The foreign policy of Uzbekistan, which is aimed at rapprochement and strengthening good-neighborly, friendly and mutually beneficial relations with neighboring states, has created a solid foundation for the development of trade, economic and investment cooperation between the countries of Central Asia (CA).
The CA countries cover a market area of 75.3 million people. In 2020, the total GDP of the CA countries amounted to $291.1 billion and foreign trade turnover was $142.5 billion.
Macroeconomic indicators of CA countries
|Countries||Population (mln.)||Foreign trade turnover (US doll. bln.)||GDP (US doll. bln.)||GDP per capita (US doll)|
Source: Statistical departments of the CA countries, * knoema.ru / atlas (2019)
In recent years, the economies of the CA countries have had high growth rates in the range of 5-7% and even in the crisis year of 2020, the growth rates were negative only in Kazakhstan and Kyrgyzstan. According to the forecasts of the World Bank, the CA countries in 2021 will be able to restore the positive dynamics of GDP growth and increase the growth rates in 2022.
Dynamics of GDP growth rates of CA countries (in %)
|2017||2018||2019||2020||2021 (**forecast)||2022 (**forecast)|
Source: Statistical departments of the CA countries; * knoema.ru / atlas; ** World Bank forecast
Favorable conditions for mutual trade have been created between the CA countries within the framework of the following trade agreements:
– all CA countries (except for Turkmenistan) are parties of «Agreement on a free trade zone of the CIS» from 2011, which the participating countries do not apply import customs duties to each other;
– Kazakhstan, Kyrgyzstan and Tajikistan are members of the WTO, Uzbekistan is actively negotiating on accession to the WTO, Turkmenistan in 2020 received observer status in the WTO;
– Kazakhstan and Kyrgyzstan as members of the EAEU are in a common customs space;
– the CA countries also have bilateral agreements to create favorable conditions for mutual trade.
Although CA countries are open to international and regional trade, labor and capital movements at various levels, they have great potential for building closer partnerships and integrated interactions with each other.
In 2020, the total trade turnover (in goods, excluding trade in services) between the CA countries amounted to $12.2 billion, the total foreign trade turnover – $145.5 billion.
Thus, the share of intraregional trade in the total foreign trade turnover of the CA countries amounted to 8.4%.
Mutual trade (in goods) between CA countries in 2020 (US doll. mln.)
|CA countries||Kazakhstan||Kyrgyzstan||Tajikistan||Turkmenistan||Uzbekistan||Total||Share of trade turnover with CA countries in total trade turnover|
Source: Statistic offices of Kazakhstan and Kyrgyzstan. Central banks of Tajikistan and Uzbekistan. Data on Turkmenistan for 2019 according to trademap.org
Note: Numbers in calculations of trade turnover volumes of Central Asian countries may differ depending on chosen calculation method by countries’ statistic offices
At the same time, it should be noted that the participation of CA countries in mutual intraregional trade is different.
Thus, the share of Kazakhstan and Turkmenistan in the volume of trade between the CA countries, their total trade turnover is the lowest and amounts to 5.5% and 4.5% respectively. The participation of Tajikistan and Kyrgyzstan in intraregional trade is the highest at 28.3% and 21.0% respectively. Uzbekistan occupies an intermediate position with an indicator of 13.3%.
Foreign trade of Kazakhstan and Turkmenistan is less focused on the regional market due to the predominance of hydrocarbons in their exports, which are mainly supplied to non-CIS countries (European countries, China, Russia) and most of the imports also go to these countries.
Indicators of share distribution in total trade turnover of Central Asian countries by countries and regions in 2020
|Share (in %) of total trade of the country|
Source: According to the data of statistic offices of CA countries,
* Data on Turkmenistan for 2019 according to trademap.org
Despite the fact that the majority of the commodity exports of the CA countries are fossil natural resources, regional trade with each other to a much lesser extent than they sell them outside of the region.
In particular, in 2020, the share of gold in total exports of Tajikistan amounted to 58.1%, Kyrgyzstan – 50.2% and Uzbekistan – 38.3%, which is supplied to Switzerland or Great Britain. About 66% export of mineral products are supplied mainly to the countries of the European Union in the total export volume of Kazakhstan. The main share of Turkmenistan’s exports, almost 70-80% falls on China, where Turkmen natural gas is mainly exported.
