Month: August 2021

Chinese Mining in the DRC: From Sicomines to Global Cobalt Monopoly

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Halim Nazar, Research Intern, ICS

Image: The Tenke-Fungurume Mine in the DRC
Source: Reuters

The Democratic Republic of Congo (DRC) embodies the paradox of plenty. Despite having an untapped resource wealth worth an estimated $24 trillion, the country remains one of the poorest in the region and needs urgent reform. Sino-Congolese relations can be traced back to the mid-1960s when the Chinese Communist Party (CCP) supported the Congolese struggle against “American imperialism” and capitalism, but it was only after 2008 infrastructure-for-minerals deal that Chinese influence became more perceptible in the DRC. Chinese mining companies have been focusing on the DRC not only because it has high-grade mineral deposits but also because competition from other transnational companies is minimal as they are wary about operating in the DRC given its tinted track record, especially when it comes to the protection of human and labour rights, and its frequent episodes of social unrest.

Almost 70 percent of the Congolese mining portfolio is under Chinese control, and so the industry is affected whenever China is affected. Chinese investors like Minerals and Metals Group (MMG) and China Molybdenum’s Tenke Fugurume are prominent in the cobalt and copper-rich Lualaba and Haut Katanga areas along with global traders like Trafigura and Glencore, and Canada’s Ivanhoe Mines and Barrick Gold Corporation, but artisanal mining still accounts for 20%-40% of the cobalt production. Nevertheless, the success of their recent forays, as well as the predicted increase in demand for precious metals, particularly cobalt, have motivated Chinese companies to bolster mining operations and increase investments and lobby their government to renew negotiations for greater mining rights.

China strengthened its presence in the DRC with the infrastructure-for-minerals deal that provided substantial mining rights in exchange for developing the DRC’s war-torn infrastructure. In late 2007, China announced a $5 billion loan to the DRC for infrastructure development with substantial investments to follow and a joint venture was set up to execute the terms of the agreement. The joint venture was named Sino Congolaise des Mines (Sicomines) and was established with a Chinese majority shareholding of 68%. The initial Chinese investments were to be evenly divided between mining projects and the development of roads, railways, schools, hospitals and dams. China has described the deal as a mutually beneficial relationship, which is absent of any political conditionality wherein China would gain access to critical minerals essential for its energy products, and the DRC would gain from the development of its shattered infrastructure and the growth of its productive capacity. Over 10 years since its inception, the so-called “deal of the century” has improved the DRC’s macroeconomic performance while also bolstering infrastructure developments. Yet, the deal still has a lot to live up to and will depend on the DRC’s ability to consolidate the benefits and ensuring that promises are kept. Moreover, since the Sicomines deal are exempt from taxes until infrastructure and mining loans are fully repaid, the DRC won’t receive any substantial income from the agreement for the foreseeable future.

Despite a rocky start and reduction in scale after two sets of renegotiations as funding from China Eximbank became uncertain, mining operations finally began in 2014. Under the agreement, China would receive 10 million mt of copper and 600,000 mt of cobalt worth approximately $50 billion over 25 years. In 2016, Congolese sources estimated that $1.2 billion had been spent on infrastructure and mining credits combined. Mining activities smoothly progressed, and Congolese cobalt production crossed 100,000 mt/year in 2018 and copper production went above a million mt/year until the global COVID pandemic when cobalt mining rates slightly went below 100,000 mt/year in 2020. Resource-for-Infrastructure (RFI) deals like this all over Africa have helped China foster strong relations with several countries and consolidate its position as a great power. China draws support and exerts its influence on these nations in matters of dire importance at the UN and while staking the claim of “One China”, which is the People’s Republic of China (PRC) and calls for the isolation of Taiwan (Republic of China). The Sicomines agreement has been widely criticized as it is perceived to unfairly benefit the Chinese. The IMF publicly criticized the DRC for taking on too much debt.

Cobalt has become an intensively sought-after mineral as the blue element is crucial for lithium-ion batteries. Given the surge in demand for electric vehicles, Cobalt demand is predicted to grow fourfold by 2030. With reserves in the ballpark of 3.5 million mt, the DRC hosts over 51% of the global cobalt reserves, and it is estimated that in 2020, the DRC produced about 90,000-95,000 mt of cobalt representing nearly 70 percent of the total cobalt feedstock production globally. Several Chinese companies like Chengtun Mining, Wanbao and CNMC have bolstered their mining operations and have expressed their desire to acquire more cobalt mines. But the new Congolese president Felix Tshisekedi has been a vocal critic of the current deal and has called for renegotiations in the spirit of drafting win-win agreements. The Sicomines deal has been mired with secrecy and controversy from the very beginning, with even the Congolese Mines Minister being denied crucial information regarding the agreement. Corruption runs rampant in the DRC as a fifth of the country’s mining revenues – $750 million – was lost to corruption between 2013 and 2015, according to The Global Witness.

