China is considered as the world’s manufacturing powerhouse. China had been successful in building infrastructure supporting world corporations to make their products in the country. Over time, the world’s leading companies have shifted their manufacturing assembly lines to China. Also, the home-grown manufacturing industry in China is itself quite big. China is successful in manufacturing and exporting a whole range of products from simple electronics to complex machineries.
According to Yue and Evenett (2010), China attracted huge FDIs between 1979 to 2007 of which 70 per cent went to the manufacturing industry. The concentration and development of the global value chains of all industries, including the high-tech industry, on the eastern coast of China have boosted the country’s exports, resulting in the “Made in China” phenomenon.
Multinational corporations such as Siemens have set up facilities for assembly and manufacturing of many of its products including high-end medical equipments such as CT Scanners for their South Asian market in China, taking advantage of low manpower cost and good connectivity networks. A world-renowned instrumentation company such as Yokogawa of Japan, manufactures and exports their meters and oscilloscopes from China. The Chinese are considered to be good with reverse engineering capabilities, which have helped grow a lot of domestic manufacturers across industrial sectors.
China’s market for capital goods and spares in Eastern India
The Chinese machineries and capital items occupy the top of India’s list of imports from China valued at US$ 19,103(2019-20). Unlike China, the global multinationals are more focused on making India a marketing hub for catering to the huge domestic market of India and South Asia rather than India being a global manufacturing destination. Thus, India’s manufacturing capacity for capital goods like other high technology products is low.
In Eastern India, where there is dearth of both capital and new industries, China has successfully filled the vacuum to some extent with its cheaper and competitive products and industrial solutions. According to a survey conducted by the author, traders and businessmen are of the view that there could be further enhancement of Chinese market in this part of the country if the Chinese companies could set up manufacturing and assembly lines for their products – both capital goods and spares in Eastern India. China has made considerable inroads into the industrial market in Eastern India both for high value capital goods as well as low value tools and spares. However, there is dearth of specific data on import of capital goods and spares parts from China by the industries of Eastern India, so this assumption is based on practical experience and field survey as illustrated in Table 1. According to some of the users interviewed from these industries, the satisfaction level of the industrial customers and the value for money proposition is good for Chinese products and their installations. The traders interviewed are of the opinion that easy loan and financial credit facilities are available for buying Chinese machineries. Companies such as Donfang Electric Corporation doing power projects have also set up offices in Kolkata to oversee their projects, marketing, and customer services, etc. The traders are vocal about dealing with China’s ease of doing business. According to them, it is easy to get dealership of Chinese companies and start doing business with them, and Chinese manufacturers are also prompt in responding to trade or dealership enquiries.
Eastern India is primarily a mineral rich belt of India producing steel, ferroalloys, power, etc. Earlier, most of the installations in old plants had been of Russian, US or German technology, but now most of the plants, particularly those built on private investments are using Chinese technologies (Refer Table 1). Even in many of the tenders called by the central and state PSUs*, Chinese companies are the lowest bidders and many of them are ordering Chinese products.
Just like industrial installations of capital goods in Eastern India, Chinese manufacturers have made considerable penetration into the market for low-end manufactured products, tools and spares. The trading communities in Kolkata and other places import Chinese products at lower price and sell them in the market at a premium and make considerable fortune. The result of the survey of a leading bearing trader in Kolkata is put up in Table 2.
Present Situation
The military standoff situation like the recent Galwan Valley clashes and its aftermath creates anxiety among the trading and industrial community, which affect business sentiments. As the Chinese influence is currently highly embedded in Indian economy, trade and commerce, complete decoupling may be expensive for India especially in the present Covid-19 pandemic scenario. However, though decoupling is tough, at the same time it is not possible to entirely ignore border and security issues in the face of economic or business considerations. Thus, India needs to look at economic growth with leverage on China.
Conclusion
Chinese economy (about US$ 14 trillion) is much bigger than that of India (about US$ 3 trillion). India is home to 1.3 billion people (17 per cent of world population) but has only 3-4 per cent of the world GDP. Although the two countries try to co-operate on several international forums such as WTO, BRICS, G20 etc., strategic rivalry is visible. This shows that while there is an understanding on many common matters of concern, the two economic giants sharing a common boundary and geopolitical and historical landscape are often at loggerheads on issues of diverging interests, geopolitical and economic ambitions.
In view of the evolving world order during the pandemic, several multinational companies are looking to relocate their manufacturing facilities out of China. It may be an opportunity for India to pitch in and fill the void by offering incentives to these corporations as well as to Indian corporates for setting up more manufacturing facilities in east and northeastern parts of India, and other untapped industrial belts. This may also help in developing these deprived regions as new industrial pockets. If this happens, it would lead to overall growth and development of these regions and augment the value chains for the industries.
Shamshad A. Khan, Visiting Associate Fellow, ICS, New Delhi and Assistant Professor, Department of Humanities and Social Sciences, BITS Pilani Dubai Campus.
Weeks before a scheduled virtual India-Japan summit meeting, Japanese Prime Minister Shinzo Abe’s announcement to step down from the office citing his deteriorating health, have been received as a surprise and shock in India. As the ruling Liberal Democratic Party is engaged in electing Abe’s successor, it is unlikely that the meeting will be held on scheduled time. Ministry of External Affairs is also non-committal about the scheduled meeting. Irrespective of the cancellation of virtual summit meeting, Abe’s absence will be felt in India and especially the Indian strategic circles for a long time to come even though his departure is unlikely to derail the bilateral engagement process.
When it comes to India-Japan relations, Abe is regarded very high among the Indian strategic circles and media for strengthening the bilateral relationship. Undoubtedly, Abe has played a leading role in strengthening India-Japan relations during his previous short stint which ended in 2007 and during the present term which started in December 2012. He attached special importance to India-Japan relations much before he assumed the top post. While he was still serving as a Japanese Cabinet Secretary during Junichiro Koizumi’s regime, he envisioned in his most talked about book “Towards a Beautiful Japan” that in the coming decades India-Japan relationship will “overtake” Japan-US and Japan-China relations. He had developed deep emotional connect with India as we witnessed that New Delhi figured prominently in almost all his key policy strategies starting from confluence of the two Seas, (now evolved as Indo-Pacific) Asia’s Democratic Security Diamond and the Quadrilateral Initiatives envisioned in 2007 and revived in 2013. Why India was so special to Abe? Tomohiko Taniguchi an advisor to the prime minister and an speech writer for Abe once told this author that Abe spent his childhood with his maternal grandfather Kishi Nobusuke who held India in high esteem shared his memories of his India’s visit to Abe especially how India treated him when he visited India on his first overseas visit in 1957.
Indian Prime Minister Nehru offered Kishi Nobusuke a big platform to address a large gathering of Indian audience from the rampart of the historic Red Fort from where only the Indian Prime Ministers address to the nation on every Independence Day. At that time, the memory of Imperial Japan was afresh among the Asian countries and no Asian country was keen to give such a platform to a Japanese leader and Kishi Nobusuke was moved by this gesture offered by the Indian leadership. In a speech delivered at New Delhi based Indian Council of World Affairs in 2011, Abe noted that his grandfather’s visit to New Delhi before embarking on a US trip provided him much needed “political capital” to bargain with America with whom Kishi was going to renegotiate the revision of US Japan security treaty. While the Cold War politics dampened the chances of fostering a closer cooperation between India and Japan, Abe driven by the emotional connect and compelled by the strategic needs saw India as an inalienable partner in Japan’s National Security Strategies and Defense planning. Japan’s first National Security Strategy unveiled during Abe’s second term in September 2013 noted India’s ascendance and considered it as an important player to strengthen its relations “in a broad range of fields, including maritime security, through joint training and exercises as well as joint implementation of international peace cooperation activities.” Considering the fact that from Kishi to Koizumi, America was considered ‘first, second and third’ important country for Japan, the special importance Japan acceded to India during Abe’s period was considered as Japan’s acceptance of India as an important partner.
