Authors: Dr Satoru Nagao and Gitanjali Sinha Roy
The Coronavirus Pandemic has shaken the world to the highest possible risks the civilisation has seen in this century and has led many countries to cooperate and collaborate with one another in these trying times. China is the only country which seems to play the card of being an ‘opportunist’ and has prevailed as an economic and maritime aggressor. Keeping the Chinese aggressiveness in mind, this article tries to pave a way for a QUAD+ Decoupling Fund in order to tackle China.
The aggressive behaviour in the maritime domain has left most countries with a bad taste especially as Chinese aggressiveness has increased in leaps and bounds in the South China Sea, East China Sea, India-China border area, Indian Ocean and the Taiwan Strait which has made countries like Japan, India, Taiwan, Vietnam, the Philippines, Malaysia and the United States of America rather uncomfortable. In addition, recently, China imposed “sanction” against Australia by stopping import beef, wines, 80 percent tariff on barley imports has greatly affected the Australian farmers and has impacted tourism and education as many Chinese students studies in universities in Australia. This sanction came in after Australia suggested an international investigation about COVID-19 on China. China has also blamed New Zealand as they supported Taiwan to participate in World Health Organisation meeting. The Chinese government passed the national security law to crack down on the democratic movement in Hong Kong. All this has resulted in Chinese aggressive behaviour which is intimidating many countries all at the same time. Thus, it is important to analyse why China choose such a course and what should be done?
One interesting point to think about the reason of China’s attitude is that China has been aggressive against Australia, New Zealand, Japan, Taiwan, Vietnam, Malaysia India, but not so aggressive against the US. China didn’t expect that its aggressive attitude toward these countries except the US will not create a serious crisis for China as these countries depend on the economic relations with China. China has been a manufacturing destination since the 1980s and ever since then, it has been growing its manufacturing footprint across the world with an abundance of cheap labour, a weak currency and speedy decision making under the authoritarian regime and infrastructural support from Japan has contributed to the rise of China as the factory of the world.
Therefore, one way of dealing with China is to reduce economic dependence toward China as it helps China become more aggressive. Countries which are facing the rut of China need to rethink their economic dependence. It is important to understand China was a preferred kernel until the tensions between the United States of America and China began resulting in a trade war and as the tensions worsened, talks of the US shifting its manufacturing base to other countries, imposing huge taxes on each other made China’s future economic prospect dark. What worsened the situation for China was that it hid vital information of the COVID-19 spread from all the countries like US, Japan, Australia, US allies in Europe and this has made all these countries rethink their relation with China through the policy ofde-coupling from China. As China’s Wuhan emerged as the epicentre of this deadly virus, it led to the disruption of supply chains world over and the over-dependence that all countries have on China was needed to be reduced and rectified.
In a meeting of the Council on Investments held on 5 March, 2020 led by Prime Minister Shinzo Abe decided to relocate the Japanese manufacturing bases to Japan from China and the Government extended help by setting up a budget of 220 billion yen to move the production units out of China and also set aside 23.5 billion yen for Japanese firms to move their production line to Southeast Asian countries as February 2020 onwards their supply chains suffered bringing home a financial slump. Recently, in Japan57 companies are set to be incentivised with a subsidy of 57.4 billion yen to move out of China and it includes companies like Iris Ohyama Inc and Sharp Corp among many others. Thereby, it was suggested to diversify the manufacturing and supply chains to Southeast Asian countries like Vietnam, Indonesia, Thailand and India which is the need of the hour. The US has been the leader of the pack by pushing to create an alliance of ‘trusted partners’ aiming for a ‘Post-COVID Economic Prosperity Network’ consisting of Australia, India, Japan, New Zealand, South Korea and Vietnam to move the global economy forward along with restructuring the supply chains and making sure that this kind of situation is prevented from happening in the future.
India has been worried that the pandemic has exposed the over-reliance on China and so, there is a major need to become self-reliant or ‘Atmanirbhar Bharat’, a 20 lakh crore stimulus package was released with an aim to ‘build locally to go global’ which would help and integrate within the global economy. European nations like the United Kingdom and Spain has faced a large number of people succumbed to death due to coronavirus and it has made these Europeans countries highly angry about China’s handling of the coronavirus. Also, the European companies businesses were less affected by the trade war, but a threat to tariffs coupled which made some of these companies to move their supply chains out of China and move to closer homes supply chains like Romania, Portugal, Turkey and Africa.
China’s bad handling of the coronavirus and misinformation about the same has led the world today at a standstill and thousands of helpless lives have paid a price. Further, the virus has torn the world apart, shaken the supplies chains and all this has given birth to an anti-China sentiment globally. The United States along with the Quad members and the US allies are paving a way a Quad+ policy of decoupling from China. The US along with its trusted friends are aiming to form the ‘Post-COVID Economic Prosperity Network’ which should also set up a decoupling fund to help all the others who are willing to diversify out of China and this could be called the ‘Quad+ Decoupling Fund’ which would prevent China’s arm-twisting and bullying. Once all the countries back off from China’s manufacturing hub, China would be forced to abide by the rules and would be forced to behave properly as then it would be at the mercy of the other countries economically and since China will become economically weak due to the moving out these factories, it would also learn to constraint its behaviour in the western Pacific which in turn would help the US and all the Quad members and the US allies to have a free and open Indo-Pacific without any threat from Chinese maritime aggression.
Talking of maritime aggression, this Quad+ Decoupling Fund can also form a ‘Post-COVID Security Prosperity Network’. We are aware that the United States, Japan and India have been in close cooperation with regard to QUAD as well as Japan-America-India (JAI). The introduction of Quad plus countries like Vietnam, South Korea and New Zealand have been included keeping in mind their direct and indirect issues with China and most face security issues primarily in the maritime domain. Also, Australia was recently invited by India to join the maritime exercises and the recent India-Australia meeting was a way to woo Australia back into the QUAD as Australia has been facing flak from China. The recent India-Japan maritime exercise in the Indian Ocean could be seen as another addition of strengthening the maritime grouping against Chinese aggressiveness. Thereby, a QUAD+ Decoupling can be formed in the realm of economic as well as security to tackle China.