Category: Strategy

COVID-19: Chinese Dominance over Global Supply Chains under Threat?

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Akshit Goel, Research Intern, ICS

Since the beginning of the COVID-19 pandemic, nations around the world have scurried to contain the spread of the pathogen which has left the global economy in shambles. The physical measures put in place to ‘flatten the curve’ such as travel bans, lockdowns and social distancing norms have revealed the fragility of global economy. The lockdowns have severely affected the economies at home due to loss in production as major industries and factories are shut down. Further, there is also a dent in consumer spending as households are burning through their savings with their incomes impacted. The combination of these factors spell disaster for the world economy as the International Monetary Fund (IMF) predicts the recession due to the pandemic may be worse than the 2009 global recession.

Prospects such as availability of cheap skilled labor and advancements in technology has increasingly moved the production and assembly chains of major corporations from their countries of origin to nations abroad. This trend of overseas production has left the global economy far more integrated and dependent on each other. This model of production outsourcing has been one of the driving forces that has transformed the Chinese economy into one of the manufacturing hubs of the world. China is part of some of the most important supply chains in the global economy. Availability of cheap skilled labor as well as a well-developed supply chain network alongside an integrated infrastructure which cannot be easily replicated elsewhere has helped China solidify its position as a lucrative source of cheap and steady manufacturing for many large firms around the globe. As income of individuals grew due to privatization and rapid economic growth, private household consumption also rose. This led to the creation of large domestic consumer markets in China which further incentivized manufacturers to move production here. Moreover, these supply chains fuel a major portion of the industries in South-east Asian nations such as pharmaceuticals, automobile, garments, and many more by supplying them with machinery and components which are imperative for their sustenance. The electronics industry is one of the most important industries which is dependent on the South-east Asian supply chains. Therefore, with the outbreak of COVID-19, not only is the Chinese economy affected but due to the shutdown of industries, supply chains across the globe have been disrupted.

The epicenter of the corona pandemic, Wuhan is a major manufacturing hub located in Hubei province. According to a report by Dun & Bradstreet, a business think-tank based in US, 51,000 companies have one or more direct suppliers in Wuhan, while 5 million companies have one or more tier-two suppliers in the region. This supply shock is not only going to affect the South-East Asian nations but rather a major chunk of the globe as supply disruption appears more widespread. Moreover, as per a report by Institute for Supply Management, nearly 75 per cent of companies have reported some form of impact on their business due to disruption of global value chains. Further, around 44 per cent lack any contingency plan to combat this sudden drop in supply as lockdowns chokes production. Wuhan is a major supplier of electrical components and assembly of smartphones for some of the biggest firms in the world such as Apple, which were some of the worst impacted by the disruption. Although the company has invested to diversify its assembly chain into Vietnam and India, it is still highly dependent on China in maintaining its inventory.

Moreover, China is highly integrated in the supply chain of auto parts around the world and with the onset of lockdown, the automobile industry around the globe has suffered. Fiat had to temporarily suspend production in its plant located in Serbia. This was due to a shortage in supply of auto parts from China. This was not a unique occurrence as automobile firms around the globe are facing the same issue. In a similar bid, Hyundai, world’s fifth largest automobile company had to halt production in South Korea. Wuhan supplied the world with auto components worth over USD 2 billion in FY 2018-19. India, although self-sufficient in its supply, still imported auto components worth USD 4.5 billion in FY 2018-19 from Wuhan.

This economic disaster revealed how overdependence on China, simply put, having all the eggs in one basket, could pose a problem. There is now a resounding demand in the global economy for the diversification of supply chains to nations other than China. Some of the main contenders, who could fill this supply vacuum left by China are Vietnam, Cambodia and India. The trend to move out of China gained traction just before the outbreak, in the wake of the trade war between US and China. With the imposition of tariffs, many Multi-National Corporations (MNCs) which had relied on China for manufacturing, had already started to look for alternatives to China. Apple had been, for a while, trying to move its assembly to Vietnam and India. But this is easier said than done as most of these nations themselves depend on China to fuel their industries. Vietnamese manufacturing is dependent on China for the supply of heavy machinery, components and electronic equipment that are required in manufacturing industries. Moreover, these nations still lack the skilled manpower which is required to take on any surge in demand from the US which makes them a lesser reliable supplier. Since the beginning of the lockdown in early February, China has got its grip on the spread of the virus. Factories and industries in Wuhan, and rest of China, are back online with production. But as the supply of manufactured goods begins in China, the rest of the world still grapples with the pandemic with the lockdowns in place which in turn led to shortage in demand for the Chinese industries. Although economists around the world were hoping for ‘V- shaped’ recovery, the reality seems far from it as the pandemic continues to unfold and the scope of the economic damage done by it slowly comes to light.

