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Impeachment Imminent for Yoon Suk-Yeol in 2023?

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Image courtesy of the People's Power Party

South Korea’s home affairs have been nothing short of a riveting drama series unfolding in real time. While the previous season starring Moon Jae-in was about a dragon slayer turned a dragon but with more heads, the current season follows the story of an ex-Prosecutor General who, having made it to the top political office, is trying to whip things into order while displaying next to no political skills and despite the need to toe the line of conservative rhetoric.

Who is Yoon Suk-yeol and what he has accomplished over his six months in power

Those who see Yoon as a typical member of the conservative camp need to check his earlier record, when he took part in student protests or famously led the investigation into the 2012 presidential elections scandal involving “political trolls”, national security agencies orchestrating an online smear campaign against the Democratic Party candidate. Although the investigation was eventually dropped, Yoon’s name surfaced yet again, when the government was looking for an investigator to probe corruption allegations against Park Geun-hye and Lee Myung-bak—and it was Yoon who was credited with unearthing the necessary evidence to back Park’s indictment.

Following this success, Yoon was appointed Prosecutor General by Moon Jae-in, who apparently expected him to rubber stamp jail convictions as instructed. The new prosecutor, however, demonstrated integrity and homed in on corruption among the President’s entourage. Following a protracted bureaucratic tug-of-war between the Ministry of Justice and the Supreme Prosecutors’ Office (SPO) and an attempt to suspend him from office, Yoon ended up in politics and joined the conservative People Power Party (PPP) for lack of any third political force in South Korea.

Yoon’s political career with the PPP did not get off to a smooth start. He ran afoul of both classic right-wing and right-center conservatives, whose Lee Jun-seok was Chairman of the Party. During the election campaign, however, Yoon succeeded in building his own faction with his old buddies and former prosecution officers.

Nevertheless, Yoon won the presidential race by a meagre 0.73%, the tiniest margin in South Korea’s electoral history, whereas Lee Jae-myung, his principal contender and a former Mayor of Seongnam and Governor of Gyeonggi-do Province, fetched more votes than Moon Jae-in five years before.

Although this analysis does not aim to provide a comprehensive overview of Yoon Suk-yeol’s first six months in power, it is worth noting that he got down to his presidential business with a good deal of zest that has met with no lesser resistance.

Yoon opened his presidency with a few major eye-catching moves to demonstrate his commitment to serious change. In his first most sweeping gesture, Yoon relocated his presidential office from the Blue House to the former Ministry of Defense building, emphasizing his resolve to end the “imperial presidency”. Then, the new president has avoided any overt acts of political vengeance and called for cooperation across ideological and party divides. A committee has been set up with a mandate to promote national unity in politics, economy, culture, and other areas.

Yoon has also continued the policy of commemorating the victims of the military dictatorship, seeking to hijack the Democrats’ agenda and taking part in such events as the commemoration ceremony for the victims of the Gwangju Uprising in 1980.

Yoon’s Cabinet and Administration are teaming with ex-Democrats, including the Prime Minister Han Duck-soo, though most public officers at the top have a history of serving under Lee Myung-bak and Park Geun-hye, a fact that left its mark on their political views. And yet Yoon was the first to meet with the Russian ambassador ahead of his Democratic opponent.

Yoon has reorganized his Presidential Office, abolishing, rather radically, the office of the Senior Presidential Secretary for Civil Affairs previously regarded as the master lever for exercising informal influence over and forcing president’s will on security agencies and the civil society. Further plans envisage support in overhauling 350 government agencies to improve their productivity and efficiency. Then, there is a big focus on anti-corruption efforts which, as the South Korean tradition goes, pursue a dual purpose of fighting corruption and ousting political opponents from positions of power. On yet another line of resolute action, the government has launched a crackdown on drug trafficking.

Significant changes have been made to the economic policy. While the previous administration relied on rising personal incomes to drive economic growth, Yoon Suk-yeol and his government prioritize the private sector. Another notable change was the scrapping of the nuclear phase-out policy and reinstatement of the “nuclear ecosystem”.

To tackle the growing missile and nuclear threat from North Korea, the new Administration came up with an “extended deterrent” policy based on the alliance between Seoul and Washington as well as the cooperation between South Korea, the United States and Japan. But the “bold initiative”, which is in fact a repackaged version of proposals harking back to the times of Lee Myung-bak (denuclearization in exchange for economic aid), was rejected while the military cooperation with the U.S. renewed on the same historical scale was responsible for the long-drawn-out bout of escalation between the Koreas and “mounting threats”.

