Social Issues Archives - ICS Research Blog

Strangers in the City: Migrant Workers in Indian and Chinese Cities

While political systems, level of State capacity and trajectory of development may vary, cities in China and India have retained many common threads of socio-spatial exclusion of migrant workers

May 28, 2020June 3, 2020 ICSLeave a comment

P.K. Anand, Research Associate, ICS

The ‘visibility’ of the migrant workers is the biggest urban predicament that is being witnessed during the nation-wide lockdown, which has now crossed 50 days. The images of their ‘reverse migration’ — whether entirely by foot, or through modes of transportation that are heart-wrenching — lay bare the desperations and anxieties emerging from the loss of livelihood and security.

Not that many of these journeys have happy endings — deaths due to exhaustion, or accidents leave behind more than just a trail of dead bodies. It is equally significant that since the lockdown started on March 25, there also exists a long list of casualties that cannot be pinned on the virus per se — including those related to mental health, often left at the periphery.

The brutal social experiment that is the pandemic has only reinforced and exacerbated the systemic exclusion and dispossession of circular/seasonal migrant workers/footloose workers, who inhabit Indian cities. A report titled Unlocking the Urban, released by Aajeevika Bureau —a non-profit organisation working among seasonal migrants in western India — released on May 1, highlighted the longstanding vulnerabilities of rural-urban migrants in cities. They often receive less than minimum wages, are engaged in manual work which last for long hours, which, are often even dangerous.

They remain unaccounted for by national statistics and are invisible to city-level administrations; precarity undergirds their working and living spaces, rendering them ineligible for social schemes and welfare programmes. These further lead to them being denied access to urban residence and governance; their survival in the cities is dependent on daily negotiations with informal actors, ranging from petty contractors to security guards, and even landlords.

The socio-spatial exclusion of migrants from Indian cities, and their statelessness in some ways, mirrors the nongmin gong (peasant workers) in China’s urban spaces, pejoratively called ‘floating population’; though the Chinese state has changed the terminology to xin shimin (new city residents) in order to fully ‘integrate’ them into urban centres, the desired results have not followed.

China’s Rural-Urban Dichotomy

The demarcation of citizenship in China into rural and urban is a legacy of socialist planning. In 1958, the hukou(registered residence permits), was introduced to regulate the flow of resources, especially labour, and sustain an agrarian countryside, while the State subsidised urban living. The economic reforms of the 1980s led to easing of rural-to-urban mobility, which, in turn, kick-started the long journey of labourers from the rural areas to the industries and companies in coastal provinces. The migrant workers have been crucial in the growth of many megacities in China today.

However, this infrastructural and economic growth of Chinese cities happened even as the migrant workers remained peripheral in China’s urbanity. The urban hukou — the foundation for a well-entrenched city life with access to public services, healthcare and education — is highly stratified and segregated, with eligibility based on the level of education, skills and status. The hukoucreates a division between privileged and entitled urban residents and the migrant workers. Though the migrant workers are tagged as ‘essential’, in reality they are ‘placeless’ and unable to make claims for a ‘right to the city’. The constant fear of eviction from their informal neighbourhoods and being at the receiving end of law enforcement’s brutal high-handedness, mirror the story of their Indian counterparts. Furthermore, the marginalisation of migrants in city spaces has also impacted the lives of their children in claiming access to healthcare and education.

Urban Citizenship

While the high level of decentralisation in China’s political-administrative system give the local governments significant decision-making powers, city governments — especially those in the megacities — remain intransigent in reforming the hukousystem. Beijing has repeatedly mentioned the need to reform the system but it more or less remains on paper. While small and medium sized cities have experimented with various models and pilot programmes, there remains reluctance from the big cities. It highlights the skewed nature of China’s tax and revenue systems favouring the central government, while the local governments bear the fiscal responsibilities. Thus, the big cities are resistant to reforms that add to their burden.

By the same count, with laws and regulations largely divided between the Union government and the state governments in India, local bodies (such as municipalities) are rendered powerless, without significant responsibilities. Such disempowerment of cities create constraints in developing specific and contextual regulations (for instance, in many cities migrant workers are not even enumerated).

Clearly, while political systems, level of State capacity and trajectory of development may vary, cities in China and India have retained many common threads of socio-spatial exclusion of migrant workers.

Originally Published as ‘Urban Spaces | Migrant workers remains invisible in India and China’ in Moneycontrol.com, 21 May 2020

Eye on Labour amidst Lockdown: Taking a China lens

The images of migrants on roads across India should perhaps help us re-evaluate the often romanticised images of the massive movement of workers annually in China

April 5, 2020June 3, 2020 ICSLeave a comment

P.K. Anand, Research Associate, ICS

The nationwide 21-day lockdown announced by Prime Minister Narendra Modi to contain the spread of the COVID-19 pandemic in India has completed 10 days. Being the second-most populous country in the world, India’s lockdown has been a massive exercise involving stopping all forms of public transport, closing down educational institutions, and recreational facilities, and all other avenues of gatherings/congregations across the vast territorial swathes of the country.

The lockdown has generated considerable debate not only on its viability and necessity, but also on its implementation and the resulting effects.

