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China and Hong Kong

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The real crucial event in China’s current policy, not only for Hong Kong, was the document on “State Security in the Hong Kong Territory”, voted in the recent National People’s Congress at the end of May.

 The document drafted by the National People’s Congress regards above all the Chinese national security and hence the internal security of the Fragrant Harbour, as well as the direct control of the strategic and public security situation of the anti-Chinese political opposition in Hong Kong, and, in particular, the reform of Article 23 of the Basic Law which governs the former British colony.

It should be recalled that two Opium Wars started from there only against mainland China. The opium was cultivated by the British East India Company in its territories in Bengal.

From 1839 to 1842 and from 1856 to 1860, as many as two trade and military conflicts allowed the actual British monopoly of the British and Indian opium throughout the Chinese territory.

Let us revert, however, to Article 23 of the Basic Law, which formally prohibits any act of treason, secession, sedition and subversion against the State of the People’s Republic of China, as well as the theft of State secrets.

Therefore, the Chinese government now acts autonomously, in the territory of Hong Kong, for the defence of its interests. This also paves the way for a wide geopolitical transformation, in some ways more “radical” than the one which Deng Xiaoping carried out in 1978 with the Four Modernizations. It should be recalled that they ended with the most important Modernization for China, namely the military one.

The first attempt to adopt national security legislation in Hong Kong was made as early as 2003, when at least half a million people demonstrated against said legislation – very similar to the present one – proposed and established by China. Later there were several other security bills and, again, other large mass demonstrations.

 Until the demonstrations of April 2019 against the Chinese bill to stop the extradition of PRC’s citizens to the Fragrant Harbour.

At the time demonstrators shouted “Liberate Hong Kong, revolution of our times”.

Certainly China has often stated it sees Hong Kong’ security severely affected by the operations of various and unspecified “powers”, which (undoubtedly) use Hong Kong to penetrate China and later possibly carry out separatist operations (Uyghurs, Tibetans and other riotous and unruly minorities),as well as infiltrations – sometimes military ones – and finally what China calls “harmful operations”.

 Certainly these “harmful” operations also include those by Europe and the United States, which already repeatedly urge many “partners” and companies of the Global Value Chains (GVC) already present in China to move to the small territory of the Fragrant Harbour. This is also an objective cause of the improbable request for an “independent” investigation on the causes of the outbreak and spreading of the Covid-19 pandemic from the Chinese laboratories of Wuhan, Hebei.

A real attack on global economic development, and on China’s economic security, right now that China is quickly transforming its production formula.

China wants to thwart such a move by bringing many production chains directly back into its territory, and by increasing the Chinese strategic (and hence financial and economic) pressure on the U.S. traditional allies in South-East Asia and the Pacific.

 Not necessarily the Southern Pacific only.

However, we will come back also to this point. As can be easily guessed, for China this is a strong point for the direct control of the Fragrant Harbour’s territory.

 However, a historical and ancient condition is no longer in place, i.e. the separation of Hong Kong’s legislation from Great Britain’s and currently China’s.

Obviously the Chinese decision is also a clear heave-ho given to Governor Carrie Lam and to the entire government in Hong Kong, by-passed in a few hours by the very clear Chinese diktat.

China has probably calculated the pros and cons of this move very well.

The cons, which are not insurmountable, include the reduced importance attached to Hong Kong as the only financial and industrial hub in the Chinese territory, which is also fully Westernized and globalized. This also greatly serves the PRC’s direct interests.

 The U.S. interests in the Fragrant Harbour will no longer be safe and this is not a negligible issue: 1,300 medium-large North American companies and 82.5 trillion U.S. dollars in direct investment.

Not to mention the dozens of NGOs that support democratization in Hong Kong against China and the many large global media headquarters in Hong Kong, as well the several operations of infiltration, intoxication and information manipulation (including some financial and industrial ones) that the West has carried out against the People’s Republic of China, starting from the Fragrant Harbour.

 From now on, for the whole West, Hong Kong’s gateway will be closed with seven seals.

Certainly, when the People’s Republic of China feels threatened, it always sacrifices the economy to global strategy.

Certainly Hong Kong has always been China’s financial lifeline, especially in difficult times.

Currently, however, Hong Kong is an irreplaceable global financial hub in Asia. Nevertheless, I imagine that China will soon want to use other less dangerous and, above all, less close channels to connect to global finance.