In spite of the declarations of strategic alliance with the United States, Seoul participates in economic formats avoiding any steps, or is reluctant to get involved in any projects, that could be damaging to its relations with China or Russia. Quite tellingly, Yoon cold-shouldered Nancy Pelosi refusing to get back from his vacation to meet the U.S. House Speaker in person during her tour of Asia and confining his welcome to a mere phone conversion.

The energetic efforts of the new President have encountered a whole raft of barriers. The first is a deeply divided society. The election defeat with the narrowest margin in South Korea’s electoral history was dismissed by the Democrats as purely accidental and even their fiasco at the local elections in June 2022 (where they secured only five out of seventeen provincial governor seats and mayor seats in directly-controlled cities) has not done much to wake them up to reality.

Moreover, since Moon Jae-in had left politics, the Democratic Party chair was taken by Lee Jae-myung, Yoon’s presidential rival with a controversial reputation of a populist who appears more left-wing in his pledges than Moon himself.

Adding to the contention is the Democrats’ overwhelming majority in the National Assembly. The opposition Democratic Party of Korea holds 169 out of 300 seats in the National Assembly, while the ruling People’s Power Party has 114. Thus, the Democrats are in good position to torpedo most of Yoon’s initiatives or reject his nominations to government offices (appointing someone without parliamentary consent is frowned upon as bad political manners). The legislating process can be simply paralyzed as the parties refuse to budge and compromise. This ongoing impasse is set to last till the next parliamentary elections in spring 2024.

The ruling party is struggling to stand united as Yoon’s supporters and conservatives teamed up against Lee Jun-seok entangled in a corruption scandal with bribes that he had received in kind as sexual services. The Ethics Committee suspended Lee’s party membership for eighteen months, but he refused to surrender his chairmanship of the party resorting to relentless litigation to overrule his opponents’ resolutions. After a long fight, Lee was finally dethroned—but he and his followers are still there to stay.

The second challenge lies in the current economic troubles, for which Yoon as President bears at least symbolic responsibility. South Korea’s economy is facing tough times with steeply rising inflation, the weak won versus the U.S. dollar, and steep interest rate hikes. Forecasts point to the growing risks of market volatility and a global recession driven by a dramatic rise in the U.S. Federal Reserve funds rate, Chinese economy slowdown and the fallout from the protracted conflict between Russia and Ukraine. The growing external economic uncertainty increases the risks of domestic stagflation and fast-paced high inflation resulting from skyrocketing energy and commodity prices as well as from persistent disruptions in the global supply chains. Some economists believe that South Korea may find itself in a situation similar to the 2008 economic crisis, at the very least. But since most of the above comes as legacy problems inherited from the previous Administration, Yoon’s critics are pointing their accusatory fingers elsewhere.

Take, for example, his controversial government appointments. where Yoon has been criticized on three counts. The first line of attack had to do with the lack of inclusivity and gender equality as many of his nominees to top positions are those whom he has long known personally, mostly men in their fifties and fellow graduates of the Seoul National University. The second fault-finding narrative talks about a “Republic of Prosecutors”, since Yoon’s team includes, for obvious reasons, quite a few people with the SPO background, including the Minister of Justice, Minister of Unification and President’s Chief of Staff. The third is concerned with specific scandals ranging from real cases of corruption to questionable allegations way back in the past. Although most rows have been settled by self-withdrawals or resignations, they leave behind a sense of frustrated expectations laced with a foul aftertaste.

On top of it, the new Administration has ignored their pledge “not to do things the way Moon did” and started using some of the previous President’s methods such as forcing some of Moon-appointed officials from their posts and pressing them to resign for the sake of maintaining stability in the current government.

From the Conservatives’ perspective Yoon has let down his people because he failed to deliver on his pledge of introducing innovation and change in line with his vision of the future. In their opinion, he should have used this decisive period of his presidency to propose a plan and lay down the groundwork for effective government administration, but has made no progress on that front. The fact that some of his plans have been blocked by the Democrats does not count any more. In the eyes of the opposition, Yoon is building a dictatorship while showing a graphic example of total incompetence.

The third problem is Yoon’s media presence. On the one hand, Yoon is not a professional politician, on the other, he almost never leaves the spotlight and talks to the media every day. Given that the right-wing outlets are controlled by his political adversaries they criticize Yoon with equal regularity. His public gaffes and ambiguous statements are instantly made public and enhanced with fitting commentaries.

The last big media scandal flared up during Yoon’s visit to New York in September 2022 when Yoon was caught cursing on a live microphone after exiting from a disappointing meeting with Joe Biden. His outburst was recorded and aired later on the pro-democratic MBC network, this time complete with very specific subtitles in spite of not very distinct sound. To be sure, when Yoon banned MBC from joining the media pool for his next international visit this sparked accusations that he was trying to stifle the freedom of speech.