China has shown signs that it is ready to strengthen this strategic partnership and recently cancelled the DRC’s interest-free loans worth an estimated $28 million and promised to fund infrastructure projects and also give $17 million in other financial support as the Central African nation joined the Belt and Road Initiative (BRI) and to also help the country overcome the impact of Covid-19. China’s decision to write off debts and welcome the country as a new partner for the BRI would further drive cooperation between the two countries and incentivize more Chinese miners to invest further into the Congolese copper and cobalt industry, increasing their stake in local mines. Essentially improving access to proven cobalt and copper reserves worth billions by waiving off a paltry $28 million loan.

Cobalt is crucial for battery technologies and to facilitate the global transition to a fossil-free future. In the current global scramble to secure forward supplies and escape the eccentricities of the spot market, China holds all the cards. Control over crucial raw materials like cobalt, along with state-of-the-art processing and manufacturing capacity, will determine the balance of industrial power, particularly in automotive and energy storage. Presently, China is the frontrunner, and it seems likely to retain this control for at least the medium-term.

Zapad/Interaction-2021: A New Milestone in China-Russia Joint Military Exercises

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R. M. V Pavan Raghavendra, Research Intern, ICS

Source: Ministry of National Defence of the People’s Republic of China

The People’s Republic of China (PRC) and the Russian Federation recently conducted the ‘West/Interaction-2021’ joint military Exercise (hereinafter called Exercise) from 9 to 13 August 2021.

Titled 西部·联合-2021 (xibu/lianhe-2021) in Chinese, and “Запад/Взаимодействие-2021” (Zapad/Vzaimodeystviye-2021) in Russian, the Exercise was unprecedented in terms of scope, level of participation by both sides and its conduct.

The theme of the Exercise was ‘safeguarding regional security and stability’ and it intended to ‘verify and improve joint reconnaissance, early warning, and electronic information attack and joint attack and elimination’. While Chinese media claimed that more than 10,000 troops from the PLA’s Western Theatre Command (WTC) and Russia’s Eastern Military District (EMD) participated in the Exercise, Janes Defence News reported 13,000 troops.

Russian troops operated PLA weapons and equipment during the Exercise, of which more than 80 per cent were modern, including a newly unveiled Type 95 ‘4-25’ integrated gun-missile air-defence system. The PLA’s J-20 fighters and Y-20 transport aircraft, and Russian Su-30 also participated in the Exercise.

It is interesting to consider the selection of troops participating in the Exercise from both sides and the location before looking at the conduct.

The WTC comprises 76 and 77 Group Armies and is responsible for China’s borders with India, South and Central Asia, and ‘counterterrorism’ in Xinjiang and Tibet. Tibet and Xinjiang Military districts (MD) located within WTC have sizeable troops and are directly under the CMC/PLA Ground Forces HQ.

As observed from CCTV 7 coverage, PLA troops* participating in the Exercise were drawn from the 181 Combined Arms Brigade, Artillery Brigade, and Special Operations Brigade of the WTC’s 77 Group Army (GA), 84 Army Aviation Brigade of Xinjiang MD, and the Airborne Corps. The choice of 77 GA over 76 GA is curious as it is based in Sichuan and is oriented to South West along the India-China Line of Actual Control (LAC) in Tibet. The 76 GA is based in Qinghai, Ningxia and Gansu, and is oriented towards the North West, i.e., the Western sector of the LAC in Xinjiang and South and Central Asia.

EMD‘s Area of Responsibility covers Eastern Siberia up to the Pacific Ocean and includes Russia’s land borders with China and Mongolia. Russian troops participating included a motorised rifle unit located in the Trans-Baikal region, operational-tactical aviation units, and a combined army aviation detachment.

One of the two main Combined Arms Tactical Training Bases (CATTBs) in WTC, the Qingtongxia (青铜峡) CATTB, is located at the base of Helan mountain ranges at an altitude of 2000m. The terrain is semi-desert with an arid climate. The base contains an urban warfare training village, electromagnetic environment simulation, monitoring and control systems, and a 1:500 scale model of the Aksai Chin.

Conduct

Before the actual Exercise, both sides conducted extensive preparations, which included familiarisation and handling of PLA weapons and equipment followed by live firing. The joint tactical training which followed included long-range precision fire by artillery and airdropping of troops and Infantry Combat Vehicles (ICV).

The PLA established a three-tiered joint bilingual (Russian-Chinese) joint command centre to ensure smooth coordination between PLA personnel and their Russian counterparts at all levels. China’s Central Military Commission (CMC) set up a directing department under General Li Zuocheng, member of the CMC and Chief of the Joint Staff Department, while Lieutenant Generals Liu Xiaowu and Mikhail Nosulev, Deputy Theatre Commanders of WTC and EMD respectively, headed the Joint Command and were involved in joint planning.

An extensive communication network involving ten communication methods and multiple networking modes with information terminals was established to ensure real-time information sharing and passing of instructions between the Joint Command and troops.

