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.

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

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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

The Malacca Dilemma: No panacea but multiple possibilities

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Sanjana Krishnan, Research Intern, ICS

The death of Mao Zedong in 1976 gave rise to a series of dramatic political changes that led the emergence of Deng Xiaoping as the next leader of the country. Deng led China through a path that has now made the country the industrial giant it is now. This was made possible through Deng’s policy of ‘Reform and Opening Up’ and the “Four Modernisations”. What fuelled this industrial expansion was a heavy dependence on energy giving birth to a new vulnerability to China, namely energy security. While China is still heavily dependent on mostly its own coal reserves and imports of coal for its energy requirements, the reliance on imported crude oil is also increasing.

In 2017, China became the largest importer of crude oil in the world, surpassing the United States and 70% of this was met through oil imports mainly from the West Asian region. In the coming twenty years, these oil imports of China are expected to grow by 10%. Therefore, energy security and oil supply in particular have profound importance for China considering that the huge and powerful economy of China might derail and dwindle if that oil supply diminishes leading to not just an industrial break down but also impact on the China’s overall credibility as a great power in the world which rests, to a great extent, on its economic prowess. The dependence of the Chinese economy on its oil imports is thus an established and critical fact.

The transport of oil through the maritime route from West Asia to China passes through many strategic choke points. One of the most important among these is the Malacca Strait through which 80% of the energy import to China takes place. More than 50,000 merchant ships ply this narrow strait which amounts to 40% of the world trade. China’s economic security is closely tied to maritime trade security as 60% of its trade value travels by sea. Much of the trade between Europe and China enters the South China Sea through the Strait of Malacca. Similar is the case with the trade between China and Africa. Therefore, even for trade, the Malacca Strait holds significance for China.

Lying between the island of Sumatra and the Malay Peninsula, this narrow stretch of water known as the Malacca Strait is the main shipping channel between the Indian Ocean and the Pacific Ocean and is one of the most important shipping channels in the world. However, this strait is not depended upon only by China but other major powers too which has been a concern for the Chinese leadership in the past, fearing that these powers might be trying to control the Strait. A control of the Strait of Malacca by anyone will also mean that they control the oil routes to China and thus the economy too indirectly. This created what is known as ‘The Malacca Dilemma’, a term coined in 2003 by Hu Jintao, the then president of China. When it comes to the Strait of Malacca the fear of other states controlling this strategic transit is greater than the ambition to control the Strait itself.

In 2003-04, here was a threat of piracy in the region which the littoral states, namely Malaysia, Indonesia and Singapore were able to curb to a large extent. This however gave an opportunity to states like US and Japan to try to get more involved in the region in the name of security, which China heavily criticised. The littoral states invited capacity building  and rejected permanent stationing of any outside power. Singapore, which is in the southernmost tip of the Malacca Strait has excellent relations with the U.S. The relations between U.S. and Indonesia are cordial.

ASEAN being the collective voice of the region has a strong say in the functioning of the Strait. Following the threats by piracy and great power involvement, today the countries of the ASEAN have sought to create a Peace and Security Community (APSC) based on three key characteristics: a “rule based community of shared values and norms”; cohesive, peaceful, stable and resilient region with “shared responsibility for comprehensive security”; and a dynamic and outward looking region in an integrated and interdependent world. But the relations between China and many of the ASEAN states have been soured due to differences in territorial claims in the South China Sea. This has added urgency to China’s need to find an alternative to the Malacca Strait. Moreover, in the recent past, India has increased her naval presence in the Andaman Sea from its base in the Great Nicobar Islands largely due to its own perceived threat perceptions emerging from China’s ‘String of Pearls’ that have emerged as a result of the Chinese activities of the past. Given its projection capabilities in the Indian Ocean, the Indian Navy is able to keep a close watch on the PLA Navy in the region.

However, China has a few options in hand which are costly but worth trying. The Kra Isthmus Canal seen to the Asian Panama Canal as well as the Strategic Energy and Land Bridge have both seen a lack of much enthusiasm due the massive cost as well as the lack of trust between China and Thailand. Thailand is considerably powerful and will be hard to press. The Lombok and Makassar Strait are longer routes and would have additional shipping costs which can reach more than $200 billion per year making it a less viable option.

While nothing currently has the capacity to completely replace the Malacca Strait, two options available for China that can completely avoid passing through the Malacca Strait and many of the other strategic choke points is the Gwadar-Xinjiang pipeline and the Myanmar-Yunnan pipeline, although the latter can be affected by Indian presence. These options serve the additional purpose of opening up lesser developed regions of China like Xinjiang and Yunnan. The Gwadar-Xinjiang line will allow the Chinese energy imports to completely circumvent the Malacca Strait. However, the pipeline in Pakistan is faced with major logistic difficulties due to some of the harshest and the most rugged terrains in the world being present there, which can prove technically difficult as well as very expensive to navigate. The region is also ridden with terrorist activities which can potentially disrupt the supply or if the worst materialises, control these and be at an advantageous bargaining point. All these factors stand as difficulties that require investment in the form of infrastructure and security.

