Month: October 2021

Establishment Strikes Back in Japan’s Ruling Party Election

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Dr. Jojin V. John, Research Fellow, Indian Council of World Affairs

Image: Fumio Kishida Wins Japan Election
Source: News18

Fumio Kishida, former Foreign Minister of Japan, has emerged victorious in the Liberal Democratic Party’s (LDP) presidential election held on 29 September, 2021 and has become the new Prime Minister of Japan. Kishida’s triumph over the charismatic Taro Kono, a former defense and foreign minister and the minister in the powerful administrative reform ministry in the Suga cabinet, is indicative of LDP’s preference for continuity over reforms, resistance to generational change and above all, the political reincarnation of former Prime Minister Shinzo Abe in the role of ‘shadow shogun’.

The election result also proves that Japan is not yet ready for a female leader. However, this year’s election was an improvement on gender terms, having featured two women candidates out of four – former Internal Affairs Minister SanaeTakaichi and former Communication Minister Seiko Noda.

Unlike many democracies, in Japan, it is not the general election but the leadership election of the LDP that decides the leadership of the country. Since its establishment in 1955, LDP had been in power throughout except for brief periods between 1993-94 and 2009-2012. Considering the fragile state that the Japanese opposition finds themselves in today, for all practical purposes, it makes sense to look into the factional debates and competition within the LDP to understand the dynamics in Japanese politics.

The leadership election took a dramatic turn in early September, following the surprise announcement of PM Suga, that he is not seeking a second term. In the first round of the election in which both LDP Diet members and party workers voted, Kishida came on top with one vote ahead of Kono, while Takaichi and Noda came third and fourth. As no candidate could get a clear majority, the contest went into a run-off between Kishida and Kono, during which the former secured a clear victory. 

Four important factors that will have long-term implications for Japanese politics were at play in the election. First, the results meant a victory for the conservative elements of the party over the reformist. While more appealing to the public and the party workers, Kono, who is known to be a maverick in Japanese politics, has not been the favourite of the party’s old guard. He represented a platform that called for reform within the party and radical change in the policy direction of the government. His support for LGBT rights, separate surname for married couples, pension reform and review of the nuclear energy policy is considered ‘too’ reformist even for LDP’s moderate conservatives. On the other hand, Kishida, who stressed stability and continuity without directly challenging the directions set by the ‘Abe/Suga administrations’ over the last decade, had no difficulty getting the backing of party elders.

Initially, after young lawmakers of the party rallied around free voting, it was widely anticipated that it would weaken the power of factions, thus benefitting Kono, who is popular among the new generation lawmakers. Therefore, Kono’s defeat also implies the limitation of the generational change in Japanese politics and the staying power of the factions led by veteran politicians. 

Third, election results highlight the political genius of Shinzo Abe and the influence that he will command as the kingmaker in the Kishida administration going forward. By offering his support to the hardliner Takaichi, who was considered as an outlier in the early phase of the campaign, Abe significantly changed the political equations. The move was critical in stopping Kono from gaining a clear majority in the first round and pushing the contest into a run-off.

Fourth, policy debates during the election also reflect LDP’s shift towards a more hard-line approach on defence and national security issues. However, Kishida, who used to call himself a ‘dove’ on foreign and security matters, styled himself as a realist and pragmatist to woo the party hardliners.  With Kishida taking a more hawkish approach to China, revision of the constitution and the need for Japan to acquire first-strike capability, Kono appeared to be soft. For Kishida, who assumed power on 4 October  during an emergency session of the Diet as the 100th Prime Minister of Japan, the immediate task is to steer the party to victory in the lower house election scheduled for next month. This will be crucial for him to seal his position as the party head and the prime minister for the next three years and to forestall Japan heading into a new phase of political instability.