In this regard, the share of mutual trade between CA countries will be much higher if their exports of raw materials (oil, gas and precious metals) to third countries are not taken into account.
At the same time, the CA countries have great prospects for increasing the volume of intraregional trade in finished products, which meets the interests of all countries in the region.
The creation by CA countries of regional value chains, including industrial and agricultural clusters, will contribute to an increase in the number of joint ventures for the production of finished products that can be exported to third countries.
Regional integration will help reduce the costs of producers and promote the production of products that are competitive on foreign markets. In addition, when the CA countries carrying out trade operations within the region, they have the shortest distances for the delivery of goods, which gives them advantages in saving on transport costs.
The interests of the CA countries also meet the joint creation of international transport corridors and international transport infrastructure in the region, which will help to reduce transport costs in the supply of export products from CA countries to world markets.
It should be noted that all the countries of the CA region are interested in increasing export volumes and diversifying their foreign trade, entering new foreign markets, as well as creating and using new transport routes.
Currently the main trade routes of the CA countries are laid in the northern direction, encouraging area of economic cooperation is the southern direction, including South Asian countries, which geographically lies on Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, India and Sri Lanka.
Economic cooperation potential between the Central and South Asian countries
The total volume of Uzbekistan’s foreign trade with the countries of South Asia in 2020 amounted to 1.38 billion dollars or 3.8% of the total foreign trade.
The commodity turnover of Uzbekistan with the countries of South Asia, the largest volume falls on Afghanistan – 56.2%, India – 32% and Pakistan – 8.9%. Trade with the Maldives and Nepal is insignificant, while there is practically no trade with Bhutan.
Foreign trade turnover (FTT) indicators of Uzbekistan with the countries of South Asia in 2020 (US doll. mln.)
|Trade turnover||Share in total FTT (in %)||Export||Import|
|Total, including:||36 299,8||100,0||15 127,7||21 171,5|
Source: State statistics office of Uzbekistan
In the trade with Afghanistan, the main share (99.7%) is taken by the export of Uzbekistan, which makes Afghanistan a profitable trade and economic partner. The main share of Uzbekistan’s exports to Afghanistan is electricity (30% of exports), wheat flour and legumes (24.1%), as well as metallurgical products.
It is also planned to implement the investment project “Construction of a 500-kW power transmission line «Surkhan – Puli-Khumri» on the territory of Afghanistan. The length is 260 km and worth about $150 million, through loans from ADB and Uzbekistan will finance $45 million. This transmission line will allow connecting the power system of Afghanistan to the unified power system of Uzbekistan and Central Asia.
In November 2020, the President signed two important documents concerning Afghanistan – the Decree «On measures to further expand and strengthen economic cooperation with the Islamic Republic of Afghanistan» and the Decree «On measures to further develop the activities of special economic and small industrial zones in the Surkhandarya region and the city of Tashkent», which create new legal conditions for strengthening economic cooperation with Afghanistan.
The documents provide for the signing of an agreement on preferential trade between Uzbekistan and Afghanistan and bringing the annual volume of mutual trade to $2 billion by 2023.
For these purposes, a free trade zone «International Trade Center Termez» is being created on the territory of Termez with Afghanistan, with an appropriate logistics infrastructure and a special visa-free regime.
On February 2, 2021, a meeting of the trilateral working group was held in Tashkent with the participation of the government delegations of Uzbekistan, Pakistan and Afghanistan on the implementation of Mazar-i-Sharif – Kabul – Peshawar railway project. As a result of the meeting, a joint “Road Map” was signed for the construction of the Mazar-i-Sharif – Kabul – Peshawar railway.
The construction of this railway will significantly reduce the time and cost of transporting goods between the countries of South Asia and Europe through Central Asia.
This railway will provide access to the Pakistani seaports of Karachi, Qasem and Gwadar and will connect the South Asian railway system with the Central Asian and Eurasian railway systems and significantly increase the transit potential of Central Asia.
India ranks second in terms of Uzbekistan’s trade with the South Asian countries. At the same time, Uzbekistan’s export volumes lag significantly behind imports, which are mainly represented by pharmaceutical products in demand in Uzbekistan.
Uzbekistan’s exports to India mainly consist of textile products (13.6% share), base metals (8.4%), food products (5.8%) and etc.
Imports of Uzbekistan from India are growing mainly due to the growth of purchases of “pharmaceutical products”, the share of imports is 47%.
