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Can a QUAD+ Decoupling Fund be possible to tackle China?

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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.

Dr Satoru Nagao is Visiting Fellow at the Hudson Institute. He is an expert on US–Japan–India security cooperation.

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Southeast Asia

Learning to build a community from a ”Solok Literacy Community”in the West Sumatra

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Established on September 21, 2020 in Solok City, West Sumatra Province, Indonesia. Solok Literacy Community initiated by the young people of Solok City has grown rapidly into a community that has its own trendsetter among young people. Bringing narratives smelling of education, The Literacy Solok Community has a movement with measurable progressiveness that can be seen from its flagship programs.

Starting from the free reading stall movement that has been moving in various corners of Solok City over the past few months. The concept of film surgery that provides proactive discussion space for all segmentation in society. “Diskusi Ngopi” activities which in fact is the concept of FGD (Focus Group Discussion), run with interesting themes and issues so that it can be considered as one of the favorite programs that are often attended by many young people in Solok. Then a class of interests and talents aimed at reactivating the soft skills and great talents of the children of Solok City.

Solok Literacy Community has a long-term goal of making Solok City as a Literacy City in 2025. With these noble targets, of course we together need small steps in the form of programs that run consistently over time. Because after all, a long journey will always begin with small steps in the process of achieving it.

Many appreciations and positive impressions from the surrounding community continue to be received by the Solok Literacy Community. This is certainly a big responsibility for the Solok Literacy Community to continue to commit to grounding literacy in Solok City. Solok Literacy Community activities can be checked directly through instagram social media accounts @solok_literasi. Carrying the tagline #penetrategloomy or penetrating the gloom and #lawanpembodohan, members of the Solok Literacy Community or better known as Soliters, will always make innovative breakthroughs in completing the goal of making Solok City 2025 as a Literacy City.

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Southeast Asia

Indonesia Submit Extended Continental Shelf Proposal Amidst Pandemic: Why now is important?

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Authors: Aristyo Rizka Darmawan and Arie Afriansyah*

Indonesia’s active cases of coronavirus have been getting more worrying with more than 100.000 active cases. With nearly a year of pandemic, Indonesia’s not only facing a serious health crisis but also an economic catastrophe. People lose their jobs and GDP expected to shrink by 1.5 percent. Jakarta government therefore should work hard to anticipate the worst condition in 2021.

With this serious economic threat, Indonesia surely has to explore maximize its maritime geographic potential to pass this economic crisis and gain more national revenue to recover from the impact of the pandemic. And there where the Extended Continental Shelf submission should play an important role.

Recently this week, Indonesia submit a second proposal for the extended continental shelf in the southwest of the island of Sumatra to the United Nations Commission on the Limit of the Continental Shelf (CLCS). Continental shelf is that part of the seabed over which a coastal State exercises sovereign rights concerning the exploration and exploitation of natural resources including oil and gas deposits as well as other minerals and biological resources.

Therefore, this article argues that now is the right time for Indonesia to maximize its Continental Shelf claim under the law of the sea convention for at least three reasons.

First, one could not underestimate the economic potential of the Continental Shelf, since the US Truman Proclamation in 1945, countries have been aware of the economic potential from the oil and gas exploration in the continental shelf.

By being able to explore and exploit natural resources in the strategic continental shelf, at least Indonesia will gain more revenue to recover the economy. Even though indeed the oil and gas business is also hit by the pandemic, however, Indonesia’s extended continental shelf area might give a future potentials area for exploitation in long term. Therefore, it will help Indonesia prepare a long-term economic strategy to recover from the pandemic. After Indonesia can prove that there is a natural prolongation of the continental shelf.

Second, as the Indo-Pacific region is getting more significant in world affairs, it is strategic for Indonesia to have a more strategic presence in the region. This will make Indonesia not only an object of the geopolitical competition to utilize resources in the region, but also a player in getting the economic potential of the region.

And third, it is also showing that President Joko Widodo’s global maritime fulcrum agenda is not yet to perish. Even though in his second term of administration global maritime fulcrum has nearly never been discussed, this momentum could be a good time to prove that Indonesia are still committed to the Global maritime fulcrum by enhancing more maritime diplomacy.

Though this is not the first time Indonesia submit an extended Continental Shelf proposal to the CLCS, this time it is more likely to be accepted by the commission. Not to mention the geographical elements of natural prolongation of the continental shelf that has to be proved by geologist.

The fact that Indonesia has no maritime border with any neighboring states in the Southwest of Sumatra. Therefore, unlike Malaysia’s extended continental shelf proposal in the South China Sea that provoke many political responses from many states, it is less likely that Indonesia extended continental shelf proposal will raise protest from any states.

However, the most important thing to realize the potential benefit of the extended continental shelf as discussed earlier, Indonesia should have a strategy and road map how what to do after Indonesia gets the extended continental shelf.

*Arie Afriansyah is a Senior Lecturer in international law and Chairman of the Center for Sustainable Ocean Policy at University of Indonesia.

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Southeast Asia

The China factor in India’s recent engagement with Vietnam

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Photo courtesy - PTI

In its fourth year since the elevation of ties to a Comprehensive Strategic Partnership, December 2020 witnessed an enhanced cooperation between New Delhi and Hanoi, ranging from humanitarian assistance and disaster relief to defence and maritime cooperation, amid common concerns about China.