A key component of China’s strategy in the Taliban-ruled Afghanistan is to make the Indian role “inconsequential”

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Hemant Adlakha, Associate Professor, Jawaharlal Nehru University, and Vice Chairperson, Institute of Chinese Studies

Image: Afghanistan News – China-Pakistan-Taliban nexus
Source: youtube.com

What does China-Taliban “bonhomie” in a Taliban-ruled Afghanistan indicate for India? Numerous speculative analyses have been voiced in the past few months in India, and many more will follow in the coming days. So far, disappointingly, the usual cliched, routine and unimaginative interpretations are being offered, i.e., now is the time India should discard its policy of non-alignment; in addition to the Taliban takeover, a friendly, pro-Beijing Taliban is not only a foreign policy setback but also a blow to India’s national security concerns; it will mean India being pushed into deeper conflicts with both Beijing and Islamabad, and so on.

Let us view the real situation from another perspective. How should India measure China’s advantage(s) under a pro-Beijing regime in Kabul? Should India be anxious/concerned over the so-called China, Russia, Iran and Pakistan ‘new Quad’? Why is there a broad consensus among China’s scholars that an “ambitious” India must be rendered “inconsequential” in an Afghanistan full of uncertainties? Why are analysts in Beijing asserting that because Afghanistan is a small part of India’s strategy, the US folly in Afghanistan will not deter New Delhi from going ahead and upgrading relations with Washington into “a quasi-alliance relationship”?

Following the chaotic US troop withdrawal from Afghanistan, there has been a “tsunami” of editorials, op-ed pieces and commentaries in the Chinese offline and online media. Interestingly, on the popularity scale, the opinion pieces written by the Chinese scholars and analysts have been in the range of 10,000 to over 100, 000 clicks. Indeed, most of these articles and opinion columns are focused on or highlight the rapidly changing political situation and the stakes for China under the Taliban-ruled Afghanistan. However, a few weeks ago, an article uploaded on the website of the popular digital guancha.cn showed a surprisingly and unusually large number of clicks – as high as close to 400,000! 

Image: Afghan Taliban on China’s side: should India be worried?
Source: thequint.com

What attracted such a huge number of readers to the article? Possibly, two factors. First, the popularity and huge-swell of readership for its author – Francis Fukuyama; second and more important reason is the title of the article in the Chinese version: “Biden says US troop withdrawal is to prepare to better deal with China and Russia Challenge. I hope Biden is serious.” The Chinese translation of Fukuyama’s write-up was based on his article in the Economist, three days before, titled “Francis Fukuyama on the end of American hegemony.” The article in Chinese also generated over six hundred “comments” from the readers – an unusually high number.

Interestingly, just like Fukuyama’s commentary attracted reactions from the Chinese readers from wider society, within hours of the US completing the withdrawal, an article entitled (in Chinese) “India suffers a severe strategic blow in a changing Afghanistan” clicked nearly 200,000 visitors. Edited by guancha.cn staffer Chen Sijia, the article in Chinese was based on an Indian analysis by a former Lt. Gen. on a digital news and current affairs platform, entitled “India backed the wrong horse in Afghanistan, and has gone into a strategic sulk now.” The Indian analysis claims “India’s actions in Afghanistan stem more out of pique for the triumph of radical Taliban and its mentor Pakistan, and less due to the lack of strategic options.”

However, the guancha.cn picked up theIndian article for entirely different reasons – reasons perhaps India’s strategic affairs or China-watcher community are yet to pay attention to.

Image: Afghanistan crisis: Taliban and China nexus threatens
Source: theweeklymail.com

First, though true that after the US initiated the peace talks with the Taliban in Doha in 2018, all major countries involved in Afghanistan except India have engaged with the Taliban to safeguard their respective interests. However, not unsurprisingly, as soon as Washington disclosed President Trump was contemplating a possible full troop withdrawal from Afghanistan, Beijing instantly swung into action and began holding consultations with Islamabad on its future Afghan strategy. A sputniknews.cn editorial (in Chinese) had then commented: “Following reports in the US media of the [Trump] administration planning to vacate half of its 14,000 forces in Afghanistan, the US plan to withdraw troops has emerged as a major agenda for China and Pakistan.” 

