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QUAD is the US “Latest Toy” to Thwart China’s Growth. But India Now More Keen to Play Along, say Chinese Experts

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Hemant Adlakha, Honorary Fellow, ICS and Associate Professor, JNU

On 6 October, 2020, the world’s attention was focused on the rare in-person Quad foreign ministers’ meet in Tokyo. But some Chinese commentators were closely watching India’s External Affairs Minister Subrahmanyam Jaishankar and New Delhi. Why?

                        Pompeo with Jaishankar in Tokyo                        

                        Photo: wionews.com

As was expected, not “Japan’s ‘Trump Whisperer’,” the Foreign Minister Toshitmitsu Motegi, but the US Secretary of State Mike Pompeo called the shots in Tokyo during the Quad second ministerial talks. But some Chinese observers, as also the Chinese Foreign Ministry mandarins, had their eyes and ears set on the Indian EAM Jaishankar and on the outcome of his separate meeting with Pompeo. For as the US presidential election voting day draws closer, Pompeo’s Mission Tokyo was to use the Quadrilateral Dialogue – President Trump’s key to realizing the Indo-Pacific strategy – to remind its allies in the region to step up putting pressure on Beijing, some Chinese commentaries observed days before the curtain went up for the Quad foreign ministers’ talks. “The [Tokyo] meeting is set to be one of the highest-profile diplomatic gatherings for the Trump administration before the US presidential election, where policy toward Beijing has become a major campaign issue,” The Washington Post had stated just before the Quad meeting in Tokyo.

However, some Western strategic and security affairs critics of Trump’s foreign policy have ridiculed the President by saying he has been brandishing the term “Indo Pacific” as the US “latest toy” to checkmate a rapidly rising China. They are also quick in pointing out “Indo Pacific” is the alternative grouping Trump has found to replace his predecessor Obama’s TPP in the Asia Pacific region in which China has been excluded. While not quite subscribing to the views of the critics of “Indo Pacific” strategy, at least one Chinese analyst perceives “Indo Pacific” to be a “brilliant concept but difficult to implement.”

Interestingly, in Beijing’s view, India’s recent change in stance on QUAD from being a “geographical concept” to “good mechanism” in Asia Pacific has provided enough dynamism to the US “Indo Pacific” concept to revive up its China containment policy. Quite in tune with what at least some scholars in China have been telling us, a US commentator recently wrote of both Indo Pacific concept and Quad security dialogue: “QUAD was served up to spice up (the Indo Pacific) alphabet soup, as a new strategy to slow, if not thwart, China’s rise as the predominant economic powerhouse in Asia Pacific.”

For example, Zhang Jie, a senior researcher at the China Academy of Social Sciences (CASS) in Beijing strongly believes the transition from “Asia-Pacific” to “Indo-Pacific” is a prominent feature of Quadrilateral Security Mechanism dialogue. This trend highlights the importance of the Indian Ocean, the increasing connection between the Indian Ocean and the Pacific Ocean and the increasing weight of India in the world, Zhang recently observed in his widely read article in Guangming Daily – China’s most influential newspaper among the urban intelligentsia.

This explains, in spite of the fact that Pompeo had told reporters before leaving for Tokyo the outcome of the talks will not be made public until after he gets a nod from the POTUS on his return to Washington, why China’s strategic affairs community was closely watching the Indian EAM Dr. Jaishankar’s tête-à-tête with Pompeo during the QUAD Tokyo Forum. Primarily due to India making a significant shift during past six months from what Prime Minister Modi had asserted at the Shangri La Security Dialogue in 2018 that “Indo-Pacific is not a strategy or a club of limited members” to New Delhi’s reticence today on the militarization of Quad.

Highlighting the fact, an Indian national English language daily, The Hindu in its editorial on the eve of the Tokyo talks cited the country’s powerful Chief of Defense Staff (CDS) – believed to be close to PM Modi – as having stated “India believes the Quad would be a good mechanism to ensure Freedom of Navigation Operations in the Indian Ocean and surrounding oceans including the Indo Pacific.”

“Quad” – Background and Past Trajectory

While a handful of commentators first explained the origin of the US, Japan, India and Australia quadrilateral grouping at the initiative of Prime Minister Abe at the ASEAN Regional Forum in Manila in May 2007, when Abe advocated the “Broader East Asia” or “Greater Asia” concept. They also pointed out the US multilateral security interaction was launched following a series of bilateral and trilateral meetings between and among the present-day Quad four countries. But due to several uncertainties then prevailing both in some of the Quad countries and also in the world, the “Greater Asia” concept along with the US, Japan, India and Australia security grouping – also dubbed by some in Beijing as the “Asian NATO,” failed to see the light of day.

In the words of widely respected Professor Zhang Li of Academy of Ocean of China (AOC), some key factors which led to premature death of the so-called Quad or the Asian NATO were, namely Abe’s sudden resignation on health grounds, the refusal of the then newly elected Australian Prime Minister Kevin Rudd of the Labour Party to join any multilateral grouping targeting China and the impending global financial crisis. Besides, Zhang Li also attributes full credit to the “alert” Chinese diplomacy in sounding death knell for the quadrilateral security grouping when Rudd visited Beijing soon after he assumed the post of Australian Prime Minister in late 2007 and unilaterally declared withdrawal of Australia from the quadrilateral security dialogue.

From Quad to Quad 2.0 – India a Key Factor since 2006

Irrespective of whatever happened to the fate of Quad 1.0 and contrary to what is generally believed both in India and among strategic affairs community in the US, Japan and Australia, Beijing has been closely monitoring India’s growing importance in quadrilateral security dialogue for over a decade and a half now. According to Professor Cu Caiyun of Institute of Asia Pacific and Global Strategic Research at the Beijing’s prestigious China Academy of Social Sciences (CASS), with the rapid and powerful rise of China since the unfolding of the 21st century, the US, Japan, India and Australia have drawn closer to each other.

“Held together by the outdated Cold War mentality of yesteryears, the four nations have been sticking together under the so-called bogey of common values and have formed groupings such as Democratic Alliance or a quasi-alliance with a singular aim to carry out their China containment design,” Professor Caiyun recently wrote in a widely influential research paper. Interestingly, Caiyun’s paper, entitled “A Rising China and Formation of Four Nation Democratic Alliance comprising of the US, Japan, Australia and India” was not published in the CASS journal, but it appeared in the flagship bimonthly Global Review of the Shanghai Institute of International Studies (SIIS) – both SIIS and GR enjoy a good rapport with the central authorities in Beijing.

Quad 2.0 – “Beggar’s Club” and Empty Rhetoric

Dismissive of President Trump’s initial desperate efforts to revive Quadrilateral Security Mechanism three years ago, scholars in China had called Trump’s “anti-China” move as “a meeting of four poor beggars” in the Indo-Pacific region. Long Kaifeng, a former PLA navy senior officer who now writes syndicated columns on military affairs, points out several inherent contradictions in Quad’s conceptual framework. First, the “negative” premise on which the concept is conceived, that is to treat China as an antithesis or an imaginary enemy. Second, the US alone does not have the wherewithal to carry out its China containment policy. This is because within Quad, it is only the US which thinks it is in its national interest to implement China containment policy. Third, closely linked to the second factor above, it is true that Japan, Australia and India (notwithstanding ongoing border tension between India and China), given their respective economic compulsions, are least willing to or prepared for directly confronting China.

Perhaps aware of what China’s Foreign Minister Wang Yi told Japan’s national broadcaster NHK last week (the NHK reported a possibility that Wang Yi may also visit Tokyo this month): Quad is a “headline-grabbing idea,” Professor Wang Zheng of Dr. Sun Yat-sen University in Canton, unlike most other Chinese analysts, scornfully dismissed the Quad grouping as “empty rhetoric.” With sarcasm in tone, Wang Zheng recently wrote: “Let the four countries first come up with their top leaders’ summit meeting or set up an institutional arrangement.”      

Finally, scholars in China are confident that in the post COVID world, the continuing decline of the United States – both economically and as the world’s dominant power – is inexorable. Hence, Beijing is in no doubt, Washington’s China containment policy is in need of New Wine in a New Bottle. Meanwhile, the Indian EAM Jaishankar’s remarks after the Quad talks in Tokyo that “it’s a matter of satisfaction that Indo-Pacific concept has gained increasingly wider acceptance” might have only further strengthened what the Chinese scholars have maintained all these years. Therefore, Beijing was least amused in what was one of India’s several “independent” TV news channels’ lead headlines hours before the Tokyo talks: “Quad FMs Meet in Tokyo as India Looks to Unite Allies against Aggressive China.” Undeterred, Beijing continues to closely watch which way Quad headwinds will be blowing in the Indian capital!

Originally published as Is QUAD the US “Latest Toy” to Thwart China’s Growth? by Nepal Institute of International Cooperation and Engagement (NIICE), Kathmandu on 6 October, 2020.