Abe, indeed, invested his energy to strengthen India-Japan relations when he assumed office after Koizumi left the scene soon after signing the bilateral Strategic Partnership in 2006 which gave much needed institutional backing to Japan’s relationship with the south Asian country. But he could not leave a mark on the bilateral relationship during his first stint as Abe held only one summit level interaction with the then Indian Prime Minister Manmohan Singh. In his second term in office, India-Japan relations progressed in a faster pace as Abe held seven summit level interactions with his Indian counterparts- two with Manmohan Singh and five with Narendra Modi. At the bilateral level, signing of the long pending India-Japan civil nuclear cooperation agreement, upgrading the ‘two plus two’ strategic dialogue to ministerial level, an annual Maritime Affairs Dialogue, an in principle agreement on Acquisition of Cross Services Agreement which will give a fillip to bilateral defense cooperation, signing the contract to lay first Shinkansen project between Mumbai and Ahmedabad and upgrading the currency swap agreement to 75 billion US dollar are a few agreement during his last tenure which will be remembered as Abe’s legacy on India-Japan relations. At the multilateral level he pushed for a greater cooperation with India by identifying New Delhi as an important partner including in Asia Africa Growth Corridor, Indo-Pacific, UN Security Council reform
Since Abe has left a deep imprint on India-Japan relations, it is quite natural that Indian media and New Delhi is missing his presence and is speculating the fate of India-Japan relationship post Abe. In the past, similar concerns also came to the fore in 2009 from the Indian strategic circles, when Japan was undergoing a regime change and in Japan in 2014 when change of government was certain in India. Since the Liberal Democratic Party which has forged the strategic partnership with India in 2006 lost power to the Democratic Party of Japan (DPJ)-a party which sought to forge an equidistant security relationship between the US and China, it was believed that India-Japan relationship will be derailed. For those who believed that India-Japan relationship is a byproduct of a burgeoning US-India relations post Indo-US nuclear deal, it was quite natural to believe so. But belying those speculations, the DPJ showed keen interest in taking the bilateral relationship forward. In fact, the negotiation on the civil nuclear cooperation agreement started during the DPJ regime and a landmark Comprehensive Economic Partnership Agreement to uplift abysmal bilateral trade volume was signed. Similarly, when Manmohan Singh who is considered as an architect of modern India-Japan relations had various official meetings with Japanese government in the capacity of Finance Minister and Prime Minister of India, questions were raised about the fate of India-Japan relationship post Manmohan Singh. But the ruling Bhartiya Janata party continued the momentum in the bilateral ties and deepened it further. This is enough to suggest that India-Japan relationship enjoys a bi-partisan support both in India and Japan and will remain immune to the political changes at the domestic levels. Moreover, India-Japan relationship is no more personality driven as was the case during the Cold War period.
The bilateral relationship is much more “institutionalised” as both the countries have made a commitment in 2006 strategic partnership to hold a prime ministerial level meeting annually and it is evident that the change of government has not had any negative impact on the bilateral relationship. In addition to this, India-Japan relationship, thanks to the strategic partnership, is much more diverse. Apart from the bilateral level dialogues, they are engaged in various multi-lateral dialogues including on UN Security reforms, a quadrilateral dialogue involving US and Australia and two prominent trilaterals- JIA consisting of Japan, India and Australia and JAI-consisting of Japan, America and India. These bilaterals and multilaterals will continue to bind Japan and India together.
Moreover, most of the probable successors of Abe including Fumio Kishida, Shigeru Ishiba, Taro Kono, Toshimitsu Motegi and the top contender Yoshihide Suga have dealt with India in different ministerial capacities and India is no stranger to them. Even though Abe’s absence may be felt in India, Japan’s economic and strategic interest in India and the need to strengthen strategic partnership amid assertive China will not let the bilateral relationship go off the track.
The Made in China 2025 (MIC) policy was launched in May 2015 as an umbrella policy to develop ten high technology focussed sectors and convert China into a technological powerhouse. This came after increasing worries that China would lose its competitive edge over developed economies due to rising labour costs. A state led plan for ten years was released by Chinese Premier Li Keqiang to develop 10 key sectors: New information technology, Numerical control tools, Aerospace equipment, High tech ships, Railway equipment, Energy saving, New materials, Medical devices, Agricultural machinery, and Power equipment. It contained key performance indicators like R&D costs, patents, Manufacturing Competitiveness, Broadband penetration etc. to measure the performance of various sectors from 2015 to 2025.
The ‘Internet Plus’ policy launched in 2015 by Chinese Premier Li Keqiang compliments the goals of MIC2025. The ‘Internet Plus’ policy aims to integrate the internet with traditional industries and manufacturing sector. Some scholars in China have also touted the ‘Internet Plus’ policy as a key to handling overcapacity in Chinese manufacturing sector.
MIC2025 is believed to be inspired from Germany’s Industry 4.0 initiative. ‘Self-sufficiency’ is among the primary motivators behind this policy. Regulatory changes, state led financing, developing industry standards, industry-academia collaboration, international brand awareness, etc. are its other salient features.
The MIC2025 policy garnered significant international attention within geopolitical and economic circles mainly on account of it being representative of China’s ambitions. A host of concerns were voiced including discriminatory treatment of foreign bustiness, unfair trade practices, forced technology transfers, intellectual property theft, and security. For example, the 2017 IP Commission report estimates the cost of Chinese IP theft to be around $225 million to $600 million. The US also started investigations into technology transfer allegations and considered banning some Chinese companies over allegations of IP theft.
These fears are not new. Author Mara Hvistendahl in her book, ‘The Scientist and the Spy: Chinese industrial espionage and the atmosphere of fear in the West’ tells an intriguing story of industrial espionage by ethnic Chinese scientists in the US. Moreover, MIC2025 was not the first of China’s policies viewed with suspicion. More than a decade ago, China’s “The National Medium- and Long-Term Plan for the Development of Science and Technology (2006-2020)” was also criticised as “a blueprint for technology theft on a scale the world has never seen before.” The ambitious nature of the MIC2025 complimented with growing assertiveness in Chinese foreign policy under Xi Jinping added to the heightened insecurities of the Western countries.
The anxiety in the West, especially in the United States over this policy stems from multiple reasons. First, currently the US is a world leader in the high technology industry and innovation. The MIC2025 not only aims to move China up in high technology manufacturing ladder, but also aims to make China a world leader in research and innovation. Second, China’s rise to great power status does not bode well with the interests of the US. In 2018, National Security Strategy of the US termed China as a ‘revisionist state’. The Belt and Road Initiative (BRI) and the MIC2025 are key pillars of China’s ambition to become a great power on par with the US. Third, the strategic technology development aspect of this policy means China would be self-sufficient in the advanced strategic technologies. This in turn would strengthen China’s position in Asia and world as a security provider over which the US has had a practical monopoly since the end of the Cold War. Hence even though the MIC2025 aims primarily to develop high tech manufacturing, its geopolitical implications cannot be ignored.
In recent years, there have been reports of the Chinese government toning down the rhetoric on MIC2025. As a result, the MIC2025 does not appear much in official documents and media anymore. However, this does not mean that China has abandoned the project completely.
It can even be argued that the US-China trade war which began in 2018 was a manifestation of discontent frothing beneath the surface. The targeting of Huawei, which is also identified as a key company under the MIC2025, was perhaps not a coincidence. Perhaps due to these setbacks the Chinese premier Li Keqiang omitted to mention ‘Made in China 2015’ in his address to the opening session of National People’s Congress in 2019.
Does this mean MIC2025 is dead? Even if direct references to the MIC2025 have reduced, the spirit of the policy is still alive. Various aspects of the MIC205 policy are still active and the targets are being pursued.
First, a media analysis of Beijing’s response to the US pressure during trade war by Eliot Chen noted that “the fact that MIC2025 is being directly linked to Reform and Opening Up suggests that Beijing continues to attach significance to the plan, if not in name then in substance and spirit.” The author goes on to explain that even though the references to MIC2025 in media have almost vanished, the idea and inspirations behind the policy has not. To analyse this, he uses the two terms relating to MIC2025 ‘Indigenous innovation’ and ‘Core technology’. His analysis shows that there has been a significant spike in the in the use of term ‘core technology’ in second quarter of 2019.
Second, the 2019 speech of Li includes many aspects of the key industries envisioned for development under MIC2025 without mentioning the policy directly. The references to the “high quality manufacturing” and “boosting technological innovation capacity” point indirectly towards the goals envisioned MIC2025.
