Category: International Relations

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’.

Cross-Strait Relations amid COVID-19: Multilateralism with Chinese Characteristics

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Hariharan Chandrashekaran, Research Intern, ICS

COVID-19 has catastrophically emerged as one of the deadliest pandemics of the modern era, reshaping the dynamics of Cross-Strait relations, which has been characterized by limited contact, tensions, and instability. Although China managed to contain the virus, it was accused of a lack of transparency in communication. Meanwhile, Taiwan, with its proximity to China and an ideal destination for mainland tourists, was expected to have the second-highest number of imported cases during the initial stages of the outbreak. However, it was lauded globally for its swift execution of control, propagating the region’s perception in a positive light. Amid all the chaos globally, the World Health Organization (WHO) endured flak from critics for its approach towards the crisis and alleged remarks of being sympathetic towards the Chinese cause.

COVID-19, China, and the WHO.

Not ceding to a “Chernobyl moment”, after a prolonged period China successfully flattened the curve by effectively mobilizing its resources. It has since picked up the mantle to quickly restore its image through soft power measures such as formally dispatching medical equipment, ventilators and face masks to European nations such as Italy, Spain and other crisis-hit countries; now termed as “Mask Diplomacy”. Also, it maintained communication with the WHO,  providing updates of the virus and its transmission, contrary to the criticisms.

With early reactions being mainly positive from resource-strapped countries, including its African allies, a discriminatory racial incident within the Chinese mainland against African ethnicity hindered its progress. Additionally, claims of faulty equipment and its return questioned the candour of such measures.

Nevertheless, at the 2020 World Health Assembly (WHA), China pledged to contribute $2 billion to aid the WHO response towards the pandemic and the socio-economic development of the crisis-hit countries, especially Africa. Additionally, it called for global solidarity and collective mobilization of efforts against the virus by supporting WHO. But, mounting criticism resulted in the parallel emergence of the “Wolf Warrior” diplomacy. 

“Wolf Warrior” diplomacy refers to the growing assertiveness of Chinese foreign policy towards the West. COVID-19 has only amplified direct engagement of China through a battle of narratives against its critics, chiefly the US, condemning it for politicizing the issue. This development marked the Chinese contribution to the gradual shift of discourse from global institutionalism to hypernationalism. This new direction aims to portray China’s story – a country, attempting to “rise to the challenges of global leadership” by striving in a climate of declining multilateralism.

The Taiwan Cause

Harnessing its experience from the SARS outbreak, the Taiwanese government reacted quickly by entering a strict lockdown mode and enforcing stringent policy measures, gaining universal acclaim. Its technological capabilities tracked down the source of the virus within its area; additionally, it developed a range of testing kits to hasten the process of the containment of the virus. Taiwan succeeded in flattening the curve, showcasing a rare, strong well-executed response, even by WHO standards.

Furthermore, Taiwan took a page out of China’s policy of engagement by initiating its version of ‘Mask Diplomacy’. It was achieved by supplying masks (Taiwan is the second-largest producer of masks after China) and providing technological action frameworks to the affected countries, especially Western powers, thereby, emulating its ability to compensate the lack of its economic power. It had significant implications on its bilateral relations through further cooperation such as ongoing Taiwan – Danish cooperation to develop vaccines and the US amending its position by supporting Taiwan’s membership to the WHA, significantly denting the “One China” policy.

However, its achievements were unacknowledged categorically due to the politics of the WHA, which recognizes the region as part of China, leading former’s exclusion from WHO meetings. It resulted in the emergence of pent up anger amongst the nationalist groups who sought to move away from the Chinese identity. However, the government response was limited to castigating WHO by questioning its non-political nature.

Balance of Tide 

It was due to the Taiwanese cause for representation after a prolonged struggle that it finally received the observer status invite to WHA in 2008 Taipei’s observer status at the WHA exemplified a historic shift in Cross-Strait relations. Nevertheless, the Assembly revoked its membership since 2016, owing to the UN Stance on “One China” Policy. Since then, China has actively blocked the prospect, thereby resulting in the reversal of whatsoever gains for positive relations over the years.

In addition to actively blocking Taiwan’s membership bid since 2016, it was also a timeline of heated economic quarrels between the US and China. Also, the Hong Kong protests had a profound impact on Taiwan by significantly affecting the results of the Taiwan presidential and legislative elections in early 2020 favouring the incumbent party and raising its image as a democratic nation. The evolved imagery and the simultaneous allegations on China over lack of transparency immensely accelerated the US legislation of  TAIPEI Act – 2019 to make it US policy to advocate Taiwan’s participation in international organizations. However, it was strongly rebutted by China who described it as an “act of hegemony”.

Nevertheless, the battle of narratives between the US and China resulted in the former halting the financing WHO. Complementing it was the announcement of US terminating its relationship with WHO as an attempt to pacify its populace for its lack of preparedness. Moreover, Australia demanded an independent assessment of the performance of the WHO and China in handling the crisis. Both responses drew sharp criticism and rebuttal from China. Nevertheless, moderates such as Germany and France urged transparency for the global good, resulting in China ceding to the demand for investigations, albeit post-crisis, making WHO a battleground of politics.

Conclusion

In tracing the dynamics of Cross-Strait relations, the ongoing situation not only demonstrates the vulnerability of international institutions’ functionality amidst political crises but also marks a growing shift away from reliance on global institutionalism. However, for Taiwan, this development brought a temporary rejuvenated hope for the government to maintain its independent co-existential nature. In contrast, with China sticking to the “One China” policy, it expects other countries to reciprocate its policy of non-interference[*]. However, the pandemic has catalyzed its assertiveness as evident in the central leadership’s decision to enforce the “New National Security Law” in Hong Kong, creating similar potential implications for Taiwan’s cause foregrounding resistance from the US. To conclude, Beijing has exploited the shift by stressing cooperation over isolation under the umbrella of the WHO by providing a differing perspective of multilateralism with Chinese characteristics that calls for solidarity without interference – a perspective steered by the rising nationalistic Wolf Warrior diplomacy.

[*]This policy of non-interference is in direct contrast to the U.S. foreign policy of selective international engagement that interferes with domestic issues.

Can Taiwan’s COVID-19 Diplomacy Help It Make Permanent Friends?

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Sanjana Krishnan, Research Intern, ICS

The world today is full of uncertainty due to the outbreak of COVID-19. While the rest of the world is still in the grip of COVID-19, one small island, namely Taiwan has been successful in flattening the curve. This was made possible by the proactive measures it took immediately after the first news of  the outbreak emerged from China. In a way, Taiwan was already in a state of readiness after the outbreak of SARS in 2003.  It was able to respond quickly by integrating the working of various ministries and employing advanced technologies to achieve good results. It implemented measures such as on-board quarantine, 14-day home quarantine, health declarations, fever screening and so on. The travel details of people are stored in their National Health Insurance cards to alert the concerned authority about any spread of the virus by using the GPS technology. This has helped in curbing individual and community spread.