All of the above have been steadily eroding Yoon’s approval rating from 52% when he took office down to a little more than 30% on September 10th, 2022, which is extremely poor performance for a president in the early months of his term. And the numbers are still oscillating around this level with only 30.1% of those surveyed on November 10th responding that they are satisfied with Yoon Suk-yeol as their President and 64.9% disapproving of the way he handles the top job.

“War with the Democrats”

Under the circumstances, both parties use the word “war” to describe their current stand-off. There are several reasons for that. First, every party that has fought its way to power sweeps clean the conquered ground under the pretext of combatting corruption. Second, political vengeance and settling old scores are embedded in the political culture of South Korea. Most Conservatives, apparently in no mood to break the tradition of locking up the ex-President, are eager to have their reckoning for the jailing of Park Geun-hye and Lee Myung-bak. Third, Yoon Suk-yeol is clearly resolved to see through the investigations which had eventually brought him to swap his Prosecutor’s Office for the President’s one.

For now, public prosecutors have their sights trained on the ex-President Moon Jae-in and the current Democratic Party Leader Lee Jae-myung. The political emergency helped Lee to rally the support of the party that was all the more unanimous since his foremost rivals either had left politics or cut less charismatic and recognizable figures. With all that, some openly said that Lee Jae-myung had been fighting not for the party chair or a parliament seat, but for his own safety and being able to recast the allegations against him as revenge for his political views.

The accusations against Moon Jae-in are related to two incidents. The first one was the repatriation of North Korean defectors in 2019, when two fishermen had murdered 16 of their comrades before they “chose freedom” and headed South, trying to escape the North Korean justice. The Moon’s government deported them, kicking and screaming, back home. The ethical reasons were good enough, but under the Constitution of South Korea all North Korean defectors are deemed to be citizens of South Korea and shall not be repatriated. Besides, there was no proper investigation, and the Conservatives might claim that the murder had not been proved and therefore Moon just sacrificed the innocent for the sake of strengthening ties with the North.

The second incident was the death of a fisheries official, Lee Dae-jun, who, according to official reports, was shot by North Korean troops in the waters of North Korea in 2020. However doubtful is the official account of the events[1]. it has surfaced that in spite of insufficient evidence Lee was portrayed not as a victim but as someone who had tried to cross over to the North fleeing gambling debts and domestic troubles. Aggravating the picture, the President knew for a fact that a citizen of the Republic was in North Korean waters but failed to take any action to rescue him. This highlights Moon as a politician who prioritizes relations with the North over human lives as well as reminds everyone about Park Geun-hye who had allegedly done nothing to save the high school kids on the sinking Sewol ferry. Though indeed Park’s government had neither capability nor any chance to rescue them. While the ex-President refuses to cooperate with the investigators, the Conservative party members keep reminding him about his own criticism of Park Geun-hye for similar behavior.

The accusations against Lee Jae-myung are more mundane. They have been trailing him since his gubernatorial years in the city of Seongnam and boil down to astronomical profits pocketed by his crony developers in the construction business at a huge cost to the municipal budget. Lee also appears to have accepted bribes from businessmen disguised as contributions to a football club under his patronage in exchange for various preferences. Although the inquiry has led to some arrests already, there is no direct evidence against Lee Jae-myung because all the four key witnesses against him had died—in a strange coincidence of two proven suicides and two apparently natural deaths—one or two days before their testimonies were due in court. As for his past abuses, Lee has so far been charged only with violating the Elections Act as he had denied the acquaintance of certain individuals involved in the scandals, a claim which later was found to be false.

In 2022, however the Supreme Prosecutor’s Office discovered that all the developers’ ill-earned gains had been hoarded in a hush fund that was used to bankroll Lee Jae-myung’s presidential campaign. The SPO has already detained a number of people in his inner circle.

Lee’s wife too is under investigation on charges of using a corporate credit card of the Gyeonggi-do Province administration to pay her personal expenses for shopping and restaurants at the time when her husband was governing the province in 2018–2021. She is also suspected in making public servants run her personal errands.

The Democrats deny all accusations, Lee Jae-myung proudly ignores any court summons, and his party puts a lot of pressure on the government to stall the investigation. The evidence of Lee Jae-myung’s corrupt behavior appears to have more substance than the “facts” against Park Geun-hye if only because this time we know how the bribe-givers’ money was spent. It would be fair to remember that Moon Jae-in also attempted to put Lee Jae-myung behind bars because Lee was his foremost contender within the party.