At the same time, investment cooperation in the pharmaceutical sector is successfully developing with India, joint ventures have been created on the territory of the «Andijan-Pharm FEZ». Branches of the Indian universities «Amity» in Tashkent and «Sharda» in Andijan were opened to train IT specialists.
In recent years, trade and economic cooperation of Uzbekistan with Pakistan has begun to develop actively, the volume of exports of finished and agricultural products has increased.
In the structure of Uzbekistan’s exports to Pakistan: food products make up 81%; textile products – 10.5%; services – 3.5%.
In the structure of imports from Pakistan: pharmaceutical products account for 37%; food products (potatoes, citrus fruits, rice, etc.) – 36%, transport services – 10%; chemical products – 4.5%.
Furthermore, Uzbekistan is interested in expanding cooperation with Pakistan in the transport sector and joint implementation of the above project for the construction of the «Mazari – Sharif – Kabul – Peshawar» railway line.
Foreign trade of Kazakhstan with the countries of South Asia mainly falls on Afghanistan, India, Pakistan, less on Bangladesh and Sri Lanka. In 2020, the volume of foreign trade amounted to more than $2.3 billion or 2.3% of Kazakhstan’s total foreign trade turnover.
Foreign trade turnover (FTT) indicators of Kazakhstan with the South Asian countries in 2020 (US doll. mln.)
|Trade turnover (TT)||Share in total FTT (in %)||Export||Import|
|Total||85 031,1||100,0||46 949,7||38 081,4|
Source: National Statistics Bureau of Kazakhstan
At the same time, the largest volume of trade between Kazakhstan and the countries of South Asia falls on India – 1.9 billion dollars. (80% of trade with the countries of South Asia) and Afghanistan – 401.8 million dollars (17%).
Kazakhstan mainly exports oil (about 50% of the export volume), chemical elements and their compounds (ferroalloys, titanium, phosphorus), as well as silver in the form of powder to India.
Kazakhstan’s imports from India are represented by medical equipment, medicines, textiles, tea products, etc.
Kazakhstan is also interested in the development of the North-South transport corridor and the use of the Iranian port of Chabahar to increase trade with India and other countries of South Asia.
Kazakhstan is a major supplier of food products to Afghanistan, like grain and flour products.
Among the Central Asian countries, Kyrgyzstan has the lowest indicators of foreign trade with South Asian countries – $61 million or 1.0% of its foreign trade turnover, which is mainly (84%) represented by imports from India.
Foreign trade turnover (FTT) indicators of Kyrgyzstan with the South Asian countries in 2020 (US doll. mln.)
|Trade turnover||Share in total FTT (in %)||Export||Import|
Source: National Statistics Committee of Kyrgyzstan
At the same time, Kyrgyzstan together with Tajikistan, is interested in the implementation of a project for the delivery of electricity from Central Asia to South Asia through the CASA-1000 (Central Asia – South Asia) transmission line. The project plans to supply annually from April to October 2 billion kWh of electricity from Kyrgyzstan and 3 billion kWh from Tajikistan to Afghanistan and Pakistan.
In February 2021, Kyrgyzstan planned to begin construction of power lines on its territory within the framework of this project.
It should be noted that the total cost of the CASA-1000 project is about $1 billion.
The foreign trade turnover volume of Tajikistan with the South Asian countries amounted to 185.2 million dollars or 4.0% of its total turnover in 2020.
Tajikistan’s main trading partners are Afghanistan, Pakistan and India in South Asia.
Foreign trade turnover (FTT) indicators of Tajikistan with the South Asian countries in 2020 (US doll. mln.)
|Trade turnover||Share in total FTT (in %)||Export||Import|
|Total||4 523,7||100,0||1 174,4||3 349,3|
Source: National bank of Tajikistan
Due to its geographical position, Tajikistan is interested in the development of alternative transport routes, including through the countries of South Asia, in particular, Afghanistan and Pakistan.
The shortest seaport for Tajikistan is the Pakistani port of Karachi (2.7 thousand km), while the distance to the Iranian seaport of Bandar Abbas is 3.4 thousand km.
Another important project for Tajikistan in South Asia is the CASA-1000 transmission line project to export electricity from Tajikistan and Kyrgyzstan to Afghanistan and Pakistan. Within the framework of the CASA-1000 project, Tajikistan plans to export 75 billion kWh of electricity within 15 years.