Second, in December 2018, Hua Chunying, the Chinese spokesperson denied at a routine foreign ministry press briefing that the hurriedly called meeting between the foreign ministers from China and Pakistan in the Chinese capital Beijing was to discuss the issue of the US withdrawal from Afghanistan. However, she did admit the two foreign ministers met to deliberate on the “most recent changes” in Afghanistan. It is pertinent to mention, China has since been proactively and carefully recalibrating its moves – primarily aimed at safeguarding its investments and ongoing project in region, especially in Pakistan’s CPEC (China Pakistan Economic Corridor) region – together with Pakistan and both the Taliban forces and the Kabul government. As it was revealed in a recent report in the semi-official Global Times, “The all-weather strategic cooperative partnership between China and Pakistan enabled the two countries to act in coordination on the Afghan situation, bringing about positive changes to the region.”

Third, it is important to point out what are key components in China’s strategy to safeguard its investments in Af-Pak border region and in the CPEC under the Belt and Road Initiative? Two factors. First, to keep India out of Afghanistan; second, if at all India manages to adjust its policies and restores contact with the Taliban, make the Indian role under the Taliban ruled Afghanistan inconsequential, as was observed by a now retired senior PLA colonel in a guest column in the NYT. Marginalizing India in the post-US era Afghanistan will result in more than one advantage for China. Namely, the Indian opposition to BRI’s signature CPEC initiative will become totally ineffective; this will further facilitate China to smoothly expand Beijing’s efforts in financing and building infrastructure across the region, which in turn will extend the Belt-and-Road access to markets in the Middle East; and given the tense relationship between India and Pakistan, the Taliban-Pakistan-China “troika” will ensure India is not allowed to create trouble in both Pakistan’s troubled Baluchistan region and plot and execute terrorist strikes especially targeting the Chinese construction projects and the Chinese personnel, as both China and Pakistan have been accusing India of “engineering” recently.

Talibs call China ‘friend’ as Beijing-Islamabad-Taliban nexus cements in Af
Image: English.lokmat.com

It is in this backdrop, the increased relevance of the Taliban commitment made to Beijing recently must be understood. At the same time, it is important to note that Beijing has already started downplaying the significance of the recent meeting between the Indian ambassador to Qatar and Sher Mohammad Abbas Stanekzai, the head of the Taliban’s Political Office. Reacting to the outcome of the meeting held in Doha on last Tuesday, a news daily in Beijing commented: “No information suggests that the Taliban has shown [to India] the sort of goodwill it has demonstrated to China.” 

Furthermore, a Taliban spokesperson Muhammed Suhail Shaheen told media earlier that “if India comes to Afghanistan militarily and has presence there, that will not be good for them.” Furthermore, Qian Feng, director of the research department at the Beijing’s prestigious Tsinghua University has said in an interview: “India’s past strategy has pushed itself into embarrassment. It cannot make a U-turn in its Afghan policies, neither can it cast aside geopolitical influence of the US and its Western allies.”

Standing up to China-Pakistan nexus
Image: openthemagazine.com

Finally, in Beijing’s view, India must blame itself for the mess it is in following the chaos left behind by the US in Afghanistan. According to the Global Times, if India designs its regional policies simply on the basis of countering China or pandering to the US, these policies are bound to fail. Lan Jianxue, head of the Department for Asia-Pacific Studies at China Institute of International Studies, told the Global Times “To some extent, this is going to jeopardize India from keeping influence in the region.”          

This article is revised version of an earlier write-up published by the web edition of the Indian Defense Review

China’s Journey to Vaccine Hegemony

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Swapneel Thakur, Research Intern, ICS

Source: Wall Street Journal, 2021

Since the beginning of the COVID-19 pandemic, China has continued to control the spread of the virus, successfully and effectively. A country of 1.4 billion people, more than the combined the populations of Europe and the United States, has been reporting some clusters of cases and has been able to prevent widespread community transmission. Although much of this success could be attributed to its experience gained from the SARS Epidemic in 2002, China’s disease control strategy featured a balanced combination of both prevention and protection.