What bear much importance here is that the Democratic camp would be utterly discredited, as well as the left without a strong leadership, should these charges turn to convictions. First, because other Democratic leaders either have taken a time-out from politics or have been compromised. Second, when a public idol and Democratic politician who has promised to fight corruption is caught red-handed himself, this inflicts irreparable damage on the party’s reputation. In this context, the Democrats would probably stoop to any kind of ruse to stop the prosecutors’ onslaught. Considering the zeal with which their opponents in power got cracking on those investigations, the Democrats’ best bet to forestall the disaster would be to bring about a change of power by impeaching Yoon Suk-yeol.

So, the political gasoline has been spilt and the question is what unfortunate event will strike the incendiary match. It could be a scandal associated with Yoon or his close allies (this is yet unlikely as both the President and his entourage has steered clear of corruption) or a national tragedy, for which the President would be held fully responsible. For Park Geun-hye, the debacle was triggered by the sinking of the Sewol ferry that killed 300 people. Although the failed rescue operation was the fault of the local authorities and it was not possible for the central government to make any difference, the opposition was swift and smart to pin the blame on Park and make it stick. However groundless the claims were that Moon Jae-in and his cohorts had faked the news, the media campaign run by the Democrats still helped to undermine Park’s approval rating and shape the public image of the ex-President that played its role in the events that followed.

Given the above, there are two questions that need to be answered. Could the Seoul Halloween tragedy (a crowd crush in the district of Itaewon on October 29th, 2022 that left 158 people killed and about as many wounded) become the equivalent of the Sewol sinking for Yoon Suk-yeol, and would the Democrats try and set Yoon Suk-yeol up for impeachment over the late 2022–2023?

The Halloween tragedy and potential impeachment

This may remind the Russian readers of a similar tragedy in Minsk (Republic of Belarus) in 1999 near the Nemiga metro station where several thousand people got crammed into a narrow sloping alley, so when those coming down first slipped and fell the crowd pushed forward over their heads and the ensuing panic only added to the casualty count. Could the Halloween disaster have been prevented? On the one hand, the festivities were not a municipality event where police should always be deployed to maintain order, but an informal celebration and the first big public event after years of Covid restrictions that drew large crowds of Halloween party-goers who were left without proper official oversight as there was no specific organizer. On the other hand, the authorities failed to take measures and disperse the crowd in good time in spite of some warning calls about the risk of a crowd surge. It seems that the local police were wary of having to interfere with the street party and spoil the fun for the revelers.

A special police department is conducting a probe to understand what went wrong, but the resentment is bitter and already widespread with surveys showing that about 70% of those asked are unhappy about the way their government has been dealing with the consequences of the tragedy. The common sentiment is that punishment ought to be served to some of the high-profile government figures that usually bear merely symbolic responsibility rather than the rank-and-file officials who were directly responsible and failed to prevent the crush or promptly pass information about the imminent danger.

The Democrats, in their turn, have been trying to exploit the tragedy as a symbol of government helplessness and incompetence, demanding a parliamentary inquiry and an independent special prosecutor, and calling for the resignation of the Prime Minister Han Duck-soo, Minister of Public Administration and Security Lee Sang-min, and Commissioner General of the Korean National Police Agency Yoon Hee-keun. To some extent this explains why the two latter officials have no intent of resigning right away on their own and thus acknowledging their share of responsibility but might do so after they have closed the case and sorted out the consequences.

Anyway, Yoon immediately declared a period of national mourning, during which he more than once visited the memorial altar, met with religious leaders and was generally demonstrating the government’s commitment to properly investigate the tragedy and punish those responsible. This has taken the wind out of the Democrats’ sails making it hard to blame Yoon for ignoring the people’s bereavement as effortlessly as they did it with Park Geun-hye. On a different tack, the Democrats have been trying to spread the word that the tragedy happened because all the local police were busy guarding the President whose residence is not far from the scene of the stampede. To set things straight, this is not true because President’s security is provided by other troops, and as for police availability, part of the force did have to be deployed elsewhere at two political rallies held by the Democrats and the Conservatives at the same time as the Halloween festivities.

It is problematic to poke any other faults since Yoon has been running the country for a little over six months and has not had time to make any consequential decisions that could supply political ammunition against him. Blaming Yoon for the economic storm is risky as this could lead to questions about who had sowed the wind in the first place.

Technically, however, there is little to stop the Democrats from initiating the impeachment proceedings that could be announced if voted for by 200 out of 300 Members of Parliament and subsequently endorsed by the Constitutional Court. The Democrats already have 169 votes that could be beefed up to 200 by enlisting allies from other left-wing parties and Yoon’s enemies among the Conservatives like Lee Jun-seok’s faction. They have enough of their appointees in the Constitutional Court, and, as the Candlelight Vigil showed, public protests can be as effective as backdoor influence in terms of putting pressure on a public institution.