Taiwan, a self-ruled island that has been denied entry into the World Health Organisation (WHO), is not only setting an example to the world by the way it has handled its internal situation but also through its help to other states by exporting medical equipment, especially medical grade masks. The territory is now the second largest producer of masks after China. According to its Economic Affairs Minister, Sheng Jong-chin (沈榮津), Taiwan produces 15 million masks every day. In March, it had relaxed the ban on export of face masks  and in April, shipped PPE and masks to its diplomatic allies and the worst hit countries in Europe. Taiwan  also announced that it would donate 10  million masks to the most needy countries and 100,000 masks per week to the United States. It has also promised to share its electronic quarantine system that employs big data analytics.

These measures helped raise considerably the profile of this self-governed island but, in turn, has attracted Beijing’s anger. Even as Taiwan received praise from various parts of the world for its effective measures and the help extended, China termed these a political game played by Taiwan to gain admission into the W.H.O and the acceptance of the world community. This accusation was made while also pointing out that Taiwan had banned its mask export when China was in its most vulnerable state with respect to the Corona virus outbreak.

China considers Taiwan a part of its sovereign territory, awaiting reunification even by force, if necessary. Today, there are only a handful of nations in Central America and the Oceanic region, that recognise Taiwan. Taiwan has even been kept out of most of the international organisations such as the United Nations, W.H.O and so on. The island is in a geo-political absurdity owing to the fact that even its most important ally, the US does not recognise its status as an independent state, its territory is under constant threat as it is claimed by a powerful state such as China and its sovereign status slowly erodes with both states and MNCs withdrawing their engagement with it due to the threat of upsetting China. In this context, the latest engagement of Taiwan holds significance.

The world is now forced to recognise the advanced healthcare and technological capability of Taiwan. The helping hand extended by the island definitely aids the improvement of its image globally. It has made Canadian Prime Minister Justin Trudeau, Japanese Prime Minister Shinzo Abe and U.S Secretary of State, Mike Pompeo call for greater inclusion of Taiwan in the work of the W.H.O. This move however, is sure to be blocked by China even though it marks a departure in spirit from the 2009 arrangement that China had agreed to for Taiwan’s participation at the annual World Health Assembly from 2009 to 2016 as an Observer. There has been a change since then. Taiwan has rejected China’s main condition for the former to be a part of the W.H.O, i.e, to accept that it is a part of Mainland China in May this year.

Taiwan today faces an opportunity to strengthen ties with other states and improve its international standing. Beijing has sought to strengthen its relations with Europe by sending them medical equipment. However, this has not meant necessarily that member countries of the E.U. have succumbed to Chinese pressure on Taiwan. Many of these states have accepted help from the island and openly acknowledged this help through Twitter.

Both China and Taiwan have been able to curb the first wave of the virus. But what brings praise to Taiwan is the fact that they did it without any support from W.H.O. Taiwan also shared COVID-19 related data with W.H.O. Although China is trying to bring in a narrative of it being helpful to the world, reports of suppression of news of its early outbreak from the media as well as export of faulty equipment has adversely affected these efforts. This has in turn been a supplementary factor in improving Taiwan’s image. While both China and Taiwan engaged in mask diplomacy, Taiwan has had more apparent and immediate success. Thus, exporting medical equipment, especially masks, has also become a tool of political expression.

Taiwan’s mask diplomacy has chances of increasing the support it gets from other states. The important question here is, how long this support will last and how far it will extend. Supporting Taiwan means directly going against Chinese interests. While such support may appear today as a necessity, this cannot last for long. States often behave differently under normal conditions and under emergencies. The common determinant here is national interest. While it might be in the national interest to accept Taiwan’s help and show acceptance towards it, it might not appear so in the future when such a policy will mean locking horns with a formidable power such as China. As the world gathers more knowledge and experience in handling the pandemic, its dependence on Taiwan will decrease. In international relations, there are no permanent friends or permanent enemies. There are only permanent national interests. Some alliances last only as long as some issues do. Therefore, the effect of ‘mask diplomacy’ by Taiwan may last only as long as the pandemic lasts.

China’s waning export-led growth: COVID-19 to accelerate the trend?

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Karthik Satheesh, Research Intern, ICS

Since the late 1970s, China had started to shift from a centrally-planned system towards a market-oriented economy. One of the most notable features of the post-1980s China’s economic development was its increasing participation in international trade. Chinese exports rose on average 5.7% in the 1980s, 12.4% in the 1990s, and 20.3% between 2000 and 2003. By 2003, China’s export growth rate was seven times higher than the export growth rate recorded by the world as a whole. By 2006, the year when China recorded the highest trade (exports and imports), trade constituted 64% of China’s GDP.

Many countries have followed the export-led path to growth in the past and have achieved rapid growth in GDP. However, the threat of facing a global demand crunch always looms large for these economies. During 2008-09 (global financial crisis) period, China faced the same situation- its export as a percentage to GDP (see graph below) fell to 24% in 2009 (as opposed to 36 % in 2006) and its GDP growth rate fell from 14% in 2007 to 9% in 2008. This is indicative of the fact that exports were imperative to China’s growth, and when faced with a global demand slump it fumbled. Even though China managed to have a relatively high growth rate in that period, such a situation is a nightmare to an export-led economy.

Since then there has been a steady decline in exports’ percentage in GDP for China. In 2018, this figure stood close to 19%- similar to that of countries like Egypt and Uganda. Meanwhile, GDP growth more than halved during this period from 14% to around 6% growth rate (in 2019).

Source: World Bank

The steady decline in exports and imports points to the fact that China is gradually reducing its dependence on exports. This can be further coloured by the fact that both exports’ and imports’ share in GDP have fallen massively, in this decade. This means that the consumers in China have been absorbing what otherwise would have been exported and as private demands are increasingly being met domestically the imports have also slumped (from 28% in 2006 to 18% in 2018).

China now seems to be focussing on boosting domestic consumption after decades of export-led growth strategy. According to the Economist Intelligence Unit, private consumption will soon constitute nearly half of China’s GDP. But is such a shift possible and if so, how? These are a few factors that have significantly boosted domestic consumption:

  • China’s per-capita income has more than doubled in the last decade thanks to its rapid growth. This means that an average Chinese have more than double the means to consume than he had a decade ago.
  • Another factor is the high adaptability and competitiveness of the Chinese retail market which ensures that home-grown retailers are always on the front line to extend goods and services to the booming consumer demand. Chinese retail market has shown extreme resilience and creativity and for the same reason, it is soon expected to emerge as the largest retail market in the world, surpassing the US.
  • Additionally, the fast-moving consumer goods market has shown excellent growth with around 4.3% growth rate in 2017 and it is expected to account for more than half of the whole economy by 2030 according to the Economist Intelligence Unit.
  • Consumer behaviour in China has been changing from conservative high savers to potential spenders. This fact is highlighted by tourism spending in the year 2018: Chinese tourists spent around $277 Billion which accounts to nearly 18% of global tourism spending which is higher than any other country.
  • Moreover, as of 2018, nearly 60% of China’s population lived in cities which indicated a high rate of urbanisation (urban population growth is around 2.4% annually). This bridges the gap between the middle-class buyers and the booming retail market in the country, which in turn helps in boosting private consumption.

All these aspects, combinedly, have bolstered the shift of Chinese economy’s dependence towards domestic consumption.