Book Review: Dexter Roberts, 2020. The Myth of Chinese Capitalism: The Worker, The Factory And The Future Of The World. New York: St. Martins Press

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Yash Johri, Research Assistant, ICS

“For years, China’s leaders have had an unspoken agreement with the people: they guarantee rising living standards, and, in turn, the populace tolerates control by a non-democratic and often unresponsive party… There are fatal problems with that equation today. Growing inequality means that a large proportion of the population decide that the party no longer is fulfilling its side of the bargain, and begin to demand changes.” (Pg. 179)

Dexter Roberts, Bloomberg Businesweek’s  China Bureau Chief in his recently published book, The Myth of Chinese Capitalism (St. Martins Press, New York) investigates how these aforementioned problems came to pass. Having spent more than two decades in China and having reported from every province in the middle kingdom, Roberts’ analyses span from the heart of corporate Beijing and Shanghai to the dusty roads of the Guizhou hinterland. In the introduction he states that the guiding motives for his work  “was to see how the party’s grand bargain was working for the Other China, of workers and farmers from lagging interior provinces – not the relatively well-off residents of its showcase coastal cities, where signs of material success were becoming increasingly apparent.” (Pg. XXIII) This holistic approach serves Roberts’ analysis of China well, especially at this moment in time. While in the early years of reform, China followed Deng Xiaoping’s trickle down economics formulation of the coastal areas becoming wealthy at first and a subsequent transfer of wealth to the rural inlands, there is now a targeted focus on programs such as ‘develop the west’ and the ‘rural vitalisation strategy’. Additionally, now that the Chinese economy has crossed its Lewis Turning Point[1] it faces the challenge of not only improving its total factory productivity with automation and a move to the digital world but more importantly in upgrading its social contract with migrant labour and rural persons upon whose toil the Chinese economic miracle has been built on so far.

From a political stability point of view, looking after the interests of migrant families who form a large portion of the Chinese middle class will be paramount. These persons now having lived in urban areas albeit without the benefits of urban residential status (Hukou) now desire further upward mobility within the cityscape, finding it difficult to go back to the village lifestyle. The author in the book also makes the point that migrants are no longer as docile as they first were, enough experience has been earned regarding their ability or inability to bargain for what they deem to be their due. There have also been a large number of persons who have returned home, largely spurred on by government schemes in order to rejuvenate the countryside in order to help China achieve higher levels of consumption required for it to reach its goal of becoming a moderately prosperous society. However the success of these schemes seems to be far from guaranteed as per Roberts.

Hukou – Household Registration System

The author views the continuance of this system as one of the biggest barriers to Chinese migrants joining the middle class and boosting consumption. This is because, only once citizens have an urban hukou can they avail benefits of state provided healthcare and education for them and their families. Given the higher costs to these vital services, most migrants leave behind their children in the villages or in state run boarding schools, earning these children the wintry moniker of ‘Left-Behind Children’, further for those who decide to migrate with their children non-aided private education is very expensive. This system was brought in to existence in 1958 before the Great Leap Forward to prevent internal migration among other reasons.

In the initial period of Gaige Kaifang (Reform and Opening Up) while internal migration was relaxed, the Hukou system remained. This situation has naturally created a large social and economic gulf in the cities and Roberts argues that even though the government recognises reforming this system as an important policy matter, one of the major constituencies against any reform are the well-entrenched urban residents themselves, unwilling to share already constrained resources. Other reasons are of course the high costs of accommodating this large population on the part of the various municipalities. The government is attempting numerous initiatives to address this issue, such as creating point systems to induct persons who meet the criterion for an urban hukou, granting hukou’s for Tier – 2 and Tier – 3 cities as well as large projects such as that of Xiong’an which aims to decongest Beijing of its various non-governmental functions and reduce pressures on the city’s own resources. However these efforts have translated into little positive change on the ground. Roberts, writes, “Ultimately, ensuring that migrants integrate into China’s middle class requires ending the rigid Mao-era policies of household registration and the collective-ownership system for rural land, allowing them to live and work where they wish while truly benefiting from the land they hold.” He goes on to state that the present government’s approach to increase restrictions as opposed to loosening them doesn’t really bode well for ending the Mao-era policies and integrating migrant labor into the Chinese Middle Class. 

“Rural Vitalisation Strategy”

With the rising costs of manufacturing coupled with the state’s desire to maintain its status as factory to the world via automation, there has been a large reverse migration to the hinterland areas as well as the West. One of the major planks of Xi Jinping to successfully achieve the goals of the Made in China 2025 policy, decongest cities and rejuvenate rural spirits is the aforementioned rural vitalisation strategy which aspires to devolve property rights (in the form of 30 year leases) to migrants. In Beijing the repopulation of the hinterland has been seen in a positive light, that persons with urban experiences would energise the countryside with their gained know-how and skills. However one of the challenges Roberts highlights to the enforcement of these newly devolved property rights that would serve as a catalyst rural vitalisation are two fold:

 1. Local Government and Real Estate Builder Nexus that ceases local land at low prices as has been illustrated by Roberts on Pg. 75-76 (Roberts further quotes a 2011 World Bank report that states that rural farmers have often lost their and been short-changed about $321 Billion); and

2. Continuing ideological commitment to land collectivisation, Xi Jinping at a speech in Xiaogang stated that the core of reform in the countryside is sticking to the collective ownership of rural land.

Therefore while the government often proposes policies to aid property rights in the hinterland, these two aforementioned factors act as countervailing pressures.

However eliminating absolute poverty is one of the paramount challenges faced by the incumbent government, and Guizhou being one of the most backward provinces has received a lot of political attention notes Roberts. Guizhou has in the recent past attracted a lot of investment as an important spot for data storage, numerous companies such as Apple, Qualcomm, Huawei, Tencent and Alibaba being investors. Additionally, given its natural beauty, the provincial and local governments along with companies and common citizens have made a bet on its tourism potential and have been building numerous hospitality retreats, from big five star resorts to small bed and breakfast places. However while the province has benefited from the hospitality industry in the recent past, numerous locals – some of whom have returned from urban areas and had plans to invest in the tourism industry – interviewed by Roberts in the village of Binghuacun continue to wait for the benefits to trickle down as well as demand for tourism arise.

China faces a number of challenges at this moment of transition, while its attempted shift to a technological superior society has catalysed the US-China trade war along with other related developments on the international front, domestic migrants who’ve not benefitted equally benefitted from China’s go-go years serve as a major challenge domestically. Dexter Roberts in his work successfully brings to light the domestic imbalances that are showing up at this time of transition, the disparities have only been accentuated by Covid – 19.

[1] The Lewis turning point is a situation in economic development where surplus rural labor is fully absorbed into the manufacturing sector. This typically causes agricultural and unskilled industrial real wages to rise. The term is named after economist W. Arthur Lewis.

The Lasting Effects of Hong Kong’s National Security Law

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Aadil Sud, Research Intern, ICS

In early May 2020, China announced its plan to draft a new National Security Law (NSL) for Hong Kong, a move long required under Hong Kong basic law, but that too should have explicitly been written and enacted by the Hong Kong government. According to the South China Morning Post (South China Morning Post, 2020), the National People’s Congress Standing Committee unanimously voted to enact the law into power, taking effect the same day. This was a significant move as the law was passed weeks after it was announced, bypassing the Hong Kong legislature, with the text being kept secret from the public and even the Hong Kong government until it was enacted. It drew diverse reactions from around the world, most notably from the US, where Secretary of State Mike Pompeo called the decision the ‘latest in a series of actions that fundamentally undermine Hong Kong’s autonomy and freedoms’ and certified to congress that Hong Kong was no longer autonomous, with President Trump announcing that his administration would end Hong Kong’s trade privileges. The UK also announced that if passed, Britain would open a route for all Hong Kong residents born under British rule to apply for and become British citizens, numbering to almost three million people.

Under the law, acts of secession, subversion, terrorism, and collusion with a foreign country are all seen as endangering national security. The law has been met with criticism by activists domestically as well as internationally. According to human rights organisations such as Amnesty International, ‘Endangering national security’ remains a very vague term that can be used to refer to anything and everything. The terms are so broadly defined that they can become catch-all offences used in politically motivated prosecutions with potentially heavy penalties. The law gives central, as well as Hong Kong governments the power to oversee and manage schools, social organisations, media, and the internet in Hong Kong. Additionally, suspects can be removed to Mainland China, with cases being tried within the Mainland criminal justice system and under their laws, which is of major concern, as China has an estimated conviction rate of 99% in Mainland courts.

This move has caused massive changes within the legal capacities of investigating authorities, allowing them to search properties, restrict travel, freeze assets, and engage in covert surveillance without a court order. Authorities can also require information from organisations and people even if it is self-incriminating and have the power to levy fines or imprisonment for failure to comply, a gross dilution of human and internationally agreed human rights. The passing of the law has acted as a death knell to the Hong Kong democratic movement. One of the more high-profile arrests was that of Jimmy Lai, the publisher of the pro-democracy paper Apple Daily, who was arrested on suspicion of foreign collusion. Additionally, as the law does not differentiate between Hong Kong citizens and overseas activists, the police have issued warrants for democracy activists living abroad as well, the first time that people not living in the city have been targeted. This has led many legal experts in Chinese law to state that the re-evaluation of extradition and legal assistance agreements is a necessary move that foreign countries must make, to be able to protect their people in exercising their rights to free speech and expression.