Soon after COVID-19 first emerged in December 2019, Chinese scientists were able to identify the virus and share the genome sequencing data internationally. By the end of the January 2020, Chinese doctors had already categorised the clinical symptoms of COVID-19 patients, risks of person to person transmission, genomic characteristics, and the epidemiology. This robust foundation of research was backed by political commitment from the very top to use science to tackle the outbreak decisively. For instance, China’s National Health Commission sent three groups of national infectious disease experts to Wuhan at the beginning of the outbreak to investigate the risks and transmissions of the virus, to which their recommendations for a lockdown immediately implemented. The government was also quick to respond to the advice given by academic scholars such as Cheng Wang, the President of the Chinese Academy of Medical Sciences. His idea of Fangcang shelter hospitals, or temporary hospitals built by converting existing public facilities like stadiums became a key strategy for promptly providing large number of hospital beds and appropriate health care to patients suffering from the disease. However, its prevention control strategy would not have been possible without the broad range of community engagements and solidarity that was seen at an unprecedented level during the COVID-19 outbreak. Control measures that could curb individual freedoms like mandatory wearing of mask in public areas and social distancing were readily accepted by the public, unlike in the Western countries where anti-masking and anti-lockdown protests were quite common. Thus, after achieving the primary objective of limiting the spread of the virus, China’s next strategic goal was to successfully balance these immediate challenges with preventive measures, namely, providing safe and effective vaccines for protecting the population from further infections.

While the US and most Western countries followed a market driven model based on advanced purchase agreements, China adopted a state driven model which leveraged both political mobilisation and the use of economic instruments. Responding to an outbreak of a new infectious disease by solely relying on market mechanism can be expensive, besides being fraught with risks. Furthermore, market-based solutions could increase the probability of slowing down vaccine research due to high levels of uncertainty. For instance, despite having early access to the virus’s genome, several Western pharmaceutical companies continued to dedicate greater share of resources to develop lucrative treatments for existing chronic diseases such as cancer than to counter this infectious disease which could have global ramifications. Janssen and Pfizer’s COVID-19 vaccine research began only when large scale infection was imminent in Western countries during late February.

With vaccine research starting as early as in January 2020, China’s Ministry of Science and Technology (MOST) had already launched emergency research projects by February to accelerate vaccine development. It went on to sponsor five technological roadmaps and 12 vaccine candidates that included private sector giants and nascent start-ups. In order to coordinate policy goals across agencies and to mobilise resources promptly, the government had also established a COVID-19 Task Force comprising senior officials from the National Medical Product Administration (NPMA), the MOST and other concerned departments. The Task Force was affiliated to the Joint Prevention and Control Mechanism of the State Council and reported directly to the Vice Premier of China. Under the Task Force’s direction and guidance, the vaccine research program featured multiple players collaborating to maximise their joint performance. For instance, due to the long-standing relationship that the MOST shared with domestic pharmaceutical companies, the Chinese Government was quickly able to identify enterprises that were capable of developing COVID-19 vaccines during the public health emergency. These enterprises were then supported with efficient allocation of resources required for vaccines development across the Chinese Academy of Sciences, universities, the army and the state-owned enterprises. In addition, the Task Force had also directed the NPMA to modify its procedure in accordance with China’s Vaccine Administration Law to streamline the inspection and review process for vaccines and accelerate market approval.

