China’s ‘Ides of Control’ and Social Credit System

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Arushi Singh, Research Intern, ICS

Image: A city notice board in Rongcheng displaying model citizens with high social credit scores
Source: South China Morning Post

Just as the “Ides of March” served as a warning and ultimately, signified a perceptible pivot for the Roman Republic, China’s social credit system in the wake of the Covid-19 pandemic has marked a new era for the “Ides” of control and surveillance. The social credit system in China has proved adept at acclimating to the new realities brought to the fore by the Covid-19 pandemic. The government in China has introduced specific stipulations to modify the requirements in the system including alterations for repayment provisions devoid of drawbacks and inducements for some companies to help control the pandemic. Obligations have also been presented, which entail businesses to desisting from price gouging on health merchandise. In 2020, the social credit system covered 1.1 billion individuals through an integrated China social credit system officially declared in 2014. Notably, the earliest forms of the social credit system have been tested since 2009 on a regional level. However, the genesis of the philosophy responsible for the social credit system has been propounded by scholars for centuries in the making. It has traced back to China’s “Warring States” Era.

At the end of the Warring States era, the Qin leaders encouraged the rule of law to nourish a well-ordered societal structure. However, the current Chinese leaders are focused on a code of conduct that emphasizes values which encompass inclusiveness, harmony, civility and morality to retain order as well as concord while harnessing compliance. Experts attest to the fact that the social credit system is an ecosystem of initiatives that share some fundamental commonalities. Subsequently, 40 trials have been conducted to establish the current social credit system nationwide with their own objectives, distinctions, recompense and castigations to establish the current social credit system nationwide.

One of the most profound influences for the social credit system appears to draw insight from the doctrine of Legalism, which rose from the ashes of the Warring States era (475-221 BCE). The Chinese terminology fa-jia for legalism encompasses more than just law. It includes approaches, norms, and impersonal guidelines. The Legalists promoted in practice and works the usage of law as the primary tool of government wherein the focus was on punishment and reward. Their distinguishing attribute was the importance placed by them on the usage of law to expand the power of the sovereign besides the authority of the State. The Legalist thought, particularly regarding the law, may well be understood in the Austinian interpretation of law wherein any orders by the ruler are backed with a threat of force. The commentators have projected that the chief objective of the Legalists was to formulate policies that would better the martial and financial position of the state. This policy construction was also motivated by the political and societal circumstances during the Warring States era. The implementation, however, required the employment of a centralized authority directing the accumulation of power for the sovereign. The sovereign exerts this power via a system of bureaucracy with strict accountability and governance accomplished through laws that all citizens understand. Therefore, legalism controlled not only the citizenry but the bureaucracy as well.

This control is exercised through the mechanism of penalties and rewards in the current social credit system. The disadvantages are significant and are enforced by a range of current methods used by the government to ensure power encompassing the “hukou” system, detention, and incarceration for dissenting deeds or even the articulation of nonconforming sentiments. The social credit system was envisioned in 1999 under Zhu Rongji, who wanted to alleviate the complexity of external firms in obtaining data on their Chinese associates. The system was considered in official papers exclusively in market reforms. However, the real breakthrough came during the 2014 Five Year Plan (FYP), which encompassed the online revelation of the identity of citizens who have been chastised and those who have been compensated. Furthermore, there has been an enhanced congruence under President Xi Jinping of the legalist philosophy, who uses numerous quotations from legalist scholars in his speeches. Xi is the focal point of China both administratively and spiritually, and the power structure is etched to bring about his interpretation of law and policy.

The administrative control is additionally exercised by other developments, including the publication of “black list,” which heralded the penalties, and “red list”, which touts access to improved privilege for the citizens according to their actions which have been intensely documented through the vast surveillance network in China. There is also a list for companies called the irregularity list, which acts as a warning to improve scores. This further underscores discussions on privacy in China which are pretty different from the Western notion. Researchers have proposed that traditional Confucian philosophy praises morality rather than deference to individual rights as the basis for social interactions. Furthermore, privacy has conventionally entailed familial familiarity or dishonorable/scandalous secrets. On the other hand, the law in China is concerned with privacy as a right to protect one’s reputation against insult and libel. Notably, the governmental authorities have also maintained a dang’an, a dossier composed of detailed information about citizens residing in urban areas, which appears to have had a desensitized impact on privacy concerns.

Strategic analysts have also reflected upon the novel surveillance culture intending to essentially eradicate the apprehension and the prospect of observation of historical, Confucian-inspired conceptions of virtue. The emerging surveillance culture is prompted to imbibe the attributes and evaluate the citizenry through the social credit system on their perceived capacity to assist or impair the state. Thereby, a noticeable change in the surveillance change is witnessed wherein there is a purging of traditional Confucian conceptions such as the face, both of its inner moral dimension and its external, socially constituted dimension. Scholars have also noted that the credit score’s rationality is founded on social discipline, which is then reinforced by official public-private partnership rather than the Confucianism’s “face.” Furthermore, this step expands across an array of exchanges by citizens. For instance, big data is being employed to construct more effective policymaking and enforcement. Nevertheless, the Covid-19 pandemic has spotlighted on the limitations of surveillance systems. However, a pattern can be observed wherein novel technologies are utilized for the attainment of better social control and social management. Thereby, tackling social dilemmas and sequestering social instabilities.

Consequently, in its current reincarnation, the social credit system is expected to track every act and transaction by every Chinese citizen in real-time and respond to the aggregate of a citizen’s financial, societal, and ethical conduct with incentives and punishments. This dream is aided by ubiquitous algorithms designed to generate fiscally valuable, socially harmonized and politically obedient citizens who self-censor and restrict. Consequently, the corporate social credit can be utilized as a trade war weapon in an informal capacity by regional officials or an implicitly authorized order by the government. Furthermore, this system has a higher export value which is likely to interest other authoritarian and totalitarian systems worldwide.

The author is thankful to her mentor, Dr. Bhim Subba, Assistant Professor, University of Hyderabad. The views expressed here are those of the author(s), and not necessarily of the mentor or the Institute of Chinese Studies.

Why Will China Not Give Up on its ‘Dynamic Zeroing’ Covid-19 Strategy?

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Hemant Adlakha, Vice Chairperson, ICS and Associate Professor, Jawaharlal Nehru University.

This article was published two months ago in Modern Diplomacy under the same title. However, following the revival and fast spreading of local variants of Covid-19, including Omicron, first in Xi’an and then in Yuzhou city in Henan province, and now in the northern port city of Tianjin near Beijing, questions have been raised in China on the rationality behind persisting with “zero tolerance” policy. I hope to come up with the second part of the article with focus on resurging Covid-19 cases in China and the Beijing Winter Olympics.

Image: Where is the exit from China’s zero tolerance on Covid-19?
Source: scmp.com

The world is again at war with China. This time, the war is not about China’s aggressive “wolf warrior” diplomacy; nor is it about China threatening to use force to reunify with Taiwan. Instead, if one goes by what the global media says, this new round of “war” is an ego clash between what China calls Covid-19 “dynamic zeroing” and what the West is practicing – “living with virus strategy.”

Last year, Dr. Li Wenliang, who raised an alarm about the coronavirus in the early days of the outbreak, was forced by the police in Wuhan to write “self-confession” and was told to immediately stop spreading false rumours. Within a few days, Dr. Li caught the infection and was hospitalized, where he succumbed to the virus and died three weeks later. Of course, Li was not infectious disease expert, he was an ophthalmologist at the Wuhan Central Hospital. A little over a year later, when Zhang Wenhong, a doctor in Shanghai who has been compared with the top US health official Dr. Anthony Fauci, wrote on his Weibo blog indicating China might have to live with the Covid-19 pandemic, he had to face vicious attacks by the official media and the Chinese health authorities. For, Dr. Wenhong had come in the cross hairs with China’s official “dynamic zeroing” strategy aimed at eliminating the coronavirus.