Lurking as yet another potential factor in the fray are the United States that may choose to assist in toppling President Yoon to replace him with a classic right-winger, given that the Democrats are as pro-American as the Conservatives anyway. If the United States are gearing up for a global confrontation, Washington would be better off with an amenable rather than pragmatic head of South Korean state.

Nonetheless, Yoon still commands a fairly strong level of confidence and support, and, though there is no shortage of warts and all, his story is not that of someone who, having climbed to the top wishing to do justice and get rid of the usual politicking government types, degenerated into just another one of them as it had precipitously happened to Moon. The accusations against the Democrats themselves are quite grave and could also be leveraged to play on the people’s emotions. Especially, if their damaging power is boosted with the same rhetorical techniques that Moon and his supporters employed during the Candlelight Demonstrations. In addition, both sides competing for presidency “enjoy” fairly high disapproval ratings, and between the two unsavory reputations people tend to opt for the status quo.

Finally, the lasting effect of the previous presidential impeachment may, too, come to weigh in on the outcome because most of the allegations that had been bandied about by the media for five years and been driving angry protesters out into the streets were never proven in court. Furthermore, only the deleted messages in secret Telegram chats saved the Democrats from accusations that all those heart-rending rumors had been fake news fed in by Moon’s coterie via loyal top bloggers. While the realization that the masses had been already duped once might not necessarily hit the public domain, it may as well immunize the minds against future manipulation, and the Democrats would no longer be able to mechanically reuse their 2016 strategy.

Therefore, the Democrats are still quite likely to try and impeach the President, but an assessment of their chances of ultimate success would do better to look back for references well beyond 2016 and consider the events of 2004 when Roh Moo-hyun was impeached over his backing of a newly established political party consisting of his supporters, which was against the Constitution and put him on the wrong side of both the Conservatives and the “old-school” Democrats. The Assembly suspended his executive powers, but Roh Moo-hyun turned the tables so that in the eyes of the broader public his impeachment looked as if the old elite had been trying to stop the reforms. Then, Roh Moo-hyun’s party won the elections that were held in the interval between the impeachment vote and the pending ruling of the Constitutional Court and he was reinstated as President.

Be it as it may, the internal political turbulence in South Korea is clearly going to pack this drama season with a good deal of thrilling action and insightful lessons.

[1] His personal opinion is that there is no absolute certainty about whether the victim shot by North Korean troops and the missing official are one and the same person.

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Chinese Communist Party and the path of “high-quality development” at Guangdong Province

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A night view of Shenzhen, Guangdong province, on March 10, 2018. (PHOTO / VCG)

During the meeting of “Huang Kunming”, Secretary of Guangdong Provincial Party Committee mentioned that it is significant for Guangdong embark on a path of high-quality development fit for its own situation. According to my highly understand of China’s high-quality development and analysis to the nature of the Chinese society and the polices of the Communist Party of China regarding the development is meaning (all-round building a strong modern socialist country) and all-round rejuvenation of the Chinese nation still need to rely on development.

 With the continuous development of the Chinese economy and the deepening of reforms, China put forward a new expression of “high-quality development” for the first time at the 19th National Congress of the Communist Party of China in 2017, which indicates that China’s economy has moved from a stage of rapid growth to a stage of high-quality development.

 Changing China’s economic development strategy is an inevitable choice in line with the law of development and the demands of its development. Now, China is seeking to change its previous development pattern of relying on a large number of factors of production to focus more on quality and efficiency.  It has begun to adhere to the implementation of the new development philosophy that emphasizes innovative, coordinated, green and open development for all, and to build a new development pattern that relies on domestic trade and promotes integration between domestic and foreign trade to enable the Chinese society to complete the building of a strong modern socialist country in an all-round way, Chinese side should stick to advancing high-quality development as the top priority, as President Comrade “Xi Jinping” stressed in the report.

 High-quality development mainly depends on the economy’s vitality, innovation and competitiveness.  In order to improve these capabilities, China is accelerating the implementation of the innovation-driven development strategy, intensifying its efforts to achieve a high level of self-reliance in scientific and technological research, mobilizing forces and focusing on solving intractable problems in original and pioneering science and technology research to achieve breakthroughs in some crucial and pivotal technologies, which are guided by these strategies, China has achieved good results in manned space industry, lunar and Mars sounding, deep-sea and land exploration, supercomputers, satellite navigation, quantum information, electro-nuclear technologies, large-scale passenger aircraft, medicine, biopharmaceuticals and other fields over the past years, and joined the ranks of innovative countries in the world.