The main Exercise was conducted in four stages involving joint confrontation, destruction of enemy defences, three-dimensional attack and pursuit and annihilation, involving extensive ground-air coordination.

Under cover of the J-20 and other fighter aircraft, H-6 bombers and JH-7As fighter bombers carried out the destruction of enemy defences in depth while artillery systems including multiple rocket systems and 155mm gun howitzers engaged enemy targets firing hundreds of tons of ammunition within forty minutes.

Y-20 and Y-9 aircraft were used to paradrop Airborne troops along with ZBL-03 to carry out long-range deep assaults to seize enemy defences and gaining battlefield initiative, while special forces along with Lynx were inserted using Mi-17 helicopters and escorted by Z-20 Attack Helicopters. The extensive use of drones for reconnaissance and surveillance, swarm attacks on ‘enemy’ positions, sniping of enemy targets and post-strike damage assessment was another unique feature of the exercise, while ground-based multi-layered air defences intercepted and destroyed enemy drones.

The Exercise’s Closing Ceremony was attended by the Defence Ministers of both countries who agreed to ‘enhance strategic communication, deepening cooperation in areas such as counterterrorism and working together to safeguard regional stability’.

The China-Russia Military Partnership: The Past and the Future

The PRC and erstwhile-USSR had a history of military cooperation from the pre-Liberation era till the deterioration of Sino-Soviet relations in the late-1950s. During the PRC’s initial years, much of PLA doctrine, organisation and equipment were borrowed from the Soviet model.

The current round of military cooperation commenced after the Sino-Russian boundary dispute was settled in 2005. Since then, the exercises have varied in scale and level of participation. These include the Peace Mission 2005 exercise and the Vostok-2018, Tsentr-2019, and Kavkaz-2020 drills.

At the military level, the Exercise is unprecedented in four aspects; first, is the level of jointness exhibited by the PLA in combining airborne and heliborne operations with ground operations in what the PLA claimed as a ‘three-dimensional’ operation. PLA sources also claimed that the vertical separation between lowest flying aircraft and the vertex of artillery shell was less than 200 metres, reflecting a high degree of coordination between the air and ground elements; second, there was near equal participation by both sides; third, unlike in the past, where both sides operated as distinct entities under an overall command, Russian troops were integrated into mixed formations; and lastly, PLA participated with its latest equipment including J-20 fighters and Electronic Warfare equipment.

The deployment of J-20 fighters, H-6K bombers, airborne and heliborne exercises and the level of degradation sought to be achieved also suggest that the Exercise was aimed at ‘regional stability’ rather than ‘counterterrorism’. The heightened interoperability between Russian armed forces and the PLA will definitely boost their capability to respond to regional threats.

The Exercise thus provides valuable experience to both sides and a foundational tool to institutionalise the bilateral defence relationship without formally entering into a military alliance.

On the diplomatic level, both Beijing and Moscow have claimed that the joint exercises are not targeted against third parties. The geopolitical signalling and intent behind the joint exercises, however, seems to involve multiple dimensions.

Firstly, the drills are being conducted in the context of increasing Western presence in China’s neighbourhood with the Quad deepening cooperation in the Indo-Pacific and Freedom of Navigation Operations in the South China Sea. Relations between Russia and the West have also sunk to a new low after the former’s annexation of Crimea. The deepening of China-Russia military ties indicates a strategic posturing on the part of both sides to contest the West.

Second, the withdrawal of US troops from Afghanistan has resulted in the Taliban taking control over the country, which threatens regional and domestic stability in neighbouring countries. Thus ‘counterterrorism’ is amongst the main agendas of the Exercise. Russia has decided to provide weapons, equipment, and training to Tajikistan’s armed forces.

Finally, the drills serve to signal India about the level of PLA’s operational preparedness as it comes against the backdrop of the ongoing crisis in Eastern Ladakh. On the Russian side, the Exercise signals Russia’s concern about India’s relations with the US despite India’s reassurance that its relations with the US were not at the expense of its relations with Russia. An interesting aspect was that the Joint India-Russia Exercise INDRA-2021, aimed at planning and conducting counterterrorism drills under UN mandate, was held at Volgograd around the same time. The deepening of the military partnership between Russia and China is thus of concern to India. * Special thanks to KK Venkatraman, Research Fellow at Institute of Chinese Studies, Delhi, for drawing attention to this.

China’s CBDC: Cross-border Prospects and Challenges

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Raj Gupta, Research Intern, ICS

Image: Speculation is growing that the digital yuan will be launched soon.
Source: Shutterstock

The Central Bank Digital Currency (CBDC) race has begun to pick up pace and almost all the countries are getting into it. Around 86% of the world’s central banks are actively researching the potential of CBDC, which makes it evident that countries all over the world view it as an important development in the monetary domain which they need to be up to speed with. As of now, the Bahamas is the first as well as the only country to have launched a CBDC for nationwide use. Whereas among the major economies, China is at the forefront. China’s CBDC journey started early in 2016 when the Digital Currency Research Institute, the first official institution in the world engaging in research and development of digital currency was established.Early identification of potential, active research of the prospects of CBDC as well as successive pilot trials in major cities brought China to the forefront.