The incrementalism adopted in India’s approach ever since the outbreak in China occupied news space in mid-January — from airport screenings, to visa restrictions and later tracing of contacts and travels of infected people — has also been subjected to scrutiny by public health scholars and experts. The reasons for reluctance of the government to scale up testing at a mass level, even as cases spiked across India, appears to be twin-fold — to avoid a panic and chaos on one hand, and reckoning with the reality of a creaky health infrastructure, amplified by the lack of requisite resources, personnel and equipment, on the other. Even now calls for mass testing than just mere lockdown continues to go unheeded.

Even though Italy was the first country to impose a nation-wide lockdown, the playbook has emerged from China in its complete shutdown of Hubei province (while allowing other provincial and sub-provincial administrations to calibrate measures as deemed necessary in their jurisdictional regions). However, there has been enough reams and ink spent on explaining the impossibility of replication of the Chinese model — which has been undergirded by the authoritarian one-party state system that is decentralised, possessing extensive reach and high-organisational capacity — in democratic, diverse political systems. Further, the party-state massively employed technology to ensure social and political discipline. The party-state’s efforts to ramp up testing and large-scale mobilisation of resources have acted as force multipliers in its combat against the contagion even though the initial cover up, censorship and failure to track it in the first place have come in for criticism.

Nowhere has the planning and viability of the lockdown been questioned than by the heart-wrenching images of displaced migrant workers and their families, fleeing cities to their native places in the Indian hinterland on foot, riven with fears and anxieties of lost livelihoods and absent State support. In fact, these images and stories have generated significant traction to the argument of privileging the middle classes and urban elite in India, who have the wherewithal and space to practice social distancing as well as be able to exercise the option of work from home. Unlike them, the poor and daily wage, low-paid workers who constitute the informal sector and are at the frontlines in keeping essential services thriving, have a hand-to-mouth existence.

The images of migrants on the road also engages us to perhaps re-evaluate the often romanticised images of the massive movement of workers annually in China, for Chunyun, or the 40-day period with the onset of the Lunar New Year holiday, cramping through trains and other public transport (incidentally that movement this year was termed to have accentuated the spread of the virus).

That China’s migrant workers, often termed as floating population, have to traverse great distances to work in manufacturing and services, mostly in coastal regions or bigger cities, reflects the failure to develop viable regional economies. This is line with the high level of inequality prevalent in China, both regional and income related. The obduracy and rigidity of the country’s urban registration system — or, Hukou — that excludes the low-paid migrants from accessing rights and services in Chinese cities, also finds echoes in how ‘invisible’ the migrant workers have become in Indian scenario.

While democracy versus one-party state value judgements have often tended to dominate India-China comparatives, ideally the metric to test the State has to be State capacity; the ability of the State to provide goods and services to its citizens, especially during times of crises and distress. Herein, in spite of its authoritarian State system, with censorship and restrictions on freedom, China has a higher State capacity compared to India. That in turn, means a more formalised economy, with even social protections built into employment contracts (even if the implementation on the ground has been tardy).

Rome was not built in a day, and that applies for State capacity as well. Perhaps this pandemic and the lockdown, and the stark images left in its wake, will finally activate the Indian State to unlearn and learn, and reshape itself as a provider than remain only as an enforcer.

Originally Published as ‘Labour, lockdown and the State’s predicament’ in Moneycontrol.com, 3 April 2020

Situating Labour in a Pandemic: Corona Virus Outbreak’s Social Costs

February 20, 2020June 3, 2020 ICSLeave a comment

P.K. Anand, Research Associate, ICS

As the Chinese pick the pieces of the outbreak of the novel Coronavirus, COVID -19, and the much-vaunted State capacity becoming frail, the pandemic has left more than a trail of dead in its wake. The direct or indirect impact on various segments of the polity, economy and society are being seriously felt and some of the cascading and ripple effects may be in the long-term.

The economic ill-health has significant bearing for not just China, but also for the rest of the world; in fact, the slowdown of the economy predates the outbreak with surge in inflation, and structural factors complicated by the trade war with the United States. While the Chinese had scaled down from high- to medium-term growth in early 2015, with reference to the term ‘New Normal’, the slowdown reflected that things had veered away from the expectations.

Much before the National Day last year, the surging prices of pork (a staple ingredient in Chinese food), along with other red flags on the economic front, had signalled life becoming harder in China. In fact, the pork prices have continued to rise amid shortages during the lockdown.

The ‘manufacturing centre of the world’ tag has taken a hit, as factories, enterprises and production units across China are either still closed or yet to restart completely, with cases of even an extension of the Lunar New Year holiday. Being the centre of automobile production in China, Wuhan has borne the maximum impact. Further, the ripple effects have in effect ceased production in automobile factories in South Korea and Japan, as closure of factories manufacturing auto parts in China.

The prospects of an extension of the economic recession also carry social costs, with significant consequences for labour in China. The travel of migrant workers — the fulcrum of the Chinese urban manufacturing story — at the onset of the new year from cities to their home provinces was often visually showcased with fascination over the years. While this masks the weaknesses of the regional economies within China by illustrating the inequalities between coastal and inland provinces, the movement also causes apprehension of spread of the virus.

The workers are also confronted with a dilemma while making decisions on returning to the workplaces — the need to make income by selling their labour versus (in)adequacies of health safety. More often than not, circumstances condition the workers to choose the former. The more days the things remain in limbo and cause disruptions including non-availability of transport for workers to reach workplaces, the more rise in workers’ anxieties.