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.

China and the ongoing Iran-US Conflict

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Bihu Chamadia, Research Intern, ICS

The US-Iran conflict has been a long drawn one but it wasn’t until recently that the Middle East witnessed the involvement of another powerful actor in the region. Of late, China’s role in the Middle East has become more proactive. China has been trying to fill the void created by the current US leadership. In the past, The US intervention in Middle East has been twofold – both in terms of military presence as well as civilian efforts. However, the present era in the Middle Eastern region has been characterized as ‘post-American era’. This majorly indicates that while the US’s military presence remains the same there has been a massive decrease in the civilian and diplomatic efforts in the Middle East by the US. China has been trying to fill the long stretches of soft power diplomacy left by the US’s decision to ‘go out’ from the region. While the US-Iran conflict has exacerbated tensions in an already conflict ridden region, China’s rise as a global actor and its Belt Road Initiative (BRI) has led to its greater involvement in the Middle East. As such, it can rightly be said that China’s policy in the Middle East has undergone a big shift – from the policy of non-intervention to that of ‘crisis diplomacy’.

China’s response to the ongoing US-Iran crisis can be described as both strategic and balanced. As a responsible global actor and an important stakeholder in the region, China has given a call for upholding international norms and has been critical of any country that has tried to undermine it. China has been critical of the US actions in Iran especially with regards the following:  the US pulling out of the Joint Comprehensive Plan Of Action (JCPOA) or the Iran Nuclear deal, imposing sanctions on Iranian oil imports and the killing of Iranian major general in the Islamic Revolutionary Guard Corps (IRGC) Qasem Soleimani. All the above actions have received condemnatory reactions from China but not without an act of balancing.

The US pulled out of the Iran Nuclear Deal in 2018 calling it “a horrible one-sided deal that should never, ever have been made”. China responded by expressing regret over the US’s decision. China mentioned that it “will take an objective, fair and responsible attitude, keep communication and cooperation with all parties concerned, and continue to work to maintain the deal.” China’s response to US’s pulling out of JCPOA can be viewed in a similar light as its response to US’s backing out of various multilateral agreement including the Paris Agreement. While US has been continuously pulling out of various multilateral international agreements China has been continuously giving calls to “Work Together to Build a Community of Shared Future for Mankind”

In 2018, after pulling out of JCPOA, the US reinstated its sanctions on Iran on the following sectors:  energy, shipping and financial sectors. The sanction banned the US companies from not only trading with Iran, but also with foreign firms or countries that were dealing with Iran. China responded by criticizing the US for its “unilateral sanctions” and “bullying”.   It even defied the US sanctions and continued buying oil from Iran. Defying the US sanctions, China continues to buy Iranian oil. Nevertheless, China’s response has been more than a mere lip service.  It has been constantly advocating the significance of multilateralism as a way to manage political as well as economic matters.

With regards Qasem Soleimani, the killing of the General who headed the Elite Quds Force of IRGC in an airstrike carried out by the US forces has led to criticism of the US by various states. US had earlier designated Iran’s Islamic Revolutionary Guard Corps (IRGC), including its Quds Force, as a Foreign Terrorist Organization (FTO). Responding with a call to maintain restraint by all parties involved in the incident, China singled out the US “for violating international norms”. The US killed Qasem Soleimani, a uniformed personnel of IRGC travelling in a flagged car in a sovereign third party state, which hosts US forces. Killing of Qasem Soleimani by the US forces has raised questions on the legality of the US’s actions. According to UN charter, unless the purpose for using force is an act of self-defense or to prevent an imminent attack on US interest or US forces, the US is prohibited from using force in or against any other nation without UN’s authorization. In case of self-defense, attack killing Qasem Soleimani will be lawful under Article 51 of the UN charter. The killing of Qasem Soleimani would have been lawful under Article 51 of the UN Charter as an act of self-defense. Though, Mike Pompeo, Secretary of State has claimed that self-defense led to the killing of Qasem Soleimani, US has not been able to provide the evidence of the same in front of UNSC.

Domestic Impact of US-Iran conflict on China

 Escalation of conflicts in the Middle East could lead to rise in the prices of oil, thereby, severely affecting China’s economy. China’s economy is heavily dependent on oil imports.  China is the world’s largest importer of crude oil (US$ 239.2 billion in 2019). Among the top 15 largest exporters of crude oil to China 7 countries belong to the Middle East.  Moreover, Middle East is also an important part of China’s Maritime Silk Road Initiative (MSRI). Most vessels transporting goods, including oil, between China and Europe must pass through several choke points in the Middle East for e.g. up to one third of crude oil shipped over sea has to transit through the Strait of Hormuz, off the coast of Iran and the United Arab Emirates (UAE)

The BRI and China’s economic growth both are major factors undergirding CCP’s legitimacy at home. Until China finds an alternative to its energy supplies, a stable Middle East would be more favorable to China than an unstable one.