The official name of China’s CBDC is Digital Currency Electronic payment (DCEP), which is commonly known as e-yuan or digital yuan. During the pilot trials, it has so far received a positive response from the public, mostly because of the red packets containing DCEP which was distributed to the public on a lottery basis. It helped create the much-needed hype among the masses and kickstart China’s mission-CBDC. Platforms such as JD.com, Meituan and Didi Chuxing were roped in to participate in such trials as well in order to test the integration of CBDC into different apps. Since its first pilot trial to the integration into apps, the journey has been gradual and smooth. With the amount of control that the Chinese government yields over its institutions, integrating DCEP won’t be a challenge domestically. Getting people to use it instead of their WeChat or Alipay wallets can be a challenge but incentives similar to the red packets at early stages can help build that user base. Recent clampdown on internet giants in China might also soften the resistance from Tencent and Alibaba and make space for the digital yuan.

China also has its eyes fixed on the Beijing Winter Olympics 2022 to showcase its first major use case on a large scale and this may also serve as a gateway to wider use of CBDC in the country. Although the PBOC officials claim that they are looking more into the domestic use of e-yuan, many initiatives reflect otherwise.

The first is the Multiple CBDC (m-CBDC) Bridge which the PBOC joined recently. It aims to develop a prototype for cross-border payments with the Central Bank of the United Arab Emirates, BIS Innovation Hub, the Hong Kong Monetary Authority, and the Bank of Thailand.The main objective is to study the feasibility of cross-border payments using CBDCs and distributed ledger technology. Being the first-of-its-kind initiative, this has huge potential to solve issues related to cross-border fund transfers. Given the scale and timing, the results of the Proof-of-concept work can perhaps contribute to setting international standards around CBDCs.

The second is, Finance Gateway Information Services Co, a joint venture established by China National Clearing Centre of the PBOC and the SWIFT, which aims to establish and operate local network of financial messaging services to process cross-border Yuan payments through China’s own settlement system. Both, m-CBDC bridge and Finance Gateway Information Services Co. aim to challenge and change the current USD-dominated payments system in the coming future.

There is no doubt that both these initiatives aim to provide solutions and develop the current cross border payment infrastructure but these will also make the currently followed arrangement of Society for Worldwide Interbank Financial Telecommunication (SWIFT) less relevant. Currently, international payments are facilitated by the SWIFT. The dominant role played by the USD in SWIFT’s payment system is arguably one of the major reasons for the USD’s status as a global reserve currency. China is aiming to change that by trying to build a parallel system. And when that parallel system gets up and running, internationalization of the RMB could get easier by incorporating DCEP into various forms of economic activity in which it participates through multilateral and bilateral arrangements.

There are many avenues through which China would want its CBDC to flow and gain a grip over cross-border payments. From providing financial aid to BRI countries to waiving off transaction fees on repayment of loans, there are a plethora of options China has because of its trade links that make it the largest trading nation in the world. China’s growing integration with the developing world can help China rally countries behind it to follow Chinese standards of CBDC.

DCEP’s success internationally can tend to affect the dominance enjoyed by USD in global payments. The brunt inflicted by U.S sanctions is largely because of the USD’s dominance in international payments architecture. Hence, a parallel network system based on m-CBDC holds the potential to soften that brunt of U.S sanction policies which have increasingly been used against Chinese entities and individuals. Even Hong Kong’s chief executive Carie Lam was left with a pile of cash because banks did not want to deposit her money and expose themselves to the risk of U.S sanctions. This is an example of how strong and effective the U.S sanctions are against companies and individuals. If China can circumvent the sanctions through its system, it is likely to reduce the U.S hard power and will allow China to act with much more flexibility without having to worry about the aftermath of U.S sanctions. It can have far-reaching effects on how China deals with the nations facing sanctions by the U.S.

But all of this won’t be easy for China to accomplish. Cross-border usage of DCEP will likely face headwinds because the U.S and its allies may see the increasing acceptability of China’s DCEP as against their interests. On June 5, a communique issued by the G7 iterated the benefits and potential of a CBDC and underlined its commitments towards transparency and rule of law. It further stated that the G7 will work together towards common principles and will publish conclusions later this year. This communique reflects that the U.S and its western allies have perhaps woken up to the potential threat of e-yuan and are now pooling efforts to study its implications and ensure appropriate frameworks are in place.