The workers in manufacturing enterprises and their significance have always dominated the discourse on labour in China, and therefore, their absence through closure of workplaces and dilemmas do command news space. However, of equal, if not more, importance are the workers in the services sector — those in essential services such as sanitation workers, security guards, drivers and those on the low-end, not only in China but also in Hong Kong.

Along with them, hundreds of workers employed to power the platform/gig economy are also on the frontlines, especially food delivery workers. Even though extra precautions are exercised through usage of safety equipment, reporting the body temperature of employees to customers and quality checks, the food delivery workers are under added pressure in addition to the need to make deliveries in time, even though heralded as lifeline during the pandemic, and valourised for their selfless service.

However, dig a little deep, and the rosy picture starts turning bleak — workers for platform services are among the most vulnerable and precarious workforces in China without adequate workplace protection, or entitlements, and are also victims of accidents in the rush to ensure speedy deliveries and for customer satisfaction. Moreover, the rating-driven ecosystem where a high number of deliveries become the benchmark for evaluation, frustrations and alienation also set in.

Avowedly, China has national laws to regulate work contracts and to implement social security, but the translation of the same into action on the ground remains lopsided and inadequate. Precarity is intermingled within the system, as tough urban registration system called hukou, that segments and stratifies residents, renders migrant workers in the services sector to the margins, without access to services in the city where they reside.

The (in)capacity of the local-state to come up with problem-solving solutions to properly integrate the workers in the services sector also has echoes in India; even though there is cognisance of the prevalence of informal workforce in the urban system, adequate legal/formal inclusive measures are few and far between. This leaves them exposed to the vagaries of the market, which leads to the glorifying of their ‘resilience’ bringing forth a low-level equilibrium.

Undoubtedly, the social costs of a pandemic are in the long-term and therefore, the need to learn and unlearn.

Originally Published as Coronavirus exposes the brittleness of China’s economic prowess in Moneycontrol.com, 18 February 2020

Challenging International Norms: Chinese Censorship Model Goes Global

This self-censorship would leave no room for a dialogue or interaction to take place over contested issues if people and states choose not to voice their opinions.

January 30, 2020June 3, 2020 ICSLeave a comment

Adveetya Kachiar, Research Assistant, Institute of Chinese Studies

Article 19 of the Universal Declaration of Human Rights protects the right to freedom of speech and expression, including the freedom to hold opinions without interference. The right is protected under many treatises such as the International Covenant on Civil and Political Rights, and ratified by an overwhelming majority of the countries, making it an international norm. In an emerging trend, China is increasingly leveraging its vast consumer market, especially the recent technological advancements in the areas of 5G and AI, to force businesses and states either to co-opt with its worldview or lose out of the race. The censorship model within China is well-known: by managing the discourse and curbing the flow of information, the party ensures its survival and maintains its hold over the system, which is to say, the CCP decides on what can and cannot be talked about in the country. However, the expansion of this model outside China is rather new. Under its global campaign of telling ‘the Chinese story well’, the party-state has increased its efforts to control the narrative of its perceptions outside its borders. The censorship model working at various levels targets businesses, states, academia, and cultural spaces, whose views are not in line with the state’s discourse.

In October 2019, Daryl Morey, the General Manager of Houston Rockets of the National Basketball Association (NBA) tweeted an image supporting the ongoing protests in Hong Kong, causing a huge outrage on social media platforms like Weibo. The tweet almost jeopardized the $500 million market that NBA is trying to establish in the country. Following a major backlash from the Chinese media and nationalists, both CCTV, NBA’s broadcasting partner and Tencent, its streaming partner, canceled the broadcast of the pre-seasons game. Consequentially, the NBA gave a statement apologizing to the Chinese people for hurting their sentiments and expressing the respect for the sovereignty and territorial integrity of China.

In their apologies, companies and people such as Daimler, owner of Mercedes, have ended up using the phrase ‘hurting the sentiments of the Chinese people’. It is important to understand that the backlash does not come mainly for the government but also from the Chinese people on social media who see themselves as victims of ‘centuries of humiliation’ by the outside forces. Florian Schneider describes ‘National humiliation’ as the underlying idea around which most of the social media outrage/debate is taking place in the country. The Chinese government then benefitting from this nationalism can continue to have relations with states or businesses, but on its own terms. Due to the asymmetry of information in China, where the government has most of the control over information flow, the businesses are constrained to show their side of the story or reach out to the Chinese public.

Dreading the backlash, corporations and people are now apprehensive about voicing their opinions. Even on American soil, the fear of losing access to the Chinese market and the related risk of financial loss, forces people to stay silent, thereby, do self-censorship. Major movie-making giants, such as Disney, have chosen to accommodate Chinese demands such as removing the Tibetan origins of the character ‘Ancient One’ from their movie Doctor Strange, in return of access to the world’s second largest economy. Even in Academia, according to interviews with professors, students and administrators, many graduates had admitted to self-censorship and choosing not to be overly-political that might threaten their ability to get a visa to China. Samantha Hoffmann argues that, if businesses continue to adhere to the Chinese demands, self-censorship would ultimately become a mechanical decision by the companies, creating a new international norm, threatening the sovereignty of other nations and challenging the values on which the liberal world order operates. This self-censorship would leave no room for a dialogue or interaction to take place over contested issues if people and states choose not to voice their opinions.