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In an effort to boost defence cooperation, the navies of India and Vietnam conducted atwo-day passage exercise (Passex) in the South China Sea on December 26 and 27, 2020, reinforcing interoperability and jointness in the maritime sphere. Two days before this exercise has begun, an Indian naval ship arrived at Nha Rong Port in Ho Chi Minh City to offer humanitarian assistance for the flood-affected parts of Central Vietnam.

Before this, in the same week, during a virtual summit between Indian Prime Minister Narendra Modi and his Vietnamese counterpart Nguyen Xuan Phuc on December 21, both countries inked seven agreements on miscellaneous areas of cooperation and jointly unveiled a vision and plan of action for the future, as both countries encounter the common Chinese threat in their respective neighbourhoods.

Vietnam’s disputes with China

India’s bone of contention with China ranges from the Himalayas to the Indian Ocean. Both Vietnam and India share territorial borders with China. Well, it seems odd that despite its common socialistic political backgrounds, China and Vietnam remains largely hostile. 

Having a 3,260 km coastline, covering much of the western part of South China Sea, Vietnam’s exclusive economic zone (EEZ) overlaps with Chinese claims based on the legally invalid and vaguely defined Nine-Dash Line concept, unacceptable for all the other countries in the region, including Vietnam, Philippines, Malaysia, and Brunei.

In 2016, China lost a case brought out by the Philippines at the Permanent Court of Arbitration based in The Hague when the court ruled that Beijing’s had no legal basis to claim ‘historic rights’ as per the nine-dash line. China rejected the ruling and continued to build artificial islands in the South China Sea, which it has been doing since 2013, some of them later militarized to gain favourable strategic footholds in the sea and the entire region.

The Paracel and the Spratly Islands in the South China Sea has been historically considered part of Vietnam. The Geneva Accords of 1954, which ended the First Indochina War, gave the erstwhile South Vietnam control of territories south of the 17th Parallel, which included these island groups. But, China lays claims on all of these islands and occupies some of them, leading to an ongoing dispute with Vietnam.

China and Vietnam also fought a border war from 1979 to 1990. But today, the disputes largely remain in the maritime sphere, in the South China Sea.

China’s eyes on the Indian Ocean

The Indian Ocean has been long regarded as India’s sphere of influence. But with the Belt and Road Initiative, a trillion-dollar megaproject proposed by Chinese President Xi Jinping in 2013, and the Maritime Silk Road connecting three continents, which is part of it, China has grand ambitions in the Indian Ocean. Theories such as ‘String of Pearls’ shed light on an overambitious Beijing, whichattempts to encircle India with ports and bases operating under its control.

China has also opened a military base in Djibouti, overlooking the Indian Ocean, in 2017 and it has also gained control of the strategic port of Hambantota in the southern tip of the island of Sri Lanka, the same year.

Chinese presence in Gwadar in Pakistan, where the Maritime Silk Route meets the land route of BRI, is also a matter of concern for India. Moreover, the land route passes through the disputed Gilgit-Baltistan region, which is under Pakistani control, but is also claimed by India.  China has also been developing partnerships with Bangladesh and Myanmar to gain access to its ports in the Bay of Bengal.

Notwithstanding all this, India’s response has been robust and proactive. The Indian Navy has been building partnership with all the littoral states and small island states such as Mauritius and Seychelles to counter the Chinese threat.

India has also been engaged in humanitarian and developmental assistance in the Indian Ocean region, even much before the pandemic, to build mutual trust and cooperation among these countries. Last month, India’s National Security Adviser Ajit Doval visited Sri Lanka to revive a trilateral maritime security dialogue with India’s two most important South Asian maritime neighbours, the islands of Sri Lanka and the Maldives.

Foe’s foe is friend

The Indian Navy holding a Passex with Vietnam in the South China Sea, which is China’s backyard, is a clear message to Beijing. This means, if China ups the ante in the Indian Ocean or in the Tibetan border along the Himalayas, India will intensify its joint exercises and defence cooperation with Vietnam.

A permanent Indian presence in the South China Sea is something which Beijing’s never wish to see materialise in the new future. So, India’s engagement with Vietnam, which has a long coast in this sea, is a serious matter of concern for Beijing.

During this month’s virtual summit, Prime Minister Modi has also reiterated that Vietnam is a key partner of India in its Indo-Pacific vision, a term that Beijing vehemently opposes and considers as a containment strategy against its rise led by the United States.

Milestones in India-Vietnam ties – a quick look-back

There was a time when India supported Vietnam’s independence from France, and had opposed US-initiated war in the Southeast Asian country in the latter half of the previous century. Later, India hailed there-unification of North and South Vietnams.

Even though India maintained consulate-level relations with the then North and South Vietnams before the re-unification, it was elevated to ambassadorial level in 1972, thereby establishing full diplomatic ties that year.

During the Vietnam War, India supported the North, despite being a non-communist country, but without forging open hostilities with the South. Today, India partners with both France and the United States, Vietnam’s former colonizers, in its Indo-Pacific vision, comfortably along with Vietnam as geopolitical dynamics witnessed a sea change in the past few years and decades.

Way ahead

Today, these two civilizational states, sharing religio-cultural links dating many centuries back, is coming together again to ensure a favourable balance of power in Asia. Being a key part of India’s ‘Act East’ policy and ‘Quad Plus’ conceptualisation, Vietnam’s role is poised to increase in the years to come as China continues to project its power in Asia and beyond.

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