Third, the Ministry of Industry and Information Technology (MIIT) which is responsible for the overall implementation and coordination of the MIC2025 is still working towards the goals of the policy For example, the documents released by MIIT since 2019 till now include range of initiatives like “formulation and revision of 10 national standards” in communications industry, “Strengthening the Construction of Quality Brands to Support the High-quality Development of Manufacturing Industry”, “Declaring the Cities (Prefectures) with Stable Industrial Growth and Transformation and Upgrading in 2019”. Moreover, the newly appointed head of MIIT, Xian Yaquing is a technocrat who is expected to have control over licensing of new technologies like electric cars and 5G. Also, in the aftermath of COVID19, China aims to increase the domestic consumption to revive the economy. For example, in June 2020 Li Keqiang presented a work report to National People’s Congress (NPC) which refers to the push towards consumption including e-commerce facilities in rural areas. Tapping these previously untouched regions can provide a boost to the China’s manufacturers. These examples indicate the slow and steady move towards the larger goals of developing a high-tech manufacturing industry in near future, if not as envisioned under rhetoric and timeline of MIC2025
In conclusion, reducing the rhetoric on MIC2025 seems to be a strategy to pacify the US and divert the media attention from the overall goals of the policy. The post COVID19 world seems more determined to face the China challenge, whether it is the US or developing countries such as India. It remains to be seen whether China’s ambition to gain leadership in technology will survive these challenges.
The perception of the Persian Gulf countries about Iran has been built across two time frames – Pre and Post-Islamic revolution. The Pre-Islamic revolution Iran was seen as a preserver of regional stability and an agent of the USA in the region. Mohammad Reza Shah (1941-79) played an important role in this context as he tried to dismantle every challenge to the regional stability whether it was Iraq’s regional hegemonic aspirations or any rebellion unrest in the Gulf monarchies, along with sustaining US legitimacy in the Persian Gulf. Ironically, the Islamic or Iranian Revolution (1979) led to a revolutionary wave in the other Gulf monarchies that made Gulf rulers perceive Iran as a threat to the regional solidity and, weaken the US-Iran ties as well. The events including- Islamic Revolution, Iran-Iraq war (1980), Gulf crisis (1990-91), and regional conflicts or disputes over Abu Musa, Tunb Islands, annual Hajj pilgrimage, and so on, contributed further to change the relation between Iran and Gulf states.
The Post-Islamic revolution Iran began to be perceived as a threat to the Gulf security, despite all the efforts made by President Muhammad Khatami and President Hassan Rouhani including the JCPOA agreement, to bring back the pre-revolution status of Iran. Broadly speaking, the securitization of Iran in the region has been the outcome of two developments: – a) the US-Israel Alliance that portrayed Iran’s nuclear program as a threat to the regional security; b) the insecurity of the neighbors about Iran, having a high amount of reserves and overpowering them. The regional security, peace, and cooperation are imperative for the domestic stability and economic recovery of Iran, but the above-mentioned developments had made it difficult for Iran to resolve the issues with its Gulf neighbors.
In this context, it could be argued that being a part of China’s BRI railway network could help Iran not only in establishing itself as a trade hub for the region, but also to boost its bilateral connection with the neighbors, thereby restoring its preserver status.
Iran became an integral part of the Chinese BRI program in 2016 when President Xi Jinping declared his intentions to help Iran in the facilitation of long-term peace and stability in the Middle East, claiming that Chinese planning to build railway network connectivity with the region will certainly improve the regional integration of the region as well.
The interest of China in the Persian Gulf region evolved majorly due to its geostrategic and geopolitical significance. The involvement of China in the Gulf region increased further during the 1970s to counteract the augmented Soviet presence in the Indian Ocean region, since Gulf is connected to the Indian Ocean through the Strait of Hormuz. Iran with domination over the Strait consequently became geopolitically important for China. Furthermore, Iran’s uneasy relationship with the USA and the strategic interest of India in Iran were the other factors that shaped Sino-Iran interactions.
The opportunity to be a part of BRI came as an advantage for Iran when it declared the plan to expand its railway network and connectivity to the Gulf neighbors as well as the other powerful actors. The Railway Restructuring/ Revolution plan of Iran invited major foreign investors including China, India, Russia, and others to participate in the progress. The Projects like- International North-South-Transport Corridor (INSTC), Eastern corridor, and Ashgabat agreement will connect Iran to India, Pakistan, Afghanistan, Central Asia, and the Gulf country Oman, but might not contribute enough to change the regional equations of Iran. Chinese BRI railway connectivity project, on the other hand, is more likely to facilitate the geo-strategies of Iran in the Persian Gulf. For instance- in 2016, the first freight (Cargo) train was launched to transport goods in bulk between Iran and China and this developed the chances of turning Iran into a central hub of the Eurasian region. The hopes of connectivity continued to develop with launches of second, third, and fourth train services from 2016 to 2018, connecting China to Tehran passing through Central Asian countries and former Soviet Union Republics as well.
Besides these freight trains, Chinese Railway Engineering Corporation has approved loans for two important railway networks- a) The Tehran-Qom-Isfahan railway network- a $1.2 billion loan agreement on 400km double-tracked railway lines, to connect these three cities of Iran to develop Iran’s transporting capacity and speed, b) The Urumqi-Tehran-Mashhad railway network- this route will start from Urumqi (China), passing through Yining and Almaty (Kazakhstan), Bishkek (Kyrgyzstan), Tashkent and Samarkand (Uzbekistan), Ashgabat (Turkmenistan), then crosses Tehran to reach Mashhad (Afghanistan). This project will help China as well as Iran to deal with the incompatibility of the Persian Gulf neighbors since the benefits attached to the networks will certainly magnetize Gulf monarchies towards Iran as well as BRI railway projects. In addition, the Chinese railway networks being a gauge for its Silk route plan have the efficacy to improve the regional solidity and interaction for Iran. For instance:- the proposed Khorramshahr-Basra Railway network between Iraq and Iran is receiving aid from China, considering it as a potential route to connect Silk Road with regional rail system of Gulf Cooperation Council (GCC) countries, as Basra is only 154 km away from the GCC country, Kuwait that would extend the connectivity further. As the Chinese railway project in Iran will not only make Iran a giant crossroad of the trade routes but also in boosting its economic as well as regional connectivity, thus largely viewed as a win-win collaboration.
However, the outspread of the Covid-19 Pandemic in the Iranian holy city of Qom has halted the work of railway network projects. On the one hand, there has been a considerable increase in the anti-Chinese sentiments in Iran, with a certain section of populace claiming that Iran contracted the virus in lieu of the economic and trade support from China. The spread of the virus has also affected the somewhat improving relations of Iran with the Gulf countries, as reports allege that Iranian travelers had spread the virus to these countries. While on the other hand, the unwillingness of majority Iranian politicians to accept Chinese workers/ travelers as a source of the virus, due to the importance of China to Iran is also noteworthy. Moreover, the latest removal of India from the Chabahar-Zahedian line project citing continuous delay in the funding is going to fuel up the Sino-Iran interactions, as the involvement of India in the Chabahar Project remained a critical concern of China and challenge to its Gwadar port project in Iran.
The BRI railway network has the potential of not only bridging the infrastructure and connectivity gap at the global level, but also at the regional level for Iran. However, Iran should not be excessively dependent on China, as it can lead to a situation reminiscent of pre-revolution era when it shared a skewed power dynamic with the USA. Moreover, China has certain unilateral goals through the BRI railway network and any conflicting stance of Iran can be a major setback to achieving its regional aspirations.
Hemant Adlakha, Honorary Fellow, ICS and Associate Professor, JNU
Abstract: Experts in Beijing believe Abe got caught up in the unending hostility between Japan’s key ally, the U.S. and China, its largest trading partner — just like in 2007
Japan’s Prime Minister Abe Shinzo, considered a strong leader in several foreign capitals, including Beijing, abruptly announced last Friday that he is resigning for health reasons. But writing for the New York Times last Sunday, a leading political scientist in Japan, Koichi Nakano, did not believe a relapse of ulcerative colitis was the only reason why Abe abruptly announced his decision to quit.