 Moreover, for the first time since 1992 – and, probably since 1978, the year of the Four Modernizations, if we analyse older time series – the Chinese economy is slowing down considerably due to the outbreak of the Covid-19 pandemic, although with less severe damage than in the United States and in some E.U. countries.

The PRC’s first objective was to resume economic and industrial activities in full swing, while the second one was to make the Fragrant Harbour safe.

 But, once again, there is a pro versus a con: while Hong Kong and, for other respects, Macao and Singapore, have been the destination areas of huge amounts of capital resulting from the corruption and embezzlement of many Chinese elites, Hong Kong’s closure will probably also mark the end of the great hunt that President Xi Jinping and his power group have focused on corruption within the Party and Beijing State.

The old strategy of “Power putting down roots”, as recommended in The Prince by Machiavelli.

Hence President Xi Jinping wants to directly control the Fragrant Harbour, the original site of China’s forced Westernization, from the beginning of the “century of humiliation” (precisely with the first Opium War) to its end, with the PRC’s declaration of independence by Mao Zedong – “the Chinese people have stood up!” -at the Gate of Heavenly Peace Square, in 1949.

The countries that are bound to win in the world arena are those with long and very long memories, while the post-modern and childish forgetful ones are always bound to lose.

Obviously – as was also seen in the very recent National People’s Congress in Beijing – Hong Kong is also a powerful sign for regaining Taiwan politically and economically.

Recently, China has announced a 6.6% increase in the Defence budget from 1.72 trillion yuan (187 billion U.S. dollars) and Li Kekiang, Beijing’s Premier, has made it clear that “China resolutely opposes and will deter any separatist activity seeking Taiwan’s independence”.

 Normally, the Chinese authorities speak of “peaceful reunification”, but this time Li Kekiang omitted the adjective. It was not a distraction.

 In Mao Zedong’s time, the always synthetic and enlightening formula of the Chinese leadership was available for Hong Kong: “long-term planning, full use”. Later the “one country, two systems” formula initially developed by Deng Xiaoping was used, later reaffirmed by the various leaders and so far supported by President Xi Jinping himself.

This Chinese choice on the Hong Kong Security Law, therefore, means only one thing: the end of the old Cold War between the West and the PRC, and hence the beginning of a new phase between China and the United States, which will be “hot” or “cold” depending on the circumstances. Therefore, China has no need in the future – not even financially – to have Hong Kong as a buffer zone with a relatively peaceful, but always radically adverse West.

 Both the USSR and Mao Zedong’s China have always regarded the “Cold War” as an unstable phase in which victory is decided by the amount of arsenals, their doctrine of use and the political will to use them as instruments of credible pressure.

Certainly, Mao knew all too well – and it was one of his most enlightening strategic insights – that the “Cold War” was a paper tiger and those who believed in it could only consume themselves, politically and economically, against the United States and its allies – something that punctually happened with the USSR, which collapsed because it had not renounced in time to a clash impossible to win and which, at most, would give it the “great European plain”, as Hegel and Raymond Aron called it.

Hence China quickly closed its accounts with the Fragrant Harbour, pending the closing of the subsequent operations also with Taiwan and all the other controversial areas, from the Philippines to the South China Sea, from South-East Asia to Malaysia and the Indian Ocean.

The old map – born with Kuomintang, but which was also very popular among Chinese Communist leaders in the 1950s, in which the new Chinese territorial waters beyond the Philippines’ line and throughout the Eastern Pacific could be seen -has not been forgotten at all.

 The United States has obviously “condemned” the Chinese decision, while Great Britain, Australia and Canada have signed a common document expressing “deep dismay” at China’s decision.

Furthermore, the United States already has the Hong Kong Human Rights and Democracy Actof 2019 available – pending the great demonstrations which characterized that year and are currently collectively called the Water Revolution.

 Therefore, by virtue of that Act, the United States could remove the preferential trade status of Hong Kong, possibly with the extension to Hong Kong of the tariff and trade sanctions already in place against China. It should be recalled that these restrictions are worth67 billion U.S. dollars per year.

Hence China’s goals for its actual regaining of the Fragrant Harbour are manifold and complex. Firstly, there is the closure of the financial closed circuit between China and Hong Kong, to be put into effect with the minimum international reaction. Secondly, there is also China’s need to rebuild the central and decisive position of the Chinese economy in the Global Value Chains – a position which, even before the “taking” of Hong Kong, had diminished in importance, but which would currently be fatal, especially if it arrived as a result of the Covid-19 pandemic.