A similar trend could be seen in the shift from an industry-based economy to a service-based economy; in 2006 industry contributed 13% more to China’s GDP than services while in 2016 it was the other way round. A service-based economy is a salient feature of most of the developed countries.

If we observe these trends, China seemed to have been making a steady transition from an export-led industry-oriented economy to a domestic-consumption-led service-oriented economy. However, the novel Coronavirus pandemic has left its economy hanging in uncertainty. According to World Economic Outlook, China’s growth rate is expected to shrink by more than 5% this year; the GDP growth rate is expected to be 1.2% in the year 2020 while this figure was 6.1% in 2019. The great lockdown has affected the Chinese economy very much- retail market, tourism, export declining due to global demand crunch- all of which will have a negative influence on the economy. Although nations around the world are foreseeing a recovery as soon as possible, experts do not expect this to be a v-shaped recovery. The recovery period might give China, which has already lifted lockdown restrictions, an incentive to focus more on its domestic consumption and strengthening its retail market. Even though exports in China has bounced back significantly higher than expected in the month of April (though it has and will remain quite low because of the existence of lockdown in many of China’s partner countries), domestic demand appears to be resilient and increasing– a trend we have been witnessing even prior to the lockdown.

Global merchandise trade is expected to decline 13-32% due to COVID-19 and the WTO has commented that the decline in world trade due to this pandemic will likely exceed the one accompanied by the global financial crisis of 2008-09. The post-pandemic period most likely will witness an accelerating trend of declining dependence on export-led growth for China for various reasons:

  • Deglobalisation: Even before the pandemic struck, deglobalisation was increasingly spreading around the globe, fuelled by the Sino-US trade war and the financial crisis. The pandemic has further instilled a feeling of self-reliance and accelerated this phenomenon- politicising travel and migration, cross accusations and exposure of anarchy in global governance in the recent crisis has contributed to the promotion of deglobalisation.
  • Global Value Chain (GVC) under pressure: By becoming a hub for cheap and efficient manufacturing, China was an integral part of the supply and value chain of many goods. However, after the COVID crisis, major economic players are planning to shift their manufacturing and production facilities back to their own countries, away from China, foregoing the manufacturing efficiency and cost minimisation that globalisation has offered them in the past. This increasing pressure on GVCs means that China’s exports and manufacture sector will be affected in the coming years.
  • Lockdown in partner countries: During the height of the coronavirus outbreak in China (January-February period) exports plummeted 17.2% and in April there was a surprising 3.5% jump in exports. However, even though China came out of lockdown successfully its trade partners are still in lockdown and fighting the virus. Hence, global demand is expected to remain low for the months that follow.
  • Trade war: Even before the pandemic, the US-China trade war shook China’s trade with its largest trade partner, US. A small relief in the trade war came in January, in the “phase-one” deal, when both sides agreed to give concessions on heavy tariffs imposed before. Recently, the cross accusations and mutual blame have further threatened the progress that lies ahead of “phase-one” negotiations and could even aggravate the problem further. A trade-war at this point will be heavy on China’s side and will affect its trade drastically.  
  • Direct interventions: The Chinese government has adopted policies to boost domestic consumption in the country to mitigate the heavy losses in exports that accompanies the slump in global demand. These policies are aimed at brand promotion of Chinese owned brands and on the same hand reducing the market for imported goods. Additionally, there are efforts to establish domestic duty-free shops, encourage domestic tourism and also to attract foreign tourists which could boost domestic demand and result in increased domestic consumption.

The COVID crisis could accelerate the Chinese economy’s dependence on domestic-consumption, owing to the various factors discussed above, that are currently at play. Therefore, the trend that we can expect is a “reducing dependence” on exports in the coming years and an increasing dependence on domestic consumption, accelerated by the COVID-19 pandemic.

Rise of Anti-China Public Sentiments in Central Asia

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Mohd. Adnan, Research Intern, ICS

Protesters during anti-China demonstrtion in Almaty, Kazakhstan September 4, 2019 Source: Reuters

Anti-China public sentiments are on the rise not just in Central Asia but almost in majority of China’s neighbouring countries. Over the years, intermittent anti-China public protests have occurred in Central Asian region, particularly in Kazakhstan and Kyrgyzstan. However, in last one and half year, the intensity of these protests has increased significantly. In September 2019, a series of anti-China public protests erupted across the various Kazakh cities. These protests were largely premised on grievances such as moving Chinese factory in Kazakhstan, presence of illegal Chinese immigrants, China’s policy of leasing land, and detention of Kazakhs in Xinjiang, etc. Similarly, in late December 2018 and January 2019, Kyrgyzstan also witnessed a round of anti-China public protests in its capital Bishkek. These protests were also premised on more or less the same issues on which Kazakhstan has witnessed the protests. That is, China’s presence in the region is seen with suspicions from the broader populace in Central Asia. Even the economic relations between these two regions has been seen from suspicions and in some cases, opposition and nationalist groups exploit these fears to halt further integration of the region with China.

On February 17, 2020, a fresh protest erupted in Kyrgyzstan’s Naryn region over the construction of joint venture logistics project supposed to be constructed by a local company with the partnership of a Chinese company. Amid the backdrop of protests, this project was cancelled. In the wake of growing anti-China public protests and simmering sentiments, this article seeks to highlight the root causes responsible for emergence of anti-China public sentiments in Central Asia. Further, it also tries to evaluate the role of China’s re-educational policies in Xinjiang in aggravating the anti-China public sentiments and how Central Asian governments are responding to this phenomenon.

The root causes responsible for emergence of anti-China sentiments

Despite being the biggest trading partner and having strong relations with the governments of Central Asian countries, China’s presence in the region has generally been viewed with suspicion by the broader populace. This deep rooted suspicion towards China had its historical underpinnings. Back in 19th century, a warlord, Yaqub Beg, from Kokand Khanate led an expedition to capture the present day approximate area of Xinjiang. He captured this area and his reign lasted for almost twenty years, when imperial China reconquered it in 1876. Along with this, October revolution in 1917 and subsequent communist Soviet Union’s formulation in Tsarist Russia prompted Soviet regime to place direct control over Central Asian region. In 1960s Sino-Soviet relations were destabilized owing to the differences in ideology. Since then, Soviet Union spread propaganda about China’s ulterior motive in Central Asian region and it also supported the Uyghur cause in Xinjiang. The historical confrontation between Sino-Turkish civilization over the present day territory of Xinjiang and Soviet propaganda back in 1960s, have created a deep suspicions among the majority of Central Asian people towards China.

Further, after the collapse of Soviet Union in 1991, Central Asian countries, along with their independent, also inherited the unresolved border disputes with China. Subsequently, the border resolutions between China and Central Asian states such as Kazakhstan, Kyrgyzstan and Tajikistan in late l990s and early 2000s, where these states ceded territories to China, have profoundly impacted the consciousness of Central Asian populace. Moreover, Growing investments and economic integration of the region with China is sometimes seen through suspicion. For instance, proposals to rent land to China for agricultural uses have sparked protests in the past. Back in 2016, when the government of Kazakhstan proposed to rent land to China for agricultural activities, it drew public protests and later, this proposal was relinquished. Although, Chinese investments in Central Asia and growing trade between them have been beneficial for common people of the region, they still fear Chinese intention and suspect its presence in the region.