In 2021, Tajikistan plans to complete the laying of power lines on its territory within the framework of this project. Currently, Tajikistan annually exports to Afghanistan up to 1.5 billion kWh. electricity.
Turkmenistan is also actively developing trade and economic ties with the countries of South Asia. In 2019, the trade turnover amounted to $462.3 million or 3.4% of its total turnover. The main trading partners of Turkmenistan are Afghanistan, India and Pakistan among the countries of South Asia.
Foreign trade turnover (FTT) indicators of Turkmenistan with the South Asian countries in 2020 (US doll. mln.)
|Trade turnover||Share in total FTT (in %)||Export||Import|
The main share (70%) of Turkmenistan’s exports to Afghanistan consists of mineral products (oil products and natural gas). In October 2020, the following agreements were signed between Turkmenistan and Afghanistan:
– Memorandum of Understanding between Turkmengaz and Afgan Gaz Enterprise on the creation and development of a natural gas market in Afghanistan;
– Agreement on the purchase of electricity by Afghanistan within the framework of the Turkmenistan-Afghanistan-Pakistan power transmission line (PTL) project.
An important project of Turkmenistan with the participation of South Asian countries is Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline with a capacity of 33 billion cubic meters of gas per year.
The consortium for the construction of TAPI includes the state concern Turkmengaz (owns a controlling stake), as well as Afghan, Pakistani and Indian gas companies.
Turkmenistan planned to complete the construction of the TAPI gas pipeline on its territory in 2020 and in 2021 to begin laying the pipeline in Afghanistan.
Prospects for economic cooperation with Central and South Asian countries.
The main trading partners of the CA countries among the South Asian countries are Afghanistan, India and Pakistan. At the same time, the most active trade and economic cooperation of the CA countries is with Afghanistan, due to the geographical proximity, as well as the great dependence of the Afghan domestic market on imports of food and industrial products.
The Central Asian countries are actively cooperating with India and Pakistan also within the framework of the SCO. In addition, India is negotiating a Free Trade Agreement with the EAEU, which includes Kazakhstan and Kyrgyzstan and with Uzbekistan to conclude a Preferential Trade Agreement.
At the same time, the increase in trade with Pakistan and India largely depends on the creation of reliable routes for the delivery of goods. The project for the construction of the Mazar-i-Sharif – Kabul – Peshawar railway occupies a special place and will significantly reduce transportation costs for delivery cargo between the countries of the region.
Thus, the main promising areas of cooperation between the countries of Central and South Asia are new transport corridors that provide access to the Central Asian countries to the southern seaports, cooperation in the energy sector (export of electricity), encouragement of mutual investments, as well as the expansion and diversification of foreign trade.
It should be noted that Afghanistan, which is a bridge between the two regions, will contribute to the further development of economic cooperation between the countries of Central and South Asia.
In this regard, the implementation of transport and energy projects on the territory of Afghanistan will create conditions to expand opportunities for building up trade, economic and investment ties, strengthening transport and communication interaction between the countries of Central and South Asia.
How Saudiconomy, is an economic-transformational miracle?
What is happening in the Global economy? The outlook seems entirely iffy, in the state of flux and bewildered with negative outlooks. The answer is, “Disturbance”. If we analyze the global-environment with respect to economy, we find it clouded with discussions pertaining to hawkish vs. dovish trends of central-banks, rising inflation, hyper-inflation, tanking GDP growth, Russian-Ukraine conflict, energy-crises, broken supply-chains, unemployment, recession-fears, supply-shocks, lower demands, inverted yield-curves, liquidity crises, banking debacles and many other ensuing economic-ramifications etc. all have become talk of corridors and towns.
In my opinion, the global economy seems in shambles, extrapolated perceptions assumed by analysts out of Jackson Hole meetings and other developed-countries’ central-banks are creating disturbances in financial-markets. Simply, the world is devoid of any solid vision, which could steer it towards betterment and prosperity. Major financial newspapers are dreading with inflation impacts. Ask any banker across the globe about his or her medium-term economic-outlook & you’ll get an ugly picture painted.
Welcome to Saudi Arabia, the year 2022 the country surpassed a mark of a trillion-dollar economy according to both IMF and Oxford Economics coupled with GDP which grew at 8.7% in 2022. The annual CPI in Saudi Arabia increased by 2.5% and inflation averaged at 2.47% in 2022 which is “absolutely nothing” against double-digits’ inflation worldwide.