There are issues such as interoperability among CBDCs of different countries which can prove to impede the goal of easier cross-border transactions. Another major issue is the lack of digital infrastructure in other countries to transact in digital currencies even if interoperability is achieved. But the single biggest impediment could be the privacy issues related to the DCEP. DCEP follows what has been termed as ‘Controllable Anonymity’ which allows the People’s Bank of China (PBOC) to have complete oversight of the data collected from its CBDC. The idea of data collection by a foreign government won’t go down well with democratic nations that have strict privacy laws. Besides, it will likely lead to an increase in scepticism and reluctance in foreign entities. There are rapid developments taking place in the CBDC domain with different countries moving up the ladder. DCEP, clubbed with China’s trade links, growing influence and strategic long-term thinking has the potential to counter Dollar weaponization but that will be a very long and difficult road ahead. China is hoping that someday e-yuan can play a key role in supplanting the U.S Dollar. But for that, there must be a system in place that can be used to gradually increase the tempo when needed. With the consistent pace at which China is developing and testing its CBDC, that system will likely be in place in the near future.

Cross-border e-commerce in China: Past, Present & Future

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Raj Trikkha, Research Intern, ICS

Image: CBE in China started to grow remarkably from 2013 due to the vast acceptance and usage of smartphones
Source: MarketingFuture

The rise in globalization and internationalization of trade has paved the way for e-commerce to expand from within nations to across the globe. This type of e-commerce is called cross-border e-commerce (CBE), wherein, products or services are sold to buyers overseas through e-commerce websites. The extent of globalization is such that the annual growth rate of CBE, which is 17%, has surpassed the growth rate of overall B2C e-commerce, which stands at 12%. 

Cross-border e-commerce in China began in 1998 with a few foreign trading companies tapping into the latest internet technology to carry out their sale activities. The year 1999 marked the birth of the company which changed the face of Chinese e-commerce. Alibaba.com, established by Jack Ma started out as a B2B portal that facilitated between local factories and overseas companies. In the mid-2000s, as more Chinese people went to foreign nations for work or studies, a new profession emerged, called DaiGou (代购). DaiGou refers to transactions where Chinese nationals who reside abroad sell foreign products to people in China with a little markup. They used various platforms like Taobao.com and WeChat. DaiGous for a long time filled the demand gap and still continue to conduct purchases online.

Since these types of transactions started to gain popularity and demand, companies like YMatou.com entered this market in 2009. CBE in China started to grow remarkably from 2013. This happened due to the vast acceptance and usage of smartphones. This made it easier for companies to reach consumers and for the consumers to avail their services. Between 2014 and 2015, over 5000 CBE startups were established in China involving Kaola.com and Vip.com. Today, the biggest e-commerce market in the world, China, has $34 billion worth of purchases in the CBE market (as of 2020). Though, in comparison with the U.S. (34 percent) and U.K. (45 percent), it consists of a mere 1.53 percent of its total e-commerce sales. This implies that there is still a lot of potential for the CBE market to grow in China. 

Image: Today, the biggest e-commerce market in the world, China, has $34 billion worth of purchases in the CBE market
Source: Practical E-Commerce

Although the market was growing and becoming an essential part of the technology-driven economy, the sustainable development of the industry required the supervision of laws and support of policies. Thus, starting from 2007, various government agencies released policies and recommendations to promote CBE in China. Subsequently, in 2014, China through the General Administration of Customs issued a new set of regulations pertaining to CBE. This was the first time that China officially accepted the CBE model. This opened up many opportunities for foreign firms wanting to sell their goods in China. As a result of increasing online sales by retailers, recent modifications in the CBE regulations were introduced on 1 January, 2019, to make them more robust. 

These schemes eased the process to a huge extent. Among many things, they lowered down the labour and logistics costs, streamlined the product return process, and announced the establishment of 46 additional cross-border e-commerce comprehensive pilot zones. Streamlining the return process enabled companies to ship goods in bulk to Chinese warehouses even before selling them to the customers, while more pilot zones meant that companies will have more areas where favourable tax rates are levied. 

Image: The General Administration of Customs announced the establishment of 46 additional cross-border e-commerce comprehensive pilot zones
Source: China-Briefing

The new policies have had a positive impact on the industry. The first three quarters of 2020, show an increase in CBE retail imports by more than 17 percent year-on-year, according to customs data. Cross-border e-commerce in China is growing at a fast pace. Even during the pandemic era, the CBE sector in China brought 31.1 percent of its foreign trade. CBE has become an essential aspect of China’s foreign trade. In 2020, over 10,000 traditional foreign firms went online for the first time. Many experts believe that CBE will continue to thrust the foreign trade in China as the market is still less-tapped and the policy incentives are yet to be yielded.

Ecological Civilisation/ Shengtai Wenming: Towards a New Wave of Resilience Thinking?

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Annesha Bhattacharjee, Research Intern, ICS

China’s resilience has been typically observed from a civilizational and culturist perspective, so far. Resilience as an organized indigenous systemic concept has yet to be defined by China from an ecological slant. Being an ancient civilisation, the idea of nature was restricted to romantic and spiritual ideation – in literature, philosophy and art, as found in the recorded history of cultural resilience. Often invested in learning the ways of nature, Tao(天) is the dreaded god that cradles human life.  China jumped from being an agricultural civilisation into the Anthropocene, spearheaded by industrial revolution. After learning the ways to ‘exploit nature’, it went on to narrowly focus on accumulating ‘economic resilience’. China, by then had realized that it had reaped economic well-being at the cost of nature’s ‘collateral’ devastation leading to continuous events of natural calamities which became evident with the passage of time. As a result of this, modern China initiates a vision of constructing a civilization that promotes ‘harmony’ between ‘man’ and ‘nature’.