How re-educational centres in Xinjiang is aggravating anti-China sentiments

In a bid to eliminate extremist and separatist elements from its restive Xinjiang province, China opted for a harsh policy in the form of mass detention and re-educational centers, what it calls ‘Vocational Education and Training’ to de-radicalize its minority groups. In these so called vocational education and training centers, it has detained a large number of Uyghurs along with other ethnic minority groups such as Kazakh, Kyrgyz, etc. According to an estimate by United Nations Elimination of Racial Discrimination Committee, approximately a million people have been detained in these centres. These minority groups share close civilizational and cultural linkages with Central Asian people. Moreover, detained ethnic minorities such as Kazakh, Kyrgyz and Tajik even constitute majority nationality in the neighbouring Central Asian countries.

Due to the close proximity and cultural linkages between the Central Asian people and minority groups in Xinjiang, Central Asia gets firsthand information of what happens in Xinjiang. Further, many of China’s ethnic Kazakh and Kyrgyz, who were previously detained in the re-educational centres, have escaped to neighbouring Kazakhstan and Kyrgyzstan. They shared their stories with local media and civil societies. Such was the case of Sayragul Sauytbay, a Chinese citizen of Kazakh origin who escaped to Kazakhstan in April 2018. Her illegal border crossing into Kazakhstan led to her arrest few months later and it was followed by a prolonged public trial. During her public trial, she claimed that she was forced to work in one of the re-educational centres as an instructor and told about the functions of these centres. However, her confession was dismissed by the Chinese authorities. Eventually, amid the growing public support, Kazakh court opted for mild sentence instead of deporting her to China.

In support of people like Sayragul Sauytbay and many others, who have escaped re-educational centres in Xinjiang, civil societies like Atajurt Eriktileri have also emerged. Atajurt Eriktileri, a Kazakh human rights group primarily concerned with the re-educational centres, has been working on to help people fleeing Xinjiang and highlighting harsh treatment meted out by Chinese authorities on its minority groups in Xinjiang. However it has been constrained by Kazakh authorities since early 2019, when its vocal leader, Serikzhan Bilash, was arrested in March 2019 and later that year, he was  released on condition to not to participate in any activities regarding Xinjiang issue for seven years.

Public testimony of Sayragul Sayutbay and many others have provided a rare insight of the functioning of re-educaional centres in Xinjiang. It has, certainly, aggravated the already prevailed anti-China public sentiments in Central Asia. It appears China’s attempt to stabilize its restive Xinjiang province through formulation of re-educational centres have irked the Central Asian people. The recent anti-China protests in Kazakhstan and Kyrgyzstan show the growing discontent among the majority of Central Asian people.

Central Asian governments’ response to the emergence of anti-China sentiments

Recent public protests and simmering anti-China sentiments have been largely ignored and in some cases, suppressed by the authority due to the fact that Inter-governmental relations and bilateral trade between China and Central Asian countries are quite strong. As Alisher Ilkhamove-program manager in Open Society Eurasia Program-claimed, ‘China’s considerable investments and trade ties have chained the Central Asian states to Beijing’. At present, China holds a significant economic influence over almost all five Central Asian countries. China-Central Asia trade almost doubled to around US $ 40 billion between 2007 and 2018 and China has eclipsed EU as the largest trading partner of Central Asia. In addition to this, as of 2018, China has also provided US $ 14.7 billion in form of foreign direct investments and undocumented unconditional loans to the underdeveloped Central Asian countries. Since China does not provide official data of its international lending, it is difficult to find exact amount of loans provided by China to central Asian countries. However, Sebastian Horn and his colleagues conducted a study to find out China’s overseas lending. This study was issued by the Kiel Working Paper No. 2132 titled as ‘China’s Overseas Lending’ in June 2019. In their findings, they estimated Kyrgyzstan owed around 30 percent of its GDP while Tajikistan and Turkmenistan both owed around 15 percent of their GDP to China as of 2017. Such is the economic dependence of the region with China that the governments of Central Asian countries generally ignore these protests and related issues.

While Kyrgyzstan and Tajikistan are heavily indebted to China and Turkmenistan almost dependent on China for its export revenue, countries like Kazakhstan and Uzbekistan are well off compare to these states. However, China’s Silk Road Economic Belt (SREB) – land based infrastructure projects of Belt and Road Initiative (BRI) connecting China with Africa, Europe and West Asia passing through Central Asia – has presented an opportunity for underdeveloped Central Asian countries to get much needed investments. In addition, given the military and economic might of China, Central Asian countries generally avoid to antagonise Beijing and primarily rely on back channels of diplomacy rather than making public comments to convey their concerns to China on its re-educational policy in Xinjiang.

China’s reliance on building strong relationships with the governments of Central Asian countries and emphasizing on mutual economic interactions with the region are not sufficient to mitigate the belligerent public sentiments. In order to improve its image among Central Asian populace, China has to consider other factors as well. Given the strong civilizational and cultural linkages between Central Asian people and China’s minority groups in Xinjiang, it will be naïve to overlook this bond between the people of these two regions. Building trust among the Central Asian populace will enhance China’s influence and secure its interests in the region. This way, China could cement its long-term partnerships with the region and ward off any possible emergence of anti-China forces in Central Asia. Amid its emergence at the global stage and the simmering Sino-US rivalry, it is imperative for China to secure its interests in neighbouring countries including Central Asia.

Amid the Covid-19 Pandemic: Assessing US-China Relations

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Mohd. Adnan, Research Intern, ICS

Before the outbreak of Covid-19 pandemic in the United States, Sino-US relations were seemed to be heading towards achieving a bit of normalcy through agreeing the ‘phase one’ trade deal in mid-January 2020. The trade deal was achieved after a round of heated negotiations lasting over a year, when the US formally announced the imposition of tariffs on Chinese imports, in March 2018. This partial trade deal was considered to be a beginning of the US-China collaboration and normalisation of their strained bilateral relations. However, the outbreak of COVID-19 in the US has prompted many in the US administration, specifically US President, to question the Chinese intentions and its handling of Covid-19 pandemic. In response, China questioned United States’ handling of the Covid-19 pandemic. A war of words has taken place from the both sides over the origin and handling of Covid-19 outbreak since early March. Amid the accusations and blame game from both sides, the relations between these two countries significantly deteriorated in the last two months. Amid the unfolding of COVID-19, this blog post explores whether the United States’ belligerent approach towards China in last two months is mere a tactic to gain domestic support regarding the upcoming election or Sino-US relations are, indeed, moving towards a new height of confrontations.