Like Nakano, most analysts both at home and abroad have cited multiple factors preventing Abe from extending his record as Japan’s longest serving prime minister – seven years and eight months, to date. At the time of Abe’s “surprise” announcement, his disapproval ratings stood at 34 percent, the highest ever during his record tenure. Among the most prominent reasons for his rising unpopularity include a negative view of Abe’s response to the pandemic and allegations of a series of scandals and controversies he is still mired in – including extravagant, lavish events such as “the cherry blossom viewing party” that the prime minister hosts every year but is paid for by taxpayer money. Other factors behind his dropping popularity include: a dismal failure in rebuilding the Japanese economy as promised by his signature “Abenomics”; the controversial re-militarization of Japan, which saw massive street protests by the anti-war Japanese people; and last but not least the ill-conceived “Abenomasks” policy, under which each household was promised two washable cloth masks – the plan not only irritated the people but was immediately dismissed as “useless” and “inefficient.” The endless list of the Abe government’s failures goes on and on, analysts are telling us.
Interestingly, neither Japanese experts nor Japan watchers in the West have seen a possible connection between the prime minister’s resignation and the worsening U.S.-China rivalry. On the other hand, as the South China Morning Post put it, Abe’s “eight-year spell in office saw several ups and downs in Japan’s relations with Beijing, the most recent being the straining of ties between Tokyo and Beijing due to the introduction of a national security law in Hong Kong earlier this year.”
To be fair, some analysts in Japan haven’t lost sight of the predicament Japan finds itself in: The country continues to depend on China economically while remaining dependent on the United States for security. “Aligning with the U.S., but at the same time maintaining functioning relations with China, is Japan’s top priority…this will not change,” Michito Tsuruoka, associate professor at Keito University in Tokyo, told SCMP on the day Abe announced his decision to step down.
The authorities in Beijing have refused to react to political developments in Japan, preferring to maintain a stoic silence — even while knowing full well the implications of a new leader in Tokyo. Chinese foreign ministry spokesperson Zhao Lijian declined to comment both on Abe’s resignation and on the leadership succession.
Chinese experts, however, have not only been forthcoming but even voiced differing opinions.
Liu Jiangyong, a Japanese affairs expert at the Tsinghua University in Beijing sees a “friendlier” post-Abe Japan. But Liu does not rule out continuation of the current Abe government’s foreign policy approach of trying to maintain a balance between Beijing and Washington in the event of U.S. President Donald Trump winning a second term. “If Trump wins and continues his aggressive policies with China, Sino-Japanese relations would be affected because Japan is, after all a key ally to the U.S. but Joe Biden may adopt a less extreme approach to Beijing,” Liu told SCMP.
Some Chinese scholars have been more appreciative of Japan’s mature approach toward Beijing under Abe in recent years, be it in the context of the two East Asian neighbors’ territorial dispute in the East China Sea — where Tokyo is not keen on starting a direct conflict with Beijing — or more recently, in tackling tensions with China over the COVID-19 pandemic and over Beijing’s imposition of a national security law in Hong Kong. “His [Abe’s] policy is one that emphasizes being both realistic and pragmatic,” according to Huang Dahui, an IR expert with Renmin University in Beijing.
Sima Nan, the stage name of a well-known nationalistic commentator, on Monday displayed a more hard-line approach toward Abe’s Japan. Sima dismissed a Keito University professor’s predictions about Japanese policies toward America and China in the post-Abe era as untenable. Overall, the take sounded like a warning to whoever is going to succeed Abe: “If you wish to reap China’s economic benefits, but at the same time you do not wish to sin against both China and America, this will no longer be possible in the face of the irreversible worsening U.S.-China bilateral relations.”
In 2007, Abe resigned for the first time from the prime minister position. Then, as now, the mainstream media both in Japan and in the West cited the following reasons for the fall of the government: Abe’s failing health, his controversy-plagued government, which foundered on scandals and gaffes, Japan’s decision to continue its military’s participation in the Afghanistan war, and most of all Abe’s rising unpopularity. In China, on the contrary, it was widely believed that a significant factor leading to Abe’s resignation in 2007 was his failure to maintain a perfect balance in Tokyo’s relations with the United States and China. Abe, who had just become prime minister, actually wanted to revive the fledgling Japanese economy by developing good relations with China and at the same time he wanted to establish a China-Japan-South Korea free trade area. Unfortunately for Abe, the United States found this to be against its national interest.
Abe proved to be wiser as he began his second tenure as Japan’s prime minister in 2012, Chinese Japan watchers say. He won former U.S. President Barack Obama’s confidence in Japan as a reliable ally committed to free trade and a stronger military ally in the Asia-Pacific region. Notably, Abe and Obama reached an agreement that would extend Japan’s ability to come to the defense of the United States. However, with the change of guard in the White House following the Trump victory in 2016, Abe’s policy of wooing the United States faced a huge challenge. And now as the worsening U.S.-China rivalry is accelerating, Abe has fallen sick once again.
In the words of veteran “leftist” Chinese foreign affairs observer Zhang Zhimin, if U.S.-China relations today were at the same level as before Trump launched the trade war or even before the outbreak of COVID-19, it would have been okay for Japan to still dabble with both parties. But now Japan is caught in a dilemma of having to choose between China and the United States. No wonder, Zhang uses the famous Chinese saying “one cannot have fish and bear’s paws at the same time” to describe Abe and Japan’s predicament. The saying actually means that in order to get something, one must sacrifice something.
In other words, what Zhang is implying is that Abe’s timing to resign both times has been perfect. And both times, his resigning in the middle of worsening U.S.-China tensions was not a coincidence.
Myanmar is one of
India’s most important neighbors, four of our sensitive Northeastern states
share a border with Myanmar, and it is India’s land gateway to Southeast Asia.
Myanmar is a country enriched with abundant natural resources with an economy
complementary to India. India and Myanmar share a long land border of over 1600kms
and a maritime boundary in the Bay of Bengal. India shares the strategically
important ocean space of the Bay of Bengal with Myanmar. China’s dominant
presence at the port of Myanmar, which gives open access to the Indian Ocean to
China, could become a significant security concern for India. The blog argues
that India must be far more focused on strengthening its relations with this
neighbor than is evident today.
Myanmar is located on
the eastern flank of India. It is shaped like a large kite, with a mountainous
crescent to the north, alluvial plains at the center, and a long and narrow
isthmus stretching into the Andaman Sea to the south. From east to west, it is watered by the Chindwin,
Irrawaddy and Salween rivers all of which run north to south. This makes
north-south communication links much more comfortable than the east-west links,
which have to cross the deep river valleys and also the lines of hills. Myanmar
is a multi-ethnic country. The 18 major ethnic groups occupy the rugged
mountains on its borders with India, China, and Thailand, with the majority,
the Burman population, inhabiting the flat plains at the center and along the
coast. Myanmar has a history of ethnic conflict, which is a constant
preoccupation for the central government. The ethnic groups also spill-over
into neighboring countries, with India, for example, the Nagas and the Mizos (known
as Chins in Myanmar) straddle the border. Just as the country enables access to
Southeast Asia for India, it is also a corridor for China to the Bay of Bengal
and a partial answer to its so-called Malacca Dilemma, or the need for most of
its energy supplies and cargo from across the Indian Ocean to pass through the narrow confines of the Malacca
Straits.
Hence, Myanmar plays a crucial role in China’s ambitious Belt and Road
Initiative(BRI).
Myanmar-China Relations
Throughout history,
Myanmar has tried to balance its relations with its two giant neighbors, India,
and China. However, Myanmar has had a higher threat perception from China
because of the latter’s use of ethnic groups to keep the central government
off-balance. This had continued though, in different forms, Chinese influence
in Myanmar began to see a significant rise since the 1990s when the military
junta staged a coup and prevented the democratically elected National League for Democracy(NLD),
led by Aung San Suu Kyi from taking office. The military regime faced
international criticism and sanctions. India, too, opposed the government and
supported the National League for Democracy. China stepped in to help the
Myanmar military with arms and economic and commercial links and soon became an
essential partner. It assisted the regime by brokering arms for peace or ceasefire
agreements with the various ethnic groups under its influence for several
years. Despite the political changes that have taken place in Myanmar in recent
years with Aung San Suu Kyi and her party sharing power with the deeply
entrenched military, China has maintained enough levers of influence to
continue its dominance country.