Obviously China also regards Hong Kong as a strategic, unavoidable and essential location for controlling the South China Sea militarily. The Chinese always reason with what De Gaulle called the “two caps”, i.e. the civilian and the military one, which must always be kept together.

 Certainly, the peaceful regaining of Hong Kong is also a breaking point of the current U.S. geopolitics in the region: from the Far East probably to the Middle East, the United States has always thought of a long strategic-military continuity that would encircle Russia and close China in its hardly controllable terrestrial mainland.

Hence China’s full control of regional seas will no longer enable the Russian Federation to depart from the project hegemonised by China, the New Silk Road, while the “small silk road” already planned by Russia, mainly with Japanese but also U.S. capital, will be either integrated into the Chinese one or destroyed.

Finally, as already mentioned, China wants to speed up the process to separate Taiwan from the Japanese and North-American military “umbrella” protecting it.

Here we need to carefully examine the relationship between “Xi Jinping’s policy line” and the 1998 theory of unrestricted warfare.

China, which is aware of not yet being clearly superior in terms of “conventional” or traditional warfare, even if technologically advanced, must absolutely win its total war, its new unrestricted warfare.

Hence another reversal of the Cold War theorem: while, during the whole conventional phase of the Cold War, China depended on Russia for military technology, currently it is Russia that depends on China for orders and financing-purchases – although with its own often excellent and innovative war technology.

Hence if China, which has also acquired – both legally and in other ways – excellent Western, and not only post-Soviet military technology, wants to wage war – even regionally and indirectly –  against the United States, it must necessarily do so in time, before the United States rising up to China’s technological-doctrinal challenge, with the weapons it would like to have and has not yet, instead of those it already has.

Furthermore a war game conducted by the RAND Corporation in early March 2020, demonstrated that, in an armed conflict, the United States would lose both against China and the Russian Federation, obviously considered separately.

As also the U.S. analysts maintain, on the neo-technological – and hence also doctrinal level – the United States lags behind China with regard to strategic and missile precision weapons, hypersonic systems and guidance systems for all theatre ballistic weapons. While the United States is still superior in tactical weapons and in conventional medium-high technology weapons.

 The United States, too, has suffered the conceptual impasse of the “Cold War”.

Also the F35 missile could be an excellent weapon for air supremacy, but – as a U.S. analyst said – it could be bombed to the ground by China or Russia.

 Other always accurate and updated war games, conducted by U.S. analysts, show that the United States would be clearly defeated even in the South Pacific, or by Russia in the Baltic, but certainly China would win in a regional clash to take Taiwan, while both Russia and China are working on the new anti-access/denial area weapons (A2A) quite successfully.

 Meanwhile, President Xi Jinping has shifted his strategic interest from the ground forces of the People’s Liberation Army (PLA) to the PLA’s Navy and then to the Air Force, but especially to the Strategic Missile Force and the more recent Strategic Support Force.

Today there is still a window of opportunity, which will last until the end of 2020, so that China can neutralize the U.S. fleet more than a hundred nautical miles from its coast and from the coast of Hong Kong, Macao and Singapore, as well as neutralize the U.S. missile systems both in Guam and Japan and in the small islands of the South Pacific.

Here is the strategic pendant of China’s choice on Hong Kong’s internal security.

Taiwan could also be the operation that makes the war escalate up to its nuclear level, but it is not said that the Chinese supremacy, still viable in a clash with the United States, decides to get to that point, although, probably, it will strike first and, hence, harder. But it will try to stop operations before the U.S. decision to go for the nuclear blow.

 Nor should we forget the regional war that China waged with India precisely in May 2020, in the area of Lake Pangong Tso and the Galwan Valley, with a quick peace negotiation for controlling Ladakh, a border area still disputed by China, as well as an always very fast operation of the Chinese Forces in the north of Sikkim, again at the beginning of May 2020.

We do not know yet whether all future Chinese operations will be lightning ones.

Hence we need to place the Hong Kong issue within this line of thinking.