It is important to recall, since early last year China has been strictly adhering to a “zero tolerance” (Qingling in Chinese) policy for Covid-19, under which authorities have imposed strict border controls, travel restrictions, lockdowns and at times carried out mass testing as and when new Covid-19 cases emerged. Furthermore, the success of “zero tolerance” policy which resulted in long stretches of zero new cases was drummed up by the communist leadership of the country as the secret for successful coronavirus pandemic containment strategy. “China’s government attributed the effective virus containment to the phenomenal leadership of the communist Party and its institutional superiority over Western liberal democratic systems,” commented The Diplomat two months ago. (Emphasis added).

Image: China’s zero-Covid strategy risks leaving it isolated for years
Source: Bloomberg.com

Rise in regional flare-ups

However, more recently, China experienced regional flare-ups of the globally prevalent delta variant, including in cities such as Beijing and Shanghai. As a result, Beijing authorities were forced to postpone the capital city’s annual marathon scheduled to be held on 31 October. A week earlier, on 24 October, Beijing’s Universal Studios theme park also took preventive measures and started testing all its employees after it was found out that a suspected case had visited the Studios. At the same time, Shanghai Disneyland and Disney town were temporarily shut down as part of the pandemic prevention drive. According to China’s English language newspaper, Caixin Daily, the decision to suddenly close Disneyland followed the emergence of a new Covid-19 case in neighbouring Zhejiang province, it was someone who had visited the Shanghai attraction.

In fact, the recent flare-ups spread across over twenty provinces and areas in China have been attributed to a cluster of Covid-19 cases in Ejin Banner in the remote Inner Mongolia that is in the Gobi region. According to reports, nearly 9,000 tourists who were visiting the Gobi Desert during China’s National Day “golden week” holidays were trapped there, mostly in quarantine. The Chinese tourists had gone there to spend time in the famous poplar forests where trees turn golden yellow during this time of the year. An official Chinese media outlet reported “the recent local Covid-19 outbreaks that began in mid-October have spread to two-thirds of China’s 31 provincial-level regions, with more than 1,000 locally transmitted infections.” Attributing delta variants as the cause for the country’s second wave of the pandemic, one of China’s top epidemiologists, Dr. Zeng Guang, a former head of Chinese Centre for Disease Control and Prevention (China CDC), opined China must continue with emergency measures, including maintaining long quarantines and vigorous contact tracing, until a “barrier of immunity” has been established.

Living with the virus” is more costly

While acknowledging that the global challenges in containing the delta variant will mean that society must learn how to coexist with Covid-19, Zeng emphasized that “China will need to continue its ‘zero tolerance’ strategy against Covid-19 with nationwide emergency responses.” Reacting sharply to the last of few remaining countries which too have finally shifted from eliminating strategy to trying to live with the virus – for example, New Zealand, Singapore and Australia – China’s most celebrated infectious disease expert and “national hero” Dr. Zhong Nanshan has strongly defended “zero tolerance” strategy on the grounds that measures to deal with sporadic Covid-19 outbreaks are less costly than treating patients after they have been infected. “The cost is truly high, but compared with not managing it, relaxing (the zero tolerance policy), then that cost is even higher,” Dr. Zhong Nanshan said in a recent TV interview.

Image: How long can China chase COVID zero?
Source: japantimes.co.jp

Remember, China has reported about 4,600 deaths due to COVID pandemic. In comparison, the US with just a quarter of China’s population and a far more expensive and superior health care system has lost over 755,000 lives. No wonder China’s foreign ministry spokesperson has recently disdainfully dismissed the US as an “inferior system” and a “total failure.” Defending the Chinese government policy, Dr. Zhong Nanshan questioned all those countries (mostly the developed countries in the West) that had relaxed their policies amid a drop in Covid-19 cases only to go on to later suffer a large number of infections. “The global mortality rate for people infected with Covid-19, which spreads fast and continues to mutate, is currently around two per cent. We [China] cannot tolerate such a high mortality rate,” the top Chinese epidemiologist said.

The logic of China’s “zero tolerance” policy

Refuting the logic offered by Dr. Zhong Nanshan in defense of China’s “zero tolerance” policy, i.e. it is more effective and less costly to contain Covid-19 than treating patients after they have been infected, an overseas Chinese scholar Zhuoran Li attributed China’s so-called success in fighting the pandemic to the Maoist doctrine of mass line and the CPC’s Leninist identity, respectively. “The key to implementing this ‘zero tolerance’ is the CPC’s mass mobilization capability. The CPC has viewed mobilization as a ‘secret weapon’ throughout its history. After Mao’s Mass Line became a key to the CPC’s victory in 1949, the Party continued to rely heavily on mass mobilization to achieve its goal – social transformation between 1949 and 1956; steel and food production between 1958 and 1961; or combating natural disasters in 1998 and 2008,” Zhuoran Li argues.

At another level, adding a different dimension to Zhuoran Li’s argument, another overseas Chinese scholar, Yanzhong Huang, a senior research fellow with the Council for Foreign Relations (CFR) has observed: “It’s becoming part of the official narrative that promotes the approach and links to the superiority of the Chinese political system.” Maybe true, however, from China’s point of view, what is most disturbing is there is a lack of consensus within the official narrative. Take Ruili for example, a southwestern city surrounded by Myanmar on three sides and currently the center of the highest flare-up. According to Ruili residents, they have been the worst victims of China’s zero-transmission strategy as they have been subjected to multiple rounds of quarantine, lockdowns and excessive Covid19 testing. The local city authorities have put the blame for the plight of the 270,000 residents on the successive flare-ups on “traders and refugees who frequently cross the border into China.” On the other hand, the angry residents in the city have been complaining of the escalating financial as well as social costs for having been left alone to cope with the epidemic.

Image: China is keeping its borders closed, and turning it inwards
Source: economist.com

Furthermore, foreign experts and the global media have maintained that China either doesn’t want to admit or the authorities in Beijing are yet to realize – as most or nearly all countries have – that not only the virus is now permanent but also that there is no chance in the long run that a zero-Covid strategy could work in terms of achieving complete elimination. This confusion is the official narrative in China has been best manifested in a public spat between the mayor and the deputy mayor of Ruili. Last month, Dai Rongli, the deputy mayor posted an essay on his personal social media blog highlighting the difficulties city residents have been facing due to the pandemic prevention policies. “The pandemic has mercilessly robbed this city time and again, squeezing dry the city’s last sign of life,” the deputy mayor wrote. Within days, an infuriated city mayor Shang Labian criticized his deputy in an interview with a Chinese digital news platform saying: “Ruili does not need outside support and sympathy.”

To sum up, it is indeed true that most people in China support the country’s strict pandemic prevention policies. Yet undeterred by what most other countries are claiming, that is, “the illness will circulate in perpetuity and can only be encountered with high immunization rates,” the Chinese leadership is standing firm on its resolve that the zero-transmission strategy is less costly. Liang Wannian, the head of China’s “leading small group” under the Ministry of Health to combat Covid19, has refuted as baseless claims that China is persisting with its zero-transmission strategy for political reasons such as holding of the Beijing Winter Olympics in February 2022 and the 20th CPC National Congress in October next year.

Image: The Delta Variant and China’s Need to Change its COVID-19 Policy?
Source: nytimes.com

“Dynamiczeroing is not zero transmission, nor is it China’s permanent strategy. Whether to change the current pandemic prevention strategy depends on the trend of the global epidemic, the mutation of the virus, the change in the severity of the disease and the level of vaccination coverage in China and other factors,” Liang said. In other words, Liang Wannian almost confirmed what experts outside China have been claiming: “They [China] are not confident about the effectiveness of [their own] vaccines – the ability to prevent infections.” Therefore, China has been caught in its own trap of “zero transmission” or “dynamic zeroing.”

The US Policy towards China: Obama, Trump, and Biden Administrations

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Ashu Maan, Research Intern, ICS

China and the United States have been explicitly at loggerheads in the past few years. However, issues of contentions in Sino-US ties have existed in the past as well. This research blog attempts to understand the US Policy towards China during three different administrations –   Obama administration; Trump administration  and Biden administration.  Additionally, the blog also attempts to understand India’s position in the  US-China conflict.