The law has purposefully been left vague, which prevents people from understanding how and when they are in violation of it. This has led to the shutdown of numerous social media accounts run by activists and organisations, the removal of banners and stickers in support of the protests by shops and restaurants, and even moves such as libraries sorting out books on ‘sensitive’ issues (and those critical of the government). Many leaders of Hong Kong political groups and student-led movements have since resigned, citing the new law as the causative factor behind them. This has resulted in the disbanding of important groups such as Demosisto, over fears of being labelled as ‘colluding with foreign forces’.

Legal aspects aside, the new law has also had a massive impact on academic freedom. According to a Global Times article, a large majority of the anti-extradition bill protestors were students. Carrie Lam has been quoted as saying that the arrests of teenagers and children at protests showed how city campuses had been influenced by forces hostile to both local and central governments. With this move, children as young as kindergartners are to be taught about this new law and the consequences it entails. While defenders of the law have argued that student freedom would remain untouched, they have reiterated that free speech comes with limitations. Most notably, Regina Ip, chairperson of the New People’s Party stated that ‘You can’t just allow teachers to talk, and impose their views, free for all’, and that ‘critical thinking does not mean training people to criticize or attack.’

There has been a commensurate impact of the policy in China studies in universities and colleges abroad as well. To try and safeguard students (especially those from China and Hong Kong) from the danger of frivolous litigation, Students in Chinese Politics classes at Princeton plan to use codes instead of names on their work to protect their identities. At Amherst, professors are considering anonymous online chats so students can speak freely, without fear or repercussion. Similarly, at Harvard Business School, students may excuse themselves from discussing potentially sensitive topics if they are worried about the risks. Another option put forth is to use codes to refer to sensitive events such as Tiananmen Square or Xinjiang. Such code switching is not dissimilar to what already happens on WeChat in China. As prestigious schools such as those in the Ivy League have thousands of Chinese students, and major donations from China, they aim to protect both their students, as well as their donors from prosecution by Chinese authorities.

Conclusion
The standards of free debate and parlance in academia and Hong Kong society have been sent into a tizzy following the passing of this law, and institutions worldwide are working to come up with methods to protect their students, especially ones from mainland China and Hong Kong, from any danger of litigation or arrest. It can be gauged that the CCP’s goal is to create a new generation of ‘loyal’ Hong Kong youth, aiming for a strategy of institutional and social control that could undermine Hong Kong’s reputation for academic freedom. The NSL is aimed towards strengthening the stranglehold China is attempting to establish over Hong Kong and is a slap in the face of pro-democracy activists and citizens alike. In line with the expectations of the ‘One Country, Two Systems’ ideology, China must proceed to properly clarify how and when the law would apply, and to whom it should apply. The potential for misuse of this law is immense. Any effort for a nation to stifle democratic dissent against it (potentially around the world), especially for those most affected by it (those who reside in Hong Kong itself) by threat of prosecution is immensely condemnable, and should be of utmost concern for activists, governments, and citizens of a globalised world.

Experience of Chinese Technologies and Products for the Industries of Eastern India

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Amitava Banik, Research Intern, ICS

Source: Indian Industry Plus

China’s progress in manufacturing

China is considered as the world’s manufacturing powerhouse. China had been successful in building infrastructure supporting world corporations to make their products in the country. Over time, the world’s leading companies have shifted their manufacturing assembly lines to China. Also, the home-grown manufacturing industry in China is itself quite big. China is successful in manufacturing and exporting a whole range of products from simple electronics to complex machineries.

According to Yue and Evenett (2010), China attracted huge FDIs between 1979 to 2007 of which 70 per cent went to the manufacturing industry. The concentration and development of the global value chains of all industries, including the high-tech industry, on the eastern coast of China have boosted the country’s exports, resulting in the “Made in China” phenomenon.

Multinational corporations such as Siemens have set up facilities for assembly and manufacturing of many of its products including high-end medical equipments such as CT Scanners for their South Asian market in China, taking advantage of low manpower cost and good connectivity networks. A world-renowned instrumentation company such as Yokogawa of Japan, manufactures and exports their meters and oscilloscopes from China. The Chinese are considered to be good with reverse engineering capabilities, which have helped grow a lot of domestic manufacturers across industrial sectors.

China’s market for capital goods and spares in Eastern India

The Chinese machineries and capital items occupy the top of India’s list of imports from China valued at US$ 19,103(2019-20). Unlike China, the global multinationals are more focused on making India a marketing hub for catering to the huge domestic market of India and South Asia rather than India being a global manufacturing destination. Thus, India’s manufacturing capacity for capital goods like other high technology products is low.

In Eastern India, where there is dearth of both capital and new industries, China has successfully filled the vacuum to some extent with its cheaper and competitive products and industrial solutions. According to a survey conducted by the author, traders and businessmen are of the view that there could be further enhancement of Chinese market in this part of the country if the Chinese companies could set up manufacturing and assembly lines for their products – both capital goods and spares in Eastern India. China has made considerable inroads into the industrial market in Eastern India both for high value capital goods as well as low value tools and spares. However, there is dearth of specific data on import of capital goods and spares parts from China by the industries of Eastern India, so this assumption is based on practical experience and field survey as illustrated in Table 1. According to some of the users interviewed from these industries, the satisfaction level of the industrial customers and the value for money proposition is good for Chinese products and their installations. The traders interviewed are of the opinion that easy loan and financial credit facilities are available for buying Chinese machineries. Companies such as Donfang Electric Corporation doing power projects have also set up offices in Kolkata to oversee their projects, marketing, and customer services, etc. The traders are vocal about dealing with China’s ease of doing business. According to them, it is easy to get dealership of Chinese companies and start doing business with them, and Chinese manufacturers are also prompt in responding to trade or dealership enquiries.

Eastern India is primarily a mineral rich belt of India producing steel, ferroalloys, power, etc. Earlier, most of the installations in old plants had been of Russian, US or German technology, but now most of the plants, particularly those built on private investments are using Chinese technologies (Refer Table 1). Even in many of the tenders called by the central and state PSUs*, Chinese companies are the lowest bidders and many of them are ordering Chinese products.


Just like industrial installations of capital goods in Eastern India, Chinese manufacturers have made considerable penetration into the market for low-end manufactured products, tools and spares. The trading communities in Kolkata and other places import Chinese products at lower price and sell them in the market at a premium and make considerable fortune. The result of the survey of a leading bearing trader in Kolkata is put up in Table 2.

Present Situation

The military standoff situation like the recent Galwan Valley clashes and its aftermath creates anxiety among the trading and industrial community, which affect business sentiments. As the Chinese influence is currently highly embedded in Indian economy, trade and commerce, complete decoupling may be expensive for India especially in the present Covid-19 pandemic scenario. However, though decoupling is tough, at the same time it is not possible to entirely ignore border and security issues in the face of economic or business considerations. Thus, India needs to look at economic growth with leverage on China.

Conclusion

Chinese economy (about US$ 14 trillion) is much bigger than that of India (about US$ 3 trillion). India is home to 1.3 billion people (17 per cent of world population) but has only 3-4 per cent of the world GDP. Although the two countries try to co-operate on several international forums such as WTO, BRICS, G20 etc., strategic rivalry is visible. This shows that while there is an understanding on many common matters of concern, the two economic giants sharing a common boundary and geopolitical and historical landscape are often at loggerheads on issues of diverging interests, geopolitical and economic ambitions.

In view of the evolving world order during the pandemic, several multinational companies are looking to relocate their manufacturing facilities out of China. It may be an opportunity for India to pitch in and fill the void by offering incentives to these corporations as well as to Indian corporates for setting up more manufacturing facilities in east and northeastern parts of India, and other untapped industrial belts. This may also help in developing these deprived regions as new industrial pockets. If this happens, it would lead to overall growth and development of these regions and augment the value chains for the industries.

Made in China 2025: Dead in Letters, Alive in Spirit

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Megha Pardhi, Research Intern, ICS

Source: Bangkok Post

The Made in China 2025 (MIC) policy was launched in May 2015 as an umbrella policy to develop ten high technology focussed sectors and convert China into a technological powerhouse. This came after increasing worries that China would lose its competitive edge over developed economies due to rising labour costs. A state led plan for ten years was released by Chinese Premier Li Keqiang to develop 10 key sectors: New information technology, Numerical control tools, Aerospace equipment, High tech ships, Railway equipment, Energy saving, New materials, Medical devices, Agricultural machinery, and Power equipment. It contained key performance indicators like R&D costs, patents, Manufacturing Competitiveness, Broadband penetration etc. to measure the performance of various sectors from 2015 to 2025.