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. “

East Asia

Tension prevails after Pelosi’s Visit

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Image tweeted by @SpeakerPelosi

Already tense geopolitics are boiling and making the whole world more nervous. Pelosi’s visit to Taiwan has damaged International politics and heated the tension around the globe. Her visit was opposed by more than 100 countries and equally criticized domestically. Many scholars, intellects, politicians, and civil society is criticizing her visit.

Looking at her profile and past, she was a rigid, hardliner, and non-flexible personality. Her role in American politics is also the same tough. She is not willing to accept others’ point of view and always insist on her opinion, or precisely described – imposing her ideology on others.

The same happened in the case of her Taiwan visit, although there was opposition from within the US as well as globally, in addition to strong warnings from China, yet, she made her visit. It was her deliberate attempt to offend public opinion and spoil the international political environment. Certainly, it has created a lot of adverse impacts, on the global economy, security, and peace.

One-China policy is well recognized and a pre-condition to establishing diplomatic relations with China. There are only 13 countries, that maintain formal diplomatic relations with Taiwan. It means the rest of the whole world recognizes China only and sticks to the One-China policy. Her visit was totally against the One-China policy.

1.4 Billion People in China are offended and public sentiments were ignored. There is tremendous pressure on the Chinese government from the public to protect its sovereignty. Although, China has made tremendous developments on the economic front, technological advancement, and defense capacities. China possesses the ability to capture Taiwan by force. Yet, Beijing has never used military options. China is a responsible state, and very mature in its international affairs. It always kept on convincing for the peaceful reunification of Taiwan with Main Land through dialogue. China has introduced “One Country, Two Systems” to manage Hong Kong and Taiwan, and is always willing to offer a similar option to Taiwan, even a high degree of autonomy.  If Taiwan thinks smartly, can bargain more concessions and favors from China, but, ultimately have to reunify with the mainland.

The implication of her visit and its consequences must be serious, but, to describe it precisely, may not be possible at this stage, the immediate actions taken by Beijing are as:-

1. Canceling China-U.S. Theater Commanders Talk.

2. Canceling China-U.S. Defense Policy Coordination Talks (DPCT).

3. Canceling China-U.S. Military Maritime Consultative Agreement (MMCA) meetings

4. Suspending China-U.S. cooperation on the repatriation of illegal immigrants.

5. Suspending China-U.S. cooperation on legal assistance in criminal matters.

6. Suspending China-U.S. cooperation against transnational crimes.

7. Suspending China-U.S. counter-narcotics cooperation.

8. Suspending China-U.S. talks on climate change.

The big Military exercise is ongoing in the Strait of Taiwan, where China is using live ammunition and using all three forces, Land, Air, and Navy, very close to Taiwan. In fact, surrounds Taiwan closely.

What other measures or reactions will China take, is not known yet. As China is an inward society and does not reveal what they are planning or thinking, so one may not guess precisely. China believes in doing more but beating the drum less (Less Shouting). It is well understood that Taiwan is a very sensitive issue for the Chinese nation and the reaction must be very serious.

The adverse impact of the Ukraine war is already harming the global economy and if something goes wrong in this region, the price has to be paid by the whole world. China is a World Factory and provides almost 70% of consumer products to the rest of the world. The price offered by China is incompatible and meets the needs of a majority of the middle and lower middle class of the whole world. Only filthy rich people can afford expensive products, but, China caters to the absolute majority.

In case of crisis, the developing and underdeveloped nations will suffer severely. Poverty will jump globally and the masses will be deprived of consumer products. The world will be divided into more blocks. China will be more close to Russia and the cold war may revive once again.

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East Asia

BRICS – How Will the Organisation Get a ‘Second Wind’?

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BRICS, which was rapidly gaining momentum in the first decade of its operation, has, expectedly, over the past few years faced a certain crisis in its development (this crisis is understood not as a decline, but as a turning point, a transitional situation). At the level of official discourse, the word “crisis” was never used; the rhetoric continued to be predominantly optimistic, however, the expert community has increasingly called for a rethinking of the role of the association, overcoming the mounting internal contradictions. The very logic of the development of any association implies that periods of growth, expansion of the agenda, the predominance of centripetal forces, and crises will alternate, and that it is necessary to look for new foundations for rapprochement. The reasons for slippage, as is always the case, have been both external and internal. On the one hand, a fundamental transformation of the globalisation process has begun (and this process is only gaining momentum); there are calls for the basic principles and mechanisms which bring the BRICS countries together to undergo reform. This challenge is facing all global multilateral organisations today; BRICS is not unique here: the WTO, the G7, the G20, and even the UN and its structures — all of them are faced with the loss of their status as universal platforms for overseeing the global rules of the game. For BRICS, on the one hand, this is a problem of self-identification, since the countries have advocated the transformation of global mechanisms imposed by developed countries. At the same time, it is also an opportunity to “rebuild” the association, turning it into an alternative, new platform for uniting the entire developing world. The latter scenario inevitably implies the expansion of the union, both by accepting new members (which is already happening), and in the BRICS+ format that has become a permanent issue for the current Chinese presidency in 2022.