Obama Administration

Barrack Obama was the first African American to become the president of the United States and he was also the first American president to visit China in the first year of his presidency. However, Obama administration’s China policy seemed inept as it faced several challenges one after another. On his state visit, Obama was criticized by the media for “not displaying American values” and being “lead by the nose”. Obama’s unsatisfactory visit to China was further followed by ‘Failure to secure an ambitious Copenhagen deal’ at the Copenhagen Climate summit in 2009. Additionally, the American spy apparatus in China was being unearthed and assets were disappearing. Despite the challenges, Obama administration leaned towards engaging China rather than confronting it considering China’s rising economic stature globally. China overtook Japan and became the second-largest economy in the world during his presidency and the Obama administration was quick to realise and accept China’s new reality as an economic heavyweight. Obama administration believed that it was best to cooperate with China as was evident from Secretary of State Hillary Clinton February 2009 remarks – “some believe that China on the rise is, by definition, an adversary, but on the contrary, we believe that the United States and China can benefit from and contribute to each other’s successes. It is in our interests to work harder to build on areas of common concern and shared opportunities”.

Further President Obama with his Chinese counterpart Hu Jintao initiated the ‘U.S.-China Strategic and Economic Dialogue’ in 2009. The dialogue was aimed at discussing bilateral, regional, and global issues between the two countries. On the trade front the US-China trade rose from $ 40.7 Billion in 2008 to $ 57.8 Billion in 2016. The trade deficit in the same period increased from $ 268,039.8 Million to $ 346,825.2 Million.

Table 1: U.S. trade in goods with China (Million US $)

Year Export Import Balance
2008 69,732.80 337,772.60 -268,039.80
2009 69,496.70 296,373.90 -226,877.20
2010 91,911.10 364,952.60 -273,041.60
2011 104,121.50 399,377.20 -295,249.70
2012 110,516.60 425,619.10 -315,102.50
2013 121.746.20 440,430.00 -318,683.50
2014 123,657.20 468,474.90 -344,817.70
2015 115,873.40 483,201.70 -367,328.30
2016 115,594.80 462,420.00 -346,825.20

Source: Compiled from United States Census Bureau.

Trump Administration

Trump throughout his presidential campaigns was vocal about his criticisms of globalization particularly in the context of the ills plaguing the US work force. Donald Trump blamed China for taking jobs away from traditional industries like iron and steel and popularised the slogan of ‘America First.’ By the time Trump came to power, China had clearly become a “competitor” as opposed to Hillary Clinton’s “partner”. Trump was straightforward in dealing with China as he termed it an outright adversary, blamed it for stealing Intellectual Property from American companies operating in China, and started the infamous trade war. In the trade war, Trump realized that China was capable of countering trade sanctions and equal retaliation. It is important to note that although aimed at China, Trump’s infamous trade war also affected United States’ closest allies in Europe and Canada. On the trade front, the U.S.-China trade under Trump decreased from $ Billion 578 in 2016 to $ Billion 558 in 2020. Naturally, the trade deficit also decreased from $ Million 346,825.2 to $ Million 310,263.5 in 2020.

Table 2: U.S. trade in goods with China (Million US $)

YEAR EXPORT IMPORT BALANCE
2016 115,594.8 462,420.0 -346,825.2
2017 129,997.2 505,165.1 -375,167.9
2018 120,281.2 538,514.2 -418,232.9
2019 106,448.4 450,760.4 -344,312.0
2020 124,485.4 434,749.0 -310,263.5

Source: Compiled using data from United States Census Bureau.

Biden Administration

Joe Biden came to power in December 2020. Biden’s policy has been the same as Trump with one change – Biden is engaging with Washington’s closest allies in Europe and Asia in countering China. Since coming to power, Biden has prioritized building alliances and reinvigorating old ones. So far, Biden’s China policy has been well received.  In March 2021, the European Union, Canada, and the United States imposed joint sanctions on Chinese officials in Xinjiang. The Biden administration also reinvigorated the QUAD grouping and hosted the first leaders meeting of the QUAD countries namely Australia, India, Japan, and the United States. India and Australia have engaged fully with QUAD owing to Chinese actions on its Himalayan borders and sanctions levied on Australia due to Australia asking for investigation into the origin of Coronavirus. Since coming into power, there have been two leaders’ summit of QUAD, the first one was held virtually on 9 March 2021 and the Second one i.e., the first in person leaders’ summit was held in Washington D.C on 24 September, 2021.  To counter China the grouping is focusing on areas such as trade, Artificial Intelligence, Quantum Computing, Infrastructure, vaccinations etc as depicted from the formation of working groups during the two meetings.

Apart from QUAD the Biden administration also formed a security alliance with Australia and the United Kingdom, popularly known as AUKUS. The group is focused on countering China’s influence in the Western Pacific region by providing Australia with eight nuclear-powered and conventionally armed submarines. The aim of the pact is to modernize the Australian navy by giving access to cutting-edge military technology to Australia including artificial intelligence, quantum technologies, and undersea capabilities.

India’s Role in the Sino-US Conflict

During the last great power rivalry between US and USSR, India spearheaded the Non-Aligned Movement (NAM) with an aim to remain neutral in the rivalry. During the Cold War neither Truman, Eisenhower, Kennedy, Johnson nor Nixon wanted India as an ally. An economically weak India would be an additional security burden for the US and for the American taxpayer because as Eisenhower put it, the US would have to defend “2,000 miles more of the active frontier”.

Unlike the Cold War, stakes are high and personal for India in the US-China rivalry. India shares a long land border with China and there have several border disputes. This time India cannot sit on the sidelines and watch from far. As can be seen from the recent trends, India’s China policy seems to be aligned with that of the U.S to a considerable extent. India has engaged vigorously with QUAD since border clashes with China last year. India’s role in the US-China rivalry will be of balancing and containing China with other Asian and Oceania allies i.e., Japan and Australia. India is slated to become the third-largest economy by 2030 overtaking Japan and Germany and is already among the strongest militaries in the world. India has a significant footprint in the Indian ocean via Andaman and Nicobar Islands and its partnership with France and Seychelles. India, through the courtesy of Andaman and Nicobar Island can impede China’s access to the South China Sea or the Indian Ocean by blockading Malacca Strait during times of conflict.  

Though there have been many areas of contentions between India and the United States in the past, they are at present focusing on cooperation both bilaterally and multilaterally. It is important to note that China will not be contained just by security alliances but by economic and technological alliances. The United States should actively look to decouple its economy and manufacturing and diversify into countries like India, Bangladesh, and Vietnam. The United States must accept the new realities of the world and understand that the future of the world will be multipolar. The United States through alliances and partnerships can counter China.

What does China gain from its South Pacific Engagement?

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Wonchibeni Patton, Research Intern, ICS

Image: President Xi Jinping with eight Pacific island countries’ leaders at the 26th APEC Economic Leaders Meeting
Source: Getty Images

The People’s Republic of China (PRC) is the third-largest aid donor to the Pacific Island Countries (PICs), spending around US$1.76 billion in aid towards the region. In its aid programme, the PRC emphasises on equality, mutual benefit and win-win cooperation. On this note, the following paragraphs examine the benefits that the PRC gains from its engagement with the PICs.

Scholars have identified the PRC’s two main interests in the PICs as political and economic. Political or diplomatic interests include decreasing Taiwan’s diplomatic clout and gaining the support of the PICs at multilateral forums, mainly the United Nations (UN). The PRC and Taiwan rigorously engaged in “chequebook diplomacy” in the 1990s, competing for diplomatic recognition from the PICs until 2008 when President Ma Ying-Jeou of the Kuomintang government came to power in Taiwan and led to a diplomatic truce. Before 2019, Taiwan had six diplomatic allies in the region, but this was reduced to four when the Solomon Islands, followed by Kiribati, switched to the PRC in September of 2019. There were several reports that the PRC had baited both countries with promised aid: US$500 million for the Solomon Islands and funds for aeroplanes and commercial ferries for Kiribati

Although the PICs occupy only 15 per cent of the world’s surface, with a cumulative population of around 13 million, they hold about 7 per cent of UN votes. The PRC’s membership in the UN Human Rights Council (UNHRC) has often been questioned, and the PRC is often targeted at the UN for its human rights record. The Xinjiang issue has been raised twice at the UNHRC in the recent past-2019 and 2021. Both were led by countries from the West. However, both times the PRC responded with greater support from its “Like-Minded Group”- a term used to describe a loose coalition of developing states often led by the PRC, Russia and Egypt . In 2020, when the issue of China’s new national security law in Hong Kong was raised at the 44th session of the UNHRC by 27 countries, Papua New Guinea was amongst the 53 countries that backed the PRC. In 2021, when the human rights situation in Xinjiang was raised at the 47th UNHRC session by Canada with the support of 44 countries, a coalition of 69 countries led by Belarus responded in China’s support. The PICs Kiribati, Papua New Guinea and the Solomon Islands were included in the 69. Thus, the PRC has been successful at garnering increasing support from the PICs on issues concerning its interests in international fora.