Impact on the International Stage

The US along with some other western powers, had set up the current framework for international law and norms after WW II. While it worked in favor of the Western powers earlier. Today, as China adopts the ‘going out’ policy, it has been largely benefitting China.

On Killing of Qasem Soleimani, China responded by saying “The sovereignty and territorial integrity of Iraq should be respected, and peace and stability in the Middle East and the Gulf should be maintained” further, it Chinese authorities also stated, “We urge all parties concerned, especially the United States, to maintain calm and restraint and to avoid the further escalation of tension.”

China’s role in the Middle East has been a strategic one, unlike the US it does not have any permanent enemy or an ‘all weather friend’ in the region. China’s role in the Middle East has been that of a regional leader where it has brought the conflicting parties to hold talks with an aim of peacefully resolving the crisis situations.  It also remains cautious about not being engaged in the conflict. China’s geographical distance also helps to maintain a distance from the region to a considerable extent, China also remains careful to merely criticize the US without taking any concrete action that can go against its own interest and derail the trade negotiation talks. However, if the US continues with its misadventure, China will also be able to legitimize its criticism over US meddling in the internal affairs of other countries.

The escalation in US-Iran conflict coincides with the US-China trade war. China has always been highlighting the political nature of the trade war. President Trump’s policies in the Middle East and especially vis-à-vis Iran  has paved the way for China’s intervention in the Middle East which has benefited China in at least two areas – , the assurance of continuous energy supply within a system that is beneficial for China and  the opportunity to ratify itself as a world leader. On one hand China defied the US’s sanctions and continued to import Iranian oil, which establishes China as a leader. Meanwhile it remains practical to look for other sources of energy, which secures its long term plan as Iranian oil export to China is decreasing.

Limitations of the New Intellectual Property Reforms

Though reforms in IP remain a strong demand of the Trump administration, there exists a significant gap in the Chinese understanding of US requirements and the actual reforms being undertaken by the Chinese government towards that end.

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Beijing Intellectual Property Court

Kuldeep Saini, Research Intern, Institute of Chinese Studies, Delhi

One of the major catalyst for the ongoing trade war between China and the United States is the question of Intellectual Property rights (IPR) protection to foreign firms in China. Even after months of discussions and negotiations, an agreement seems elusive. China recently imposed tariffs worth US$60 billion in retaliation to the tariff hike that had been imposed on Chinese goods by the US. The investigation report submitted by United States Trade Representative (USTR) Robert Lighthizer on 22nd March 2018 cited Section 301 of the US Trade Act of 1974[1] to discuss China’s engagement in policy of transfer and theft of Intellectual Property (IP) technology from foreign firms. Ever since, China has committed to enhance its IP protocols by 2020 through the attainment of high levels of IP regulations on utilisation, administration, protection and creation.

The latest step in this regard are the amendments made to the Trademark Law of the People’s Republic of China (PRC) on 23 April 2019 at the 10th session of the Standing Committee of the 13th National People’s Congress (NPC). Though reforms in IP remain a strong demand of the Trump administration, there exists a significant gap in the Chinese understanding of US requirements and the actual reforms being undertaken by the Chinese government towards that end.

This article discusses the constraints faced by the Chinese Government in deescalating the ongoing trade war with the US despite the it having undertaken three major intellectual property reforms. A discussion of the three reforms undertaken by the Chinese government follows.

First, the measures governing the transfer of intellectual property rights overseas were issued on 18 March 2018 by the State Council’s General Office. These reforms state the complete opposite of what the world understood by Trump’s claim of IP theft by China. The changes mandate the reduction in IP related theft by putting the onus on US firms that are in a merger with domestic Chinese companies. They fulfil the purpose of implementing the regulations and setting forth the procedures for overseas transfer of intellectual property for the foreign companies having mergers with the domestic companies. However, while China’s State Intellectual Property Office (SIPO) claims transfer of more than USD 4 billion intellectual properties from China, the numbers fail to reflect the home conditions for foreign companies. These structural changes fail to focus on the internal regulations of IP in China while considering the export of technology as a priority concern for the Chinese government.