 Green development is an important symbol of the transition of China’s economy from the stage of rapid growth to the stage of high-quality development. In recent years, China has pushed the green transition to a development mode, implemented the comprehensive rationalization strategy, developed green and low-carbon industries, and advocated green consumption.

  The bright future of China’s economy stems from more flexible and high-quality development. In 2021, China calmly responded to changes in the world as well as the COVID-19 epidemic, took new steps to build a new development pattern, achieve new results in high-quality development, and achieve a good start for the 14th Five-Year Plan. China has maintained a leading position in the world in economic development and in epidemic prevention and control, accelerated the growth of national strategic scientific and technological forces, improved the flexibility of the industrial chain, continued to deepen supply-side structural reforms, and made solid progress in the green transformation of the low-carbon economy and prosperity subscriber.

  Here, with the strong leadership of the Communist Party of China, the significant advantages of the socialist system with Chinese characteristics, the technological foundation accumulated since reform and opening up, the extremely large market advantage and domestic demand potential, and with huge human capital and human resources, the Chinese economy will continue to grow steadily on the path of high-quality development, enabling China to contribute in achieving a steady and stable progress in the recovery of the global economy.

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China’s Deflating Population: The Economic Marvel in Eclipse?

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So China’s population shrank last year. I admit my first instinct was … well, isn’t this a good thing? I mean, during the entire 1960s and 1970s, global discourse misted around how the world population kept growing beyond the finite resources of this world. And how food scarcity and poverty would create a social depression. China, with a population of roughly 1.4 billion people, was specifically a focal point of population reduction strategies. After the widespread catastrophe of the Great Leap Forward, a debilitating social program orchestrated by Mao Zedong in the late 50s, China’s population was on the up and up in the following decade, to the point that the infamous ‘One-Child Policy’ was introduced in the late 70s to inhibit the burden of a growing population – and concomitant poverty. Since then, however, China has dynamically transformed into an economic powerhouse – a factory floor for global manufacturing. And here lies the answer to this population conundrum: Shrinking population in China is a problem now!

According to the data released by the Chinese government last week, China’s population contracted by circa 850,000 people in 2022; with 9.56 million births against 10.41 million deaths, it was the first time in more than half a century that deaths outnumbered births in China. The initial thought would be to blame it on the pandemic. But that would be a blinkered assumption without gauging the stunted birth rate. It was the sixth consecutive year that the number of births fell, down from 10.6 million in 2021, according to the National Bureau of Statistics. Many demographers and statisticians warned for years about a population decline on the cards, albeit much later in this decade. This presage was why the government reposed its one-child policy in 2016 and extended the limit to three children in 2021. Local governments offered tax rebates and outright cash handouts to couples having children. The source of anxiety was partly social and partly economic – or maybe socioeconomic is the correct juxtaposition.

China is a rising economic power, the world’s second-largest economy, and the strongest contender to dethrone American supremacy. But in listing all the superlatives, we sometimes forget that China is still a developing economy. Despite its phenomenal evolution from endemic poverty, its average population still earns less than the average earnings in advanced economies. And the shrinking population is a two-pronged issue that could constrict China, like other leading developing economies, into a middle-income trap.

Just by simple inference, we can judge that a declining population is also an aging population. Impressive modernity in China’s healthcare system has led to an increase in life expectancy. Meanwhile, a decades-long hiatus in birth-conducive policies and changed mores of young Chinese couples, often antipathetic to having children altogether, have led to a sharp decline in births. A combination of these factors has invited a conspicuous outcome: Shrinkage in China’s working-age population. In fact, China’s working-age population has been in decline since 2015; according to a government spokesman, it could fall to roughly 700 million (approximately 23%) by 2050. This factor would be particularly problematic for China, which has long been a competitive labor market for manufacturing heavyweights like Apple and Microsoft. But moreover, a bulging elderly population amidst falling tax receipts would pose a challenge to government finances, especially given the comparably underdeveloped social safety net programs in China. Therefore, either taxes ought to be raised sharply or state pensions to old-age dependents would hit the skids – a spartan policy dilemma either way.

We can draw apt comparisons from Japan – the world’s third largest economy – which has notoriously suffered from a lopsided aging population and accompanying anemic economic growth since the asset bubble burst of the 1990s. I mean, China’s real estate market does look like a financial crisis just waiting to happen. But post-boom Japan has tried virtually every bizarre economic strategy – from negative interest rates to yield curve control – yet has failed to spark demand-led inflation. Strangely, however, China has sustained its bustling economy on prohibitive rates of investment rather than consumer demand, which has remained relatively lukewarm due to policymakers’ reluctance to pass the complete scope of economic growth to households. Nonetheless, a contracting labor force would perhaps accelerate the exodus of manufacturing from China unless the government finds alternatives to sustain China’s unrivaled productivity levels.