As of now, four vaccines have been approved in China and in at least one foreign country. Sinopharm’s BBIBP-CorV, Sinovac Biotech’s CoronaVac, CanSino BIO’s Convidecia and ZhifeiLongcom’s ZF2001 make up the most of China and its allies arsenal in the fight to defeat COVID-19. The World Health Organisation (WHO) had also given emergency approval to Sinopharm vaccine in May and the Sinovac Biotech vaccine in June 2021 With the help of government resources and institutions such as Chinese Academy of Sciences and Academy of Military and Medical Sciences, Chinese manufacturers had already started increasing production capacity when the vaccines were in early stage of development. As early as in April 2020,Sinopharm had established production lines in Beijing and Wuhan with an annual capacity of 300 million doses and with plans to eventually export 300 to 500 million doses to over twenty countries. Similarly, Sinovac and CanSinoBIO increased their production capacities to 300 million and 200 million doses respectively. This explains why Chinese companies have been very optimistic about reaching an annual production capacities of more than a billion doses in 2021. For instance, earlier this year both Sinovac and Sinopharm had declared that they were capable of producing more than a billion doses annually. This expanded capacity has allowed China to meet huge domestic demands as well as to fulfil orders from abroad. With Chinese vaccine developers conducting Phase III trials in various countries in Asia, Latin America and Africa, China has emerged as one of the leading suppliers of COVID-19 vaccines in the world.

Such vaccine developers would usually collaborate with local pharmaceutical companies or health departments which helped recruit volunteers, coordinate physical and institutional resources and conduct trials in return for preferential pricing, delivery time and technology transfer. This led to China extending support to more than 80 developing countries. The government has been actively encouraging companies to export independently to other countries in its effort to ensure sufficient supplies of COVID-19 vaccines. Some of the agreements entered into by Chinese companies included an additional clause stating that if a local pharmaceutical company has hosted the clinical trial, the country itself is designated as partner in manufacturing and distributing vaccines for domestic use and export. This explains why China has been supporting overseas production bases of its vaccines in countries like Brazil, UAE, Egypt, Indonesia, Turkey Mexico and Pakistan. While UAE would be producing Sinopharm’s vaccine under the name of Hayat Vax, Brazil, Indonesia, Turkey and Egypt have been manufacturing Sinovac Biotech’s vaccines. Mexico and Pakistan have also started producing CanSinoBIO’s vaccine via an exclusive production line in their respective countries.

As one of the major producers of COVID-19 vaccines in the market, China has reshaped its position as a supplier of affordable vaccines to several developing countries in the world. By investing in research and production capabilities right from the early days of the pandemic, Chinese companies have not only taken major steps to mitigate the severe shortages of vaccines in the developing world but has also provided a viable alternative to expensive vaccines offered by pharmaceutical giants like the Pfizer and Moderna.

The author is thankful to his mentor, Dr. BiswajitDhar, Professor, Centre for Economic Studies and Planning School of Social Sciences, Jawaharlal Nehru University.The views expressed here are those of the author(s), and not necessarily of the mentor or the Institute of Chinese Studies.

E-RMB: A Challenge to Mitigate Trust and Surveillance

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Kunal Nitin Timbalia, Research Intern, ICS

Source: China-briefing.com

Digital RMB (hereinafter, E-RMB) is the digital version of China’s paper currency, the conversion of physical currency into a digital form. In the last 40 years, China has rapidly developed and transformed its economy into the second-largest economy globally. China wants to enhance this economic status and aspires to become the largest economy in the world. To achieve the goal, China is working with great perseverance on all fronts of the economy. The digital currency is one such examples. Since 2014, the People’s Bank of China (PBOC) has been exploring the chances of digitization of RMB to boost their economy. 

E-RMB is issued by the PBOC and is mainly a substitute to physical currency and will coexist with it. Further, the purpose and use of E-RMB are divided into two kinds: wholesale and retail. Wholesale E-RMB is mainly issued to institutions like commercial banks and would primarily serve large value settlements. On the other hand, retail E-RMB is issued to the public for daily transactions. E-RMB is a legal tender, individuals in China cannot refuse it and the PBOC facilitates its issuance.