So paradoxically asking, what is happening in Saudi Economy? The answer is, “Growth”. If we analyze Saudi economic ecosystem, we find it filled with positive economic-vibes where the discussion is all about hike in industrial-production, foreign-investment-inflows especially huge industrial-investments, mining-investments which aim to unleash the potential of natural-resources, infrastructure-investments, giga-projects, achievement of economic & financial targets on time, flourishing private-sector, multiplying Non-Oil GDP etc.
Taking global-view, H1+H2 of 2022 were clouded with immense geo-political tensions, with ultimate economic-ramifications. But KSA has remained insulated of all global economic-vagaries, which attests the resilience & robustness of Saudi economic framework which is strengthened by Saudi leadership. The fiscal-year 2022 attracted significant foreign capital-inflows, which proves that Saudi Arabia has successfully positioned itself as a desired-destination of global financial-capital amid the ongoing global-turbulence. Saudi Arabia has successfully averted economic-effects of current geo-political turmoil, in terms of utilities, food-security and inflation-containment etc.
The question arises, how did KSA achieve this economic excellence & resilience in really a short time-span? The answer is, a Vision is being implemented and realized by Saudi leadership with sheer commitment and enabled by Saudi youth. This trifecta is indeed a global successful case-study of how major economic-transformations can happen in a short-period of time.
Delving into more details, the fundamental reason is, in 2016 Saudi Arabia had devised a brilliant Vision 2030 under the leadership of H.R.H King Salman and this was a road-map drawn by H.R.H Crown Prince Mohammad Bin Salman, as a forward strategic-economic framework. Under this brilliant vision, uniquely-crafted “Vision Realization Programs” (VRP) were designed, each tasked with a particular niche to smoothen the regulatory-processes, incentivize deployment of local-resources and ultimately attract private-sector & foreign-investments. All these VRPs are showing satisfactory-progress and many of these VRPs have over-achieved brilliantly.
Another driver of this economic-success is a significant-emphasis on optimizing potential of “Non-Oil GDP”. It is the Non-Oil GDP, which ultimately provided an impetus and incentivized Saudi Private-sector to act proactively. The fuel for sky-rocketing “Non-Oil GDP” is actually the giant private-sector of KSA, whose potential is being unleashed by Saudi government via launching a partnership-program namely “Shareek” which aims to intensify the potential of SAR 5 trillion of domestic private sector investments by 2030. The aim is to maximize the private-sector contribution up to 65% in Saudi GDP by 2030.
One of the attributable reasons of this economic-miracle of Saudi Arabia has been a constant emphasis on Higher Education & Research. For instance, scholarship programs for Saudi students proved to be a stellar success. Today we see countless highly-qualified Saudis, possessing valuable global-experience are now steering many organizations in both the public and private sector of country. Their competence coupled with determination, passion & loyalty for their leadership and the country paved the way for Saudi Arabia to result such an economic-success. Nature Index which tracks scientific & intellectual contributions globally has ranked Saudi Arabia, 1st in Arab World & 30th globally in 2022, which manifests emergence of high quality scientific-output by Higher education ecosystem.
Saudi Arabia was one of the countries, which made headlines across global-media due to smart Covid-management, leaving behind many developed economies. For instance, King Abdullah Port has bragged the 1st-position leaving behind 370 global-ports in a globally-renowned index, Container Port Performance Index – 2021 by World Bank and S&P Market Intelligence, which analyzed performances of 370 ports in post-Covid broken supply-chain scenario. Similarly, Jeddah Islamic port and King Abdul Aziz port have bragged 8th and 14th position respectively.
Saudi Arabia’s Sovereign Wealth Fund, Public Investment Fund has emerged as one of the smartest-SWF leaving behind many decades-old SWFs with stellar investments. The PIF (AuM = 620 USD billion) with its in-built strong potential has taken lead in investing locally in Saudi Arabia. In any country, a monetary-system always carries immense importance in proper functioning of an economy & solidifies its robustness. This important task is being carried out diligently by Saudi Central Bank, SAMA, which is brilliantly regulating Saudi financial-sector.