Myanmar has never been
comfortable with its over-dependence on China. Even the military regime tried
to balance Chinese influence by becoming a
member of the ASEAN in 1997 and later of the BIMSTEC. It responded positively to
India’s overtures in the 1990s and encouraged Indian support to infrastructure
building, including cross-border links. Chinese involvement in infrastructure
projects was slowed down, with the Myitsone hydro project suspension on the upper reaches
of the Irrawaddy River. There was also a degree of caution in its participation
in the BRI to avoid high debt levels. However, in other respects, China has
probably emerged as an even more powerful influence in the country than a
decade ago. Some of the key projects are the oil and gas pipeline from
Myanmar’s Rakhine coast to Yunnan province, the development of the Kyaukphu
deep water port, and the proposed rail and road links connect to Southeast Asia
through Myanmar.
There are two
significant projects between China and Myanmar in terms of the Belt and Road
initiative. The Kyaukphyu special economic zone
is one of China’s crucial projects at the Bay of Bengal coast on the western
Rakhine state, giving China direct access to the Indian Ocean and allowing its
oil imports to bypass the Strait of Malacca. It also serves the terminus for
the twin cross border oil and gas pipelines between the two countries. The
framework agreement was signed between the Myanmar government and the China
International Trust and Investment Corporation (CITIC)in November 2018. The
project investment in the initial phase was US$1.3 billion, with 70 per cent
from CITIC and 30 per cent from the Myanmar government. The concession period
is said to be 50 years, during which the Myanmar government will earn US$7.8
billion in revenue from the SEZ and US$6.5 billion from the deep
seaports. The project covers a combined 1000 hectares, including an
industrial park and deep seaports on Made and Yanbye islands.
Muse Mandalay railway
project travels from China’s Kunming through Myanmar’s Muse on the Chinese
border in northern Shan state to Mandalay in Central Myanmar. It’s a part of
Beijing’s plan to build a parallel expressway and railway line from Ruili
(across the border from Muse in China’s Yunan province) to Kyakphyu. The 431kms
electric railway passes through armed conflict areas in Shan state; the
estimated investment cost is US$8.9 billion.
During President Xi
Jinping’s two days, visit Myanmar on 17-18 January 2020, which was the first visit by a Chinese leader in 19 years. There were talks
held, and dozens of agreements were signed, paving the way for implementing
various projects underway the Belt and Road initiative. However, Myanmar is not a passive bystander
and has managed to negotiate better conditions regarding BRI projects. In 2017,
the CITIC group decided to reduce its stake in the project from 85 to 70 per cent.
Also, the Myanmar government effectively scaled the project down from $7.3
billion to $1.3 billion in 2018, realizing that the project was taking on too
much debt.
India-Myanmar Relations
Since the 1990s, it has
been an objective of Indian policy to become a significant countervailing
presence to China in Myanmar. This has been moved by the need to elicit
Myanmar’s cooperation in dealing with the Northeast insurgencies and promote
India’s Look East policy. There are two significant projects in Myanmar led by
India, which focuses on improving connectivity with Myanmar and enable to
counterbalance China’s BRI in the Indo Pacific region. Still, its efforts have
paled in comparison to China.
The
India-Myanmar-Thailand highway project will boost trade and commerce in the
ASEAN, India Free Trade Area, and the rest of Southeast Asia. It is a part of
India’s Look East Policy that will cultivate and strengthen economic and
strategic relations with the nations of Southeast Asian countries to solidify
its standing as a regional power. The project helps the Indian position as a
counterweight to the People’s Republic of China’s strategic influence in the
region.
Kaladan Multi-Modal
Transport Project is set to promote neighborly ties, trade, and tourism under
the government’s Look-East or Act-East policy. But unfortunately, it hasn’t traveled
much, the Kaladan Multi-Modal Transport Project is designed to connect
Kolkata with Myanmar’s port of Sittwe by sea and to move northwards by the
Kaladan river to Paletwa, and a long stretch of road from to Mizoram in India’s
Northeast. This project is seeking an extension till June 2021. The fundamental goal of construction
of Sittwe Port is to create a multi-modal sea, river, and road transport corridor for
shipment of cargo from the eastern ports of India to Myanmar through Sittwe
port and to the Northeastern part of India via Myanmar. The approved
construction cost is US$68 million. But the projects are consistently facing
delays.
India has failed to
emerge as a credible countervailing power balancing China’s formidable presence
in Myanmar. An entrenched Chinese presence along the Rakhine coast across the
Bay of Bengal is particularly worrisome. With Nepal, Sri Lanka, Bangladesh, and
Myanmar wading into the BRI, India stands badly isolated, and this is something
India needs to work upon. Since 2012, India has been trying to modernize and
extend its navy to counter China’s increasing challenge, but finances are
scarce, and projects are yet to materialize. That makes it harder to maintain
India’s ambition to become the Indian Ocean’s security provider.
To knit the Indian
Ocean into existing defense plans for the Pacific, India should coordinate with
the Quad, including countries in the United States, Japan, and Australia. Myanmar is desperate for financing to help build roads,
ports, power plants, and other massive infrastructure to drive economic growth.
Since the world is well aware that Chinese loans come with a deadly debt trap,
expanding China’s geopolitical and military reach and failure to be transparent
creates a vast opportunity for India to compete with China and blunt some of
its recent gains. India should be focusing on the project that helps the
Indian position as a counterweight to the People’s Republic of China’s
strategic influence in the region.
The new Hong
Kong National Security Law
(香港国家安全法 ) has caused massive controversy in Hong Kong as well as in the
international community. On 21st May the Chinese authorities
introduced a proposal in National People’s Congress (NPC) to enact the National
Security Law. Further, on 28th May, the 13th NPC
(人民代表大会), voted in favour of the National Security Law (NSL) for Hong
Kong. The new law aims at tackling
secession, subversion, terrorism and foreign interference, the details of which
were kept under wraps until it was implemented on 30th June2020. A protest broke out in Hong
Kong city on 1st July and several people were charged under the new
NSL.
The NSL consists of a total of 66 Articles
divided among six chapters. Some Articles are more important to look at, as
they provide an overview of what awaits Hong Kong (香港) and anti-CPC Hong Kong
citizens.
Article 12 of the Law states the establishment
of a Committee for Safeguarding National Security, which will be under the
supervision of and accountable to the Central People’s Government in Beijing.
Although the committee will be headed by the Chief Executive, Article 15 states
that the committee will also have a National Security Advisor, who will be
designated by the Central People’s Government and shall be responsible for
providing advice to the committee relating to its functions and duties. Article
14 states that the committee will work in secrecy and its decisions are not reviewable by the court. While Article 5
states that all persons shall be considered innocent until declared guilty by
the judicial organ, Article 42 contradicts it by stating that no bail shall be
granted to a criminal suspect or defendant unless the judge has sufficient
grounds for believing that the criminal suspect or defendant will not continue
to commit acts endangering the national security. Article 38 states that the law would be even applied
to offences committed against the Hong Kong Special Administrative Region
(HKSAR) from outside the region by people who are not a permanent resident of
HKSAR. Article 40 provides that the jurisdiction is in the hands of the Hong
Kong authorities by default but it can be taken over by the mainland’s office
for Safeguarding National Security. Further, Article 57 states that once in
mainland, the processing and sentencing will be done according to the Chinese
Criminal Law Procedure.
On the other hand, Article 60 provides complete
impunity to the office and its personnel as they are not subjected to the
jurisdiction of HKSAR while performing any act in the course of duty. The
National Security Law has caused ripple effects not only in Hong Kong but in
the international arena as well.
Hong Kong in Sino-US Relations
Sino-US relations have
seen a massive downgrade since the Trump administration came into power in 2017. Human Rights and Trade have
been a point of contestation between the US and China. Hong Kong has always
acted as a geopolitical buffer state between China and the West especially for
the U.S. Under the Hong Kong Policy Act of 1992, the U.S. had decided to
maintain its favourable treatment, especially in the matter of trade, even after
Hong Kong was reverted to Chinese sovereignty in 1997. The underlying condition
for the preferential treatment was the autonomy of HKSAR. The Act also stated
that “whenever the President determines that Hong Kong is not sufficiently
autonomous to justify treatment under a particular law of the United States,”
he is authorized to “suspend the favourable treatment.” In the wake
of anti-extradition bill protests in 2019, the
U.S. Senate and the House respectively passed the Hong
Kong Human Rights and Democracy Act (HKHRDA) in November of the same year.