Between 2014 and 2016, the PBOC formed the digital currency research group and initiated their research on the concept of E-RMB. In 2017, the PBOC started the E-RMB development project. In this project, large commercial banks, telecom operators and internet companies with high technological development were selected to participate and help the PBOC develop and test E-RMB. At the end of 2019, PBOC launched E-RMB pilot programs in Shenzhen, Suzhou, Xiong’an and Chengdu. In 2020, Shanghai, Hainan, Changsha, Xi’an, Qingdao and Dalian were also included in the distribution of E-RMB. PBOC’s Whitepaper titled “Progress of Research & Development of E-CNY in China” confirms that, as of 30 June, 2021, E-RMB has been applied to over 1.32 million scenarios, covering utility payment, catering service, transportation, shopping, and government services. If all goes according to the plan, it is predicted that China would become one of the dominant economies to offer a national digital currency.

As the usage of digital currency is rapidly growing, the circulation of cash in retail payments has been on a decline. E-RMB gives the advantage to people who do not have bank accounts in Chinese banks; for instance, foreigners travelling to China can open E-RMB wallets to use for daily transactions without opening a domestic bank account. E-RMB will help the citizens with a new compatible way of payment and diversify modes of payment and make the transactions more efficient and safer. China also aims to use E-RMB in cross-border payments to promote RMB internationalization. In 2020, with more than 750 million people in China purchasing consumer products online,  as per Goldman Sachs, E-RMB could be used by one billion people in the coming decade.

In the recent white paper of PBOC, ‘managed anonymity’ has been proposed as an extra security measure. PBOC while explaining the – ‘managed anonymity’ concept, stated that; “E-CNY follows the principle of anonymity for small value and traceable for high value, and attaches great importance to protecting personal information and privacy.” That means the small transactions will be anonymous and significant transactions will be traceable. Further, PBOC explains that to comply with the requirements of Anti-money laundering, it is vital to guard against the misuse of E-RMB such as tele-fraud, internet gambling, money laundering and tax evasion.

In the current times, Chinese consumers are increasingly using third-party mobile and online payment platforms. PBOC controls these transactions and data. But now through E-RMB, PBOC will have intensive control over all sorts of transactions. While PBOC monitors all the private sector transactions, the private sector has relatively low trust in privacy protection in anonymous payments.  Research shows that mobile users in China are worried about sharing excessive personal information through digital wallets.

The E-RMB might facilitate the Chinese government to integrate data, collect and generate more detailed pictures of individual users’ buying patterns. It will help the Chinese government to identify patterns in financial transactions. Hence, E-RMB may allow the Chinese government to use it for public surveillance. Further the government may collect data of its citizens residing abroad or businesses that will use the E-RMB. China already has authoritative surveillance with facial recognition technologies, big data analytics technologies, and artificial intelligence.

The Chinese government reportedly carries out surveillance of all the Chinese citizens indiscriminately. As the users of E-RMB will be sharing personal data with the regulators, it becomes easier for the government to carry out surveillance. It is observed by the Washington Post that,  as part of the social credit system, the Chinese Communist Party (CCP) blacklists untrustworthy individuals, and the E-RMB could be connected to this system. The use of E-RMB may give more power to the government and can monitor users. As PBOC argues, if they find any E-RMB or account involved in suspicious transactions they can immediately freeze the account. The Chinese government also claims that post-pandemic; E-RMB will help improve the money supply and boost their economic recovery.

In today’s technologically advanced world, where data plays a critical role, the state controls citizens’ data; and can use it for its benefit – to govern or control. Since China has acclaimed technological superiority in data surveillance, the government can trace all the transactions carried through E-RMB. Moreover, China’s aim to internationalize E-RMB may have larger security impact. The E-RMB may help the Chinese state to carry out scrutiny of data at an international scale as well. The issue here is the trust, and the question to be investigated further is: how the Chinese government mitigates this problem in the coming future.

The author is thankful to his mentor, Aravind Yelery, Senior Research Fellow (Associate Professor Grade) at the HSBC Business School, Peking University, Beijing/Shenzhen, for his invaluable guidance and support in writing this article. The views expressed here are those of the author(s), and not necessarily of the mentor or the Institute of Chinese Studies.