Saudi Arabia is taking a lead in developing state-of-the-art infrastructure. Each of the giga-project is adding gross-value of billions of SAR directly to economy and is providing thousands of jobs. I call them; “Super-infrastructure” because they are being developed with a super-vision, led by super-teams, giving super-results and yield a super-future. Recently Knight Frank which is a top-notch and a century-old UK-based real-estate consultancy firm has evaluated the 15 giga-projects up to 1.1 trillion dollars.
Indeed, Saudi success story of economic-transformation and diversification embodies sheer brilliance, commitment and determination, which has manifested wonders in less than a decade as appreciated by the Managing Director of IMF in the recent WEF sessions, in these words, “They (Saudis) are using the increase in revenue very effectively to create the investment environment for future growth for diversifying the economy,”
Economic Strangulation Policies to Impact Kashmir Socio-Economic Dynamics
For decades, India has implemented coercive economic policies in the estwhile state of Jammu and Kashmir, a region that has been the subject of a longstanding dispute between India and Pakistan since their partition in 1947. Despite ongoing efforts to suppress the aspirations of the Kashmiri people, including economic deprivation, one of the most significant examples of India’s economic coercion in the region has been the imposition of an economic blockade.
In 2019, the Indian government further intensified its efforts by revoking the special status of Jammu and Kashmir, which had granted the region autonomy to determine its economic policies. This move was accompanied by a curfew and communication blackout that effectively isolated the region from the outside world, further exacerbating the economic hardship faced by the people of Jammu and Kashmir.
The blockade has had a devastating impact on the economy of IIOJK. The region’s tourism industry, which was a major source of revenue, has been decimated. The Indian government has also seized control of the region’s industries, including its mineral and agricultural resources. The region’s apples, for example, are a major source of revenue, but Indian authorities have blocked their export to the rest of the country, causing huge losses to the farmers.
India has also used other economic measures to exert control over the region. For example, the Indian government has placed restrictions on the movement of goods and people across the Line of Control (LoC) that divides the region between India and Pakistan. This has made it difficult for businesses to import and export goods, as well as for people to visit their families and friends on the other side of the LoC.
In addition, the Indian government has used financial measures to suppress dissent in the region. Indian authorities have frozen the bank accounts of individuals suspected of involvement in anti-India activities. This has made it difficult for these individuals to access their own funds, as well as for others to conduct transactions with them.
India has also used its control over the region’s financial institutions to exert pressure on the Kashmiri people. For example, Indian authorities have pressured banks in the region to refuse loans to individuals suspected of anti-India activities. This has made it difficult for these individuals to start businesses or invest in their communities.
The application of economic strangulation policies in IIOJK is expected to have a substantial impact on the socio-economic dynamics of the region. These policies are aimed at restraining economic activity and growth, and they are likely to result in various harmful consequences for the people of Jammu and Kashmir.
The primary effect of these policies will be an increase in poverty and unemployment rates. As businesses struggle to function and create employment in an environment of economic uncertainty, a considerable number of people will find themselves out of work and grappling to make ends meet. This is likely to intensify the existing social and economic disparities in the region.
Another probable outcome of the economic strangulation policies is a decline in the living standards of the people. As economic activity slows down, prices of essential goods and services are likely to surge, making it difficult for individuals to obtain the basic necessities of life. This could potentially result in a surge in social unrest and political instability in the area.
Additionally, the economic strangulation policies may lead to a decrease in the overall standard of healthcare and education. As the government diverts resources away from these sectors to impose economic sanctions, hospitals and schools are likely to face reductions in funding and staffing, thereby leading to a deterioration in the quality of these essential public services.
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So far, the impact of India’s economic coercion on the people of IIOJK has been devastating. The region’s poverty rate is estimated to be around 30%, and unemployment is rampant. The lack of economic opportunities has led many young people to join freedom fighters, which have been fighting for Kashmiri independence from India for decades.
India’s economic coercion has also had a profound impact on the mental health of the Kashmiri people. The curfew and communications blackout imposed by India in 2019, for example, left many people feeling isolated and helpless. The lack of economic opportunities has also led to high levels of stress and anxiety among the region’s youth.
The international community has condemned India’s coercive policies in IIOJK but is not willing to pressurize India over human rights violations. The United Nations has called for a peaceful resolution of the Kashmir dispute, and has urged India to respect the human rights of the Kashmiri people. The Organization of Islamic Cooperation (OIC) has also expressed its concern over the situation in the region.