The PRC’s economic interests in the region include the promotion of China’s Belt and Road Initiative (BRI) and the hunt for raw materials. All the ten diplomatic partners of the PRC in the region have signed up for the BRI. The PICs’ total exclusive economic zones (EEZs) extend across nearly 7.7 million square miles of ocean. This can be beneficial to China’s endeavours in exploring and extracting natural resources. Some of the PICs are blessed with abundant natural resources and raw materials in terms of minerals, metals, fossil fuels, fisheries and wood. A global audit of Pacific resource extraction undertaken by the Guardian’s Pacific Project revealed that China is the largest importer of the region’s natural resources, importing resources worth US$3.3 billion in 2019. In the mining industry, the PRC has invested in seven mining projects across the region, with the largest one being the US$1.4 billion Ramu nickel and cobalt mine in PNG. PNG and Fiji have been the main focus of investments in this field. Other major operations include the Porgera gold mine and the Frieda River Copper project in PNG, the Nawailevu Bauxite mining project and the Vatukoula gold mine in Fiji, and so on. These operations are partly owned and run by Chinese SOEs such as Zijin Mining Group, Xinfa Aurum Exploration and Zhongrun International Mining. In 2019, PNG exported US$2.3 billion worth of oil, metals and minerals to China while Fiji exported US$4.8 million of the same.

The Pacific region is the world’s most fertile fishing ground. China imported US$100 million worth of seafood products from the region in 2019. However, Chinese vessels have also been involved in illegal, unreported and unregulated (IUU) fishing, which has been threatening the region’s revenue sources and food security. Even though the Western and Central Pacific Fisheries Commission (WCPFC) states that China has around 600 licensed vessels fishing in the area, various estimates of the Chinese fleet range between 1,600 and 3,400 vessels. The major exporters of tropical logs in the region are PNG and Solomon Islands, where forestry is a major industry. According to the US Department of Agriculture report, in 2020, Papua New Guinea was the largest hardwood log exporter to China, accounting for 21 per cent of China’s total imports, followed by the Solomon Islands. The Pacific region’s emerging potential as the ‘blue economy’ has also caught Chinese interest. China has started looking into Deep Sea Mining by conducting research projects through the China Ocean Mineral Resources Research and Development Association (COMRA). They have identified polymetallic and cobalt nodules, hydrothermal sulfide deposits and have also produced several deep-sea mining maps in the Pacific. Furthermore, in 2017, China signed a 15-year exploration contract for polymetallic nodules in the Clarion-Clipperton Fracture Zone in the Pacific Ocean with the International Seabed Authority. Although the gains from the Sino-Pacific engagement may not be equal in quantity, Sino-Pacific engagement can be considered a qualitative ‘win-win’. Certainly, China’s primary goals in the region are being met to some degree on both the political and economic fronts.

Establishment Strikes Back in Japan’s Ruling Party Election

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Dr. Jojin V. John, Research Fellow, Indian Council of World Affairs

Image: Fumio Kishida Wins Japan Election
Source: News18

Fumio Kishida, former Foreign Minister of Japan, has emerged victorious in the Liberal Democratic Party’s (LDP) presidential election held on 29 September, 2021 and has become the new Prime Minister of Japan. Kishida’s triumph over the charismatic Taro Kono, a former defense and foreign minister and the minister in the powerful administrative reform ministry in the Suga cabinet, is indicative of LDP’s preference for continuity over reforms, resistance to generational change and above all, the political reincarnation of former Prime Minister Shinzo Abe in the role of ‘shadow shogun’.

The election result also proves that Japan is not yet ready for a female leader. However, this year’s election was an improvement on gender terms, having featured two women candidates out of four – former Internal Affairs Minister SanaeTakaichi and former Communication Minister Seiko Noda.

Unlike many democracies, in Japan, it is not the general election but the leadership election of the LDP that decides the leadership of the country. Since its establishment in 1955, LDP had been in power throughout except for brief periods between 1993-94 and 2009-2012. Considering the fragile state that the Japanese opposition finds themselves in today, for all practical purposes, it makes sense to look into the factional debates and competition within the LDP to understand the dynamics in Japanese politics.

The leadership election took a dramatic turn in early September, following the surprise announcement of PM Suga, that he is not seeking a second term. In the first round of the election in which both LDP Diet members and party workers voted, Kishida came on top with one vote ahead of Kono, while Takaichi and Noda came third and fourth. As no candidate could get a clear majority, the contest went into a run-off between Kishida and Kono, during which the former secured a clear victory. 

Four important factors that will have long-term implications for Japanese politics were at play in the election. First, the results meant a victory for the conservative elements of the party over the reformist. While more appealing to the public and the party workers, Kono, who is known to be a maverick in Japanese politics, has not been the favourite of the party’s old guard. He represented a platform that called for reform within the party and radical change in the policy direction of the government. His support for LGBT rights, separate surname for married couples, pension reform and review of the nuclear energy policy is considered ‘too’ reformist even for LDP’s moderate conservatives. On the other hand, Kishida, who stressed stability and continuity without directly challenging the directions set by the ‘Abe/Suga administrations’ over the last decade, had no difficulty getting the backing of party elders.

Initially, after young lawmakers of the party rallied around free voting, it was widely anticipated that it would weaken the power of factions, thus benefitting Kono, who is popular among the new generation lawmakers. Therefore, Kono’s defeat also implies the limitation of the generational change in Japanese politics and the staying power of the factions led by veteran politicians. 

Third, election results highlight the political genius of Shinzo Abe and the influence that he will command as the kingmaker in the Kishida administration going forward. By offering his support to the hardliner Takaichi, who was considered as an outlier in the early phase of the campaign, Abe significantly changed the political equations. The move was critical in stopping Kono from gaining a clear majority in the first round and pushing the contest into a run-off.

Fourth, policy debates during the election also reflect LDP’s shift towards a more hard-line approach on defence and national security issues. However, Kishida, who used to call himself a ‘dove’ on foreign and security matters, styled himself as a realist and pragmatist to woo the party hardliners.  With Kishida taking a more hawkish approach to China, revision of the constitution and the need for Japan to acquire first-strike capability, Kono appeared to be soft. For Kishida, who assumed power on 4 October  during an emergency session of the Diet as the 100th Prime Minister of Japan, the immediate task is to steer the party to victory in the lower house election scheduled for next month. This will be crucial for him to seal his position as the party head and the prime minister for the next three years and to forestall Japan heading into a new phase of political instability.

A key component of China’s strategy in the Taliban-ruled Afghanistan is to make the Indian role “inconsequential”

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Hemant Adlakha, Associate Professor, Jawaharlal Nehru University, and Vice Chairperson, Institute of Chinese Studies

Image: Afghanistan News – China-Pakistan-Taliban nexus
Source: youtube.com

What does China-Taliban “bonhomie” in a Taliban-ruled Afghanistan indicate for India? Numerous speculative analyses have been voiced in the past few months in India, and many more will follow in the coming days. So far, disappointingly, the usual cliched, routine and unimaginative interpretations are being offered, i.e., now is the time India should discard its policy of non-alignment; in addition to the Taliban takeover, a friendly, pro-Beijing Taliban is not only a foreign policy setback but also a blow to India’s national security concerns; it will mean India being pushed into deeper conflicts with both Beijing and Islamabad, and so on.

Let us view the real situation from another perspective. How should India measure China’s advantage(s) under a pro-Beijing regime in Kabul? Should India be anxious/concerned over the so-called China, Russia, Iran and Pakistan ‘new Quad’? Why is there a broad consensus among China’s scholars that an “ambitious” India must be rendered “inconsequential” in an Afghanistan full of uncertainties? Why are analysts in Beijing asserting that because Afghanistan is a small part of India’s strategy, the US folly in Afghanistan will not deter New Delhi from going ahead and upgrading relations with Washington into “a quasi-alliance relationship”?