Increasingly, many nation-states are also adopting the norm of self-censorship. This trend is especially visible in the EU-member states, avowed proponents of liberal values such as democracy, human rights, freedom of expression and the rule of law. States are now willing to make concessions to the Chinese government either because of fear or to curry favor. The normalization of relation between China and Norway in 2016 is one such example, where Norway, distanced itself from the Chinese political activist Liu Xiaobo after he was awarded the Nobel Peace Prize in 2010 resulting in freezing of the relations. Ever since then, Norway has tried to mend its relations with China by helping it gain observer status in the Arctic Council, and also refusing to meet the Dalai Lama in 2014. According to a report by the European Think-Tank Network on China, a trend is emerging in Europe where states are downgrading the emphasis on political values while dealing with China.

However, there has been a pushback against the Chinese campaign, for example, Sweden rejecting the threats from China after awarding a freedom of speech prize to the Chinese-Swedish scholar, Gui Minhai, and Google terminating its Dragonfly project, a prototype censored search engine which could be used to monitor people’s behavior online. However, such options are not available to smaller powers that are much more dependent on China. State and corporations have to choose between their commitment to the values of freedom of expression or taking the path of least resistance. One must realize that China has risen in an environment of unprecedented levels of interconnectedness and interdependence, and that it is not only the world that needs China, but China also needs the world.

Discovering My Father Artist Xu Beihong’s Experience in Santiniketan, India

Xu Fangfang

August 13, 2019August 13, 2019 ICSLeave a comment

My visit to Santiniketan, India, in January 2019 was to continue the journey my father artist Xu Beihong had started there between 1939 and 1940. At the invitation of the Indian poet Rabindranath Tagore, Xu Beihong went to India at the end of 1939, holding an exhibition at Visva-Bharati and another in Calcutta in the following year. Rabindranath Tagore had established Visva-Bharati to offer the studies of all the components of Eastern civilization in one place and Chinese civilization was one of Tagore’s major focuses. A most influential Chinese painter and teacher, Xu Beihong came to Santiniketan as the first Chinese visiting professor of Kala Bhavana, the art school at Visva-Bharati, which had been eager to get a broad view of Chinese art. He lectured and demonstrated Chinese ink brush painting and calligraphy to Kala Bhavana students.

Xu Beihong (1895-1953) is widely known as the father of modern Chinese painting. Born into a poor family in Yixing, Jiangsu Province, he learned Chinese classics and traditional Chinese painting from his father, a self-taught artist.

One of the first Chinese art students to study in Europe, Xu Beihong in the 1920s graduated from the Ecole des Beaux Arts. Returning to China in 1927, he successfully integrated Western painting methods and techniques with traditional Chinese painting in order to develop Chinese painting. Xu Beihong pioneered China’s art education. From 1927 until his death in 1953, he trained several generations of Chinese artists.

Admiring Xu Beihong’s art, Rabindranath Tagore wrote an introduction to Xu’s exhibition. In response to Tagore’s welcome address, Xu Beihong said: “Santiniketan is a place which corresponds to my ideal of a center of art and culture. The whole world should make a pilgrimage here in order to breathe the joyful atmosphere of creative endeavour undertaken here under the direct inspiration of India’s great poet. My visit here is that of a pilgrim. I have come not to give but to receive the great gifts that India may have to bestow upon my country and people as she did in the days gone by.”

Now I understand why my father made such a comment. Rabindranath Tagore’s poetic lines, his sensitivity to the beauty in nature and his ability to capture the soul of a human being really touched my heart. Tagore’s creativity made Visva-Bharati such a vibrant place. The short, yellow-colored buildings with light grey windows appeared lively. The dark-red leaf design patterns on the pillars and around windows suggest a sense of growth, symbolizing the intellectual growth of students. I hear these design motives have remained since 1940 or earlier.

Besides observing cultural activities and the magnificent landscape of the Himalayas and Darjeeling, which are reflected in his works, Xu Beihong interacted with outstanding cultural figures including the Nobel laureate Tagore and Mahatma Gandhi. Xu Beihong was moved by Tagore’s sympathy with China’s War of Resistance and his firm denunciation of the Japanese invasion of China. In his memorial speech for Tagore in 1941, he praised Tagore’s love of humanity that resonated in the whole universe. Describing his meeting with Gandhi on 17 February 1940, Xu Beihong wrote: ‘Today I felt truly honored to live with the soul of all India’.

This rich experience enabled Xu Beihong to create during his year of residence in India, a great number of masterpieces that exemplify the pinnacle of his artistic career. These include Portrait of Rabindranath Tagore, Portrait of Mohandas Karamchand Gandhi, The Foolish Old Man Who Removed the Mountains, depictions of the Himalayas and his famous ink brush paintings of horses. After his experiences with the horses in India, the horses he painted exhibit noticeably greater vigor.