Pakistan has been vocal in its condemnation of India’s actions. The Pakistani government has called on the international community to intervene in the dispute, and has urged India to withdraw its military forces from the region.
One of the recent policies of economic strangulation in IIOJK by India is the implementation of new land laws in the region. In October 2020, the Indian government issued new land laws that allow non-residents to purchase land in the region. This decision has been met with widespread condemnation from Kashmiri political leaders, who argue that it will lead to demographic change and the loss of control over their land.
Kashmiri leaders from mainstream political parties have also rejected the decision of the Indian government to levy taxes in the region without representation. The slogan “No taxation without representation” has been used by these leaders to argue that the Indian government has no right to impose taxes on the people of the region without their consent.
The argument put forth by these leaders is that the Indian government has violated the basic principle of democracy, which is that the people have the right to elect their own representatives who can make decisions on their behalf. By imposing taxes without representation, the Indian government has effectively denied the people of IIOJK their democratic rights.
The Kashmiri political leaders have also argued that the Indian government’s decision to levy taxes without representation is a violation of international law. The International Covenant on Civil and Political Rights, which India is a signatory to, guarantees the right of all peoples to self-determination. The Kashmiri leaders argue that by imposing taxes without representation, the Indian government is denying the people of IIOJK their right to self-determination.
The Kashmiri leaders have also pointed out that the Indian government’s decision to impose taxes on the region without representation is a continuation of its policy of economic strangulation in IIOJK. They argue that the Indian government’s actions are designed to suppress the aspirations of the Kashmiri people and to maintain its control over the region.
Overall, the impact of the economic strangulation policies in IIOJK is likely to be extensive and severe, affecting not only the economic but also the social and political structure of the region. The people of Jammu and Kashmir are likely to face various challenges in the upcoming years as they strive to adjust to this new reality, highlighting the need for the international community to closely monitor the situation and take action to support those affected.
U.S. Is Threatening to Default China Debt Repayment, What Will Beijing Do?
Under Xi’s decade-long rule, China’s holding of US Treasury debt has been consistently declining, last year it fell by $173.2 billion – 17% of the total holdings of the US bond by China. This was the largest annual reduction in six years when the Chinese holdings were reduced by $187.6 billion in 2016. Experts reckon China will continue to reduce its holdings of US Treasury holdings in 2023. However, clamoring for selling US debt as soon as possible is growing by the day in China.
Financial experts say the ramifications of the continuing US-China political rivalry are now increasingly being manifested in arenas other than geopolitics – in the speeding up of the Renminbi’s exit from the dollar. International Capital Statistics (ICS) released by the US Department of Treasury this February show China’s holdings of US treasury bonds stood at $867 billion at the end of December last year – a month-on-month fall for five consecutive months. Viewed from escalating political hostility, this decline is a new low since Xi Jinping was installed as the party general secretary at the CPC 18th Congress in October 2012. Remember, this was also the time when the Obama administration had launched its China containment strategy, called the “pivot to Asia” policy.
Analysts point out, though the reduction in China’s holdings of US bonds last year is normal when compared with the overall 6% decline in the holdings of US treasury bonds in overseas countries, what is alarming is the decline in China is more prominent. Following the rapid raising of the interest rates by the US Federal Reserve Bank (FRB) last year, the 10-year Treasury yield – an indicator of US long-term interest rates, rose from about 1.5% at the end of 2021 to nearly 4% by the end of December month last year. Soon after the US Department of Treasury made public the ICS for the year 2022 on February 15, a Nikkei Asia analysis on its Chinese website stated, the sharp decline in China’s holdings of the US Treasury bonds was to avoid losses caused by rising interest rates.
Yellen: We Won’t Allow China Get Repayment Benefits
More interestingly, citing a large US bond management company the cn.kikkei.com article further pointed out the US sanctions on Russia after the outbreak of the Russo-Ukraine war as one of the leading factors behind China’s move to reduce holdings of US Treasury bonds. “China has raised its vigilance against similar measures being taken when the confrontation between China and the United States deepens in the future,” cn.nikkei.com wrote. As has been widely reported, top US officials including Antony Blinken and Janet Yellen have repeatedly said the US wouldn’t hesitate to sanction Chinese entities if Beijing aids Russia in the war against Ukraine.