In late January-early February 2020, amid the backdrop of crucial signing of ‘phase-one’ trade deal, it seemed US-China bilateral relations were heading towards normalcy. While China was struggling to contain the Covid-19 outbreak, US President, Donald Trump, on multiple occasions, had praised China’s professionalism and transparency in handling the Covid-19 outbreak. However, in early March, all these changed, when the cases of Covid-19 started to increase in the US. The Trump administration started to question China’s handling of pandemic. There is little doubt that the pandemic had its origins in China and initially, there was cover up by Party-state at the level of Wuhan. But the criticisms on China’s non-transparency, which did cost the world, shouldn’t be seen as a free pass to the US. Even though the World Health Organisation (WHO) declared the outbreak a ‘Public Health Emergency of International Concern’ on 30 January, many countries including the US did not give the virus outbreak serious attention, delaying formulation of effective measures to contain it.

COVID-19 pandemic has inflicted significant human and economic costs to the US -at the time of writing this, around a million people have been infected and above seventy thousand have succumbed to death. Further, US economy has taken a serious hit and the real extent of this damage will only surface once the situations started to normalise, with many equating it with the Great Depression before the World War II. Unemployment rate in US has hit record high more than 22 million people have applied for financial aid as of mid-April. According to the ‘advance’ estimate data provided by Bureau of Economic Analysis, United States’ real  gross domestic product has contracted 4.8 per cent in the first-quarter of 2020 and it is expected the things will get worse before improving in the second half of the year. The US President’s repeated statements to open economic production at the earliest, indicates the desperation of the administration in an election year.

The approval rating of President Donald Trump has declined since the outbreak of Covid-19. In an article published by CNBC on 25 April, it was noted, ‘in January, (US president) Trump planned to run for re-election on the strength of a booming economy and a pledge to keep fighting the “deep state” government bureaucracy. But that all ended as soon as the coronavirus pandemic gained a foothold in the United States’. To augment this argument, on April 17, in a leaked report obtained by Politico, the National Republican Senatorial Committee sent a 57-page written Memo to its electoral candidates advising how to counter the candidates of the Democratic Party. In the short version of this Memo, Republican candidates have been advised to follow China-centric issues; like how China caused this pandemic by ‘lying’ and ‘covering it up’ and ‘hoarding of medical equipment’. Further, it also advised to present, China as an ‘adversary’ and the Democratic candidates, as ‘soft on China’, while Republicans were ‘tough’, being capable of confronting China. Moreover, on 29 April, in an interview with Reuters news agency, Trump directly accused China of seeking his loss in his re-election bid. It seems that the delicate predicament that emerged due to the COVID-19 has prompted the Trump administration to shift the blame towards China in the run up to the Presidential election in November 2020.

Moving on, the recent blame game and deteriorating relations between the US and China is not only limited to domestic compulsions but they are, indeed, moving towards a new height of confrontations. Along with the United States’ belligerent postures, China, too, has adopted an aggressive and assertive approach, which has not been seen in recent years. In the process of blaming each other, a war of information has taken place between the US and China. While Beijing was busy to burnish its image and enhance legitimacy – tarnished by its initial mishandling of the outbreak – by sending medical teams and equipment around the world to assist the fight against COVID-19, Washington DC used every opportunity to ratchet up tensions, starting with multiple accusations on China’s non-transparency and suppression of crucial information. In mid-April, President Trump even questioned the authenticity of Chinese data on the infected cases and reported deaths.

In retaliation, China accused that the US was unable to handle the pandemic therefore it is trying to shift the blame. Theories such as ‘Corona virus was brought by the US military in Wuhan’ and ‘Chinese model of governance is better than the democracy’ were also propagated. On 28 April, amid the accusations of ‘covering up’ and not being ‘transparent’, China’s Executive Vice Foreign Minister, Le Yucheng, in an interview with NBC questioned United States’ handling of the  outbreak and denied the accusations that China has ‘covered up’ and ‘under-reported’ the Covid-19 cases and deaths. He further added, ‘unfortunately, some political figures are politicizing this Covid-19. They are using this virus to stigmatize China. This is not something we are willing to see’. In this war of information to enhance one’s legitimacy and degrade the other, questions have also been raised over the role and authenticity of WHO; the US administration has even halted their funding to the WHO, accusing them of complicity in Beijing’s initial cover-up.

The US is targeting China’s State Owned Enterprises (SOE) – earlier in April, several US executive agencies urged the Federal Communications Commission (FCC) to revoke the license of operation of China Telecom in US territory, citing risks for national security. In this regard, the FCC sent a ‘show cause’ notice to three state-controlled Chinese telecommunications operators including China Telecom. The US is also planning to impose severe restrictions on its own companies from exporting certain technological products, especially the semiconductor production equipment, to companies related with Chinese military.

Amid the devastating effect of COVID-19, world’s reliance on China for essential supply has come into spotlight. The call to bring back home or relocate major US companies’ production units away from China in the height of trade confrontation has intensified. Earlier in April, Larry Kudlow, US National Economic Council Director, advocated the same by ‘paying moving costs’. Further, several US Senators have also been voicing the same in order to reduce dependency for essential supplies.

Issues such as South China Sea dispute, Hong Kong protests, Taiwan, and human rights have been flaring-up between these two states. The pandemic has not constrained China in being assertive in South China Sea – it placed the administrative jurisdictions of Spratly and Parcel Islands under the Sansha administrative unit – a city in the island of Hainan. Apart from that, China has also collided with other claimant countries in the disputed South China Sea. In early April, a Vietnamese fishing boat was drowned by a Chinese maritime vessel. Various other incidents have occurred where Chinese coastguard vessels have been seen posturing aggressively in the whole region including South China Sea. In response to this, the US has increased its maritime patrolling in the disputed area; US warships have sailed through the disputed areas on two separate occasions evoking harsh criticism from China.

The Taiwan issue has remained contentious in US-China relations. While, over the years, Beijing, has been trying to curb Taiwan’s remaining diplomatic relations. The US, on 26 March, enacted a law called as ‘The Taiwan Allies International Protection and Enhancement Initiative, which  requires the US, to assist Taiwan in acquiring memberships in international organisations where statehood is not a precondition and also proposes to take unspecified action against countries which ‘undermine the prosperity and security of Taiwan’. This move by the US, expectedly, drew severe criticism from China accusing the US of ‘interfering’ in its internal matters by ‘violating’ the principle of ‘One China’ Policy.

While it appears, to a large extent, that the recent anti-China rhetoric by the US administration is politically motivated by domestic electoral compulsions, there are factors that go beyond that. These recent developments only indicate the further deterioration of relations between both the countries. It may be surmised that the trade deal will not necessarily reduce the tensions. Until the US continues to perceive China as a challenger to its hegemony, it is unlikely that relations between them will be of mutual collaboration and cooperation.

Contemporary Dynamics of Sino-Japanese Relations

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Mohd. Adnan, Research Intern, ICS

Contemporary Sino-Japanese relations rested on the logic of economic competition and interdependence along with prevalent distrusts and territorial disputes, have become one of the most crucial bilateral relations in the world. Despite competing with each other over various overlapping economic and strategic interests, their increasing bilateral trade have inextricably bound to each other. World’s second and third largest economy China and Japan respectively, at one side, entangled in regional competition to gain influence and their confrontations over disputed Senkaku (Diaoyu) Islands situated in East China sea. On the other side, their indispensable economic interdependence has been the key aspect of their complex relationships. In 2012, the relations between them were severely strained over the confrontations on Senkaku islands. However, increasing economic interdependence and United States’ inward looking “America First” approach have provided an impetus for both states to pacify their relations. This paper intends to explore the contemporary dynamics of Sino-Japanese bilateral relationship.