This indicated that the State Department would
annually require to re-certify Hong Kong’s autonomous nature, in order to
continue the so-called “special treatment” the U.S. affords to Hong Kong. It was a
week after the National Security Law was tabled for voting before the NPC on 27th
May, 2020 the U.S. Secretary of State Mike Pompeo refused to certify the
autonomy of HKSAR. On 28th
May, the NPC passed the Hong Kong National Security Law. On 29th
June, the U.S. Department of State ended exports of U.S.-origin defence
equipments to Hong Kong. It also mentioned that U.S. will take steps to impose
the same restrictions on U.S. defence and dual-use technologies to Hong Kong as
it does for China. Mike Pompeo in his Tweet mentioned about the waning of ‘One
Country, Two Systems’ （一国两制） and replacement of it with ‘One Country, One System’. As the
Sino-US relations have already been in a tailspin due to the ongoing trade war
and the COVID-19 impact, the recent issues have further exacerbated tensions in
an already fragile relationship.
Sino-British Relations
Hong Kong has been a major component of the
Sino-British relations. The recent move by the Chinese government has led to
deterioration in the relations between two countries. Hong Kong was handed back
to Chinese sovereignty in 1997 under the Sino-British Joint Declaration, 1984.
Since then Hong Kong has been ruled under the framework of ‘One Country, Two
Systems’, which is to continue until 2047. Under this system Hong Kong
maintains a mini-constitution and enjoys autonomy on matters other than defence
and foreign relations. On the National Security Law, the UK criticized China
for breaching the ‘One Country, Two systems’ formula. On 11th June
2020, while presenting the 46th report to Parliament
on Hong Kong, the British Foreign
Secretary mentioned that China must respect Hong Kong’s autonomy and its own
international obligations. Britain also mentioned that the Joint Declaration is
registered with United Nations (UN). Thus, indicating its international
obligations. On the other hand, China has mentioned that the Sino-UK Joint
Declaration is unilateral policy announcement by China and not an international
commitment.
On 1st July, Britain introduced a new
route for those with British National (Overseas) (BNO) status to move to UK.
BNO status holders refer to Hong Kong citizens born before 1997. The recent
announcement by the British Prime Minister Boris Johnson in the House of
Commons, extended the Right of Abode (ROA) to dependents of BNO passport
holders, giving way for millions of Hong Kong citizens to acquire British
citizenship. China’s Foreign Ministry criticized Britain’s decision and
mentioned that the offering of ROA to BNO status holders is a breach of the
terms of a memorandum offered by the UK to China in 1997.
China-Hong Kong Relations
Hong Kong maintains a democratic-capitalist
system under the shadow of Communist China. It also enjoys certain level of
autonomy on various matters and is governed by Hong Kong Basic Law. Article 23 of the law states that the HKSAR “shall enact laws on its
own to prohibit any act of treason, secession, sedition, subversion against the
Central People’s Government, or theft of state secrets, to prohibit foreign
political organizations or bodies from conducting political activities in the
Region, and to prohibit political organizations or bodies of the Region from
establishing ties with foreign political organizations or bodies.”
Before the British handover of Hong Kong to
China in 1997, China’s
crackdown on the student-led democracy movement
in 1989 created anxiety in Hong Kong regarding the handover and led to the
political awakening of the population. In 1992, Chris Patten was appointed as
the last colonial governor of Hong Kong. Patten initiated a series of political
reforms designed to give the people of Hong Kong a greater voice in government
via democratic elections to the Legislative Council (LEGCO).
When Hong
Kong’s Democratic Party, led by barrister Martin Lee, routed pro-Beijing
candidates in the 1995 LEGCO elections, Beijing denounced Patten and began a
series of strong measures aimed at re-establishing its influence. On 24th
March, 1996 China’s 150-member Preparatory Committee, which had been created to
oversee the handover, voted to dissolve LEGCO and installed a provisional
legislature after Hong Kong returned to Chinese sovereignty. In December 1996 a
China-backed special election committee selected the 60 members of the
provisional body, just days after it had overwhelmingly elected
59-year-old Tung Chee-hwa as the
first Chief Executive of the HKSAR. Tung soon signalled his intention to roll
back Patten’s reforms, announcing in April 1997 proposals to restrict political
groups and public protests after the handover. After the handover, however, the
situation in Hong Kong remained stable but complete freedom in the exercising
political and civil rights remained doubtful.
In September 2002, Hong
Kong government released a proposal to implement Article 23 of the Basic Law.
In February 2003, the National Security (Legislative Provisions) Bill was
introduced in the Legislative Council. This caused a massive upheaval in the
city and the bill was
finally withdrawn by the government following a huge protest by the citizens of
Hong Kong on 1st July, 2003. The city has witnessed many protests
since the British handing over of Hong Kong to China. Each protest has
culminated into a “pro-democracy” protest. In 2012, Protests broke out in Hong Kong as the authorities
tried to change the curriculum of the school system in Hong Kong. The 2014
Umbrella Movementwas
a movement against the decision of China’s National People’s Congress Standing
Committee (NPCSC) regarding the ‘proposed reforms of the Hong Kong electoral
system.’ The reforms suggested a pre-screening of the candidates by the CPC for
the post of Chief Executive of Hong Kong.
The 2016 protestwas the
first pro-independence protest held in Hong Kong as it demanded complete
independence of Hong Kong from Mainland China. In 2017, as Hong Kong celebrated
two decades of handing over of Hong Kong to the Chinese control, the pro-
Democracy protesters marched against China’s refusal to grant ‘genuine
autonomy’ to Hong Kong and the erosion of ‘one country, two systems.’ In 2019,
the city, during the Anti-Extradition Bill movement, witnessed the most violent
protests since its handover, as police used brutal force to supress it. It
garnered the attention of the world and led to massive criticism of China on
the international
stage.
The Bill was eventually shelved indefinitely,
causing major embarrassment for the CPC. Hong Kong was the last remains of the
humiliation faced by China at the hands of a foreign power. Even when return to
Chinese rule, in terms of politics, society and culture, there has been vast
discrepancies between Hong Kong and Mainland. China, time and again has tried
to interfere in the city’s day-to-day affairs in order to create more semblance
between Hong Kong and Mainland. On the economic front, although, Hong Kong is
just 2.7% of China’s but it remains a most favoured destination for FDI due to
its financial and legal system. While
international companies use Hong Kong as a launching pad to expand into
mainland China. The bulk of foreign
direct investment (FDI) in China continues to be channelled through the city.
Although, recently Shenzhen surpassed Hong Kong in terms of GDP, Hong Kong
still provided systems and frameworks which cannot be provided by Mainland
Shanghai or Shenzhen. Most
of China’s biggest firms, from state-owned Industrial and Commercial Bank of
China (1398.HK), to
private firms like Tencent Holdings (0700.HK), have listed in Hong Kong, often as a springboard
to global expansion. Last year, Chinese companies raised $64.2 billion globally
– almost a third of the worldwide total – via initial public offerings (IPOs),
but just $19.7 billion of that came from listings in Shanghai or Shenzhen. Hong
Kong has also been pivotal to China’s longer-term ambition to turn the RMB (Yuan
元) into a widely-used international
currency, competing with the U.S. dollar.
Conclusion
The citizens of Hong Kong have often voiced
their concern over the ‘Mainlandization’ of the city and the waning of ‘One
Country, Two Systems”. The passing of the National Security Law has caused a
great amount of anxiety among the citizens and was termed as a “Death Knell”
for democracy in Hong Kong. Every year, 1st
July commemorates the anniversary of the British handing over of Hong Kong to
China and the citizens take out an annual march on this day. On 1st
July, 2020 the day which commemorated the 23rd anniversary of
British handing over of Hong Kong, the citizens marched into the streets
while National Security Law was already put in place.
The day witnessed the actual implementation of the Law when the protestors were
arrested under the new Law on charges of “inciting sedition and terrorism”.