Following the chaotic US troop withdrawal from Afghanistan, there has been a “tsunami” of editorials, op-ed pieces and commentaries in the Chinese offline and online media. Interestingly, on the popularity scale, the opinion pieces written by the Chinese scholars and analysts have been in the range of 10,000 to over 100, 000 clicks. Indeed, most of these articles and opinion columns are focused on or highlight the rapidly changing political situation and the stakes for China under the Taliban-ruled Afghanistan. However, a few weeks ago, an article uploaded on the website of the popular digital guancha.cn showed a surprisingly and unusually large number of clicks – as high as close to 400,000! 

Image: Afghan Taliban on China’s side: should India be worried?
Source: thequint.com

What attracted such a huge number of readers to the article? Possibly, two factors. First, the popularity and huge-swell of readership for its author – Francis Fukuyama; second and more important reason is the title of the article in the Chinese version: “Biden says US troop withdrawal is to prepare to better deal with China and Russia Challenge. I hope Biden is serious.” The Chinese translation of Fukuyama’s write-up was based on his article in the Economist, three days before, titled “Francis Fukuyama on the end of American hegemony.” The article in Chinese also generated over six hundred “comments” from the readers – an unusually high number.

Interestingly, just like Fukuyama’s commentary attracted reactions from the Chinese readers from wider society, within hours of the US completing the withdrawal, an article entitled (in Chinese) “India suffers a severe strategic blow in a changing Afghanistan” clicked nearly 200,000 visitors. Edited by guancha.cn staffer Chen Sijia, the article in Chinese was based on an Indian analysis by a former Lt. Gen. on a digital news and current affairs platform, entitled “India backed the wrong horse in Afghanistan, and has gone into a strategic sulk now.” The Indian analysis claims “India’s actions in Afghanistan stem more out of pique for the triumph of radical Taliban and its mentor Pakistan, and less due to the lack of strategic options.”

However, the guancha.cn picked up theIndian article for entirely different reasons – reasons perhaps India’s strategic affairs or China-watcher community are yet to pay attention to.

Image: Afghanistan crisis: Taliban and China nexus threatens
Source: theweeklymail.com

First, though true that after the US initiated the peace talks with the Taliban in Doha in 2018, all major countries involved in Afghanistan except India have engaged with the Taliban to safeguard their respective interests. However, not unsurprisingly, as soon as Washington disclosed President Trump was contemplating a possible full troop withdrawal from Afghanistan, Beijing instantly swung into action and began holding consultations with Islamabad on its future Afghan strategy. A sputniknews.cn editorial (in Chinese) had then commented: “Following reports in the US media of the [Trump] administration planning to vacate half of its 14,000 forces in Afghanistan, the US plan to withdraw troops has emerged as a major agenda for China and Pakistan.” 

Second, in December 2018, Hua Chunying, the Chinese spokesperson denied at a routine foreign ministry press briefing that the hurriedly called meeting between the foreign ministers from China and Pakistan in the Chinese capital Beijing was to discuss the issue of the US withdrawal from Afghanistan. However, she did admit the two foreign ministers met to deliberate on the “most recent changes” in Afghanistan. It is pertinent to mention, China has since been proactively and carefully recalibrating its moves – primarily aimed at safeguarding its investments and ongoing project in region, especially in Pakistan’s CPEC (China Pakistan Economic Corridor) region – together with Pakistan and both the Taliban forces and the Kabul government. As it was revealed in a recent report in the semi-official Global Times, “The all-weather strategic cooperative partnership between China and Pakistan enabled the two countries to act in coordination on the Afghan situation, bringing about positive changes to the region.”

Third, it is important to point out what are key components in China’s strategy to safeguard its investments in Af-Pak border region and in the CPEC under the Belt and Road Initiative? Two factors. First, to keep India out of Afghanistan; second, if at all India manages to adjust its policies and restores contact with the Taliban, make the Indian role under the Taliban ruled Afghanistan inconsequential, as was observed by a now retired senior PLA colonel in a guest column in the NYT. Marginalizing India in the post-US era Afghanistan will result in more than one advantage for China. Namely, the Indian opposition to BRI’s signature CPEC initiative will become totally ineffective; this will further facilitate China to smoothly expand Beijing’s efforts in financing and building infrastructure across the region, which in turn will extend the Belt-and-Road access to markets in the Middle East; and given the tense relationship between India and Pakistan, the Taliban-Pakistan-China “troika” will ensure India is not allowed to create trouble in both Pakistan’s troubled Baluchistan region and plot and execute terrorist strikes especially targeting the Chinese construction projects and the Chinese personnel, as both China and Pakistan have been accusing India of “engineering” recently.

Talibs call China ‘friend’ as Beijing-Islamabad-Taliban nexus cements in Af
Image: English.lokmat.com

It is in this backdrop, the increased relevance of the Taliban commitment made to Beijing recently must be understood. At the same time, it is important to note that Beijing has already started downplaying the significance of the recent meeting between the Indian ambassador to Qatar and Sher Mohammad Abbas Stanekzai, the head of the Taliban’s Political Office. Reacting to the outcome of the meeting held in Doha on last Tuesday, a news daily in Beijing commented: “No information suggests that the Taliban has shown [to India] the sort of goodwill it has demonstrated to China.” 

Furthermore, a Taliban spokesperson Muhammed Suhail Shaheen told media earlier that “if India comes to Afghanistan militarily and has presence there, that will not be good for them.” Furthermore, Qian Feng, director of the research department at the Beijing’s prestigious Tsinghua University has said in an interview: “India’s past strategy has pushed itself into embarrassment. It cannot make a U-turn in its Afghan policies, neither can it cast aside geopolitical influence of the US and its Western allies.”

Standing up to China-Pakistan nexus
Image: openthemagazine.com

Finally, in Beijing’s view, India must blame itself for the mess it is in following the chaos left behind by the US in Afghanistan. According to the Global Times, if India designs its regional policies simply on the basis of countering China or pandering to the US, these policies are bound to fail. Lan Jianxue, head of the Department for Asia-Pacific Studies at China Institute of International Studies, told the Global Times “To some extent, this is going to jeopardize India from keeping influence in the region.”          

This article is revised version of an earlier write-up published by the web edition of the Indian Defense Review

China’s Journey to Vaccine Hegemony

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Swapneel Thakur, Research Intern, ICS

Source: Wall Street Journal, 2021

Since the beginning of the COVID-19 pandemic, China has continued to control the spread of the virus, successfully and effectively. A country of 1.4 billion people, more than the combined the populations of Europe and the United States, has been reporting some clusters of cases and has been able to prevent widespread community transmission. Although much of this success could be attributed to its experience gained from the SARS Epidemic in 2002, China’s disease control strategy featured a balanced combination of both prevention and protection.

Soon after COVID-19 first emerged in December 2019, Chinese scientists were able to identify the virus and share the genome sequencing data internationally. By the end of the January 2020, Chinese doctors had already categorised the clinical symptoms of COVID-19 patients, risks of person to person transmission, genomic characteristics, and the epidemiology. This robust foundation of research was backed by political commitment from the very top to use science to tackle the outbreak decisively. For instance, China’s National Health Commission sent three groups of national infectious disease experts to Wuhan at the beginning of the outbreak to investigate the risks and transmissions of the virus, to which their recommendations for a lockdown immediately implemented. The government was also quick to respond to the advice given by academic scholars such as Cheng Wang, the President of the Chinese Academy of Medical Sciences. His idea of Fangcang shelter hospitals, or temporary hospitals built by converting existing public facilities like stadiums became a key strategy for promptly providing large number of hospital beds and appropriate health care to patients suffering from the disease. However, its prevention control strategy would not have been possible without the broad range of community engagements and solidarity that was seen at an unprecedented level during the COVID-19 outbreak. Control measures that could curb individual freedoms like mandatory wearing of mask in public areas and social distancing were readily accepted by the public, unlike in the Western countries where anti-masking and anti-lockdown protests were quite common. Thus, after achieving the primary objective of limiting the spread of the virus, China’s next strategic goal was to successfully balance these immediate challenges with preventive measures, namely, providing safe and effective vaccines for protecting the population from further infections.