Historically, Sino-Japanese relations have been of a competitive nature rather than mutual collaboration. Japanese aggression during the late nineteenth and first half of twentieth century has left a deep impact on contemporary Sino-Japanese relations. The relations between them got normalized in the beginning of 1970s and subsequently, they have signed the Treaty of Peace and Friendship in 1978. Japan has invested heavily in and provided much needed essential technologies to China for its development in the post-Mao era. As Kerry Brown in his 2016 article in The Diplomat, explained, without Japan’s assistance in form of ‘technology and knowledge’, China’s opening up and reforms would not have succeeded ‘as quickly and extensively’ as it happened.

The end of the Cold War and relative rise of China created an environment of competition between these two giants. In 2012, the relations between them hit a serious blow when Japanese government purchased three out of five Senkaku islands from their private owners in order to fully legitimize its claim over the disputed islands. China vehemently opposed this act and various anti-Japan protests erupted across mainland China. Japanese products were boycotted by public and relations between them were severely damaged.

The impasse between China and Japan remained intact until a surge of populism was witnessed in 2016 US presidential election. Consequently, the United States partially relinquished its previous neoliberal approach of leading free trade and open market and opted for an increasingly inward looking “America First” approach. This so called “America First” approach allows the US administration to renegotiate trade deals with its major trading partners and its adoption of protectionist approach to pressurise these partners by putting tariffs. This new development in the international market has unintentionally pushed China and Japan to step aside their differences and come to a cooperative platform. Amid US-China trade confrontation and its protectionist approach, first, Chinese Premier Li Keqiang visited Tokyo and a subsequent reciprocal visit by Japanese Prime Minister Shinjo Abe was witnessed in 2018. Since then both states maintained their complicated relationships despite competing and confronting with each other in many overlapping economic and strategic interests.

Contemporary Sino-Japanese economic relations revolve around two sets of notion. On the one hand, they are increasingly interdependent owing to the huge amounts of bilateral trade. According to the data provided by Japan’s foreign ministry in fiscal year 2019, China is by far the largest trading partner of Japan and bilateral trade between them well exceeds above US $ 300 billion. Further, China’s vast demography and rising middle class provides a lucrative market to export-led Japanese economy. While, witnessing the increasing rift between the United States and China, Japan’s importance to China has grown in many ways. Japan has been the major source of essential technology for China since its ‘opening up’ in late 1970s. At a time, when the US is barring Chinese companies from acquiring essential technology, China’s reliance on Japanese technology will only increase. Moreover, while the US is retaliating against its major trade partners including China and Japan, increasing economic engagement becomes a necessity for both states to reduce their dependence on the US markets.

The economic interdependence between China and Japan is expected to further increase once the Regional Economic Comprehensive Partnership (RCEP) is signed. RCEP is a trade agreement, which emphasises on reducing tariffs, between the ten member countries of Association of Southeast Asian Nations (ASEAN), China, Japan, India, South Korea, Australia, and New Zealand. Last year in November, these states signed text-based negotiations, in which India opted to exclude itself. However, a fissure has surfaced in RCEP because Japan seems reluctant to sign the deal without the inclusion of India. Japan fears without the involvement of India, RCEP will be dominated by China. Though, China is coaxing both Japan and India to get back in the fold of RCEP. It is expected that the Pact will be signed in the year 2020. According to a report published in Xinhua on 5 November, 2019, “once (RCEP) signed, it will form the largest free-trade agreement in Asia covering 47.4 percent of the world’s population, and accounting for 32.2 percent of global GDP, 29.1 percent of trade worldwide and 32.5 percent of global investment”.

On the other hand, since both states are largely export-led economy, they have been competing with each other in third party markets. China and Japan, in recent years, increasingly competed with each other in third party markets on trade, infrastructure projects, and investments, particularly in Southeast Asian countries. Such is the competition that Japan initially avoided to become part of China’s Belt and Road initiative (BRI) – a land-based and maritime infrastructure projects aimed to enhance China’s influence in and connectivity with the rest of Asia, Europe and Africa. And in 2015, Japan initiated its own policy known as ‘Partnership for Quality Infrastructure’ aimed to rival BRI through developing infrastructure projects in foreign countries.

However, in 2017, Japan agreed to cooperate with BRI under certain conditions. A year later, on June 26, 2018, during the Japanese Prime Minister’s visit to Beijing, the first ‘Third-Party Market Cooperation Forum’ was organised in which both states agreed to participate in conducting joint venture projects in third-party markets. According to a report published on the website of the State Council of China on 26 October, 2018, ‘At the (aforementioned) forum, more than 50 cooperation agreements were reached between local governments, financial institutions, and enterprises from the two sides, with the total amount exceeding $ 18 billion’. But conducting such projects is fraught with difficulties, given the competitive nature of this agreement and conditions placed by Japanese government on its enterprises while venturing on third-party projects with China. Further Japan’s insistence on quality and financial viability of targeted projects contrasts with China’s ignorance of these elements. For example, in 2018, a high speed rail project in Thailand was planned to be conducted by the companies from China and Japan but Japanese company abandon this project due to the financial risks involved.

From the strategic point of view, there has been a deep distrust and clash of interests between China and Japan. China’s growing assertiveness in East and South China seas and its claim over Senkaku (Diaoyu) islands and South China Sea increasingly discomforts Tokyo. Further, China’s insistence to ignore International Laws such as Permanent Courts of Arbitration’s July 2016 decisions nullifying its claims in South China Sea contrasts the principles and interests of Japan. To counter Chinese interests and claims, in 2015, Japan introduced the vague concept of ‘Free and Open Indo-Pacific’. Vague in the sense, it does not have a coherent policy and over the years various elements have been added and removed. As the name indicates, it promulgates for an open and free Indian and Pacific Ocean contrasts to China’s claim over South China Sea and its growing influence in Indo-Pacific Ocean. Apart from that, this vague policy also emphasises over freedom of navigation and acceptance of international norms and laws.Through propagation of ‘Free and Open Indo-Pacific’ approach, Japan seeks to mould China in the Western-led International Laws and Treaties, and at the same time, Japan also wants to constrain China’s assertiveness in the region detrimental to its interests.

Further, China’s growing military power and its assertive nature in the region creates a sense of insecurity in Japan. It is a common notion in Japan along with other regional states that China seeks dominance and hegemony in Asian continent. To counter it, Japan propagates a multi-polar order in Asia and adopted a policy of building alliances with like-minded countries, which share the same views and are worried with China’s relative rise. Japan has historical military alliance with the US since the end of Second World War. Recently these two states along with Australia and India have revived the Quadrilateral Security Dialogue initiative, which earlier, in 2007, came into existence but faded away amid China’s opposition. Quad initiative similar to ‘Free and Open Indo-Pacific’ policy but differ in the sense that it has four member state seeking to counter-check China’s growing influence in the Asia-Pacific region.