“弹性”(Tánxìng) or elasticity, “韧性”(Rènxìng) or toughness, or “恢复力”(Huīfù lì) or the power to recover. These are the direct translations for the word ’resilience’ in Chinese which however lacks any conceptual rendition or indigenous scientific framing, unlike the West. The president of China, Xi Jinping, earlier this year in the 2021 Earth Summit, reiterated the vision of Shengtai Wenming or Ecological civilisation. China’s ‘economic resilience’ during the pandemic has led to several scholarly appraisals. In 2017, the withdrawal of the US from the Paris Agreement increased China’s willingness to lead global environmental governance. Being one of the biggest polluters in a climate hostile world and an economic power has put China in a tight space for international scrutiny. Thus, achieving ‘ecological resilience’ might be the next big thing for China to prevent any major risk of regime shift that will hurt the developmental state of the nation.

The conceptualisation of resilience in IR discourse began in the West during the cold war period, emerging in various social and natural science fields. As a consequence of rising environmentalism after industrial revolution. Ecological resilience, got popularly defined at the time by ecologists such as C.S. Holling as, “the time required for an ecosystem to return to an equilibrium or steady-state following a perturbation.” Around 1980s, environmentalists in Soviet Union were the first to propose the term ‘ecological civilization’ which was later incorporated by China’s CPC party. Scholars in the West were conceptualising resilience around the same time. The 1972, the Stockholm conference resulted in political effectiveness against environmental issues in China. China’s evolution of political ecology has been marked since then. Repercussions of Deng Xiaoping’s reforms and economic liberalism was already showing signs of enviornmental issues. Leading Hu Jintao’s regime, to push forth the idea of ‘Beautiful China’, specifically stressing on the ecological degradation factor irrespective of significant industrial growth in the sustainable sector. This unfolded the imbalanced socio-ecological systems that was systematically observed after President Zemin’s leadership who maneuvered China into becoming a major global producer and user of clean and renewable energy technology. China, a developing nation has largely been a reform and transformation-based society than just being induced by any strong ideological standards. Especially after the cultural revolution in the post-Mao phase where the focus was to ‘grow’ in the neocolonialist world, curating a strong labor force with little to no tolerance for traditionalism. Hence, the ‘laws of nature’ that were once preserved in traditional Chinese literature were significantly discouraged until then. As a rectification, Xi Jinping initiated the party’s intention to build a ‘community life’ together that allows man and nature to co-exist based on the political foundation of modern socialism with a brush of Chinese characteristics. This had been surfacing reluctantly in the party’s political agenda for the past two decades.

Remembering as David Easton once quoted that ‘scientism’ is good, but the ‘mad craze’ for the same is bad that should be avoided. In the past four decades, China had similar bout of lessons  from impelling an intensive industry built on the foundations of capitalism and growth-based sustainability. Thus, choking the boundaries of the biosphere and opening alternatives for energy-based industries. The Western  resilience system has been ‘empirically’ based on typical rational consciousness and minimal ‘value’ inclusiveness. China recognized it’s failure to balance the ecological sphere along with its economic growth despite taking the best developmental lessons from the West. Coercing them to think about creating a balance between being less ‘yang’ and more ‘yin’ until a state of equilibrium is reached, referring to an anti-waste-based society caused by intense globalisation. The Chinese scholars thus, argues that the situation can be altered by imbibing a socialist modern culture coupled with Chinese characteristics while acknowledging the fall of communism in Soviet Russia. China has been striving to defend its integration of a constantly transforming domestic socio-ecological system against the West-inspired, ‘universalism’. Their value system is predominantly based on Confusion philosophy. It promotes the idea of ‘relational self’ in a way where one does not limit oneself to evolve just as an individual entity but transcend that very evolving-self to the extended  virtues of the community. “What you do not wish for yourself, do not do to others?”, quoted Confucius. Only then one can achieve a harmonious community life together. Thus, trying to align with the traits of socialism by building communal responsibility along with the self.  This ideation of China’s ‘harmony’ towards establishing a political nation based on eco-socialism certainly signals a new wave of resilience thinking that diverges from the existing trends of liberal environmentalism governmentality.