There are nine original Chinese ink brush works by Xu Beihong at Visva-Bharati, including two in Rabindra Bhavana, the university museum, and seven in Kala Bhavana’s Nandan Museum. Among these works, Portrait of Rabindranath Tagore has the highest artistic merit. It is Xu Beihong’s representative Chinese ink brush portrait based on his many sketches of Tagore. A similar painting of Rabindranath Tagore is in the collection of the Xu Beihong Memorial Museum in Beijing. The accomplishment of this Chinese ink brush portrait is comparable to that of a Western oil portrait from life. Such a portrait from life revealing an individual’s facial expression and capturing his creative moment was unique in Chinese ink brush painting at the time it was done. I think that Xu Beihong must have given this portrait of Rabindranath Tagore to Visva-Bharati to honor his friendship with Tagore and also to serve as an example for the students to learn from.

To help research on Xu Beihong, I deciphered the inscriptions and seals on all the works by Xu Beihong in the twin museums’ collection and provided translation. The implications of these inscriptions and seals had not been known to scholars before. I also offered suggestions to both museums concerning preserving their fragile ink brush works by Xu Beihong so future generations in India and around the world will be able to understand and appreciate Xu Beihong’s art.

During my visit, Nandan Museum held an exhibition of paintings by Xu Beihong and other Chinese artists. Watching a Kala Bhavana professor and his students discussing the paintings at the exhibition, I was happy to share with them how Xu Beihong’s animal paintings express deeper meanings through the use of analogy implied in his inscriptions and seals. On his painting The Horse, he inscribed: “November 1940. Beihong painted this to congratulate Elder Tagore on his recovery from his illness. Gentle breeze and beautiful sun. The celestial and human worlds were celebrating.” Xu Beihong conveyed his happiness for Tagore’s recovery through this spirited horse and the artist’s inscription. One of the seals says: “Brilliant and Fluid,” expressing the joy through fluid brushwork.

Xu Beihong had received strong support for his exhibition in Calcutta, initiated by Rabindranath Tagore and held under the joint auspices of the Indian Society of Oriental Art, Calcutta, and the Sino-Indian Cultural Society, Santiniketan. Nandalal Bose, principal of Kala Bhavana, wrote an appreciation for the exhibition catalogue while another famous Indian artist Abanindranath Tagore opened the exhibition, which included among the 206 artworks Xu Beihong’s representative Chinese ink brush painting Jiufang Gao, Horse Judge and his oil history painting Tian Heng and His Five Hundred Warriors. Xu Beihong’s comprehensive exhibition strongly influenced artists and art lovers in India. He donated the entire proceeds from the exhibition to help alleviate the suffering of refugees driven from their homes in Japanese-occupied areas of China.

To learn more about my father’s experience in Santiniketan, I visited Professor Tan Yunshan’s old house behind Cheena Bhavana where Father had stayed. Tan Yunshan was founder of Cheena Bhavana. The earth color of the house is consistent with the design of other buildings in Visva-Bharati. The simplicity and openness of the architectural design allow ample space both inside and outside the house, which has several entries. I imagined Father walking in the morning around the open space next to the house, observing the large trees and birds carefully for his creative work. He made many studies of the red flowers on the huge silk-cotton trees, one of which grew in front of the Chanda house. Anil Chanda, Tagore’s secretary, and his wife Rani Chanda became Xu Beihong’s close friends. I also imagined Father chatting with his host Professor Tan in the evening, sharing his personal stories and his concerns for his country suffering from the Japanese invasion. Now the people in that once bustling house are gone, leaving only the old trees and birds to reminisce about the people and events that had taken place there.

In my lectures at Visva-Bharati I shared my understanding of Xu Beihong’s art, his Indian connection and my memoir Galloping Horses: Artist Xu Beihong and His Family in Mao’s China. Faculty and students appreciated my insight into Xu Beihong’s art and how his family and legacy had survived the turbulence of Mao’s ever-changing policies, which dictated the direction of art and music from 1949 through the devastating ten-year Cultural Revolution as described in my memoir. Students told me that I had enriched their experience. At the same time, I received inspiration from the creative environment of Visva-Bharati as my father had received in 1940. Viewing Father’s works in Santiniketan was like seeing his life experience in front of me. I felt rewarded to have contributed to Tagore’s Visva-Bharati as my father had done three quarters of a century before.

I appreciate the help from Dr. Tan Chung, Chameli Ramachandra, Srila Chatterji, and other people in Santiniketan.

Hong Kong: A Fight Against Subordination

The present mass opposition and upheaval against a proposed extradition law by Chief Executive Carrie Lam, is driven by the same factor. But, this time precious rights and freedoms guaranteed under “one country, two systems” are at stake.

July 2, 2019January 7, 2020 ICSLeave a comment

Sanjana Dhar, Research Intern, Institute of Chinese Studies, Delhi

Hong Kongers are known for mass protests whenever they have been pushed to a corner by their government. The present mass opposition and upheaval against a proposed extradition law by Chief Executive Carrie Lam, is driven by the same factor. But, this time precious rights and freedoms guaranteed under “one country, two systems” are at stake.