Along with the territorial dispute, Japan’s close association with the United States and its opposition to Chinese assertiveness in the region have been contrary to China’s interests. It is widely held belief in China that through the revival of Quadrilateral strategic alliance, the US is trying to contain Chinese influence in the region. Japan’s participation in this alliance is perceived by China as a step to limit its growing influence in the region and taking side in a broader Sino-US rivalry. In other words, China sees itself as a major power capable of dominating Asian Continent and feasible challenger to the US led World Order. It expects from Japan along with other regional actors to conform to its interests and do not take side with the US in the broader Sino-US rivalry.

The relations between China and Japan are one of the most complex bilateral relations in the world. Despite competing and clashing with each other in myriad of overlapping interests and prevalent distrust, their economy is well integrated and bilateral trade have continuously been increasing.  Their bilateral relations, which were severed in 2012 over Japan’s nationalization of Senkaku (Diaoyu) islands, have been steaming up again owing to relative decline of the US in the region and it’s America First’ approach. Both states have been continuously propagating for increasing engagement and cooperation. However, structural and political differences between China and Japan remained intact as they were three years ago before their rapprochement.

Western Balkans: China’s Gateway to Europe

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Priyanka Madia, Research Intern, ICS

China’s Gateway to Europe

Western Balkans is one of the significant regions in southeastern Europe, which has been waiting to be a part of the European Union (EU) for a long time. Comprising six countries, namely, Albania, Bosnia, Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia, together they constitute the south-western arc of Europe. They are among the lesser developed of the European countries but are aspirants for membership of the EU. For China, the region is significant as a gateway to Europe because of their geographical positions and the lower developmental levels, which makes them particularly susceptible to Chinese offers of investment, credits, and trade. This makes the Western Balkans an essential component of China’s ambitious Belt and Road Initiative (BRI).

The focus of BRI has been towards developing connectivity corridors across Eurasia. The land corridor or the Belt, in the shape of highways, railroads,  pipelines, and digital networks, intend connecting China’s manufacturing and logistics bases like Chongqing(Sichuan) to Duisburg (Germany). Also, Hungary has emerged as a key logistics base for Chinese companies. At the European end of the Belt, China has invested heavily in acquiring significant ports such as Piraeus in Greece, which are also a terminus for the Road or the maritime routes from China.

The Greek economic crisis gave a golden opportunity to China to establish itself at the port of Piraeus. COSCO, the Chinese state-owned company, has been operating the Greek container port since 2008. In 2017, it acquired 67% of its shares. In view of the strained financial conditions of the Western Balkan countries, which are being exacerbated by the impact of COVID-19, China is in a position to establish its dominance in these countries quite easily, with little support forthcoming from the EU or the U.S. While these countries are not yet members of the EU, they are less constrained in accepting Chinese FDI or credits. This is the reason why the EU is especially apprehensive of the China-CEE or 17+1 Forum, which Greece has joined recently. Several EU members participate in the Forum along with non-member countries, including those from the Western Balkans. The Forum has become a significant instrument to advance Chinese influence in Europe to the detriment of the EU.

Chinese penetration in Western Balkans is being achieved through an array of instruments such as FDI, government-to-government credits, outright grants, favorable trade deals, etc. Despite remaining outside of the EU, the region attracted 147 greenfield FDI projects in 2018, the highest number of investments for six years. Serbia accounted for the lion’s share (70%) of Western Balkan’s greenfield projects in 2018, Bosnia-Herzegovina accounted for 11.6%, despite attracting four fewer greenfield projects than in 2017, according to fDi Markets. On the other hand, Montenegro performed well in 2018, attracting a record 11 greenfield FDI projects. According to the latest annual FDI Markets statistics, Albania and North Macedonia received $184.4 million and $809.9 million of inbound greenfield funds, respectively, as the number of inbound greenfield projects grew by 200% and 80% compared to the same duration a year before.

Soft-power diplomacy such as the setting up of Confucius Institutes, scholarships, and people-to-people exchanges also play an imperative role in terms of penetrating Western Balkans. Under Confucius Institutes, there are higher educational institutes set up in southeast Europe. These institutions host Chinese cultural programs, provide Chinese language, culture, and also host Chinese political, social, and economy-related seminars. Confucius Institutes are operated by the Han Ban, a part of China’s Ministry of Education. Over 10,000 students are currently studying the Chinese language in respective countries of the western Balkan region. Cultural centers set up by the Chinese government are also a vital step to maintain cultural diplomacy.

Another critical component of China’s soft power diplomacy is tourism. Visa liberalization and simplification has attracted a lot of tourist from China and undoubtedly lead to the flourishing of tourism industries in Western Balkans countries. China is also gaining additional credit through its assistance to these countries in their fight against the COVID-19.

The Western Balkans are a congenial target for China’s Eurasian diplomacy and offer them a south-western entry point to Europe. Chinese have been able to identify and understand the regions which are not catching up well with their economy and having infrastructural issues; perhaps China has addressed those regions with a structural solution. Studying China’s involvement in Western Balkans gives an outlook that China is filling the gap which the European Union (EU) has not been able to address. The position of the EU here is being undermined by aggressive Chinese diplomacy, mainly through the BRI.

A geo-economic and political logic drives China’s increased engagement in the Western Balkans. Her main motive could be to use the Western Balkans as a commercial platform for Western Europe, as Beijing is eager to search for markets. While the EU remains preoccupied with its fight against the pandemic and is beset by continuing threat of fragmentation, the COVID-19 pandemic may offer even more opportunities for consolidation of Chinese influence in Western Balkans.

Book Review: Gurudas Das and C. Joshua Thomas (ed.), Voices from the Border: Responses to Chinese Claims over Arunachal Pradesh (New Delhi: Pentagon Press, 2015), 159 pp.

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Reena Bhatiya, Research Assistant, ICS

The debates on Sino-India border dispute largely fall within the strategic affairs and geopolitical framework of international relations. This book approaches the subject of border dispute by looking at the debates on linear borders, local perspectives on the border conflict as an alternative to a state-centric view. The authors examine the historical evidence of China’s claim over Arunachal Pradesh while investigating the dynamics of territorial politics. The book is structured into three broad themes: the geopolitical aspects of the conflict, the local community’s spatial history before linear borders, their infrastructure development needs and perspectives on the dispute.

Discussing the boundary question, C.V. Ranganathan looks at the rivalry through the prism of changing geopolitical situations while suggesting India for a multilateral architecture in the South Asian region. Srikanth Kondapalli’s chapter yields a persuasive insight into India’s engagement with China on multiple fronts to prevent any change in the configuration of power in the region. This implies that India should not let China become an extra-regional power in South Asia. In the fifth chapter, Jabin Jacob advances the argument that a mixed strategy of combining the local aspirations of Arunachal Pradesh for peaceful and sustainable development with the national security considerations can best fulfill the demand for ‘first line of defense’ to deter China’s ‘new forward policy’. However, he has not dealt in sufficient depth the ways of deepening the democratic spirit and how communities could be engaged in the decision-making processes. These scholars primarily focus on different ways of India’s engagement with China. But the limitation lies in the fact that they reify the state-centric view of the dispute thus drifting away from the main aim of the book.