The difficulties of the BRICS were also caused by internal reasons. The test for BRICS was 2020, when the association, contrary to expectations, did hardly anything to assist in countering the COVID-19 pandemic. While initially considered a club of the most dynamic economies, the union of five countries has become internally highly heterogeneous. China and India continue to vie with each other as leaders of economic growth, while Brazil, South Africa and Russia have witnessed a systemic crisis since the mid-2010s, when the fall in GDP alternates with stagnant growth. Economic difficulties in Brazil and South Africa have led to a change of elites. The new leaders have sought to critically rethink their goals and priorities in unification. However, today BRICS is no longer a club of growth leaders, and the ability of the candidate countries to effectively participate in solving the most acute current problems facing the developing world — the energy and food crises — is coming to the fore. In many respects, these considerations have dictated China’s desire to include Argentina and Iran in the union, despite all the well-known problems facing the economies of these countries.

The aggravation of contradictions between China and India, and along the China-Brazil line, has also led to a slowdown in active work in the BRICS. The rise of China, securing for it the role of the “main sponsor” of the BRICS (primarily as the main founder of the New Development Bank) presents a kind of challenge for Beijing, since the line between leadership and dominance, as the experience of other associations shows, is usually very thin. The accumulated dissatisfaction with the real results of the decade-long work of the association has also made its contribution: many initiatives, including the task of strengthening the voice of developing countries and reforming the global regulatory institutions, still remain only slogans.

To understand the prospects for BRICS, it makes sense to look at the evolution of approaches to unify the current government in Brazil. The victory of Jair Bolsonaro in 2018 was perceived by some experts as a moment of risk for the five, as the new elites in power made no secret of their desire to place their main stake on rapprochement with the United States. The negative scenarios did not materialise. However, Brasilia did significantly rethink its priorities, goals and objectives. Unlike his predecessors from the leftist camp (Presidents Lula da Silva and Dilma Rousseff), Bolsonaro was not close to the idea of uniting the Global South under the banner of reshaping the world order. However, more pragmatic, technocratic areas that are objectively beneficial to the country (technological cooperation, the fight against organised crime, digitalisation and the Development Bank) were chosen as priorities in the year of Brazil’s chairmanship in 2019. Paradoxically, such a narrowing of the agenda played a rather constructive role in the development of BRICS, since the quality of the elaboration of joint decisions was so high that Deputy Foreign Minister Sergey Ryabkov, Sherpa of the Russian Federation in the BRICS, even commended the brilliant organisation of the work, saying that there were far more specifics than general declarations. Paraphrasing the famous phrase of Alexander Gorchakov, one can say that the Brazilian presidency allowed BRICS to focus, to replace the extensive growth of the agenda of previous years with intensive progress in really important and compromise-driven areas.

The arrival of the Joe Biden administration in Washington in 2021 has led to a cooling of the enthusiasm among the Brazilian elites regarding the prospects for rapprochement with the United States. In Brasilia the incumbent American President’s threats, made during the election campaign, were well-heard: to impose sanctions against the Tropical Giant if it does not reconsider its policy toward the Amazon River. Bolsonaro is also worried about the inclusion of environmental issues in the NATO agenda. That is, the increased attention of the military alliance in the Amazon region is not ruled out, which is traditionally an extremely sensitive topic for Brazilians. In this context, the Brazilian leader is revisiting his previously restrained approach to the BRICS, recognising its importance and strategic significance for the country as a tool to counter isolation in the event that the risks of worsening relations with the US and the EU materialise. Following this logic, Bolsonaro today advocates expanding the association, including within the framework of BRICS +, and in official speeches he speaks of the need to reform the World Bank, IMF and the UN Security Council, which was difficult to imagine a few years ago.