The Fugitive Offenders and Mutual Legislation (Amendment) Bill 2019, or the Extradition law of Hong Kong has garnered widespread attention. The proposed law deals with the extradition of fugitives from Hong Kong to Taiwan, Macau and mainland China. It was initiated by Carrie Lam in February 2019 and the motivation for it was due to a murder case, where a man from Hong Kong murdered his girlfriend in Taiwan and fled back home. Extradition requests made by Taiwanese officials could not be carried forward due to the absence of an extradition treaty between Hong Kong and Taiwan. Carrie Lam proposed this law in the hopes of filling a “legal loophole” because without a prior treaty in place, extradition cannot be carried out. With the formulation of a new extradition treaty, criminals cannot evade punishments for crimes committed in a different country.

The present situation of mass protests in Hong Kong is driven by the fact that the extradition law will give Beijing more leeway in matters of suppressing democracy and freedom in Hong Kong. Central authorities could arbitrarily arrest individuals who oppose their authority and bring them to justice under the opaque and politicised judicial system in the mainland. This is in contrast with the judicial system in Hong Kong, which is guided by rule of law. Beijing’s overbearing involvement in Hong Kong is in contradiction to the “one country, two systems” policy, which allows Hong Kong to maintain its partial democracy and free market within the territory of China. Fear of erosion of this policy has shaken the minds of the public and they are choosing to express this fear in the form of fierce protests.

Amidst popular discontent for the law, Carrie Lam initially had a strong position and vouched that the proposed law would in no way compromise human rights principles of Hong Kong. The final say in the granting of extradition requests would rest with Hong Kong and religious and political matters would be kept out of the purview. Yet, growing public dissatisfaction against the bill has undermined her image and created demands for her resignation.

The mass protests of 9 and 12 June is evidence of the dissatisfaction among Hong Kong citizens with the turn of events. It is testimony that Hong Kongers are ready for what has been touted as the “last fight” for safeguarding their democracy and freedom.

The protests on 12 June gave the people a temporary relief as the second round of discussions of the bill was cancelled due to blockades by protesters near the government headquarters. However, the protests took an unprecedented turn as the police used tear gas and fired rubber bullets at the protesters. Media outlets have dubbed it as violence which has never been witnessed in the history of Hong Kong and the police force is being held accountable by the public for such a blatant act. Rising protests after such violence has forced Carrie Lam to suspend discussions on the law indefinitely. Her apology for the negligence on her part in involving the opinions of the society in making the law and expediting the passing of the law at the cost of peace in Hong Kong has brought temporary relief, but the people do not intend to stop until the bill is entirely withdrawn.

Undoubtedly, these events have drawn the attention of the international community. Leaders all over the world have come out in support of the anti-extradition protests and voiced their concerns of Hong Kong transforming into an illiberal region, not suitable for its once reputed liberal, market oriented society. Multiple rallies have taken place worldwide in support of the protesters. Hong Kongers have also urged foreign leaders to discuss the situation in the G-20 Summit and back demands of withdrawal of the bill.

China is at the center of this issue, although its direct involvement in the matter is not clear. Regardless, Chinese foreign ministry spokesman, Geng Shuang initially came out in full support of the administration in Hong Kong. Beijing believed the involvement of “foreign forces” was aggravating the situation and filling the public with animosity towards the law, which would not jeopardise the rule of law and justice in Hong Kong. But Beijing has now backtracked and is in support of the suspension of the bill.

The shift in Beijing’s stance reflects the precarious condition China is presently in, due to the trade war with the USA and the slowing economy. Can Xi Jinping afford to counter the situation in Hong Kong through force and add another tragedy in China’s history or could the protests in Hong Kong further attenuate Beijing’s vulnerabilities, are some of the questions which are yet to be answered. But at the moment, Hong Kongers seem to have gotten the better of Beijing.

The black clad protests of 16 June of nearly two million people sent a strong message to the administration over the people’s demands of complete withdrawal of the bill. Protesters won’t be satisfied only with the suspension of the bill because they speculate the administration will bring back discussions once the protesters have calmed down.

The situation in Hong Kong demonstrates the resolution of the protesters and their concerns about erosion of the “one country two systems” and its eventual merging with the system present in mainland China. Fierce resistance of the people is not just against the extradition law, but this upheaval is critical for Hong Kongers to safeguard their prized rights and freedoms in the face of arbitrariness and subordination from Beijing.

The dance of dualities in the Chinese Social Credit

Unlike the conflicting nature of dual forces in western philosophy, traditional Chinese philosophy manifests this duality in the form of complementary and balancing forces exemplified in the Yin-Yang.

July 1, 2019July 12, 2019 ICSLeave a comment

Nishant Dilip Sharma, Research Intern, Institute of Chinese Studies, Delhi

Dualities have always held a prominent place in traditional Chinese philosophy. Unlike the conflicting nature of dual forces in western philosophy, traditional Chinese philosophy manifests this duality in the form of complementary and balancing forces exemplified in the Yin-Yang. The way in which the Chinese government has gone about experimenting and implementing the infamous Social Credit System in China is another duality at play.

What is being seen as the emergence of an Orwellian “Big Brother” age in China, is being carried out in several cities through a number of pilot projects running on a dual ‘carrots & sticks’ model. Just like any other ‘reward-punishment’ scheme, this programme offers certain incentives (carrots) to people complying with the expectations of the governing body and at the same time, has punitive sanctions (sticks) in place for non-compliance. Interestingly, the quality of the carrots and the size of the sticks has not been uniform across all pilots.