Internationally many critics are however, skeptical of how China is likely to achieve the ambitious dream of stable economic growth as well as an Eco-civilization, simultaneously. As they argue that continuous growth is detrimental to the ecological crisis.  To which, Xi remains hopeful especially after observing its ‘triumphant’ pandemic situation in comparison to the rest of the world, further encouraging growth over 6%, in the post-pandemic phase. Green development (one of Xi’s 6 developmental policies), is likely to induce a possible alternative including green economic reform that shall be introduced along with several other structural changes to suit the 2050 vision of ‘ecological civilization’. Chinese scholars, meanwhile are speculating about the possible challenges the government will have to tackle with the emergence of the upcoming reforms.  Uncertain outcomes might spark social contestations and disruptions – to which, however, the government prefers authority and not democracy.  Successive transformation in the past couple of decades has been slowed down and stalled due to various challenges of such kind. The risks looming around in the post pandemic world will thwart China’s growth in the long term if it does not adapt to the situation and take control while it can. Especially as the industries experience a paradigm shift. Irrespective of Xi’s ability to achieve the ambitious political agenda, it will be refreshing to see how China brings about a new holistic system of green transformation that might stimulate a lot of other developing countries in the future while adhering to the international and domestic standards and stresses.

Did Lavrov-Blinken tête-à-tête in Reykjavik Stir the Pot between Beijing and Moscow?

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Hemant Adlakha, Associate Professor, Jawaharlal Nehru University, and Honorary Fellow, Institute of Chinese Studies

Image: Lavrov-Blinken summit: A test of US-Russia ties ahead
Source: gulftoday.ae

For more than seven decades Russia, China and Iran have successfully denied being reduced to becoming the US vassalage. During the US-Soviet Union Cold War years, the geostrategic coming together of Washington and Beijing, isolated and weakened Moscow. However, under the prevailing new Cold War conditions the US must induct the “barbarians” into neoliberal global financialization orbit. Or else, the recent Blinken-Lavrov smiling images from Reykjavik may just end up as only good optics and to Beijing’s great relief. 

On 20 May, the Moscow Times (MT) website carried one photograph and one news headline, both must have caused huge anxiety if not concern among Beijing’s foreign ministry mandarins responsible for China-Russia relations. While the headline read as “US, Russia seek to ease tensions in first meeting under Biden”, the accompanying picture of the two countries’ foreign minister was perhaps the best ‘smiling’ image since the Obama days, to say the least. The MT further quoted the Russian foreign minister saying, perhaps causing more discomfort in Beijing, that he was ready to “plough through the rubble left behind by previous US administration.” The next day, Russia Today television news website rt.com in an op-ed commented: “Despite recent rock-bottom relations and growing tensions, Russia is willing to end hostilities and strive for better relations with the West, its top diplomat Lavrov announced after meeting with his US counterpart.”

Strangely, or perhaps expectedly, China’s usually “bellicose” foreign ministry spokespersons maintained an uncharacteristic low tone on the issue. Likewise, Beijing’s generally proactive strategic and security affairs commentariat too was found wanting and hiding. However, it is quite obvious to anyone who closely follows Beijing’s statements and actions, what is concealed behind the “indifferent” pretense is “disbelief” and “worries” caused by the sudden Biden administration “expediency” to “bear hug” Russia and Putin. Did China’s IR experts and specialists on US-Russia relations err by failing to gauge Biden’s initiative to reset US-Russia ties? Perhaps yes. Or is it that Beijing took for granted that Biden’s “America is back” diplomacy is only aimed at winning back the US allies? Maybe true.

Biden alone cannot stop China

Last Friday, China’s widely read and influential online platform specializing in international politics and diplomacy, huayuzhiku.com carried an exclusive commentary entitled “US hand-shake with Russia aimed at Beijing.” The commentary observed: “Under Trump presidency, American diplomacy was regarded by the world as ‘unreliable’ and ‘unpredictable.’ Since the change of guard in the White House this January, Biden administration has been vigorously amending Trumpian foreign policy by trying to win over traditional allies and declared ‘America is back’. In its treatment of Russia, it seems Biden is continuing to endure the previous administration’s legacy. It is not difficult for anyone to see the Trumpian ghost guiding the White House.” (Emphasis added)

It is indeed puzzling as a quick Google search on the internet did not show up in the top ten pages a single news story on the two foreign ministers’ meeting from the English language media outlets in the PRC. Every other Asian news channel or media website reported the important event but not the Xinhua or CGTN or China Daily or not even the Global Times. Though not surprisingly, a week prior to the Reykjavik tête-à-tête, China’s English and Mandarin language media extensively reported the scheduled meeting along with editorial comments. On May 13, China’s official Xinhua news agency carried a report headlined “Lavrov, Blinken discuss upcoming Russia-US summit over phone.” The next day, global.chinadaily.com.cn published a similar report filed by its Moscow correspondent highlighting that the proposed foreign minister’s meeting was being held “amid the biggest crisis in ties between Russia and the United States in years.” 

Chinese Media underreports Reykjavik Meet

On the other hand, the semi-official media in China, especially in Chinese and English languages, has published op-ed articles and commentaries following the Reykjavik meeting between Lavrov and Blinken. The English language Shanghai Daily was the first to report the Lavrov-Blinken meeting held at the famous Harpa Concert Hall in the Iceland capital. The newspaper showed conspicuous urgency and without waiting for China’s official media went ahead and relied on foreign news agencies’ reports. But in contrast with the positive sounding Russian and global media headlines, Shanghai Daily was quite circumspect in its title: “Lavrov, Blinken spar politely in their first face-to-face meeting.”   