The Kyaukpyu Port which is being developed by the Chinese government in Myanmar is another alternative for China. The oil from the west can be docked here and transported to China via the Myanmar-Yunnan pipeline. However, now the pipeline only transports 420,000 barrels per day compared to the 6.5 million barrels per day that pass through the Strait, bound to China. The speeding up of the China sponsored infrastructural development, as a result of the increasing ties between the two countries, which was cemented during the January 2020 visit of Xi Jinping to Myanmar, has the potential to solve this problem to some extent. However, it cannot increase the capacity of this alternative as much as the Malacca Strait. Therefore, comparing the capacities of the various alternatives available to the Malacca Strait, it is evident that there is no single replacement for the latter.  China can rather rely on multiple routes for the transfer of energy sources and trade to sustain the humungous economic machine. It is to be noted that the multiple alternatives, with efficiencies which cannot rank up to the Malacca Strait pose a dilemma in solving the Malacca Dilemma. Thus, the best option that China has in hand is to lower the contestation in the Malacca Strait and to find a peaceful way to work with.

China-Solomon Islands: An overview of a brand new friendship

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Tanishka, Research Intern, ICS

  • China & Pacific Island Countries

The Asian superpower China, second-largest aid provider to the Pacific Island countries established diplomatic relations with the Solomon Islands in 2019. A country of just over half a million people, a low-income economy with more than three-fourth of its population living in small villages, is among the lesser developed countries of the South Pacific region. The Chinese offers of infrastructure projects, concessional loans along with aid-in-kind and Solomon Island’s rich timber, fish, and potential seabed resources facilitated the connection between the two countries. China’s other motive for establishing diplomatic relationships in the Pacific is limiting Taiwan’s international space. Solomon Islands switched allegiance from Taipei to Beijing, terminating its 36-year-old official relationship with Taiwan. Out of the fourteen Pacific Island states, China now has ten partners.

For the Solomon Islands, the decision to switch allegiance, came from the recommendations of a task-force deployed by Prime Minister Sogavare, which indicated the past action to establish ties with Taiwan, which was economically more active than China back then was bought by money power. The report pointed out that presently Taiwan has a limited economic capacity while China’s investments cover the entire globe; the switch thus, brings a large potential donor to Solomons. The report can be characterized as Idealistic towards the People’s Republic of China, it also asked an open-ended question —when was the last time the world saw China invade another country?

China assured funding for 2023 Pacific Games hosted by Solomon Islands in the form of grants and the main stadium would be a gift from Beijing. But, the infrastructure project will not provide local employment, as Chinese companies bring their own construction workers. In the future, maintenance of such infrastructure facilities will be a great challenge for the government of Solomon Islands, as it became for Vanuatu, which had no budget to maintain the Chinese-funded national convention centre.

There is an ongoing assessment by Solomons’  Finance Ministry regarding $US100 million loan offered through a Chinese broker[1]. Matters such as restrictions on the usage of loan money, determination of loan’s interest rate and the duration of loan which could be twenty years or more are not yet settled. Denton Rarawa, the previous governor of the Solomon Islands Central Bank showed displeasure over government proposals, warning this could land Solomon Islands in China’s debt trap. We may also note that the traditional donor, Australia imposes strict supervisions on aid programs and pays attention to economic and political reforms in the Pacific region, Chinese assistance, on the other hand insinuate a “no strings attached” strategy as a bait. Clearly, China seeks supremacy over other donor countries to advance its geostrategic interests.

The Solomon Islands has not yet accepted every Chinese offer on the table. During Prime Minister’s first official visit to China, he met with the leaders of Sam group, a state-connected enterprise, and invited them to the Solomon Islands.  But the Solomons rejected a deal that asked for the lease of Tulagi Island for 75 years. The Island is of strategic importance – it was the Solomons’ capital under British rule for forty-six years, then a Japanese base and an American base in World War II. In 1952, the capital shifted to Honiara. The government called the deal with Sam group illegal due to a lack of vital details and ordered its termination. 

This issue raised concerns over China’s intentions. Perhaps, it wanted to challenge the Western world by installing a military base there. Defence experts raised similar concerns a year ago, with Chinese-funded Vanuatu dockyard, which is too big for commercial use but a perfect location for visiting foreign navy ships –  such as a rapid Chinese move to become two-ocean navy. Located not too far from the Australian coastline, if these military bases come up, it can lead to military tensions in an ocean about which Australia did not have to worry since 1942. TheSolomon Islands showcases a desire to be on the right side of history and normalize relations with the People’s Republic of China. It is not the only Pacific Island country to establish diplomatic relations with China in 2019. Kiribati followed its trail. China’s intensified economic efforts could soon take away the four remaining Taiwan’s Pacific allies: Tuvalu, Nauru, Palau and the Marshall Islands. Taiwan has indicated that China has a desire to make the Pacific Ocean another South China Sea. These actions have been disapproved by the United States who itself switched recognition to China four decades ago. It also recently declined the Prime Minister Sogavare’s request for a meeting with the United States Vice President, and it has begun to reassess the aid it provides the Islands. Although China’s plan to install a military base remains a matter of speculation, its search for new markets and the untapped under-seabed resources remains the prime reason for its pursuits in the Solomon Islands and South Pacific region.

[1] The deal was reported by ABC News. The article mentioned a loan deal of $US100 billion instead of $US100 million. It is important to understand that the Solomon Islands is a small economy with a GDP of $US1.3 billion (ABC News. 2020. ‘Solomon Islands discussed $US100 billion loan from Chinese businessman, according to leaked letters’. February 21).

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.