The ‘Internet Plus’ policy launched in 2015 by Chinese Premier Li Keqiang compliments the goals of MIC2025. The ‘Internet Plus’ policy aims to integrate the internet with traditional industries and manufacturing sector. Some scholars in China have also touted the ‘Internet Plus’ policy as a key to handling overcapacity in Chinese manufacturing sector.

MIC2025 is believed to be inspired from Germany’s Industry 4.0 initiative. ‘Self-sufficiency’ is among the primary motivators behind this policy. Regulatory changes, state led financing, developing industry standards, industry-academia collaboration, international brand awareness, etc. are its other salient features.

The MIC2025 policy garnered significant international attention within geopolitical and economic circles mainly on account of it being representative of China’s ambitions. A host of concerns were voiced including discriminatory treatment of foreign bustiness, unfair trade practices, forced technology transfers, intellectual property theft, and security. For example, the 2017 IP Commission report estimates the cost of Chinese IP theft to be around $225 million to $600 million. The US also started investigations into technology transfer allegations and considered banning some Chinese companies over allegations of IP theft.

These fears are not new. Author Mara Hvistendahl in her book, ‘The Scientist and the Spy: Chinese industrial espionage and the atmosphere of fear in the West’ tells an intriguing story of industrial espionage by ethnic Chinese scientists in the US. Moreover, MIC2025 was not the first of China’s policies viewed with suspicion. More than a decade ago, China’s “The National Medium- and Long-Term Plan for the Development of Science and Technology (2006-2020)” was also criticised as “a blueprint for technology theft on a scale the world has never seen before.” The ambitious nature of the MIC2025 complimented with growing assertiveness in Chinese foreign policy under Xi Jinping added to the heightened insecurities of the Western countries.

The anxiety in the West, especially in the United States over this policy stems from multiple reasons. First, currently the US is a world leader in the high technology industry and innovation. The MIC2025 not only aims to move China up in high technology manufacturing ladder, but also aims to make China a world leader in research and innovation. Second, China’s rise to great power status does not bode well with the interests of the US. In 2018, National Security Strategy of the US termed China as a ‘revisionist state’. The Belt and Road Initiative (BRI) and the MIC2025 are key pillars of China’s ambition to become a great power on par with the US. Third, the strategic technology development aspect of this policy means China would be self-sufficient in the advanced strategic technologies. This in turn would strengthen China’s position in Asia and world as a security provider over which the US has had a practical monopoly since the end of the Cold War. Hence even though the MIC2025 aims primarily to develop high tech manufacturing, its geopolitical implications cannot be ignored.

In recent years, there have been reports of the Chinese government toning down the rhetoric on MIC2025. As a result, the MIC2025 does not appear much in official documents and media anymore. However, this does not mean that China has abandoned the project completely.

It can even be argued that the US-China trade war which began in 2018 was a manifestation of discontent frothing beneath the surface. The targeting of Huawei, which is also identified as a key company under the MIC2025, was perhaps not a coincidence. Perhaps due to these setbacks the Chinese premier Li Keqiang omitted to mention ‘Made in China 2015’ in his address to the opening session of National People’s Congress in 2019.

Does this mean MIC2025 is dead? Even if direct references to the MIC2025 have reduced, the spirit of the policy is still alive. Various aspects of the MIC205 policy are still active and the targets are being pursued.

First, a media analysis of Beijing’s response to the US pressure during trade war by Eliot Chen noted that “the fact that MIC2025 is being directly linked to Reform and Opening Up suggests that Beijing continues to attach significance to the plan, if not in name then in substance and spirit.” The author goes on to explain that even though the references to MIC2025 in media have almost vanished, the idea and inspirations behind the policy has not. To analyse this, he uses the two terms relating to MIC2025 ‘Indigenous innovation’ and ‘Core technology’. His analysis shows that there has been a significant spike in the in the use of term ‘core technology’ in second quarter of 2019.

Second, the 2019 speech of Li includes many aspects of the key industries envisioned for development under MIC2025 without mentioning the policy directly. The references to the “high quality manufacturing” and “boosting technological innovation capacity” point indirectly towards the goals envisioned MIC2025.

Third, the Ministry of Industry and Information Technology (MIIT) which is responsible for the overall implementation and coordination of the MIC2025 is still working towards the goals of the policy For example, the documents released by MIIT since 2019 till now include range of initiatives like “formulation and revision of 10 national standards” in communications industry, “Strengthening the Construction of Quality Brands to Support the High-quality Development of Manufacturing Industry”, “Declaring the Cities (Prefectures) with Stable Industrial Growth and Transformation and Upgrading in 2019”. Moreover, the newly appointed head of MIIT, Xian Yaquing is a technocrat who is expected to have control over licensing of new technologies like electric cars and 5G. Also, in the aftermath of COVID19, China aims to increase the domestic consumption to revive the economy. For example, in June 2020 Li Keqiang presented a work report to National People’s Congress (NPC) which refers to the push towards consumption including e-commerce facilities in rural areas. Tapping these previously untouched regions can provide a boost to the China’s manufacturers. These examples indicate the slow and steady move towards the larger goals of developing a high-tech manufacturing industry in near future, if not as envisioned under rhetoric and timeline of MIC2025

In conclusion, reducing the rhetoric on MIC2025 seems to be a strategy to pacify the US and divert the media attention from the overall goals of the policy. The post COVID19 world seems more determined to face the China challenge, whether it is the US or developing countries such as India. It remains to be seen whether China’s ambition to gain leadership in technology will survive these challenges.

‘Shinzo Abe Fails to Double Down under Mounting US Pressure Twice Over, Prefers to Step Down: Chinese Experts’

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Hemant Adlakha, Honorary Fellow, ICS and Associate Professor, JNU

Abstract: Experts in Beijing believe Abe got caught up in the unending hostility between Japan’s key ally, the U.S. and China, its largest trading partner — just like in 2007

Japan’s Prime Minister Abe Shinzo, considered a strong leader in several foreign capitals, including Beijing, abruptly announced last Friday that he is resigning for health reasons. But writing for the New York Times last Sunday, a leading political scientist in Japan, Koichi Nakano, did not believe a relapse of ulcerative colitis was the only reason why Abe abruptly announced his decision to quit.

Like Nakano, most analysts both at home and abroad have cited multiple factors preventing Abe from extending his record as Japan’s longest serving prime minister – seven years and eight months, to date. At the time of Abe’s “surprise” announcement, his disapproval ratings stood at 34 percent, the highest ever during his record tenure. Among the most prominent reasons for his rising unpopularity include a negative view of Abe’s response to the pandemic and allegations of a series of scandals and controversies he is still mired in – including extravagant, lavish events such as “the cherry blossom viewing party” that the prime minister hosts every year but is paid for by taxpayer money. Other factors behind his dropping popularity include: a dismal failure in rebuilding the Japanese economy as promised by his signature “Abenomics”; the controversial re-militarization of Japan, which saw massive street protests by the anti-war Japanese people; and last but not least the ill-conceived “Abenomasks” policy, under which each household was promised two washable cloth masks – the plan not only irritated the people but was immediately dismissed as “useless” and “inefficient.”  The endless list of the Abe government’s failures goes on and on, analysts are telling us.

Interestingly, neither Japanese experts nor Japan watchers in the West have seen a possible connection between the prime minister’s resignation and the worsening U.S.-China rivalry. On the other hand, as the South China Morning Post put it, Abe’s “eight-year spell in office saw several ups and downs in Japan’s relations with Beijing, the most recent being the straining of ties between Tokyo and Beijing due to the introduction of a national security law in Hong Kong earlier this year.”

To be fair, some analysts in Japan haven’t lost sight of the predicament Japan finds itself in: The country continues to depend on China economically while remaining dependent on the United States for security. “Aligning with the U.S., but at the same time maintaining functioning relations with China, is Japan’s top priority…this will not change,” Michito Tsuruoka, associate professor at Keito University in Tokyo, told SCMP on the day Abe announced his decision to step down.

The authorities in Beijing have refused to react to political developments in Japan, preferring to maintain a stoic silence — even while knowing full well the implications of a new leader in Tokyo. Chinese foreign ministry spokesperson Zhao Lijian declined to comment both on Abe’s resignation and on the leadership succession.

Chinese experts, however, have not only been forthcoming but even voiced differing opinions.

Liu Jiangyong, a Japanese affairs expert at the Tsinghua University in Beijing sees a “friendlier” post-Abe Japan. But Liu does not rule out continuation of the current Abe government’s foreign policy approach of trying to maintain a balance between Beijing and Washington in the event of U.S. President Donald Trump winning a second term. “If Trump wins and continues his aggressive policies with China, Sino-Japanese relations would be affected because Japan is, after all a key ally to the U.S. but Joe Biden may adopt a less extreme approach to Beijing,” Liu told SCMP.

Some Chinese scholars have been more appreciative of Japan’s mature approach toward Beijing under Abe in recent years, be it in the context of the two East Asian neighbors’ territorial dispute in the East China Sea — where Tokyo is not keen on starting a direct conflict with Beijing — or more recently, in tackling tensions with China over the COVID-19 pandemic and over Beijing’s imposition of a national security law in Hong Kong. “His [Abe’s] policy is one that emphasizes being both realistic and pragmatic,” according to Huang Dahui, an IR expert with Renmin University in Beijing.