While China received massive criticism over
subversion of freedom and rights of citizen of Hong Kong from various countries
including the U.S. and UK, HKSAR Chief Executive Carrie Lam stated that “the
National Security Legislation will help restore stability in Hong Kong, and
protect the life and property, basic rights and freedoms of the overwhelming
majority of residents” and will not cause any harm to freedom possessed by the
citizens of Hong Kong. China lashed out at the U.S. and UK, stating that while these
powers have a National Security Law in place, they are against China for doing
something similar. China’s current domestic politics including rising
nationalistic sentiments, of which territory occupies a great portion and Xi
Jinping’s aggressive foreign and domestic policies have a major effect on the
implementation of the law. Besides, the 2019 protests and fading CCP’s patience
to deal with Hong Kong together has also played a great role in panning out of
the new Law. The Chief Executive elections which was due in September was
very crucial to the Law. The Hong Kong government on 31st Aug 2020
announced the postponement of elections by 1 year. While the reason cited by
the government was the pandemic, the pro-democracy opposition remarked that
this was an attempt to prevent their winning which, according to them, is
inevitable in the face of massive dissatisfaction among the Hong Kong
citizens.
Finally, the Law has also affected
China’s relation’s with other countries, including the U.S and UK. While
Sino-US relations have already been on a crossroad due to trade war and the
outbreak of COVID-19, the implementation of National Security Law by China and
retaliation by the State Department of the U.S., further deteriorated the
relations. U.S. has massive
investment in Hong Kong which
includes over 1,300 companies and $82.5 million dollars as direct investment
and the new Law have put into risk U.S. business interest as it will no longer
be protected under British-style
common law jurisdiction. Moreover, as American elections remain due in November
2020, Trump has hardened its stand on China. On the other hand, the
Sino-British relations have been in its ‘golden era’ post- ‘Brexit’. As Hong
Kong constitutes an important part of Sino-British relationship, the National
Security Law, means much more for the UK than
what it stands for the U.S. Thus, UK’s has been the most direct international
response against the implementation of the law.
As it were, other countries’
reactions make it easy for China to blame foreign interference and play the
nationalist card to go through with the plan of completely integrating
territories under the roof of ‘One China’.
Since 2014, the
National Unity Government has lobbied China for their assistance on issues of security, economic and
regional integration.
The prospects of peace in Afghanistan has since motivated China to ramp up its commitment
to the nation. China’s Central Asian policy has the possibility of replication
here, with economic commitments under the Belt and Road Initiative (BRI), military aid
through arms sales and training, and reciprocal security assistance – with
China aiding in dealing with the Taliban, and the Afghani government working to
mitigate cross-border Islamist influence in Xinjiang, helping them combat their
‘three evils’ of terrorism, separatism and extremism. These commitments have
led many to question the future role of China in Afghanistan’s post-coalition
future. Namely, can China effectively integrate their relations with
Afghanistan, in line with their own goals in the region?
Economic Integration
with Afghanistan
Over the past few
years, China has initiated numerous projects in Afghanistan’s key sectors – mining, transportation
infrastructure, and agriculture. While the country is seen as
geographically strategic, the BRI initially bypassed it. However, since 2016,
both countries have jointly promoted this cooperation. Afghanistan acts as a link between China and
Southern, Central and Western Asia, with the countries being connected in north
by the Sino-Afghan special railway transportation project and the Five Nations
Railway Project, which aim to connect to southern Afghanistan via the China–Pakistan Economic Corridor (CPEC).
Afghanistan is also home to massive resource deposits, such as rare earth
metals and lithium, which have the capacity to reduce the dependence of
Afghanistan on foreign aid if exploited properly.
China, Afghanistan’s
largest foreign investor, is using this position effectively to increase their
influence in the region. According to Arif Sahar, an Afghan security
expert based in London, these resources can only be effectively exploited by
close neighbours, because of geopolitics and logistics. Aware that their
manufacturing sector would benefit massively from this access to resources,
‘China is signalling that it is the only country in the region with the
financial and economic capabilities that can be relied on as a trustworthy
partner’.
This takes on more weight due to China’s interactions with Afghanistan’s
neighbours. While China and Pakistan are perennial, all-weather allies, and
remain economically and politically integrated, the recent
push in Iran has provided Afghanistan further incentive to remain aligned
with China, that of coastal access through Iran. Pakistan has consistently
blocked Afghanistan from using their territory; and being aligned with Iran
through China and the BRI remains a position that the Afghanistan government could
be willing to accept.
Political-Strategic
Integration: Indifference to Engagement
Over the years,
China’s regional policy has gone from a calculated indifference to active
engagement, with China realising the best chance to achieve their goals is a
strong, stable Afghanistan. As such, China has pushed to reconcile with, and
build contacts with both the Taliban and the Afghan government. It also strives
for greater cooperation between
Pakistan and Afghanistan, by pushing for greater opportunities for trade and
investment.
Chinese motivations in Afghanistan vary. They remain wary of the country
being used as a launching ground for Uyghur separatism (such as the East
Turkestan Independence Movement), which it often claims could radicalise
Uyghurs in Xinjiang province. It also aims to portray itself as an important
regional and global player, with the potential to solve one of the world’s longest
running insurgencies . China has hence embarked on numerous policies aimed
at achieving these. It has portrayed itself as a point of contact between the
government and the Taliban, acting as a facilitator in the Afghan peace
process. It had also initiated a joint training operation with India for Afghan
diplomats, as a gesture of goodwill. However, the future of this collaboration
remains to be seen, due to renewed tensions with India following the Galwan
incident. It has also aided Afghanistan militarily, helping build the
military mountain brigade in the Wakhan corridor, with the primary goal of
preventing infiltration by
the Islamic State into China.
Afghanistan also hopes to use China as leverage against Pakistan. Quetta
is widely believed to be the base
of the Afghanistan Taliban leadership, and
Pakistan has historically held some sway over the Taliban. Hamid Karzai was
quoted as saying that ‘China is a close and strategic friend of
Pakistan, and Chinese words with the Pakistani government carry weight… we
believe that China can use that asset in a way that brings good relations
between us and Pakistan and also leads to peace in Afghanistan’, laying the groundwork for cooperation between
the three countries. Preferring multilateralism over unilateralism in the region,
China has also been examining using institutions like the UN to ensure regional
peace and stability. Rightly so, any unilateral action in the region will face
blowback from Afghanistan’s regional partners, as well as the international
community.
The Way Forward
Over the past few years,
China has steadily increased its involvement in Afghanistan, taking the form of
military, economic and diplomatic commitments. However, these acts have not
been without pushback, with China’s policy perceptions as giving pre-eminence
to their own geopolitical and security concerns being the concern of many in
the international community. As such, while the Afghani government views China
as an important partner in Afghani stability, their impact so far has remained
limited.
One last factor to
consider is the influence of Russia. While not one to disrupt the coalition
withdrawal, Russia under Putin has been steadily increasing its reputation as a
great power with an international reach, as seen also in Libya and Syria. Additionally,
Afghanistan is part of the erstwhile Russian sphere of influence, and any
attempts by foreign powers to increase their influence in these regions have
often been met by opposition. Some recent examples stem from accusations of Russian support to the Taliban, and
allegations of state-sponsored bounties on US soldiers.
The force withdrawal
provides China with an immense opportunity to increase their influence in the
region – unilaterally through the BRI and its associated investments, or
multilaterally through organisations like the UN. However, the viability of
these projects largely depends on the confidence the international community
and Afghanistan’s partners have in the Chinese leadership, which has taken a
hit in the aftermath of the pandemic and China’s belligerent ‘Wolf Warrior’ diplomacy. China’s
engagement in Afghanistan had started to take shape before this crisis, but the
efficacy of such policies now remains to be seen, especially with increasing
diplomatic challenges, such as with the USA, UK, Canada, and India. Without the
support of the countries involved with Afghanistan, the expansion of Chinese
policy remains a distant dream, which shall face numerous hurdles in
implementation.