While the US and most Western countries followed a market driven model based on advanced purchase agreements, China adopted a state driven model which leveraged both political mobilisation and the use of economic instruments. Responding to an outbreak of a new infectious disease by solely relying on market mechanism can be expensive, besides being fraught with risks. Furthermore, market-based solutions could increase the probability of slowing down vaccine research due to high levels of uncertainty. For instance, despite having early access to the virus’s genome, several Western pharmaceutical companies continued to dedicate greater share of resources to develop lucrative treatments for existing chronic diseases such as cancer than to counter this infectious disease which could have global ramifications. Janssen and Pfizer’s COVID-19 vaccine research began only when large scale infection was imminent in Western countries during late February.

With vaccine research starting as early as in January 2020, China’s Ministry of Science and Technology (MOST) had already launched emergency research projects by February to accelerate vaccine development. It went on to sponsor five technological roadmaps and 12 vaccine candidates that included private sector giants and nascent start-ups. In order to coordinate policy goals across agencies and to mobilise resources promptly, the government had also established a COVID-19 Task Force comprising senior officials from the National Medical Product Administration (NPMA), the MOST and other concerned departments. The Task Force was affiliated to the Joint Prevention and Control Mechanism of the State Council and reported directly to the Vice Premier of China. Under the Task Force’s direction and guidance, the vaccine research program featured multiple players collaborating to maximise their joint performance. For instance, due to the long-standing relationship that the MOST shared with domestic pharmaceutical companies, the Chinese Government was quickly able to identify enterprises that were capable of developing COVID-19 vaccines during the public health emergency. These enterprises were then supported with efficient allocation of resources required for vaccines development across the Chinese Academy of Sciences, universities, the army and the state-owned enterprises. In addition, the Task Force had also directed the NPMA to modify its procedure in accordance with China’s Vaccine Administration Law to streamline the inspection and review process for vaccines and accelerate market approval.

As of now, four vaccines have been approved in China and in at least one foreign country. Sinopharm’s BBIBP-CorV, Sinovac Biotech’s CoronaVac, CanSino BIO’s Convidecia and ZhifeiLongcom’s ZF2001 make up the most of China and its allies arsenal in the fight to defeat COVID-19. The World Health Organisation (WHO) had also given emergency approval to Sinopharm vaccine in May and the Sinovac Biotech vaccine in June 2021 With the help of government resources and institutions such as Chinese Academy of Sciences and Academy of Military and Medical Sciences, Chinese manufacturers had already started increasing production capacity when the vaccines were in early stage of development. As early as in April 2020,Sinopharm had established production lines in Beijing and Wuhan with an annual capacity of 300 million doses and with plans to eventually export 300 to 500 million doses to over twenty countries. Similarly, Sinovac and CanSinoBIO increased their production capacities to 300 million and 200 million doses respectively. This explains why Chinese companies have been very optimistic about reaching an annual production capacities of more than a billion doses in 2021. For instance, earlier this year both Sinovac and Sinopharm had declared that they were capable of producing more than a billion doses annually. This expanded capacity has allowed China to meet huge domestic demands as well as to fulfil orders from abroad. With Chinese vaccine developers conducting Phase III trials in various countries in Asia, Latin America and Africa, China has emerged as one of the leading suppliers of COVID-19 vaccines in the world.

Such vaccine developers would usually collaborate with local pharmaceutical companies or health departments which helped recruit volunteers, coordinate physical and institutional resources and conduct trials in return for preferential pricing, delivery time and technology transfer. This led to China extending support to more than 80 developing countries. The government has been actively encouraging companies to export independently to other countries in its effort to ensure sufficient supplies of COVID-19 vaccines. Some of the agreements entered into by Chinese companies included an additional clause stating that if a local pharmaceutical company has hosted the clinical trial, the country itself is designated as partner in manufacturing and distributing vaccines for domestic use and export. This explains why China has been supporting overseas production bases of its vaccines in countries like Brazil, UAE, Egypt, Indonesia, Turkey Mexico and Pakistan. While UAE would be producing Sinopharm’s vaccine under the name of Hayat Vax, Brazil, Indonesia, Turkey and Egypt have been manufacturing Sinovac Biotech’s vaccines. Mexico and Pakistan have also started producing CanSinoBIO’s vaccine via an exclusive production line in their respective countries.

As one of the major producers of COVID-19 vaccines in the market, China has reshaped its position as a supplier of affordable vaccines to several developing countries in the world. By investing in research and production capabilities right from the early days of the pandemic, Chinese companies have not only taken major steps to mitigate the severe shortages of vaccines in the developing world but has also provided a viable alternative to expensive vaccines offered by pharmaceutical giants like the Pfizer and Moderna.

The author is thankful to his mentor, Dr. BiswajitDhar, Professor, Centre for Economic Studies and Planning School of Social Sciences, Jawaharlal Nehru University.The views expressed here are those of the author(s), and not necessarily of the mentor or the Institute of Chinese Studies.

E-RMB: A Challenge to Mitigate Trust and Surveillance

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Kunal Nitin Timbalia, Research Intern, ICS

Source: China-briefing.com

Digital RMB (hereinafter, E-RMB) is the digital version of China’s paper currency, the conversion of physical currency into a digital form. In the last 40 years, China has rapidly developed and transformed its economy into the second-largest economy globally. China wants to enhance this economic status and aspires to become the largest economy in the world. To achieve the goal, China is working with great perseverance on all fronts of the economy. The digital currency is one such examples. Since 2014, the People’s Bank of China (PBOC) has been exploring the chances of digitization of RMB to boost their economy. 

E-RMB is issued by the PBOC and is mainly a substitute to physical currency and will coexist with it. Further, the purpose and use of E-RMB are divided into two kinds: wholesale and retail. Wholesale E-RMB is mainly issued to institutions like commercial banks and would primarily serve large value settlements. On the other hand, retail E-RMB is issued to the public for daily transactions. E-RMB is a legal tender, individuals in China cannot refuse it and the PBOC facilitates its issuance.

Between 2014 and 2016, the PBOC formed the digital currency research group and initiated their research on the concept of E-RMB. In 2017, the PBOC started the E-RMB development project. In this project, large commercial banks, telecom operators and internet companies with high technological development were selected to participate and help the PBOC develop and test E-RMB. At the end of 2019, PBOC launched E-RMB pilot programs in Shenzhen, Suzhou, Xiong’an and Chengdu. In 2020, Shanghai, Hainan, Changsha, Xi’an, Qingdao and Dalian were also included in the distribution of E-RMB. PBOC’s Whitepaper titled “Progress of Research & Development of E-CNY in China” confirms that, as of 30 June, 2021, E-RMB has been applied to over 1.32 million scenarios, covering utility payment, catering service, transportation, shopping, and government services. If all goes according to the plan, it is predicted that China would become one of the dominant economies to offer a national digital currency.

As the usage of digital currency is rapidly growing, the circulation of cash in retail payments has been on a decline. E-RMB gives the advantage to people who do not have bank accounts in Chinese banks; for instance, foreigners travelling to China can open E-RMB wallets to use for daily transactions without opening a domestic bank account. E-RMB will help the citizens with a new compatible way of payment and diversify modes of payment and make the transactions more efficient and safer. China also aims to use E-RMB in cross-border payments to promote RMB internationalization. In 2020, with more than 750 million people in China purchasing consumer products online,  as per Goldman Sachs, E-RMB could be used by one billion people in the coming decade.

In the recent white paper of PBOC, ‘managed anonymity’ has been proposed as an extra security measure. PBOC while explaining the – ‘managed anonymity’ concept, stated that; “E-CNY follows the principle of anonymity for small value and traceable for high value, and attaches great importance to protecting personal information and privacy.” That means the small transactions will be anonymous and significant transactions will be traceable. Further, PBOC explains that to comply with the requirements of Anti-money laundering, it is vital to guard against the misuse of E-RMB such as tele-fraud, internet gambling, money laundering and tax evasion.