Sima Nan, the stage name of a well-known nationalistic commentator, on Monday displayed a more hard-line approach toward Abe’s Japan. Sima dismissed a Keito University professor’s predictions about Japanese policies toward America and China in the post-Abe era as untenable. Overall, the take sounded like a warning to whoever is going to succeed Abe: “If you wish to reap China’s economic benefits, but at the same time you do not wish to sin against both China and America, this will no longer be possible in the face of the irreversible worsening U.S.-China bilateral relations.”

In 2007, Abe resigned for the first time from the prime minister position. Then, as now, the mainstream media both in Japan and in the West cited the following reasons for the fall of the government: Abe’s failing health, his controversy-plagued government, which foundered on scandals and gaffes, Japan’s decision to continue its military’s participation in the Afghanistan war, and most of all Abe’s rising unpopularity. In China, on the contrary, it was widely believed that a significant factor leading to Abe’s resignation in 2007 was his failure to maintain a perfect balance in Tokyo’s relations with the United States and China. Abe, who had just become prime minister, actually wanted to revive the fledgling Japanese economy by developing good relations with China and at the same time he wanted to establish a China-Japan-South Korea free trade area. Unfortunately for Abe, the United States found this to be against its national interest.

Abe proved to be wiser as he began his second tenure as Japan’s prime minister in 2012, Chinese Japan watchers say. He won former U.S. President Barack Obama’s confidence in Japan as a reliable ally committed to free trade and a stronger military ally in the Asia-Pacific region. Notably, Abe and Obama reached an agreement that would extend Japan’s ability to come to the defense of the United States. However, with the change of guard in the White House following the Trump victory in 2016, Abe’s policy of wooing the United States faced a huge challenge. And now as the worsening U.S.-China rivalry is accelerating, Abe has fallen sick once again.

In the words of veteran “leftist” Chinese foreign affairs observer Zhang Zhimin, if U.S.-China relations today were at the same level as before Trump launched the trade war or even before the outbreak of COVID-19, it would have been okay for Japan to still dabble with both parties. But now Japan is caught in a dilemma of having to choose between China and the United States. No wonder, Zhang uses the famous Chinese saying “one cannot have fish and bear’s paws at the same time” to describe Abe and Japan’s predicament. The saying actually means that in order to get something, one must sacrifice something.

In other words, what Zhang is implying is that Abe’s timing to resign both times has been perfect. And both times, his resigning in the middle of worsening U.S.-China tensions was not a coincidence.

Originally Published as Chinese Experts Think US-China Rivalry Accelerated Abe Shinzo’s Departure in The Diplomat, 2 September 2020.

China Myanmar Friendship: Implications on India

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Priyanka Madia, Research Intern, ICS

Myanmar is one of India’s most important neighbors, four of our sensitive Northeastern states share a border with Myanmar, and it is India’s land gateway to Southeast Asia. Myanmar is a country enriched with abundant natural resources with an economy complementary to India. India and Myanmar share a long land border of over 1600kms and a maritime boundary in the Bay of Bengal. India shares the strategically important ocean space of the Bay of Bengal with Myanmar. China’s dominant presence at the port of Myanmar, which gives open access to the Indian Ocean to China, could become a significant security concern for India. The blog argues that India must be far more focused on strengthening its relations with this neighbor than is evident today.

Myanmar is located on the eastern flank of India. It is shaped like a large kite, with a mountainous crescent to the north, alluvial plains at the center, and a long and narrow isthmus stretching into the Andaman Sea to the south. From east to west, it is watered by the Chindwin, Irrawaddy and Salween rivers all of which run north to south. This makes north-south communication links much more comfortable than the east-west links, which have to cross the deep river valleys and also the lines of hills. Myanmar is a multi-ethnic country. The 18 major ethnic groups occupy the rugged mountains on its borders with India, China, and Thailand, with the majority, the Burman population, inhabiting the flat plains at the center and along the coast. Myanmar has a history of ethnic conflict, which is a constant preoccupation for the central government. The ethnic groups also spill-over into neighboring countries, with India, for example, the Nagas and the Mizos (known as Chins in Myanmar) straddle the border. Just as the country enables access to Southeast Asia for India, it is also a corridor for China to the Bay of Bengal and a partial answer to its so-called Malacca Dilemma, or the need for most of its energy supplies and cargo from across the Indian Ocean to pass through the narrow confines of the Malacca Straits. Hence, Myanmar plays a crucial role in China’s ambitious Belt and Road Initiative(BRI).

Myanmar-China Relations

Throughout history, Myanmar has tried to balance its relations with its two giant neighbors, India, and China. However, Myanmar has had a higher threat perception from China because of the latter’s use of ethnic groups to keep the central government off-balance. This had continued though, in different forms, Chinese influence in Myanmar began to see a significant rise since the 1990s when the military junta staged a coup and prevented the democratically elected National League for Democracy(NLD), led by Aung San Suu Kyi from taking office. The military regime faced international criticism and sanctions. India, too, opposed the government and supported the National League for Democracy. China stepped in to help the Myanmar military with arms and economic and commercial links and soon became an essential partner. It assisted the regime by brokering arms for peace or ceasefire agreements with the various ethnic groups under its influence for several years. Despite the political changes that have taken place in Myanmar in recent years with Aung San Suu Kyi and her party sharing power with the deeply entrenched military, China has maintained enough levers of influence to continue its dominance country.

Myanmar has never been comfortable with its over-dependence on China. Even the military regime tried to balance Chinese influence by becoming a member of the ASEAN in 1997 and later of the BIMSTEC. It responded positively to India’s overtures in the 1990s and encouraged Indian support to infrastructure building, including cross-border links. Chinese involvement in infrastructure projects was slowed down, with the Myitsone hydro project suspension on the upper reaches of the Irrawaddy River. There was also a degree of caution in its participation in the BRI to avoid high debt levels. However, in other respects, China has probably emerged as an even more powerful influence in the country than a decade ago. Some of the key projects are the oil and gas pipeline from Myanmar’s Rakhine coast to Yunnan province, the development of the Kyaukphu deep water port, and the proposed rail and road links connect to Southeast Asia through Myanmar.

There are two significant projects between China and Myanmar in terms of the Belt and Road initiative. The Kyaukphyu special economic zone is one of China’s crucial projects at the Bay of Bengal coast on the western Rakhine state, giving China direct access to the Indian Ocean and allowing its oil imports to bypass the Strait of Malacca. It also serves the terminus for the twin cross border oil and gas pipelines between the two countries. The framework agreement was signed between the Myanmar government and the China International Trust and Investment Corporation (CITIC)in November 2018. The project investment in the initial phase was US$1.3 billion, with 70 per cent from CITIC and 30 per cent from the Myanmar government. The concession period is said to be 50 years, during which the Myanmar government will earn US$7.8 billion in revenue from the SEZ and US$6.5 billion from the deep seaports. The project covers a combined 1000 hectares, including an industrial park and deep seaports on Made and Yanbye islands. 

Muse Mandalay railway project travels from China’s Kunming through Myanmar’s Muse on the Chinese border in northern Shan state to Mandalay in Central Myanmar. It’s a part of Beijing’s plan to build a parallel expressway and railway line from Ruili (across the border from Muse in China’s Yunan province) to Kyakphyu. The 431kms electric railway passes through armed conflict areas in Shan state; the estimated investment cost is US$8.9 billion. 

During President Xi Jinping’s two days, visit Myanmar on 17-18 January 2020, which was the first visit by a Chinese leader in 19 years. There were talks held, and dozens of agreements were signed, paving the way for implementing various projects underway the Belt and Road initiative. However, Myanmar is not a passive bystander and has managed to negotiate better conditions regarding BRI projects. In 2017, the CITIC group decided to reduce its stake in the project from 85 to 70 per cent. Also, the Myanmar government effectively scaled the project down from $7.3 billion to $1.3 billion in 2018, realizing that the project was taking on too much debt.

India-Myanmar Relations

Since the 1990s, it has been an objective of Indian policy to become a significant countervailing presence to China in Myanmar. This has been moved by the need to elicit Myanmar’s cooperation in dealing with the Northeast insurgencies and promote India’s Look East policy. There are two significant projects in Myanmar led by India, which focuses on improving connectivity with Myanmar and enable to counterbalance China’s BRI in the Indo Pacific region. Still, its efforts have paled in comparison to China.

The India-Myanmar-Thailand highway project will boost trade and commerce in the ASEAN, India Free Trade Area, and the rest of Southeast Asia. It is a part of India’s Look East Policy that will cultivate and strengthen economic and strategic relations with the nations of Southeast Asian countries to solidify its standing as a regional power. The project helps the Indian position as a counterweight to the People’s Republic of China’s strategic influence in the region.