Geographic expansion

Expansion through the inclusion of new full members has been talked about since the first years of the BRICS. Since the concept of BRICS as an alliance of civilizations initially prevailed, where each macro-region is represented by one leader, the inclusion of a large Islamic country was most likely. Indonesia, as the world’s largest Islamic country in terms of population, and Egypt were usually considered. The recent application for the entry of Shiite Iran alters this logic, since, apparently, when inviting Tehran to the recent 14th Summit, China was guided by the exceptional importance of the country precisely from the point of view of its energy potential as one of the leaders in hydrocarbon reserves.

The possibility of Argentina joining the BRICS was also discussed for a long time, but Brazil was interested in maintaining its role as a regional leader, representing all of Latin America. The possibility of competition from Buenos Aires did not rouse enthusiasm among the authorities of the Tropical Giant, even during the reign of the left, despite the friendly relations between the countries at that time. Argentina then did not yet face the economic problems that it is experiencing today; the country’s economy was one of the most dynamic in the region. At present, the countries are going through a difficult period in the history of their bilateral relations; the leaders have no trusting, friendly contact. In BRICS, any decision on the admission of new members is made by consensus, but how easy it will be to get the support of the Brazilian authorities for the entry of Argentina remains a big question. Argentina’s entry into the association will not only exacerbate political rivalry; the countries are the largest food producers, competing in many markets. The appearance of a second country from one continent in BRICS will finally move the organisation away from its original concept of uniting the political and economic leaders of their continents (or civilizations). However, these challenges also present opportunities. The new global situation requires developing countries to push old grievances to the background, so that they may work on the task of increasing the representative nature of the BRICS, expanding its potential in addressing the food and energy crises.

Without Argentina, achieving this goal will be much more difficult, since together the two Latin American countries are able to provide food for more than 1 billion people. Participation in the BRICS of another state of the region, especially a partner in Mercosur, despite the competition, creates more opportunities to convey the Latin American agenda and priorities.

At the time of writing, Jair Bolsonaro had not officially commented on his decision to support or not support the entry of Argentina, while the statements were limited to the words of the Minister of Economy Paulo Guedes about the possibility of connecting Buenos Aires to the New Development Bank. However, the mere fact of the official application for membership may indicate that there may be some informal arrangements between Brasilia and Buenos Aires.

The inclusion of new full members of the BRICS is a long process, which, even with the consent of all participants, could take several years. The Chinese approach to foreign policy is traditionally characterised by flexibility and action on several tracks at once. It is this “second track” that BRICS+ is intended to become. There are two approaches to the implementation of cooperation within the framework of this format. The approach of Russia is known, which promoted the concept of “integration of integrations”, which implies the cooperation of integration projects, where the participating countries are leaders (EAEU, Mercosur, South African Customs Union). China could participate through the Regional Comprehensive Economic Partnership. If to consider the concept of “integration” precisely as a formalized process of trade liberalisation, then at present individual regional integration blocs would really be interested in implementing deep forms of integration, for example, through the signing of free trade agreements (FTAs). Mercosur, having signed a Memorandum of Cooperation with the EAEU, consistently offers the Eurasian bloc the opportunity to start trade negotiations. China would also be interested in rapprochement with all associations, but many countries see significant risks from such agreements for their producers. It may seem paradoxical that the “integration of integrations” format was promoted by Moscow, whose foreign trade policy is conservative; the EAEU has only a few FTAs with third countries. Despite the optimism of many experts about the prospects for establishing such a network of trade agreements between integration blocs, the author sees such breakthroughs as unlikely in the medium term. Today, in many countries or associations, there is a growing demand for closeness and the protection of national producers in order to achieve greater industrial and technological independence. The willingness to actively cooperate in creating a common financial or logistics infrastructure does not mean the willingness of Brazil, Russia or perhaps Argentina to open their markets and increase competition with imports from China.