In the current times, Chinese consumers are increasingly using third-party mobile and online payment platforms. PBOC controls these transactions and data. But now through E-RMB, PBOC will have intensive control over all sorts of transactions. While PBOC monitors all the private sector transactions, the private sector has relatively low trust in privacy protection in anonymous payments.  Research shows that mobile users in China are worried about sharing excessive personal information through digital wallets.

The E-RMB might facilitate the Chinese government to integrate data, collect and generate more detailed pictures of individual users’ buying patterns. It will help the Chinese government to identify patterns in financial transactions. Hence, E-RMB may allow the Chinese government to use it for public surveillance. Further the government may collect data of its citizens residing abroad or businesses that will use the E-RMB. China already has authoritative surveillance with facial recognition technologies, big data analytics technologies, and artificial intelligence.

The Chinese government reportedly carries out surveillance of all the Chinese citizens indiscriminately. As the users of E-RMB will be sharing personal data with the regulators, it becomes easier for the government to carry out surveillance. It is observed by the Washington Post that,  as part of the social credit system, the Chinese Communist Party (CCP) blacklists untrustworthy individuals, and the E-RMB could be connected to this system. The use of E-RMB may give more power to the government and can monitor users. As PBOC argues, if they find any E-RMB or account involved in suspicious transactions they can immediately freeze the account. The Chinese government also claims that post-pandemic; E-RMB will help improve the money supply and boost their economic recovery.

In today’s technologically advanced world, where data plays a critical role, the state controls citizens’ data; and can use it for its benefit – to govern or control. Since China has acclaimed technological superiority in data surveillance, the government can trace all the transactions carried through E-RMB. Moreover, China’s aim to internationalize E-RMB may have larger security impact. The E-RMB may help the Chinese state to carry out scrutiny of data at an international scale as well. The issue here is the trust, and the question to be investigated further is: how the Chinese government mitigates this problem in the coming future.

The author is thankful to his mentor, Aravind Yelery, Senior Research Fellow (Associate Professor Grade) at the HSBC Business School, Peking University, Beijing/Shenzhen, for his invaluable guidance and support in writing this article. The views expressed here are those of the author(s), and not necessarily of the mentor or the Institute of Chinese Studies.

How Nepal Turned to China to Fill its COVID-19 Vaccine Shortfall

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Shreha Gupta, Research Intern ICS

Image: Vaccine diplomacy and Nepal
Source: Griffith Asia Institute

Nepal’s vaccination drive against COVID-19 began on 27January, 2021 with the Oxford-AstraZeneca vaccine manufactured by the Serum Institute of India (SII) under the brand name Covishield. The campaign was launched with the one million doses of Covishield that India had provided under grant assistance in sync with its ‘Neighbourhood First’ Policy and ‘Vaccine Maitri’ Initiative.

On 17 February, 2021, Nepal signed a contract with SII and made the advance payment to procure two million doses of Covishield, out of which only a million doses were delivered.  According to a report by Reuters, India had put a temporary hold on all major exports of the AstraZeneca Coronavirus shot made by SII to meet rising demands at home amid the raging second wave of Coronavirus. The second phase of the vaccination drive that began on 7March, 2021 was left in limbo, despite the country becoming one of the first in the world to launch the campaign.

However, India denies that restrictions were imposed on vaccine exports and maintained that it was trying to prioritise the demand at home. “India has not enforced any restrictions on exports of Covid-19 vaccines,” said Arindam Bagchi, spokesperson for the Ministry of External Affairs of India during the weekly press briefing on 2April, 2021. “We will export vaccines taking into account the domestic demand”, he added.

Following the inability expressed by SII to provide vaccine until the end of this year, the COVAX facility which is a vaccine pillar of the Access to Covid-19 Tools (ACT) Accelerator in partnership between Coalition for Epidemic Preparedness Innovations (CEPI), the Global Alliance for Vaccines and Immunization (GAVI), UNICEF and WHO, suggested that Nepal should explore appropriate alternatives apart from the Covishield vaccine.

Nepal began looking towards China to fill its vaccine shortfalls amid uncertainty over COVID-19 vaccine supplies from India. China had donated 1.8 million Covid vaccines developed by Sinopharm in two different grants of 800,000 doses and 1 million doses. On 29March 2021, Nepal received China-gifted 800,000 doses of vaccine as per the commitment of providing 500,000 doses made on 5February 2021 during a telephonic conversation between the foreign ministers of China and Nepal. Later, China decided to provide an additional 300,000 doses which increased the grant assistance of the COVID-19 vaccine for Nepal to 800,000 doses.

On 1June 2021, Nepal received another consignment of 800,000 doses of Vero Cell vaccine developed by the Chinese state-affiliated pharmaceutical giant Sinopharm, out of the 1 million doses of vaccine which were earlier announced to be provided on a grant basis as per the commitment made during a telephonic conversation between presidents of the two nations on 26May, 2021. The remaining 200,000 doses of the Vero Cell vaccine has been provided to Nepal by the Government of the Tibet Autonomous Region of China, Nepal’s Ministry of Foreign Affairs stated in a release.

Nepal has also bought four million doses of the Vero Cell vaccine from China under an agreement with a non-disclosure clause, of which 800,000 doses have been received on 9 July 2021. On 16July, Hou Yanqi, Chinese Ambassador to Nepal informed the newly-appointed Nepalese Prime Minister Sher Bahadur Deuba that China will provide additional 1.6 million doses of the COVID-19 vaccine to Nepal in grant assistance. With this announcement, China has become by far the largest vaccine donating and exporting country to Nepal.

Ashok Pandey, Associate Research Fellow in Policy Research Institute mentioned in his Research Report that vaccine donations made by India helped to strengthened Nepal-India relations but the delay in the procurement thereafter and news of corruption in vaccine procurement began to reverse the gains. He also mentioned that the gesture of one million vaccine donations from China was widely appreciated in Nepal at a time when the country was in dire need of the vaccine.

Beijing’s vaccine diplomacy will benefit its competition for influence in South Asia where India has traditionally been the dominant power. According to an article published in Voice of America (VOA), analysts have pointed out, “China moves in to fill the gap left by India, Beijing’s “vaccine diplomacy” could give it leverage in the strategic Indian Ocean region, where it has been pushing its Belt and Road initiative that aims at building infrastructure projects across many countries”.  

Michael Kugelman, the Deputy Director of the Asia Program and Senior Associate for South Asia at the Wilson Center pointed out that China views its vaccine diplomacy as an image-building tactic and India’s suspension of vaccine exports is a strategic opportunity for China.

In his article published in The Himalayan Times, retired Nepali Army lieutenant colonel Ashok Kumar Khand mentioned that the economic giants like India, China and the United States are “trying to regain a foothold in the countries of their interest or influence in the name of humanity through vaccine donations”. According to him, “the vaccine donation gives China a key to deter India’s monopolistic political influence over Nepal, counter the Indo-Pacific Strategy of the United States and the QUAD policy, and push the ambitious BRI project forward”. He added, “Winning the Nepali sentiment for India, aligning the Nepali view with that of India against China’s expanding influence in South Asia, including the Belt and Road Initiative (BRI), and control of Nepali politics from behind the curtain could be the hidden agenda behind India’s vaccine diplomacy”.

Prime Minister Narendra Modi held a telephonic conversation with Prime Minister Deuba on 19 July 2021 and assured early supply of covid vaccine to Nepal but India’s image as a vaccine-giving nation and its soft power gains has been dented and could be further damaged if there is a long delay in exporting vaccines. As the world’s largest producer of vaccines, India is expected to ramp up enough capacity to resume vaccine deliveries to other countries in addition to meeting the requirements at home. Michael Kugelman pointed out that New Delhi has the opportunity to reassert itself further down the road and India has an inherent comparative advantage over China because it is the world’s top manufacturer of vaccines. Another advantage India’s locally produced vaccine has over Chinese vaccines is its affordability. Although the price of the Chinese vaccine has not been disclosed owing to the non-disclosure clause, it is said to be around $10 per dose whereas, Nepal bought the jabs from the SII at $4 per dose.