Kaladan Multi-Modal Transport Project is set to promote neighborly ties, trade, and tourism under the government’s Look-East or Act-East policy. But unfortunately, it hasn’t traveled much, the Kaladan Multi-Modal Transport Project is designed to connect Kolkata with Myanmar’s port of Sittwe by sea and to move northwards by the Kaladan river to Paletwa, and a long stretch of road from to Mizoram in India’s Northeast. This project is seeking an extension till June 2021. The fundamental goal of construction of Sittwe Port is to create a multi-modal sea, river, and road transport corridor for shipment of cargo from the eastern ports of India to Myanmar through Sittwe port and to the Northeastern part of India via Myanmar. The approved construction cost is US$68 million. But the projects are consistently facing delays.

India has failed to emerge as a credible countervailing power balancing China’s formidable presence in Myanmar. An entrenched Chinese presence along the Rakhine coast across the Bay of Bengal is particularly worrisome. With Nepal, Sri Lanka, Bangladesh, and Myanmar wading into the BRI, India stands badly isolated, and this is something India needs to work upon. Since 2012, India has been trying to modernize and extend its navy to counter China’s increasing challenge, but finances are scarce, and projects are yet to materialize. That makes it harder to maintain India’s ambition to become the Indian Ocean’s security provider.

To knit the Indian Ocean into existing defense plans for the Pacific, India should coordinate with the Quad, including countries in the United States, Japan, and Australia. Myanmar is desperate for financing to help build roads, ports, power plants, and other massive infrastructure to drive economic growth. Since the world is well aware that Chinese loans come with a deadly debt trap, expanding China’s geopolitical and military reach and failure to be transparent creates a vast opportunity for India to compete with China and blunt some of its recent gains. India should be focusing on the project that helps the Indian position as a counterweight to the People’s Republic of China’s strategic influence in the region.

The Hong Kong National Security Law

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Bihu Chamadia, Research Intern, ICS

The new Hong Kong National Security Law (香港国家安全法 ) has caused massive controversy in Hong Kong as well as in the international community. On 21st May the Chinese authorities introduced a proposal in National People’s Congress (NPC) to enact the National Security Law. Further, on 28th May, the 13th NPC (人民代表大会), voted in favour of the National Security Law (NSL) for Hong Kong.  The new law aims at tackling secession, subversion, terrorism and foreign interference, the details of which were kept under wraps until it was implemented on 30th June2020. A protest broke out in Hong Kong city on 1st July and several people were charged under the new NSL.

The NSL consists of a total of 66 Articles divided among six chapters. Some Articles are more important to look at, as they provide an overview of what awaits Hong Kong (香港) and anti-CPC Hong Kong citizens.

Article 12 of the Law states the establishment of a Committee for Safeguarding National Security, which will be under the supervision of and accountable to the Central People’s Government in Beijing. Although the committee will be headed by the Chief Executive, Article 15 states that the committee will also have a National Security Advisor, who will be designated by the Central People’s Government and shall be responsible for providing advice to the committee relating to its functions and duties. Article 14 states that the committee will work in secrecy and its decisions are  not reviewable by the court. While Article 5 states that all persons shall be considered innocent until declared guilty by the judicial organ, Article 42 contradicts it by stating that no bail shall be granted to a criminal suspect or defendant unless the judge has sufficient grounds for believing that the criminal suspect or defendant will not continue to commit acts endangering the national security.  Article 38 states that the law would be even applied to offences committed against the Hong Kong Special Administrative Region (HKSAR) from outside the region by people who are not a permanent resident of HKSAR. Article 40 provides that the jurisdiction is in the hands of the Hong Kong authorities by default but it can be taken over by the mainland’s office for Safeguarding National Security. Further, Article 57 states that once in mainland, the processing and sentencing will be done according to the Chinese Criminal Law Procedure.

On the other hand, Article 60 provides complete impunity to the office and its personnel as they are not subjected to the jurisdiction of HKSAR while performing any act in the course of duty. The National Security Law has caused ripple effects not only in Hong Kong but in the international arena as well.

Hong Kong in Sino-US Relations

Sino-US relations have seen a massive downgrade since the Trump administration came into power in 2017. Human Rights and Trade have been a point of contestation between the US and China. Hong Kong has always acted as a geopolitical buffer state between China and the West especially for the U.S. Under the Hong Kong Policy Act of 1992, the U.S. had decided to maintain its favourable treatment, especially in the matter of trade, even after Hong Kong was reverted to Chinese sovereignty in 1997. The underlying condition for the preferential treatment was the autonomy of HKSAR. The Act also stated that “whenever the President determines that Hong Kong is not sufficiently autonomous to justify treatment under a particular law of the United States,” he is authorized to “suspend the favourable treatment.” In the wake of anti-extradition bill protests in 2019, the U.S. Senate and the House respectively passed the Hong Kong Human Rights and Democracy Act (HKHRDA) in November of the same year.

This indicated that the State Department would annually require to re-certify Hong Kong’s autonomous nature, in order to continue the so-called “special treatment” the U.S. affords to Hong Kong. It was a week after the National Security Law was tabled for voting before the NPC on 27th May, 2020 the U.S. Secretary of State Mike Pompeo refused to certify the autonomy of HKSAR.  On 28th May, the NPC passed the Hong Kong National Security Law. On 29th June, the U.S. Department of State ended exports of U.S.-origin defence equipments to Hong Kong. It also mentioned that U.S. will take steps to impose the same restrictions on U.S. defence and dual-use technologies to Hong Kong as it does for China. Mike Pompeo in his Tweet mentioned about the waning of ‘One Country, Two Systems’ （一国两制） and replacement of it with ‘One Country, One System’. As the Sino-US relations have already been in a tailspin due to the ongoing trade war and the COVID-19 impact, the recent issues have further exacerbated tensions in an already fragile relationship.

Sino-British Relations

Hong Kong has been a major component of the Sino-British relations. The recent move by the Chinese government has led to deterioration in the relations between two countries. Hong Kong was handed back to Chinese sovereignty in 1997 under the Sino-British Joint Declaration, 1984. Since then Hong Kong has been ruled under the framework of ‘One Country, Two Systems’, which is to continue until 2047. Under this system Hong Kong maintains a mini-constitution and enjoys autonomy on matters other than defence and foreign relations. On the National Security Law, the UK criticized China for breaching the ‘One Country, Two systems’ formula. On 11th June 2020, while presenting the 46th report to Parliament on Hong Kong, the British Foreign Secretary mentioned that China must respect Hong Kong’s autonomy and its own international obligations. Britain also mentioned that the Joint Declaration is registered with United Nations (UN). Thus, indicating its international obligations. On the other hand, China has mentioned that the Sino-UK Joint Declaration is unilateral policy announcement by China and not an international commitment.

On 1st July, Britain introduced a new route for those with British National (Overseas) (BNO) status to move to UK. BNO status holders refer to Hong Kong citizens born before 1997. The recent announcement by the British Prime Minister Boris Johnson in the House of Commons, extended the Right of Abode (ROA) to dependents of BNO passport holders, giving way for millions of Hong Kong citizens to acquire British citizenship. China’s Foreign Ministry criticized Britain’s decision and mentioned that the offering of ROA to BNO status holders is a breach of the terms of a memorandum offered by the UK to China in 1997.

China-Hong Kong Relations

Hong Kong maintains a democratic-capitalist system under the shadow of Communist China. It also enjoys certain level of autonomy on various matters and is governed by Hong Kong Basic Law. Article 23 of the law states that the HKSAR “shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People’s Government, or theft of state secrets, to prohibit foreign political organizations or bodies from conducting political activities in the Region, and to prohibit political organizations or bodies of the Region from establishing ties with foreign political organizations or bodies.”

Before the British handover of Hong Kong to China in 1997, China’s crackdown on the student-led democracy movement in 1989 created anxiety in Hong Kong regarding the handover and led to the political awakening of the population. In 1992, Chris Patten was appointed as the last colonial governor of Hong Kong. Patten initiated a series of political reforms designed to give the people of Hong Kong a greater voice in government via democratic elections to the Legislative Council (LEGCO).

When Hong Kong’s Democratic Party, led by barrister Martin Lee, routed pro-Beijing candidates in the 1995 LEGCO elections, Beijing denounced Patten and began a series of strong measures aimed at re-establishing its influence. On 24th March, 1996 China’s 150-member Preparatory Committee, which had been created to oversee the handover, voted to dissolve LEGCO and installed a provisional legislature after Hong Kong returned to Chinese sovereignty. In December 1996 a China-backed special election committee selected the 60 members of the provisional body, just days after it had overwhelmingly elected 59-year-old Tung Chee-hwa as the first Chief Executive of the HKSAR. Tung soon signalled his intention to roll back Patten’s reforms, announcing in April 1997 proposals to restrict political groups and public protests after the handover. After the handover, however, the situation in Hong Kong remained stable but complete freedom in the exercising political and civil rights remained doubtful.