The significant change is the involvement of relevant governmental departments like Forestry and Ministry of Commerce (MOFCOM) and departments looking at technology and agriculture in a more orderly and legal manner. This increases the processing time in receiving the patent rights. As of 2017, the total numbers of patent applications received in China were 1.2 million out of which only 3,26,000 were approved. These reforms further discourage the trade incentives of foreign companies to establish themselves in the Chinese market.

Second, the establishment of the appellate-level intellectual property tribunal on 1 January 2019 by the Supreme People’s Court of China (SPC) reflects the concrete structural steps undertaken to strengthen the IP protection laws. According to Zhou Qiang (Chief Justice of SPC) there has been an increase of 41.8 per cent in the IP cases resolved in 2018 and the new IP court will add to these numbers. The major point of contention in the first quarter of the year highlights the lack of resources, enlisting of powers, persistence and professionalism in handling the IP cases of foreign companies. Another concern with the new IP court as stated is the unknown statistics about the IP cases of foreign firms that are currently under review. This creates an asymmetry of information for scholars and other countries attempting to analyse the efficiency of China’s IP Court.

The verdict of the first case in IP Court came out in just two trials embodying the idea of “protecting innovation innovatively”. However, the speed at which the decision was made led the foreign companies to fear that the verdict was pre-decided. This also raises the question of which court’s verdict has the final say in the IP matters as these cases are still being directed to the earlier SPC and not to the new IP Court. The development of a national level appeals court might prove to be insufficient to tackle the current situation for international businesses fear that their proprietary technology could be stolen at a regional level.

Third, the reforms in the Trademark Law and Anti-Unfair Competition Law issued on 23 April 2019 did not follow the usual process for public comments. The primary concern regarding these positive changes is whether they will be followed by the necessary laws on transparency of the enforcing and implementing agencies like National Intellectual Property Administration (CNIPA) that still awaits additional clarifications related to administrative procedure regulations. This concern arises due to the inability of IP related cases that involve technical, confidential or business information that are not reported on public databases. It is hard for foreign companies to comply with the requirements raised by the new NPC reforms resulting in the current slowdown of foreign related cases. The reforms further fail to restrict the fraudulent activities such as claims of trademarks (TM) with bad faith and no commercial usage. The use of language in the recent reform of Article 4 highlights the need for commercial use of the trademark while applying. Thus, the US government and firms see these reforms as a state encouragement for violating international intellectual property rights.

Overall, it can be accepted that China is firmly aiming to be the hub of technological innovation. But with the escalation of trade war with US (increasing tariffs to 25 per cent) has added heavy pressure on the Chinese government to negotiate the opening of the Chinese economy with effective protection to foreign technology. However, one has to agree that the current reforms fail to address the major US concern with respect to forceful technology transfers. The Chinese government needs to accommodate the international guidelines of relaxing contractual norms with respect to foreign companies in order to prevent the slowdown of its economy due to trade war.

[1] Section 301 authorizes the US President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement. Section 301 cases can be self-initiated by the (USTR). Thus, Trump initiated the tariff imposition on China.

Wang Huning: China’s Amit Shah

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Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

If Shah’s job is to help Modi do the electoral math and draw up strategies to win elections, it is Wang’s job to help create the narrative that legitimizes Xi Jinping in power in an authoritarian system.

As the National People’s Congress in China cleared a constitutional amendment on Sunday allowing President Xi Jinping to remain president for life, here is a look at Xi’s closest confidante and politburo member Wang Huning, who is also known to be the brain behind President Xi.

Wang has been speechwriter and ideologue to three successive General Secretaries of the CPC –- Jiang Zemin, Hu Jintao and now Xi. Many key concepts for these three leaders have been fashioned and refined under Wang’s watch in the Party’s Central Policy Research Office since 2002 and later as a member of the Central Secretariat.

Indeed, one might wonder if China’s – and President Xi Jinping’s — slow turn towards a more assertive stance has not been influenced also by Wang’s personal ideological proclivities conveyed through the mouths of China’s leaders.

In practical terms, Wang Huning is to Xi Jinping what Amit Shah is to Narendra Modi. If Shah’s job is to help Modi do the electoral math and draw up strategies to win elections, it is Wang’s job to help create the narrative that legitimises Xi Jinping in power in an authoritarian system Continue reading “Wang Huning: China’s Amit Shah” →

Term Limits Off for Xi: Some Reflections for India

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Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

When China’s National People’s Congress – the rough equivalent of India’s Lok Sabha, but toothless – meets in the coming week it has to deal with a proposal by the ruling Communist Party of China to amend the state constitution to remove term limits for the President of the state. Coming from where it does, this is pretty much a direct order to the NPC to remove the term limits.