China’s approach to the implementation of the BRICS+ format implies rather a “union of regionalisms”, when not trade blocs, but regional associations (SCO, CELAC, African Union) participate in the dialogue. China has established a dialogue with all these organisations (or being a member); there is a broad agenda of cooperation related to economic, political, scientific and technological areas and other topics. Obviously, the advantage of the Chinese approach is flexibility, as there is no need to talk about trade agreements by imposing rigid standards. The only formal obstacle to the implementation of the model today is the non-participation of Brazil (by Bolsonaro’s decision) in CELAC since 2019, the return of the country to the organisation has not yet been discussed. However, it is possible to expect that the position of the Brazilian leader in a reasonable perspective will change amid disappointment in the stalled rapprochement with the United States. A softening of the position is also noticeable in relations with the left-wing radical governments of Latin America, primarily Venezuela (it was precisely the preservation of this country’s participation in CELAC that became the reason for Brazil’s withdrawal). In any case, the decision on the possible resumption of participation in the regional union, if it is made, looks most likely after the elections in October 2022. If the left-wing politician Lula da Silva wins, the country’s return to CELAC can be considered a foregone conclusion. Therefore, Beijing is ready to bide its time. Chinese approaches to diplomacy and international politics are known for their strategic vision for the long term, the current formal obstacles to the implementation of their plans are perceived as temporary, and simply to be waited out. When communicating with our Chinese colleagues dealing with the topic of BRICS, one can feel a similar conviction in the objective mutual benefit and usefulness of the format for all participants.

New realities — new agenda

In the year of its presidency, China was noted not only for initiatives to expand the BRICS; it also significantly developed the agenda, including 23 priorities in 5 areas. There have not been such a number of initiatives within the BRICS for a long time, although most areas of work continue to develop the previous priorities. However, attention is drawn to the surprising similarity of the agenda of all major international forums in 2022. For example, within the framework of the 9th Summit of the Americas, held in early June under the chairmanship of the United States, Washington promoted an agenda that included the problems of post-pandemic recovery, combating the food and energy crises, cooperation in the field of healthcare, innovation, security, ecology, and trade. The intersections with China’s priorities in BRICS are significant. Washington’s main message during the Summit can be formulated as a desire to limit the presence of external players in the zone of their traditional interests. China, which did not participate in any way at the Summit of the Americas and was not mentioned by US officials in speeches, was in fact invisibly present. During his keynote speech at the opening of the forum on June 6, Joe Biden, after the announcement of new proposals for cooperation, emphasised, clearly in defiance of China, that the Western Hemisphere has enough of its own resources to solve all its main problems. The competition of the main financial development instruments is also obvious. For example, the United States promised to capitalise the Inter-American Development Bank (IADB) as it is concerned about the growing presence of the Chinese New Infrastructure Investment Bank and the BRICS New Development Bank, financed mainly by Beijing.

Certain signs of rivalry with China can also be seen on the agenda of the 48th G7 summit at the end of June. Developed countries, largely in opposition to the Chinese Belt and Road project, announced their own infrastructure development project in developing countries. There was also talk about the food crisis and assistance to poor countries in counteracting rising prices, where Argentina was also invited to participate. The Western countries and China are entering into intense competition for the developing world, where aid and development programmes will become the main tool, and the developed world is playing the role of catching up in many respects.

For Russia, such a transformation and expansion (geographical and thematic) of the BRICS is obviously beneficial. The intensification of work on the creation of independent financial mechanisms (a new international currency, a pool of reserve currencies, the BRICS Pay payment system) is of interest not only to Moscow, which seeks to reduce its dependence on the monetary infrastructure of the West. The possible inclusion of new members, like Argentina and Iran, demonstrates the failure of the policy of isolating Russia. The Kremlin is ready to move away from the previous logic of the BRICS, when the association was emphatically positioned neither as an alternative to the West, nor as a coalition against it. Today, such positioning is no longer relevant for Russia and China. The latter confirmed this by inviting Iran to participate in the Summit, a country that is in a long-standing conflict with the US, but at the same time has almost 9% of the world’s oil reserves and 17% of its natural gas.