A similar argument has been put forward by the mainland Chinese professor of economics Cao Xing last Sunday. Weary of the US game-playing on debt repayment (to China), Professor Cao said it’s time for China to clear its US debt. Earlier in February, when US Treasury Secretary Yellen in a stark statement said, “China cannot be allowed to get the benefits of repayment,” Cao described the blunt remark as symbolic of the US determination to politicize the issue. In his popular signed blog “Professor Cao Xing,” he wrote: “The debt scale of the United States has exceeded the debt ceiling of $31.4 trillion. On top of this, the ongoing banking system crisis has put everyone in the US financial sector at risk.” Cao went on to add.
Will US Actually Default China Debt Payment
At another level, a serious debate is unfolding among global fund management strategists in the US on the likely ramifications for the global economy in general and China in particular, if the United States debt default on the People’s Republic. In the opinion of Arthur R. Kroeber, a Washington-based independent economic researcher, and Editor of China Economic Quarterly – a publication of a global economic research firm, GaveKal Dragonomics, a big political drama promises to take place in the next few months over the federal debt ceiling – the GOP strongly opposed to raising the ceiling on the one hand, and the US Treasury defaulting on its debt on the other hand.
Disagreeing with those who argue the US Treasury bond “political drama” is merely politicking, such as Arthur Kroeber, professor Cao not only takes every word uttered by Secretary Yellen very seriously (that she won’t allow the US to pay up the Chinese debt), but he is also quite apprehensive that Yellen’s real purpose is to pressure and trick China into increasing its holdings of US debt.
Furthermore, the Wall Street Journal disclosed in a report the US deputy assistant secretary of the Department of Treasury for Asian Affairs, Robert Kaproth, visited Beijing in February last week to discuss macroeconomic and financial issues. Speaking about Kaproth’s visit, Professor Cao has revealed the “secret” mission Kaproth undertook to Beijing actually had only one agenda, i.e. to hope China would increase its holdings of US debt, but China obviously did not make any concessions.
Renminbi versus US Dollar
According to experts in China, the gradual yet continuous decline in China’s holdings in US Treasury bonds is increasingly causing concerns in the United States. In the past decade or so, China has reduced its holdings of US debt by 34%; China currently holds $859.4 billion US debt which is at the lowest since 2009. Analysts in China say, the US fear is China will drastically reduce its US debt holdings to as low as $100 billion. Earlier on, before the visit to China by Blinken became a casualty to the “spy balloon” drama, Treasury Secretary Yellen was to accompany the Secretary of State.
Yellen’s chief mission to visit Beijing in early February was to resume discussions with her Chinese counterpart, Vice Premier and China’s economics tsar Liu He – left off in Yellen-Liu meeting this January in Switzerland – to “deter” Beijing from further selling its holdings of the US bonds. It was precisely to achieve the agenda of preventing continuous decline in China’s holding of US bonds that Yellen had announced US will not let China enjoy benefits of “repayment.” It is this naked display of the US determination to default on the Chinese debt which might lead Beijing to create a substitute system to dollar by internationalizing the renminbi.
By Defaulting, Is US Aiming At Regime Change In China
In short, as Kroeber has wondered, the consequences of the US debt default may not be threatening regime change, instead it will be damaging enough to destabilize the renminbi. It is pertinent to mention, in the event of a global meltdown caused by the US federal government shutdown (if it happens, it will occur in coming June), unlike during the 2008-2009, this time Chinese economy would be hurt a lot. For two reasons, back in 2008-2009 the Chinese Communist Party quickly unleashed a massive debt-financed economic stimulus program; second, fifteen years ago, the country’s debt level at 140 percent of GDP was rather low, but today its debt has soared to 300 percent of GDP.
Finally, experts in China are fully aware of the limitations to internationalize the renminbi, just to mention a few: unlike the US dollar, the renminbi is by far hugely insulated from global financial shocks, and to bring money in and out of China requires permission from Beijing (a.k.a. capital controls); like the US dollar is considered the world’s lynchpin currency, the renminbi is not; the renminbi accounts for just 2.8 percent of global official central bank reserves as compared to 60 percent and 20 percent for the US dollar and euro, respectively. Without a doubt, therefore, Cao and many Chinese experts are clamoring for an easy and quick way out: since the US has made it clear Washington won’t repay Chinese debt even if it has the money, the best solution for Beijing is to at once clear all of US Treasury bond holdings. But can China, do it?
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