We could blame China’s ‘zero Covid’ policy for strangling economic growth. It is no surprise that China’s economy grew by a modest 3% in 2022, its slowest rate in nearly four decades, barring 2020. Intermittent lockdowns and pedantic mass testing regimes cast a pall over economic activities. And higher interest rates imposed by the Federal Reserve and other central banks have dampened global demand and diluted appetite for Chinese imports. According to government officials, year-on-year Chinese exports fell by 9.9% in December. While an economic turnaround is widely expected later this year, a falling working-age population; a skyward old-age dependency ratio; and the ongoing trade tussle with the United States could cost China many more decades to supersede the American edge. However, China has been an iridescent success story, an economic miracle of sorts. And therefore, if the Chinese Communist Party (CCP) could somehow prioritize economy over national security; social reforms over governmental control; and collaboration over confrontation, I reckon China can again defy the odds and achieve its dream.

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Nepal-China Relations and Belt and Road Initiative

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Image source: xinhua

China appears to be more “functional” in Nepal recently. A new administration led by leader Pushpa Kamal Dahal has acted on the same pitch initially also. The Rasuwagadhi border crossing, which had been blocked for three years, has been reopened for two-way trade, and the much-anticipated Gyorong-Kathmandu train project’s final survey has also begun as of January 1, 2023. The second phase of the 10-lane ring road project from Kalanki to Chabhil is anticipated to start soon as well. All these accumulatively demonstrate the current nature of friendship between them and the profound Belt and Road Initiative is the key rostrum for the current complexion of the relationship between them. Hence, the trends are indicating a greater form of cooperation even in the regional domain as well.

Meanwhile, China and Nepal have inked a six-point agreement to strengthen bilateral collaboration and exchanges on governance, legislation, and supervisory practices, in line with Beijing’s Belt and Road Initiative (BRI). On September 12, 2022, in Kathmandu’s federal parliament building, Agni Prasad Sapkota, Speaker of the Parliament, and Li Zhanshu, Chairman of the Standing Committee of the Chinese National People’s Congress, signed the agreement. According to the agreement, the nations would exchange information about each other’s legislative, oversight, and governance activities. Five years after BRI’s founding, on May 12, 2017, Nepal formally joined the process. Nine projects – the upgrading of the Rasuwagadhi-Kathmandu road, the construction of the Kimathanka-Hile road, the construction of the road from Dipayal to the Chinese border, the Tokha-Bidur Road, the Galchhi-Rasuwagadhi-Kerung400kv transmission line, the Kerung-Kathmandu rail, the 762MW Tamor Hydroelectricity Project, the 426MW Phuket Karnali were on the to do list. However, more than any other nation, China invested US$188 million in Nepal during the 2020–21 fiscal year. During KP Sharma Oli’s visit to Beijing in 2016, Nepal and China also ratified a transit transport agreement for commerce with other parties.

However, amidst the current global tension and the changing rapport of international politics, China remains as a key investor in Nepal. Besides, the recent activities from the Nepal administration showed a shift in policy domain from the previous regime which in some cases was rigid to Chinese projects. Meanwhile, the BRI becomes more eminent in the strategic, political and economic domain of the status quo. Against such backdrop, the next sections will discuss current trends of the BRI in Nepal.

Nine Projects: Token of Continuation of the Initiative

Nepal put forward nine potential projects to be undertaken under the BRI at the beginning of 2019. These included setting up a technical institution in Nepal, building new highways, tunnels, and hydroelectricity dams, as well as conducting a feasibility assessment for a trans-Himalayan railway that would connect Jilong/Keyrung, a Chinese port of entry, with Kathmandu. This enhanced the significance of the project which will direct to more prosperous China- Nepal relations.

Nepal, the “Pillar”

Hou Yanqi, the Chinese ambassador to Nepal, stated in April 2022 that Nepal was one of the BRI’s most significant pillars and that projects were still moving forward despite the “speed of pragmatic collaboration” slowing down because of the coronavirus pandemic and Nepal’s changing political climate.

Transit Through China: Better Connectivity and Trade

Kathmandu protocol agreement with Beijing, Nepal will import and export goods from a third country through China through Tianjin, Shenzhen, Lianyungang and Zhanjiang seaports and land ports of Lanzhou, Lhasa and Shigatse. They will also get the facility of transporting goods through six dedicated transit points of the two countries. It will boost the trade for improved connectivity.