This arises from the fact that the implementation of pilot programmes is being undertaken in a two-pronged approach. At one end are the Government run mandatory SCS programmes that are operational in more than 43 Chinese cities. At the other end, there are the corporate-run Social credit systems. Unlike the Government SCS programmes (GSCS), the corporate ones (CSCS) are not mandatory. The CSC pilots do offer virtual and monetary rewards to their customers, however the real intent is to eventually become incorporated with the government’s plans. This way the corporate in question remains in the forefront when SCS is rolled out in a more comprehensive measure. Speaking of the sticks, punishments are harsher in GSCS than under CSCS. The carrots and sticks in the GSCS are in the form of ‘red-lists’ and ‘black-lists’ respectively. While one’s name in the ‘red-list’ would mean a special honor and privileged/subsidized access to public services, a name in the ‘black-list’ would mean lesser privileges or denial of certain privileges. This could mean low internet speed, ban from traveling, denial of bank loans, public naming and shaming, etc. In short, one’s social credit scores could have a great impact on his/her routine life and social reputation.

In a country which bears the tag of the most populous nation on Earth, such measurement of reputation scores for each individual is no small undertaking. This is accomplished through the creation of a systematic surveillance state where big data and artificial intelligence play a major role. Each camera captures the movement of every face and small offenses like jaywalking or walking your dog without a leash could result in an immediate fine from the government. Thus, surveillance in the eastern industrialized towns is associated more with governance and has helped bring down law enforcement costs and many governance issues.

In contrast, state surveillance in Xinjiang and Tibet is employed to address security concerns. Surveillance cameras here snoop into the personal lives of the inhabitants to stamp out any cultural expression. Any sign of resistance opens up the gates of re-education camps, the insides of which many have seen but few have come out to tell the story. Here state security is a priority while separatism is viewed as evil and surveillance becomes a tool. This dual nature of surveillance, that of governance in the eastern region and that of security in the western region, is another duality present in the Chinese system. This duality, however, begs to question the coherence of what China plans to achieve with a full-scale rollout of the SCS model in the entire Mainland China, which could be up and running as early as 2021.

These dual objectives, dual implementation models, dual outcome conditioning, raise multiple questions: Will China be successful at creating a reputation state amidst the incongruities that exist in China? The answer seems to be hooked to a second question: Will China be willing to respect the socio-geographic disparity present between the historically separatist western regions and the presently thriving eastern industrial hubs?

One way of doing so would be to prevent any punitive sanctions and credit reductions on the grounds of cultural suppression. A conundrum in the eastern region could be credit rating reductions caused due to systemic failures, human errors, or corrupt bureaucracy. As remediation mechanisms, legislations are being put in place to prevent such reputation harms. Shanghai’s local credit legislation passed in 2017 on the “right to be forgotten” provides a much-needed right to credit restoration and a reasonable requirement on administrative agencies’ query over citizens’ social credit information.

Such remediation mechanisms are also extended to cover data protection and norms for safe collection, processing and storage of personal data. These measures are limited to eastern cities like Hubei, Shanghai, and Hangzhou. The lack of such legal remedies in the GSCS pilots being run in the western region calls for a systemic shift in the way the pilots are being conducted. More polarized developments in the way the pilots are conducted could likely leave the western inhabitants estranged and brew discontent if the policy is applied without systemic planning and West-specific trials. Perhaps it’s time for the policymakers to take a hint from their traditional philosophies and create more balancing dualities than conflicting ones.

SME Financing: The need for Concrete Reforms in China’s Financial Sector

“As China plans loan boost for small companies, technology firms could be the answer”

May 23, 2019July 11, 2019 ICSLeave a comment

The annual meeting of China’s legislative body, the National People’s Congress (NPC) came to an end on 15 March 2019 with Premier Li Keqiang expressing commitment towards several reforms in China’s banking and financial sector. Apropos the reforms, the large state-owned commercial banks have been instructed to increase their lending by 30 per cent to micro, small and medium enterprises (MSMEs). Economists, analysts and bankers remain sceptical however, owing to the vague character of the declarations. Detailed and clarified reforms are required in order to encourage truly productive lending.

At present, there are 38.82 million MSMEs in China. MSMEs in China are defined as firms with less than 300 employees, an average revenue of RMB 30 million and RMB 40 million in assets. Market liberalisation and reform policies in various sectors and industries have been beneficial for MSMEs. MSMEs have emerged as a crucial component of China’s economy as they account for 75 per cent of total jobs, alleviate poverty and facilitate rural development. However, vulnerabilities remain due to poor execution of reforms.

For example, reforms have been inadequate with respect to the property rights of the SMEs, leading to the discouragement of private investors. Investors face problems in administrative procedures like taxation due to vague definitions. In particular, firms find it difficult to predict the level of tax they will face owing to the ambiguity regarding whether they qualify as a state-owned or collective owned enterprise. Raising lending targets of banks without addressing this ambiguity, therefore, is not adequate to empower MSMEs.

While the Chinese government expects total loans made to MSMEs to increase by RMB 300 billion on account of the raised lending requirements, this may not materialise due to lack of clarity in the NPC report. Although it instructs banks to lend to “small companies,” it is uncertain whether this term is defined the same as MSMEs or whether it refers to a subset of these. These will exacerbate existing confusions – only 63.1 per cent of the total SMEs in China applied for loans from the institutions as of 2018. Moreover, the creation of too many administrative stages in lending procedures for Township and Village Enterprises (TVEs) has made the entire affair more time-consuming.