Within twenty-four hours of the meeting, an opinion piece on the haiwainet.cn website, which essentially caters to the Mandarin speakers in North America and is an important arm of the party’s official newspaper Renmin Ribao or People’s Daily, described the meeting as the result of “temptation to meet” on both sides.  Lavrov-Blinken met in order to “confirm to each other to carry on with their mutual friction short of a full-scale fighting in the face of hosts of hostilities and contradictions,” the website stated. The website further cited Li Yonghui, a senior researcher with the Centre for Russian, Eastern Europe and Eurasian Studies of Beijing-based China Academy of Social Sciences as saying “Given many deep-rooted contradictions and complexities between the two countries, there is not much room for a turnaround in the Russia-US relations.”

Interestingly, while most Chinese commentaries focused on highlighting the outstanding issues between the two countries, there have been few and far between writings so far which look at the implications for China should the Reykjavik meeting become a thaw in the frozen ties between Washington and Moscow. A key element absent in the Chinese op-ed columns so far has been “no reaction” on the timing and on the venue for the Reykjavik diplomatic rendezvous between the two foreign ministers. As according to Nikolas K. Gvosdev, a senior fellow at the Foreign Policy Research Institute, “the Arctic is one of the few remaining issues where Washington and Moscow do tend collaborate and share interest in beating back any efforts by states like China to insist that a category of ‘near-Arctic’ states should also have a say in the regional infrastructure of governance.” 

Biden Eager to Meet Putin: Deal within Deal

Now, as already mentioned, since the state-controlled mainstream media in China has been “censored” from commenting on the Reykjavik meet, a few select party-backed “leftist” and the state-sponsored foreign policy online platforms have more than revealed the mood in Beijing on the possible implications of the two foreign ministers’ in-person elbow bumping each other. Based on the commentaries, the early reactions in Beijing may be broadly summed up as follows: first, temporary breathing space. Some commentators see the sudden US move to “kiss and make up” with Moscow as a temporary step in order to 铺垫 Pūdiàn (literally meaning to “make bed”) for Biden-Putin meeting scheduled to be held in Geneva next month.

The second reason is the quick short-term diplomatic gain. Following the confirmation last Monday both in Washington and in Moscow that the maiden in-person Biden-Putin summit will be held during Biden’s first foreign trip to Europe as president, several opinion write ups referred back to the Biden-Putin first post-inauguration telephone call held in mid-April, in which Biden reportedly expressed his desire for an early meeting with the Russian counterpart. It is pertinent to recall that the Chinese commentators did not miss to notice that Biden had proposed to meet with Putin amid heavy Russian military building up at the Ukrainian border. At least one Chinese scholar also pointed out Biden was in tearing hurry to meet Putin and “hinted that resolution of the continuing differences between the two military superpowers is not a prerequisite for the summit.”

Third, last but not least, deal within deal. An unsigned commentary on the Xinhua news agency blog last Wednesday, entitled “Shocking how for petty gains Biden can’t wait meeting Putin” claimed to have deconstructed the raison d’être for why Biden is eager to meet Putin. Referring to the secretary of state Antony Blinken’s 19 May announcement of lifting of sanctions on the companies involved in the Nord Stream 2 gas pipeline project, the commentary termed it as the first of the two deals towards realizing the goal of a summit meeting with Putin. Five days later, the meeting in Geneva between the NSA Jake Sullivan and his Russian counterpart Nikolai Patrushev was described by the Xinhua blog post as specifically called to strike a deal for the early Biden-Putin summit.

Biden will do anything to not let China ‘ride the tiger’

To conclude, it is beyond doubt that Beijing is convinced China is the reason why Washington is more than desperate to “humor” Putin. Since taking office Biden and his foreign policy team has been relentlessly subjecting China under mounting pressure to “give in” but in vain as China continues骑虎难下 Qíhǔnánxià or in English “to ride the tiger”. Explaining further, a Chinese scholar said: “Maybe, the Biden administration is softening its policy towards Russia. This is because in recent years the focus of US foreign policy has been shifting from Europe and the Middle East towards Indo-Pacific. There the main target is not Russia but China. In order to defeat China, Biden coerced and lured Western allies to join together. However, due to the difficult situation of fighting China and Russia on the two fronts, it is showing unsustainable fatigue. Besides, the EU too is unwilling to get involved against both Russia and China at the same time.”

Just like Beijing miserably failed in concealing its worries with regards to the recent US success in forging together Quad alliance, the Chinese experts must be in a quandary and under great pressure in telling the party leadership to relax even as reports from Moscow suggest Putin is equally eager, if not more, in shaking hands with Biden instead of a mere elbow bump!                                                                                          

This article was earlier published in under the same title in Modern Diplomacy on 1 June 2021.