Extended Cooperation in Domains Except for BRI

In addition to the BRI projects, China is currently making significant investments in Nepal’s infrastructure, including ring road expansion, dry ports at the border crossings of Larcha and Syabrubesi, the establishment of China Study Centers, a new international airport in Pokhara, and optical fiber cable connectivity from Kathmandu to the Chinese border.

Energy Exploration: New Domain of Cooperation

China is also looking into the prospect of discovering gas and oil deposits in Nepal and is building a border river crossing at Hilsa, Humla. It will open a new domain of cooperation based on mutual interest.

Poverty Reduction and Generating Newer Income Sources

Currently, roughly six Chinese airlines offer regular flights to Nepal. Nepal has the fastest-growing Chinese tourist industry. Nepal granted China access to choose 16 Himalayan regions that border China to develop as part of a program to fight poverty.

Security: Bringing Peace

Joint military drills between China and Nepal are also a new development in security cooperation. It will bring peace in the region since the image of Nepal is very clean.

Increased Diplomatic Connectivity

The BRI appears to be one of the three priority pillars for the Chinese government’s organizing principles of foreign policy, along with the Global Development Initiatives and the Global Security Initiatives, in terms of developing successful international relations rather than just an economic endeavor. It will bring a fresh start in the diplomatic domain of both countries and the future prospects of ties in the diplomatic arena can be discussed robustly.

No More Landlockedness

Under BRI and the Trans-Himalayan Multi-dimensional Connectivity Network, which will transform Nepal from a landlocked country to a land-linked one, there are multiple road, sea, and corridor networks throughout the world. It will boost the relationship to a great extent while there will be a surge in the arena of export and import.

Regional Connectivity

The extension of the Qingzang railway from Tibet to Nepal and the border with India is among the most significant BRI projects. Three routes are being considered for this railway. The first would connect Shigatse to Kathmandu via Kerung and continue on to Pokhara and Lumbini before reaching the Indian border. The second would run from Shigatse to the Burang border and connect Humla and Darchula districts in Nepal with Pithoragdh, Uttarakhand, while the third would link Shigatse to the Yandong border of Sikkim, India.

As China and India have no trade disputes with one another, India would gain from this project as well after trading through this route. In comparison to other industrialized parts of the world, South Asia could see an increase in commerce and investment if this project is carried out on a win-win basis between China and Nepal.

Challenges

Additionally, loans are typically provided on commercial terms through the Silk Road Fund and the Asian Infrastructure Investment Bank (AIIB), both of which are led by China (SRF). Due to project site clearance delays and the nation’s political instability, along with its comparatively short repayment time, Nepal’s big projects have raised concerns that they may not get off the ground.

Besides, three primary issues with China are of particular concern to the Nepalese government. First, instead of commercial loans, the nation favors grants and lenient loans from China. Second, it wants the interest rate and repayment period to be comparable to those of multilateral funding organizations like the Asian Development Bank and the World Bank. Thirdly, it thinks that bid competitions ought to be allowed for the BRI projects. But the Chinese authorities are not responding on the same page.

The Inception of a Recommenced Cooperation

Pradeep Gawali, Foreign Minister in the KP Sharma Oli’s government, said that from the perspective of Nepal, the BRI projects were the way to be connected to the trans-Himalayan multipurpose connectivity network. Nepal had been able to select the nine projects included in the BRI with great success. However, Chinese authority said on December 26 that it looks forward to cooperating with the new government to advance projects under the ambitious Belt and Road Initiative, a day after the Maoist party chairman Pushpa Kamal Dahal alias Prachanda was named as Nepal’s new prime minister (BRI). China aims to develop initiatives under the Belt and Road collaboration, according to Mao Ning, the official spokesperson for the Chinese foreign ministry, who congratulated Prachanda on his appointment. Beijing claims that as a longtime ally and neighbor of Nepal, China cherishes Nepali relations very highly. China is prepared to collaborate with the new Nepalese administration to broaden and deepen friendly relations and cooperation on all fronts, pursue high-quality Belt and Road cooperation, strategic cooperative alliance marked by enduring friendship for growth and prosperity new impetus, and bring more benefits to peoples from both sides.

Hence, it is evident that China’s policy toward Nepal is generally stable and uncomplicated, and the two countries’ bilateral relations have been cordial and shaped by Nepal’s strategy of balancing the divergent impact of China and its southern neighbor. Through BRI projects, Nepal could gain better connectivity relations with its northern neighbors, but in order to do so, Nepal must enhance its negotiations with China.

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