such strategic stability may also help to establish a pattern of bilateral relations that decreases the likelihood of accidental conflict particularly military conflict while simultaneously enhancing the possibilities for future collaboration. However, the reality on all three sides make stability appear like a far-off dream. Beijing has made it obvious that it feels its national might is quickly expanding and that it will soon be enough to exercise diplomatic, economic, and military supremacy, at least in the western Pacific. Furthermore, the realities of Beijing’s expanding power have allowed it to engage in resentment diplomacy, accusing the US and other foreign powers of being responsible for China’s “Century of Humiliation” and demanding retribution. If strategic stability is to be achieved, it must begin here for the US to change its policies toward Taiwan and China, they must opt.

Conclusion

Both militaries have increased their capabilities in order to dissuade and defeat the other. The two countries have moved from rivalry to conflict, and both have made establishing Taiwan’s future the focal point of that clash on numerous occasions. Taiwan, whether you call it a pawn or not, is caught in the crossfire. As a result, lowering tensions over Taiwan might be the first step toward avoiding potentially devastating instability and, possibly, developing a cautious trust on both sides that other lingering problems can be resolved successfully. A reinforced US policy of dual deterrence, coupled with authoritative assurance, can be a first step toward restoring trust in enormous strategic stability between these two superpowers.

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