However, such an anti-Western projection of the BRICS is not beneficial to all its participants. Significantly, India, as well as candidate Argentina, took part in the G7 Summit. Argentina depends on the position of the IMF because of its debt problem; it discusses the possibility of obtaining assistance from developed countries. India seeks to pursue a multi-vector policy by participating with the US, Japan and Australia in the Quadripartite Security Dialogue (QUAD). Its interest in achieving the common goals of improving global regulation and interaction for the sake of development does not mean that all BRICS members are ready to oppose the countries of the West. Realising the positive chances from the emerging new period of growth of the association, all countries need to remain diplomatic in promoting their priorities, and seek a delicate balance that will give the BRICS the required stability in the next development cycle.

from our partner RIAC

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East Asia

A Game of Brinkmanship: Pelosi’s Taiwan visit and what China is likely to do

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Image tweeted by @SpeakerPelosi

US House of Representatives Speaker Nancy Pelosi’s visit to Taiwan could not have come at a more interesting juncture- Pelosi greeted flashing cameras at the Taipei airport just hours after a US drone shot down Al-Qaeda leader and mastermind of the 9/11 attacks Ayman al-Zawahiri and days after China tested its hypersonic missile Dong Feng-17, claimed to be powerful enough to render all US missile systems in East Asia obsolete, to  ward off the possibility of her visit. Despite warnings from an enraged Beijing, Pelosi successfully landed on the Taiwanese tarmac marking a clear win for America. It is now China’s response that is being closely speculated.

Beijing has bitterly criticised the visit as a violation of its ‘One China Policy’ and the three communiqués agreed upon between China and the US. The Chinese Defense Ministry is said to be on high alert and preparing for “targeted military actions”. While tensions between the two simmer to the highest, a war is not likely to be on the cards for several reasons.

Both United States and China being nuclear powers would act as a deterrence for if a war erupts, there is no guarantee that nuclear weapons would not be used which would be unimaginably disastrous for not just the two but the region at large.

With their economies being closely intertwined, a war would prove to be highly disastrous specifically as both countries struggle to kickstart their economies after the recent surges of the Coronavirus. Military weakness is another concern for China. While its People’s Liberation Army is rapidly modernising towards the goal of becoming a ‘world class military’ by 2049 when Communist China turns 100, it lags behind the American military in both experience and technological prowess. If a war erupts, it is highly likely that China would lose, an embarrassment which would not just blot Xi Jinping’s legacy as he seeks a re-election at the upcoming 20th Party Congress but also threaten the legitimacy of the Communist Party rule.

However, the PLA possesses the capability of inflicting enough damages to make it a pyrrhic victory for the US which Washington would neither be interested in nor have the capability to sustain as reflected in the withdrawal from Afghanistan.

The close occurence of al-Zawahiri’s killing and Pelosi’s visit speaks volumes about Biden’s goal of restoring Washington’s place as the global leader and enhancing his domestic approval ratings which had recently fallen down to 36%. A war with China involving heavy investments in terms of both human lives and material resources would dampen what he has managed to gain. Moreover, as the case of Russia shows, Washington’s allies such as South Korea might not come out in its support for  they have more to lose in a conflict with China than they had with Russia. Moscow too has promised to support Beijing if its claims over Taiwan are violated which would further complicate the matter. Even if Washington manages to minimise the damages and win, Beijing is likely to make the defeat a rallying point domestically and recuperate at some point to hit back. A war would thus not end the conflict.

Though Pelosi was escorted by American air force jets, she is neither associated with the Biden administration nor was  accompanied by any of his ministers which technically does not record as a state visit and hence does not result in a violation of the ‘One China Policy’. Her visit, though memorable for its boldness,is not a reason grave enough to call for war. 

Nevertheless, the upcoming 20th Party Congress would demand Xi to take a major action, for mere verbal attack would appear as a sign of weakness vis à vis Washington to his large nationalist domestic audience. Apart from diplomatic criticism and sanctioning Pelosi and American firms, China is likely to carry out a massive  psychological warfare where it would focus on elevating tensions to the brink while not letting a full fledged war erupt. Cyber attacks against Washington and Taipei are also likely. This might include naval operations near Taiwan, a more aggressive stance in the South China Sea, sending off fighter jets to violate Taiwanese airspace, continued and intensified scuffles with American allies such as Canada and Australia over patrolling jurisdictions in sea and air, imposing sanctions or writing off trade deals with American allies who come out in its support and even possible missile tests near Taiwanese territory as done in the 1995-96 crisis. Beijing is also likely to launch a more aggressive foreign policy against Washington where it might seek help from its allies and Washington’s adversaries- Russia, North Korea and Iran. Moreover, the risks of having to choose a side have gone up for many nations in the Indo-Pacific region and the option of maintaining neutrality might not come easily.

The whole episode appears to be a game of brinkmanship where the focus would be  on elevating tensions as a way of unsettling the other. Dialogue would be the only way to ensure a peaceful way out.

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