In September 2002, Hong Kong government released a proposal to implement Article 23 of the Basic Law. In February 2003, the National Security (Legislative Provisions) Bill was introduced in the Legislative Council. This caused a massive upheaval in the city and the bill was finally withdrawn by the government following a huge protest by the citizens of Hong Kong on 1st July, 2003. The city has witnessed many protests since the British handing over of Hong Kong to China. Each protest has culminated into a “pro-democracy” protest. In 2012, Protests broke out in Hong Kong as the authorities tried to change the curriculum of the school system in Hong Kong. The 2014 Umbrella Movement was a movement against the decision of China’s National People’s Congress Standing Committee (NPCSC) regarding the ‘proposed reforms of the Hong Kong electoral system.’ The reforms suggested a pre-screening of the candidates by the CPC for the post of Chief Executive of Hong Kong.  The 2016 protestwas the first pro-independence protest held in Hong Kong as it demanded complete independence of Hong Kong from Mainland China. In 2017, as Hong Kong celebrated two decades of handing over of Hong Kong to the Chinese control, the pro- Democracy protesters marched against China’s refusal to grant ‘genuine autonomy’ to Hong Kong and the erosion of ‘one country, two systems.’ In 2019, the city, during the Anti-Extradition Bill movement, witnessed the most violent protests since its handover, as police used brutal force to supress it. It garnered the attention of the world and led to massive criticism of China on the international stage.

The Bill was eventually shelved indefinitely, causing major embarrassment for the CPC. Hong Kong was the last remains of the humiliation faced by China at the hands of a foreign power. Even when return to Chinese rule, in terms of politics, society and culture, there has been vast discrepancies between Hong Kong and Mainland. China, time and again has tried to interfere in the city’s day-to-day affairs in order to create more semblance between Hong Kong and Mainland. On the economic front, although, Hong Kong is just 2.7% of China’s but it remains a most favoured destination for FDI due to its financial and legal system. While international companies use Hong Kong as a launching pad to expand into mainland China. The bulk of foreign direct investment (FDI) in China continues to be channelled through the city. Although, recently Shenzhen surpassed Hong Kong in terms of GDP, Hong Kong still provided systems and frameworks which cannot be provided by Mainland Shanghai or Shenzhen. Most of China’s biggest firms, from state-owned Industrial and Commercial Bank of China (1398.HK), to private firms like Tencent Holdings (0700.HK), have listed in Hong Kong, often as a springboard to global expansion. Last year, Chinese companies raised $64.2 billion globally – almost a third of the worldwide total – via initial public offerings (IPOs), but just $19.7 billion of that came from listings in Shanghai or Shenzhen. Hong Kong has also been pivotal to China’s longer-term ambition to turn the RMB (Yuan 元) into a widely-used international currency, competing with the U.S. dollar.

Conclusion

The citizens of Hong Kong have often voiced their concern over the ‘Mainlandization’ of the city and the waning of ‘One Country, Two Systems”. The passing of the National Security Law has caused a great amount of anxiety among the citizens and was termed as a “Death Knell” for democracy in Hong Kong. Every year, 1st July commemorates the anniversary of the British handing over of Hong Kong to China and the citizens take out an annual march on this day. On 1st July, 2020 the day which commemorated the 23rd anniversary of British handing over of Hong Kong, the citizens marched into the streets while National Security Law was already put in place. The day witnessed the actual implementation of the Law when the protestors were arrested under the new Law on charges of “inciting sedition and terrorism”.

While China received massive criticism over subversion of freedom and rights of citizen of Hong Kong from various countries including the U.S. and UK, HKSAR Chief Executive Carrie Lam stated that “the National Security Legislation will help restore stability in Hong Kong, and protect the life and property, basic rights and freedoms of the overwhelming majority of residents” and will not cause any harm to freedom possessed by the citizens of Hong Kong. China lashed out at the U.S. and UK, stating that while these powers have a National Security Law in place, they are against China for doing something similar. China’s current domestic politics including rising nationalistic sentiments, of which territory occupies a great portion and Xi Jinping’s aggressive foreign and domestic policies have a major effect on the implementation of the law. Besides, the 2019 protests and fading CCP’s patience to deal with Hong Kong together has also played a great role in panning out of the new Law. The Chief Executive elections which was due in September was very crucial to the Law. The Hong Kong government on 31st Aug 2020 announced the postponement of elections by 1 year. While the reason cited by the government was the pandemic, the pro-democracy opposition remarked that this was an attempt to prevent their winning which, according to them, is inevitable in the face of massive dissatisfaction among the Hong Kong citizens. 

Finally, the Law has also affected China’s relation’s with other countries, including the U.S and UK. While Sino-US relations have already been on a crossroad due to trade war and the outbreak of COVID-19, the implementation of National Security Law by China and retaliation by the State Department of the U.S., further deteriorated the relations. U.S. has massive investment in Hong Kong which includes over 1,300 companies and $82.5 million dollars as direct investment and the new Law have put into risk U.S. business interest as it will no longer be protected under British-style common law jurisdiction. Moreover, as American elections remain due in November 2020, Trump has hardened its stand on China. On the other hand, the Sino-British relations have been in its ‘golden era’ post- ‘Brexit’. As Hong Kong constitutes an important part of Sino-British relationship, the National Security Law, means much more for the UK than what it stands for the U.S. Thus, UK’s has been the most direct international response against the implementation of the law.

As it were, other countries’ reactions make it easy for China to blame foreign interference and play the nationalist card to go through with the plan of completely integrating territories under the roof of ‘One China’.

Chinese Commitments in Afghanistan: A Strategic Calculus

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Aadil Sud, Research Intern, ICS

Afghanistan has long been a country on the periphery of Chinese policy due to its inherent instabilities, the presence of foreign coalition forces and the influence of the West acting as a buffer against overt Chinese involvement. Well aware of Afghanistan’s reputation as a ‘graveyard of empires’, China has refrained from serious involvement with the country, supporting the Afghan-led, Afghan-owned policy propagated by the West instead. However, with the imminent withdrawal of coalition troops, China has found a security and diplomatic void it is suited to fill, adding to its pre-existing investments in the country.

Since 2014, the National Unity Government has lobbied China for their assistance on issues of security, economic and regional integration. The prospects of peace in Afghanistan has since motivated China to ramp up its commitment to the nation. China’s Central Asian policy has the possibility of replication here, with economic commitments under the Belt and Road Initiative (BRI), military aid through arms sales and training, and reciprocal security assistance – with China aiding in dealing with the Taliban, and the Afghani government working to mitigate cross-border Islamist influence in Xinjiang, helping them combat their ‘three evils’ of terrorism, separatism and extremism. These commitments have led many to question the future role of China in Afghanistan’s post-coalition future. Namely, can China effectively integrate their relations with Afghanistan, in line with their own goals in the region?

Economic Integration with Afghanistan

Over the past few years, China has initiated numerous projects in Afghanistan’s key sectors – mining, transportation infrastructure, and agriculture. While the country is seen as geographically strategic, the BRI initially bypassed it. However, since 2016, both countries have jointly promoted this cooperation. Afghanistan acts as a link between China and Southern, Central and Western Asia, with the countries being connected in north by the Sino-Afghan special railway transportation project and the Five Nations Railway Project, which aim to connect to southern Afghanistan via the China–Pakistan Economic Corridor (CPEC). Afghanistan is also home to massive resource deposits, such as rare earth metals and lithium, which have the capacity to reduce the dependence of Afghanistan on foreign aid if exploited properly.

China, Afghanistan’s largest foreign investor, is using this position effectively to increase their influence in the region. According to Arif Sahar, an Afghan security expert based in London, these resources can only be effectively exploited by close neighbours, because of geopolitics and logistics. Aware that their manufacturing sector would benefit massively from this access to resources, ‘China is signalling that it is the only country in the region with the financial and economic capabilities that can be relied on as a trustworthy partner’.

This takes on more weight due to China’s interactions with Afghanistan’s neighbours. While China and Pakistan are perennial, all-weather allies, and remain economically and politically integrated, the recent push in Iran has provided Afghanistan further incentive to remain aligned with China, that of coastal access through Iran. Pakistan has consistently blocked Afghanistan from using their territory; and being aligned with Iran through China and the BRI remains a position that the Afghanistan government could be willing to accept.

Political-Strategic Integration: Indifference to Engagement

Over the years, China’s regional policy has gone from a calculated indifference to active engagement, with China realising the best chance to achieve their goals is a strong, stable Afghanistan. As such, China has pushed to reconcile with, and build contacts with both the Taliban and the Afghan government. It also strives for greater cooperation between Pakistan and Afghanistan, by pushing for greater opportunities for trade and investment.

Chinese motivations in Afghanistan vary. They remain wary of the country being used as a launching ground for Uyghur separatism (such as the East Turkestan Independence Movement), which it often claims could radicalise Uyghurs in Xinjiang province. It also aims to portray itself as an important regional and global player, with the potential to solve one of the world’s longest running insurgencies . China has hence embarked on numerous policies aimed at achieving these. It has portrayed itself as a point of contact between the government and the Taliban, acting as a facilitator in the Afghan peace process. It had also initiated a joint training operation with India for Afghan diplomats, as a gesture of goodwill. However, the future of this collaboration remains to be seen, due to renewed tensions with India following the Galwan incident. It has also aided Afghanistan militarily, helping build the military mountain brigade in the Wakhan corridor, with the primary goal of preventing infiltration by the Islamic State into China.