Removing term limits for the President, imposed in 1982, is a roundabout way of saying that the norm of two terms for the CPC General Secretary – Xi’s more powerful avatar – too, is not set in stone. Continue reading “Term Limits Off for Xi: Some Reflections for India” →

India Becoming a Threat in Chinese Imagination

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Hemant Adlakha, professor of Chinese at Jawaharlal Nehru University, New Delhi and Honorary Fellow, Institute of Chinese Studies (ICS), Delhi.

As the new year gets underway, and Chinese foreign policy analysts join their counterparts around the world in assessing the events of 2017, the emerging international relations (IR) discourse in Beijing is quite a revelation — at least to the Japanese and Indian strategic affairs community.

While most Chinese believe Japan to be the second biggest threat to China’s “peaceful rise,” according to a few Chinese experts, the rising global profile of India, especially under the “right-wing” nationalist Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP), has gone unacknowledged. Continue reading “India Becoming a Threat in Chinese Imagination” →

Fluffy Ambassadors: China’s Panda Diplomacy

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Preethi Amaresh, Research Officer, Chennai Centre for China Studies (C3S)

The giant panda has proven itself to be an instrument of foreign affairs and its use as a soft power tool has played a part in International relations. Pandas are considered to be a symbol of peace for China. China’s policy of sending pandas as diplomatic gifts was revitalized in 1941 when Beijing sent two pandas to the Bronx Zoo as a “thank you” gift on the eve of the United States entering World War II. This stimulated the relationship between countries, which in turn increased China’s soft power in the panda-receiving country. Mao Zedong, the founding father of the People’s Republic of China, often engaged in panda diplomacy in the 1950s, sending the bears as gifts to North Korea and the Soviet Union.

According to one theory, the movement of pandas from China to another country means that the other country accepts the extension of “China” on its territory. It all began in 1941 where Soong Mei-Ling (First lady of the People’s Republic of China) sent the first batch of pandas as gifts to the U.S. In 1949, after the foundation of the People’s Republic of China, more giant pandas were shipped abroad. One well-known example is when the Chinese government presented two pandas to U.S President Richard Nixon during his visit to China in 1982, which turned out to be an enormous diplomatic success with respect to China’s establishment of relations with the U.S. Continue reading “Fluffy Ambassadors: China’s Panda Diplomacy” →

Nepal’s Views on the Doklam Standoff

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Avadhi Patni, Research Intern, Institute of Chinese Studies, Delhi

The Doklam standoff between India and China has caused security, economic as well as political concerns for other countries of the South Asian region. This article explains general views and opinions of Nepal on the Doklam standoff. Nepal has signed a Treaty of Peace and Friendship with both India (Ministry of External Affairs 1950) and China (Friedrich Ebert Stiftung 1960). It has two tri-junction points with India and China and its dependency on both the countries raises security as well as economic concerns for Kathmandu.

One tri-junction point between Nepal, China and India is at Lipulekh in western Nepal and the other is at Jhinsang Chuli in eastern Nepal. Concerns for Nepal started in 2015 when India and China signed a bilateral agreement to increase trade through Lipulekh but without any consultation with Nepal. This tri-junction point is considered crucial by Nepal for developing it as an economic bridge between India and China. Following this event was the 2015-2016 India-Nepal border blockade. These incidents have created a popular opinion in Nepal about India being at fault in the current standoff in Doklam (Baral 2017).

A statement by Gopal Khanal, the foreign policy advisor to the ex-Prime Minister K.P. Sharma Oli, Continue reading “Nepal’s Views on the Doklam Standoff” →

Opening Doors Southwards: China’s Increasing Presence in Nepal

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Aakriti Vinayak, Research Intern, Institute of Chinese Studies, Delhi  

China is making its influence keenly felt in Nepal today. China is using different strategies from road connectivity, hydroelectric projects to using soft power as an approach to forge linkages with Nepal. China’s concentrated effort to use soft power diplomacy in Nepal – with heavy investments in religion, education and tourism – has been a success on the high tables and between the government elites, relations have been institutionalised. One sees a prospective future for Nepal where there is an attempt to tilt more and more towards China – on almost every front – economic, cultural and regional. When Nepalese president Bidya Bhandari released the Nepalese edition of the book, Governance of China by Chinese president Xi Jinping, Upendra Gautam the General Secretary of China Nepal Study Centre said that the event befittingly heralds Nepal and China relations into the 21st century kinship where soft power plays a paramount role (Gautam 2016).

Under former Nepalese prime minister Prachanda, China started using Buddhism as a tool of soft power by Continue reading “Opening Doors Southwards: China’s Increasing Presence in Nepal” →