The strength of the book lies in unpacking local histories of borderland spaces in this region and local community perception of the conflict thereby giving a more nuanced understanding of the territoriality of these regions. For instance, Namrata Goswami looks at the border dispute through the local community’s point of view. She argues that the Lamas vindicated Tawang Monastery’s historical ties with the Lhasa monastery. And, the Adi, Nishi, Apataani communities do not approve of China’s claim on Arunachal Pradesh. She emphasizes the need to meet the demands of the development of these communities to improve the democratic structure and infrastructure conditions in the region.
On the other hand, J.R. Mukherjee briefly surveys the Tibetan folklores to question China’s claims over Arunachal Pradesh to highlight that the tribal people of Arunachal Pradesh were never the subjects of Tibet and only had cultural and commercial links. He notes that the ancient pilgrimage route of Takpasiri Mountain in the Subansiri Valley holy to the Tibetans, Monpas, and Tagians of Arunachal Pradesh, is claimed by China.

Further expanding the discussion on local communities, Gomar Basar attempts to understand the Chinese claim in Arunachal Pradesh through a historical analysis of the local dynamics. He traces the historical trajectory of the hill tribes of Arunachal Pradesh from the colonial period and notes that the British ambition to exercise an indirect control over the tribal areas through drawing inner and outer lines led to Chinese intrusions within the outer line area. These intrusions were contested at the time by the Mishmi community inhabiting the outer line as they already considered themselves British subjects.

Adding to the discussion on linear borders, H. Srikant cautions against “nationalist myopia” on the border dispute and considers linear borders as a colonial baggage. Although he argues that the linear borders overlooked the traditional boundaries of the native communities and kingdoms, but he fails to provide a detailed account of the local traditional boundaries. In addition, he suggests that history, geographical realities, administrative, economic activities, customs, language, etc. that generates deep-rooted sentiments and emotions in the region should be taken into consideration while negotiating border issues.

Through his detailed discussion of the pre-modern kingdoms in eastern sector, Mathew Alkester argues that Moyul (present-day Bhutan) belonged to the Tibetan world not Loyul (present-day Arunachal Pradesh). He, thereby, debunks the Chinese claim that Arunachal Pradesh was under Tibet’s control. The main contention of the essay is that cultural and commercial links of these kingdoms with the Tibetan world do not confirm Tibetan political control over them.

Overall, the unbundling of the complex local histories of the frontier region in these chapters could have been coupled with a discussion on the present concerns of the local communities regarding infrastructure demands and preparedness to be able to participate in the gains from any large development projects in their region. An overview of the traditional knowledge systems and community institutions of the Mishmi could prescribe ways to democratically engage them in decision-making processes.

The last section of the book leaves the reader with C Joshua Thomas’s questions on China’s claim over Arunachal Pradesh. a). Did Tibet ever claim Arunachal Pradesh as her part? b). Tibet had ceded the Tawang tract to British India by signing the Shimla accord in 1914 d). Why would the world accept Chinese historiography and refute the Tibetan historiography? The author observes that systemic misunderstanding is a major issue in Sino-Indian relations therefore to prevent India’s hedging; China must come to terms with India.

Largely, this book provides a good overview of the historical and political aspects of the border dispute in the eastern sector and gives the much-needed perspective of the local communities on the dispute and the territorial dynamics of the region. All the chapters display a firm grip over understanding the specifics of the dispute with the larger logics of international politics, but a notable kind of perplexity surfaces over an analytical framework to the issue of border disputes. Although informative, its limitation lies in the lack of a theoretical base while looking into the concept of ‘territoriality’ in international politics. An absence of the theoretical discussion on the notion of territoriality puts this discussion in a vacuum. However, the book paves the way for researchers to develop upon the information provided here and engage with it theoretically, and thus becomes an important contribution to the studies on border issues with China.

Superpowers and spirit of International Cooperation in a Pandemic

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Anu Dhull, Research Assistant, ICS

The grip of COVID-19 pandemic across the globe has showed albeit in a brutal way the extent of global connectivity. However, the responsive measures taken by major powers to deal with the contagion have exposed the hollowness of their commitments for global cooperation, especially at a time when it is most needed. In hindsight, this has been most visible in the actions of the USA and China. These have belied all the commitments made under phase one deal in January 2020, which had been agreed by both after more than two years of tariff or ‘trade-war’. Effects of the levying tariffs and counter tariffs had not only affected the economy of USA and China but also rendered the global economy and market in a doldrums. Hence this deal came into picture reflecting the need of a fair and mutually beneficial global trade practices. Their unilateral actions and their foreign policy decisions vis-à-vis each other during this pandemic – when international cooperation is most required – have questioned their willingness of a truly globalized world with peaceful cooperation.

Talking about China where the outbreak started, it has widely been accused of containing the information. Criticisms have come in despite the containment measures being seen as effective. At this time not only did the US President failed to recognize COVID-19 as a threat by ruling out any possibility of it becoming pandemic; but also resorted to stigmatise the disease despite warning from World Health Organisation (WHO) to not do so.

The US has labeled the disease as “Wuhan Virus”, “Chinese Virus”, etc. and blamed China for the repressive measures against its own population. In March, with China recovering from the first wave, the tables were turned as China blamed the US Army for bringing COVID-19 to its territory, as a ‘bio-weapon’. Therefore, betraying its own vaunted principles of peaceful cooperation and mutual benefit, China did not extend any help to the USA. These counter accusations were given weight – and paralleled – by China’s own diplomatic overtures of ensuring medical supplies and knowledge to other parts of the world. However, President Xi Jinping’s “idea of building a community with a shared future for mankind” also proved to be rhetorical as it “sells” medical equipment rather than donating them.

This blame-game has spiralled into further accusations and counter-accusations, extending to actions against media – the US tightened rules on Chinese state media organizations including Xinhua news agency inside its territory to tackle the aggressively growing Chinese State-controlled propaganda, and by the same count, China expelling journalists working for New York Times, Washington Post and the Wall Street Journal.

While China claimed of successfully containing the virus, the USA was in the midst of rise in positive cases. In such a situation, instead of assisting US from its experiences of fighting the disease, the Chinese Party-state only sought to criticize the USA for its lack of preparedness. Despite overtures through telephone calls between Xi and Trump, where they decided to take joint actions that has not necessarily translated into meaningful action. Further, neither did USA approach China for any joint research on the virus or on measures to counter its spread, nor did China extend any helping hand to the hard hit public health system in the USA.

Both the USA and China have made significant advances in technological innovations in natural sciences; however, neither of them are acting responsibly in such a time of global crisis. Instead of practicing and emphasizing on cooperating in fighting the disease, both are engulfed into diplomatic and rhetorical battles. Rather, both are more focussed on the stability of internal ‘political regime’ and the blame game adds grist to the mill. Their actions and behaviour only cripples the global efforts to harness resources and strengthen the flailing health infrastructure in many countries. Even while multilateral organizations and regional groupings are making efforts to pool resources – example being the SAARC COVID-19 Emergency Fund – and coordinate,  the actions of the two major powers goes against the grain of a globalized world, that requires everyone to pull together.