Afghanistan also hopes to use China as leverage against Pakistan. Quetta is widely believed to be the base of the Afghanistan Taliban leadership, and Pakistan has historically held some sway over the Taliban. Hamid Karzai was quoted as saying that ‘China is a close and strategic friend of Pakistan, and Chinese words with the Pakistani government carry weight… we believe that China can use that asset in a way that brings good relations between us and Pakistan and also leads to peace in Afghanistan’,  laying the groundwork for cooperation between the three countries. Preferring multilateralism over unilateralism in the region, China has also been examining using institutions like the UN to ensure regional peace and stability. Rightly so, any unilateral action in the region will face blowback from Afghanistan’s regional partners, as well as the international community.

The Way Forward

Over the past few years, China has steadily increased its involvement in Afghanistan, taking the form of military, economic and diplomatic commitments. However, these acts have not been without pushback, with China’s policy perceptions as giving pre-eminence to their own geopolitical and security concerns being the concern of many in the international community. As such, while the Afghani government views China as an important partner in Afghani stability, their impact so far has remained limited.

One last factor to consider is the influence of Russia. While not one to disrupt the coalition withdrawal, Russia under Putin has been steadily increasing its reputation as a great power with an international reach, as seen also in Libya and Syria. Additionally, Afghanistan is part of the erstwhile Russian sphere of influence, and any attempts by foreign powers to increase their influence in these regions have often been met by opposition. Some recent examples stem from accusations of Russian support to the Taliban, and allegations of state-sponsored bounties on US soldiers.

The force withdrawal provides China with an immense opportunity to increase their influence in the region – unilaterally through the BRI and its associated investments, or multilaterally through organisations like the UN. However, the viability of these projects largely depends on the confidence the international community and Afghanistan’s partners have in the Chinese leadership, which has taken a hit in the aftermath of the pandemic and China’s belligerent ‘Wolf Warrior’ diplomacy. China’s engagement in Afghanistan had started to take shape before this crisis, but the efficacy of such policies now remains to be seen, especially with increasing diplomatic challenges, such as with the USA, UK, Canada, and India. Without the support of the countries involved with Afghanistan, the expansion of Chinese policy remains a distant dream, which shall face numerous hurdles in implementation.

China’s Infrastructure Development Projects in Bangladesh

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Sayantan Haldar, Research Intern, ICS

Bangladesh’s Prime Minister Sheikh Hasina, with Chinese President Xi in Beijing, on 5 July, 2019.Image Source: AP Photo

On 14 October, 2016, Chinese President Xi Jinping created history by being the first Chinese leader to visit Bangladesh in 30 years. This visit bears great importance for the deepening of Sino-Bangladesh relations as well as China’s increasing outreach towards South Asia. Bangladesh is situated at the heart of the Bay of Bengal which makes it a strategically indispensible country in China’s growing network along the 21st Century Maritime Silk Route and the New Silk Road. China-Bangladesh relations dates back to 1976 when Beijing began diplomatic relations with Dhaka. However, President Xi’s visit to Dhaka in 2016 has been seen as an important development in the Sino-Bangladesh relations, especially after the onset of the Belt and Road Initiative (BRI). Bangladesh has responded positively to the BRI drawing some criticism from India which is a dominating factor in Bangladesh’s foreign policy, particularly in the neighborhood. Bangladesh is a developing country with major demand for infrastructure development which has largely inspired its engagement with China, while its strategic location has significantly shaped China’s outreach. Therefore, it is important to take stock of China’s infrastructure development projects in Bangladesh.

President Xi Jinping and Prime Minister Sheikh Hasina signed twenty-seven agreements worth billions of dollars and also elevated their relationship from ‘a comprehensive partnership of cooperation’ to a ‘strategic partnership of cooperation’ during the Chinese President’s visit to Dhaka in 2016. Earlier in 2015, China emerged as the top trade partner of Bangladesh replacing India. China’s growing engagement with Bangladesh has been based on steady economic linkages along with infrastructural assistance by China in Bangladesh. As a small country with a growing economy, Dhaka has positively embraced Beijing’s engagement. Even during Prime Minister Sheikh Hasina’s visit to China in July, 2019, the two sides agreed to enhance cooperation on trade, defense and infrastructure projects, which have further deepened China-Bangladesh ties.

The Padma Bridge Rail Link Project is one of the flagship projects undertaken by China in Bangladesh which aims to connect Dhaka with Jessore through the Padma Bridge. The estimated budget of the project is approximately BDT 40, 000 Crores jointly sponsored by the Exim Bank of China and Bangladesh government. The project began in 2016 and is aimed to be completed by 2024. The Padma rail project has been divided into three phases connecting Dhaka to Mawa, Mawa to Bhanga and Bhanga to Jessore. Rail connectivity is an important instrument for the bourgeoning market of Bangladesh. The Padma Bridge Rail project in particular is important to Bangladesh as it improve accessibility to Dhaka with central and south-western regions of the country and provides a shorter alternative to the Dhaka-Jessore-Khulna railway connectivity. It is also important to Bangladesh as it is expected to ensure socio-economic development and minimize regional disparity. China’s involvement in this project pertains to funding it. China is funding 85% of the project while the rest is funded by local contractors in Bangladesh. Interestingly the project was elevated to the ‘fast track’ status in Aril, 2016, emphasizing on China’s commitment of timely progress and delivery. This can be seen as an attempt by China to establish itself as a better alternative to India in the region, because one of the major issues flagged off by most countries in India’s neighborhood concerns New Delhi’s delivery deficiency. Infrastructure development in Bangladesh is also a strategically important sector for China to establish itself in, as it would increase greater dependence of Dhaka on Beijing. The biggest hindrance to the project so far has been the operational discontinuity caused by the Covid-19 pandemic. According to Bangladesh’s Road Transport and Bridges Minister’s briefing, the infrastructural progress of the project is 24.43% and the financial progress is at 30.52% until May.     

Another important project undertaken by China in Bangladesh is the Payra Deep Sea Port. The Payra shipping port is situated at the Patuakhali region of Bangladesh on the banks of the Bay of Bengal. This project will be given shape by China Harbor Engineering Company (CHEC) and China State Engineering and Construction Company (CSCEC). China’s interest in this project is not a matter of surprise as it is strategically situated and falls in line with China’s string of maritime bases across the Indian Ocean region. The total cost of the port is expected to be between USD 11 billion to 15 billion. For long, China has expressed its interest in building port projects in Bangladesh. The Payra port project was inaugurated in November, 2013, and started operating in 2016. This project holds great significance for Bangladesh as it is expected to facilitate internal development. The deep-sea port is vital for reinvigorating Bangladesh’s internal connectivity which will boost its booming economy. Bangladesh has however made it very clear that it is not meant to be developed as a Chinese naval base, as has been the experience with Gwadar and Hambantota in the past. Interestingly, China’s involvement in this project has not aroused suspicion in India as well, primarily because it does not follow the ‘field of dreams’ approach. The Payra port will also be complemented by the Padma Rail Link project, as the latter is expected to create opportunity to construct a second line in this route and connect Barisal & Payra Deep Sea Port. Even though there have been questions about the feasibility of this project, from China’s perspective, projects like this help Beijing engage its bloated state-owned enterprises and increase dependence of other countries on China.

While Bangladesh’s ties with China have been steadily growing, Prime Minister Sheikh Hasina has also maintained a balanced relationship with India. Notably, she described Bangladesh’s relations with India as ‘organic’ and ‘beyond a few billions of dollars of trade’ at the World Economic Forum in Dalian in 2019, reiterating her bonhomie with India. Towards this end, New Delhi and Dhaka have made progress in strengthening their connectivity linkages which have, for instance, manifested in terms of the shipment of the cargo vessel from Kolkata to Agartala via Chittagong for the first time in fifty-five years. However, participating in the BRI has been a strongly felt need in the Dhaka making China emerge as the seemingly perfect fit to alter Bangladesh’s infrastructure deficit. The two countries have increasingly shared more comfort in jointly developing infrastructure projects which have been beneficial to both. While Dhaka benefits with assistance in infrastructure development, Beijing also views this as an opportunity to expand its geo-strategic footprint in South Asia. It is important for Dhaka to draw lessons from fellow South Asian small-states like Sri Lanka and cautiously engage with China. However, Bangladesh has been firm on its view of engaging with China at a level that is mutually beneficial to both. Infrastructure development has been at the heart of this relationship, and is expected to strengthen further in light of the current Covid-19 pandemic. While the crisis has been a hindrance to the existing projects which were under progress, it has also opened a new avenue for both the countries to cooperate on health infrastructure. Bangladesh-s recent demand of priority for cooperation from China reaffirms their willingness to cooperate. Towards this end, Chinese Ambassador to Bangladesh, Li Jinming has reassured Bangladesh that China will remain its ‘most reliable’ partner.