Nor has the recently expressed reform commitment adequately addressed shortcomings in the Credit Guarantee System (CGS) – an institutionalised service offered by specialised agencies that help SMEs obtain loans from non-banking financial institutions. The CGS is intended to solve the problem of high financing cost for SMEs, reducing the bank’s management and operational risks, while developing the credit rating agency market in the country. It suffers from notable shortfalls that are in need of resolution. Firstly, the seven thousand credit guarantee subsidiaries that currently exist are still not catering to the problem of asymmetric information between the banks and enterprises. Enterprises are not adequately aware of collateral management, ways of repaying previous loans and other finance related technical details (like credit score) that the banks can mentor to the SMEs.

Secondly, there are no specific changes in the collateral requirements by the government, which is of significant concern for the banks. Even though the CGS Policy is well defined in official papers, it is not very efficient at the grass root level as the bank managers are still reluctant to invest in SMEs. This is also owing to the rising non-performing loan ratio – banks are, thus, resorting to fulfilling their annual loan targets by lending largely to small State-owned enterprises (SOEs) on the grounds that the state guarantees repayment. For example, the famous InnoFund government program that supports R&D activities does not fund the MSMEs at opening stages as the preference is for state-backed companies.

Chinese Steel Industry: How Did the World’s Largest Steel Producer Protect Itself from Global Slowdown and a Trade War?

The US-China trade war and rising environmental concerns have led to a slowdown in global infrastructural projects in 2018. The objective of this short piece is to understand the impact of these global phenomena on the Chinese steel industry.

April 29, 2019 ICSLeave a comment

Vidushi R Singh, Research Intern, Institute of Chinese Studies

engineering-2868901_960_720 — How Did the World’s Largest Steel Producer Protect Itself from Global Slowdown and a Trade War?

China has been the world leader in steel production since 2008, with about half of the total world steel exports originating in China. The US-China trade war and rising environmental concerns have led to a slowdown in global infrastructural projects in 2018. The objective of this short piece is to understand the impact of these global phenomena on the Chinese steel industry.

Economic logic follows that excess supply and reduced demand, as have been observed in recent times, would lead to falling prices. The inelasticity of supply should have meant low prices for the Chinese steel market. As can be observed in the following graph, prices dipped following the first steel tariff announcement from the United States Trade Representative’s (USTR) office on 1 March 2018. However, while prices did fall, they also rebounded much sooner than initially predicted. This trend can also be observed in the graph, with prices rising back up April 2018 onwards. However, the prices crashed again in November 2018, due to falling demand in downstream sectors, such as infrastructure and manufacturing industries, as a speculative response to rising tariffs between the US and China. Chinese steel manufacturers also registered losses for the first time in the last three years, in November 2018. Despite this, the Chinese steel economy remained largely immune to economic shocks.

Source: Trading Economics

The Chinese conduit to coming out unscathed lies in the supply side reforms, initiated by the government in 2015. The end of the Chinese construction boom in 2014 had instigated the government to carry out reforms to cut down on steel production. As the growth rate of the construction industry fell from 10% in 2014 to just 2% in 2015, steel production was reigned in, with the growth rate actually falling to a negative value in 2015 (National Bureau of Statistics of China). The government decided to intervene at this point so as to ensure the survival of the steel industry and avoid mass layoffs that would have resulted from a slowdown in the industry. The goal decided in 2015 was to reduce capacity by 45 million tonnes, a target that was attained by the latter half of 2017, much before the set deadline of 2020.

Thus, when the demand growth rate fell, the Chinese steel industry had already moved on to capacity optimization and did not face grave overutilization. This allowed for the industry to shift supply rapidly, and safeguard itself from future tariffs as well. This success of the Chinese steel industry is evident in the fact that since 1 January 2019, Chinese steel prices have increased consistently. The shift from high-grade iron ore to lower grades has also allowed manufacturers to increase margins by cutting costs.

One interesting factor in this situation is the ability of the Chinese steel manufacturers to divert inventory to Chinese infrastructural projects under the ‘Made in China 2025’ initiative and the Belt and Road initiative. While it is hard to ascertain the exact amount of steel inventory being fed into these initiatives, they do provide the steel industry with a reliable sink to use up inventory, while cutting down on any overutilization, thus stabilizing prices in the short run. The government’s plans to expand on infrastructure development in the coming years also provides support to investor speculations and have played a role in stabilizing the Chinese steel economy.

The 25 per cent tariffs imposed on steel imports by President Trump, thus, fall short of having a real impact on the Chinese steel industry, in part due to China’s relatively unimportant position in US steel imports (China is the 25^th largest exporter of steel to the USA), and in part because of the foresight of the Chinese government.

So while the Chinese steel industry did face multiple shocks over the course of the 2018 trade war and global infrastructural slowdown, the government’s preemptive measures of securing a strategic sector allowed it to come out of the tussle relatively unharmed. While the opacity of government and industrial operations make it tough to analyze the situation in greater depth, one can say that the Chinese steel industry has been able to cope with the changing world geopolitical scenario with ease.