India had an early movers advantage because it moved in with the commitment of initial large supplies but it lost ground due to the inability to provide vaccines either on a grant basis or fulfil commercial commitments made by SII. Nepal gave priority to vaccines produced in India because of reasons like, logistics, pricing, existing storage and transportation facilities in Nepal and India’s assurance to facilitate procurement but India’s inability to provide vaccines have created a vacuum that was filled in by China. According to Harsh Pant, Director Studies and Head Strategic Studies program at the Observer Research Foundation in New Delhi, “Given that this crisis will be with us for the foreseeable future, certainly there is going to be a sense of China becoming a very important player for many of these countries if India is not able to pick up some slack after a few months once things stabilize”.

Nepal is still far from achieving the required inoculation for its population. According to the latest data (14th September 2021) of the Ministry of Health, 5243236 people or 17.4% of Nepal’s 30 million population have been fully vaccinated. The lost ground could still be retrieved if India can ramp up its vaccine producing capacities and resumes providing vaccines to Nepal. It will be in India’s interest to prioritize inoculating the Nepali population because the two countries share an open border and uninoculated people crossing the India-Nepal border on a daily basis could surge the coronavirus cases in both countries. In addition, India should also take lessons from the 2015 border blockade which pushed Nepal into China’s lap and be cautious about China’s attempt to fill the gap in vaccine shortage.

************************************************************************The author is thankful to her mentor, Ambassador Ashok K. Kantha, Director, Institute of Chinese Studies and former Ambassador of India to China, for his invaluable guidance and support in writing this article. The views expressed here are those of the author(s), and not necessarily of the mentor or the Institute of Chinese Studies.

Seven Months post-Coup, Decoding China’s Myanmar Policy

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Jelvin Jose, Research Intern, ICS

Image: President Xi Jinping meets with Myanmar Commander-in-Chief of Defense Services Min Aung Hlaing in Nay Pyi Taw, Myanmar.
Source: China Daily

Seven months have passed since the Tatmadaw (Myanmar’s military) under General Min Aung Hlaing captured power in a military coup on 1 February 2021. China is one of the few major countries that did not condemn the coup. The Chinese response has continued to be carefully crafted to evade damaging its core strategic, security, and economic interests. Beijing’s official stance from the beginning has been that the coup is Myanmar’s internal affair, and the international community should refrain from “inappropriate intervention” while respecting Myanmar’s sovereignty.

Chinese Response to the Coup

Despite the widespread international opinion against the coup, Beijing and the Kremlin intervened to block the United Nations Security Council’s (UNSC) attempted move to condemn the coup in the immediate aftermath of its occurrence. In April, Chinese State Councilor and Foreign Minister Wang Yi communicated with several ASEAN leaders such as of Malaysia, Indonesia, Philippines, and Singapore. Among the “Three Avoids” Wang emphasized to resolve the crisis were “inappropriate intervention by the United Nations Security Council,” undermining Myanmar’s sovereignty and external support to the popular unrest for “private gains” further stoking the crisis.

As per reports, the harsh language in a UNSC draft statement on Myanmar of March prepared by the U.K., including the direct reference to the coup and the threat of international action, was removed on the demands of China, Russia, India, and Vietnam. Similarly, on 18 June, China was among the 36 nations (including India and Russia) that abstained from voting on the UN General Assembly resolution against the overturn of Myanmar’s democratic government. The resolution was adopted by an overwhelming majority of 118 against one.  In August 2021, the Chinese State Counselor and Foreign Minister Wang Yi participated in an ASEAN video conference pledging humanitarian assistance to Myanmar. While expressing concern over Myanmar’s overall situation and supporting ASEAN’s efforts to find a peaceful resolution to the crises, Wang, who carefully refrained from mentioning the coup, steadfastly maintained the position that this was ultimately Myanmar’s internal affair.

Decoding Chinese Response: Beijing’s Policy Imperatives in Myanmar

Over the years, Beijing has been the most prominent economic, political and military support pillar of Myanmar’s military junta when that regime has attracted international outrage and isolation. Nay Pyi Taw’s decades-long international isolation and sanctions, and the junta’s consequent reliance on China have largely helped Beijing carve out a dominant space in that country (along with other factors too, no doubt). Nevertheless, Beijing’s interests in backing the military had somewhat reduced since 2011, mainly after it found an alliance of greater convenience with Suu Kyi. After all, the military has traditionally harboured deep suspicion about Beijing’s intentions concerning Chinese support to various Armed Ethnic Organizations (EAO’s).

Nay Pyi Taw’s international isolation resulting from the military takeover is likely to help China reduce the strategic and economic competition it faces and diminish strategic, border security, and economic challenges it has recently encountered from Myanmar’s increasing international engagements, particularly with the Western countries and U.S. allies whom Beijing see as foes. However, while considering the overall scenario, Beijing does not view the present military takeover as unequivocally conducive to securing its interests in Myanmar and thus it is unhappy about the coup.

Two major reasons lead us to such a conclusion. First of all, “stability” is at the core of Chinese interests in Myanmar. Although the fall of democracy does not matter for Beijing, the unrest, chaos, and subsequent instability resulting from the coup gravely threaten Chinese economic interests. A peaceful, economically vibrant, and stable Myanmar is necessary to reap the benefits of the already huge Chinese investments in Myanmar, such as in the Kyaukpyu port project and Kyaukpyu special economic zone. More robust international investments and resultant economic gains would, predictably benefit the Chinese infrastructural and connectivity projects, even though, Beijing may not politically welcome investments from rivals such as Japan and India. In addition, the coup has also brought in the additional risk of alienating Myanmar’s civilian population as some popular sentiment has turned against Beijing for backing the military takeover.

Secondly, the coup does not provide any significant strategic or security advantages to Beijing but erodes them to some extent. Myanmar’s generals remain well aware of how crucial Beijing’s tacit support for them to remain in power. Thus, they may well try to please the Chinese leadership, by showing them the coup has not damaged Chinese interests in the country and that the military rulers remain highly accommodative of its interests. However, the present military leaders do not seem to be granting Beijing the degree of strategic and economic leeway in Myanmar that it had been receiving from previous military rulers. This is particularly true in the light of the fact that countries such as Japan, South Korea, and India have also remained unwilling to sever ties with Myanmar’s military regime.

Meanwhile, the continuing political instability and chaos in the country puts China’s border security – one of Beijing’s crucial objectives in Myanmar – at risk. China is wary of the prolonged political unrest in Myanmar as it fears that it would provide an excuse and opportunity for its rivals such as the U.S. and its allies to continuously interfere in Myanmar in a way that Beijing believes may risk China’s national security. This is of particular concern for the Chinese leadership considering China’s porous border with Myanmar in the Yunnan province.

Beijing knows very well that the Tatmadaw is a fiercely nationalistic organization, suspicious of China’s engagements and backing to the EAO’s, which the military sees as a peril to the country’s unity and integrity. Although the coup has increased Tatmadaw’s reliance on Beijing for tacit political and military support, which no other country except Russia is able to provide at the moment, Beijing is aware that the Tatmadaw will not hesitate to play Beijing against its other rivals like New Delhi or Tokyo if necessary. On the other hand, the partnership with the civilian government under Suu Kyi had, over time, become more convenient for Beijing than it had expected. Dealing with the civilian government also was helpful for Beijing to evade international criticism and image loss from backing the military.

Beijing equally looks forward to the return of a post-coup democratic mechanism if possible since the Chinese leadership also sees such an arrangement as more facilitating to the achievement of its interests. However, China’s tacit backing to the Tatmadaw leadership is aimed at damage limitation. Beijing does not want to sponsor democracy in the South East Asian country at its cost. Instead, China actively encourages ASEAN’s efforts to restore peace and democracy in Myanmar. Through this, Beijing intends to send a message that it is in support of Myanmar’s democratic transition. Moreover, Beijing, which views the U.S. and Western engagement with Myanmar as a threat, does not have such levels of threat perception regarding ASEAN. Altogether, China’s Myanmar policy today is guided by the sole mantra of best securing its own medium-term national interests.  

The author is thankful to his mentor, Ambassador Vijay K. Nambiar, former Ambassador of India to China and UN Secretary General’s Special Advisor on Myanmar, for his invaluable guidance and support in writing this article. The views expressed here are those of the author(s), and not necessarily of the mentor or the Institute of Chinese Studies.