Recent skirmishes between China and India at Galwan Valley ignited debates in policy circles across New Delhi about growing importance of Taiwan in positioning India’s stance towards Beijing. Currently, Taiwan is India’s 35th largest trading partner, and for Taiwan, India is 17th largest trading partner. In 2019-20, trade accounted for US$ 5.7 billion, which is a decline of 17.54% as compared to the previous year. However, in the current strategic context, India’s appointment of seasoned diplomat Gauranglal Das as an envoy to Taiwan and virtual participation of two parliamentarians in Taiwan president Tsai Ing-Wen’s swearing-in ceremony indicates a shift in policy towards China.
Since
the 1990s, there have been efforts to diversify Taiwan’s trade beyond mainland
China. In 1994, Taiwan president Lee Teng-hui officially announced the ‘Go
South Policy’ aimed to improve its trade and investment relations with ASEAN
countries. India was also included in the policies owing to its growing
economic importance after the DPP (Democratic Progressive Party) won the
presidential election for the first time under the leadership of Chen Shui-Bian
in 2000. The DPP government signed a Bilateral Investment Agreement (BIA) with
India in 2002, which came into
force in 2005. The agreement stressed on the need for protection and promotion
of investments.
In
2011, China Steel Corporation (CSC), the largest integrated steel maker in
Taiwan invested $178 million in Bharuch district of
Gujarat. A rapport existed between the Indian state of Gujarat and its then
Chief Minister Narendra Modi with Taiwanese firms. Informal deliberations for a
FTA (Free Trade Agreement) between Taiwan and India were held when he later
became Prime Minister of India in 2014, the discussions for which are ongoing and not
finalized and. India also signed a Double Taxation Avoidance Agreement (DTAA)
and a Customs Cooperation Agreement with Taiwan in 2011. The BIA was updated by both of the
countries in 2018 to ensure that Taiwanese businessmen’s investments are
treated in synchrony with international standards. The COVID-19 spread raises
generous challenges and opportunities to furthering India-Taiwan relations
together.
Opportunities
China
is Taiwan’s largest trading partner accounting for 30% of total trade. Tsai Ing-wen’s reelection exhibits the changing perception in
Taiwanese people against Mainland China. According to a survey conducted by the Pew
Research Center in 2019 among Taiwanese youth shows that about 85% of the
participants supported close economic relations with the United States, at the
same time, support for Beijing was limited to 52%. The New Southbound Policy (NSP)
initiated in 2016, reoriented the prime focus of Taiwanese firms from China.
Apart from NSP, there are several reasons substantiating the migration of firms
from Mainland China. First, increasing intense competition from Mainland
companies in the manufacturing sector. This adduced as the primary reason for the
firms shifting their business to huge markets with similar traits. Second,
rising labour costs and lastly the instability in markets caused by the
US-China trade war.
According
to Sana Hashmi, a Taiwan Fellow at the Institute of International Relations,
National Chengchi University in Taipei, there was a dip in the trade figure
last year. More than trade, Taiwanese companies see India as a vast market for
investment. Foxconn is already investing US$ 1 billion in the Apple plant at
Chennai. Therefore, the focus should be on attracting investment in the post
COVID-19 period.
Keeping the market potential aside, the cheap
labour cost in India, as compared to PRC, invited more attention. Soon after
Foxconn’s announcement regarding their $1 billion investment to set up a
factory in India, Pegatron, the second-largest assembler of Apple iPhones based
in Taipei announced
their interest to set up a plant in India. The
availability of skilled labour, massive mobile user base and Indian
government’s policy initiatives like Make in India and by latest ‘Atma Nirbhar
Bharat’ has attracted foreign investments from Taiwan.
During the pandemic, China’s expansionism yielded more
investments to India from Taiwan. Policymakers should endorse the role of
Taiwan in addressing India’s technology deficits. Under the aegis of Make in
India and Atma Nirbhar Bharat, India should work towards attracting more
investment which will have an impact on the rising unemployment rates. As
Taiwanese exports to India majorly concentrated on heavy machinery and
engineering tools, India must make use of the current geopolitical/geoeconomic
environment by inviting more firms.
Challenges
The
first challenge is regarding the long-standing talks on FTA between India and
Taiwan. To address this, both sides need to fast track talks and finalize an
agreement by sidelining political difficulties. A two-year joint feasibility study was conducted by the Indian Council for Research on
International Economic Relations and Chung Hua Institution for Economic
Research in Taiwan during the 2011-13 period. The study suggested an Economic
Cooperation Agreement (ECA) for promoting trade relations. As stated by Taiwanese officials, India and
Taiwan are also in the negotiations regarding allowing Special Economic Zones
(SEZs) for Taiwanese firms. Currently, India has SEZs with Chinese and Japanese
firms.
The trade
figures also affirm the fact that India is way back in terms of trade, as
compared to other dominant countries. Here a contradiction in China’s actions
is it’s exponential growth in trade with Taipei on one hand and restricting
India to do the same on the other hand.
The second challenge is regarding the unbalanced tax system. Recently Taiwan and Japan approached
the World Trade Organisation (WTO) to set up dispute settlement panels against India owing to
lopsided tariff structures on Information and Communication Technology (ICT)
devices and mobile phones imported from them. Imbalance in this tariff
structure restricts the prospective inflow of investments towards India.
Transparency
in the legal system and effective utilization of decentralized governance can
also trigger foreign direct investments. Open-ended support from local
governments to a business-friendly environment can also help in this regard.
India
and Taiwan share many commonalities such as belief in democratic values and
similar economic potentials. In the current geopolitical scenario, India’s best
option would be to enhance trade and people to people interactions with Taiwan.
Both are gradually strengthening their bilateral ties. Tapping into Taiwan’s Taiwan’s
expertise in healthcare, education and agriculture would help India in the
future.
Bangladesh’s Prime Minister Sheikh Hasina, with Chinese President Xi in Beijing, on 5 July, 2019.Image Source: AP Photo
On 14 October, 2016, Chinese President Xi Jinping created history by being the first Chinese leader to visit Bangladesh in 30 years. This visit bears great importance for the deepening of Sino-Bangladesh relations as well as China’s increasing outreach towards South Asia. Bangladesh is situated at the heart of the Bay of Bengal which makes it a strategically indispensible country in China’s growing network along the 21st Century Maritime Silk Route and the New Silk Road. China-Bangladesh relations dates back to 1976 when Beijing began diplomatic relations with Dhaka. However, President Xi’s visit to Dhaka in 2016 has been seen as an important development in the Sino-Bangladesh relations, especially after the onset of the Belt and Road Initiative (BRI). Bangladesh has responded positively to the BRI drawing some criticism from India which is a dominating factor in Bangladesh’s foreign policy, particularly in the neighborhood. Bangladesh is a developing country with major demand for infrastructure development which has largely inspired its engagement with China, while its strategic location has significantly shaped China’s outreach. Therefore, it is important to take stock of China’s infrastructure development projects in Bangladesh.
President Xi Jinping and Prime Minister
Sheikh Hasina signed twenty-seven agreements worth billions of dollars and also
elevated their relationship from ‘a comprehensive partnership of cooperation’
to a ‘strategic partnership of cooperation’ during the Chinese President’s visit
to Dhaka in 2016. Earlier in 2015, China emerged as the top trade partner of
Bangladesh replacing India. China’s growing engagement with Bangladesh has been
based on steady economic linkages along with infrastructural assistance by
China in Bangladesh. As a small country with a growing economy, Dhaka has
positively embraced Beijing’s engagement. Even during Prime Minister Sheikh
Hasina’s visit
to China in July, 2019, the two sides agreed to enhance cooperation on trade,
defense and infrastructure projects, which have further deepened
China-Bangladesh ties.
The Padma Bridge Rail Link Project is one of the flagship projects undertaken by China in Bangladesh which aims to connect Dhaka with Jessore through the Padma Bridge. The estimated budget of the project is approximately BDT 40, 000 Crores jointly sponsored by the Exim Bank of China and Bangladesh government. The project began in 2016 and is aimed to be completed by 2024. The Padma rail project has been divided into three phases connecting Dhaka to Mawa, Mawa to Bhanga and Bhanga to Jessore. Rail connectivity is an important instrument for the bourgeoning market of Bangladesh. The Padma Bridge Rail project in particular is important to Bangladesh as it improve accessibility to Dhaka with central and south-western regions of the country and provides a shorter alternative to the Dhaka-Jessore-Khulna railway connectivity. It is also important to Bangladesh as it is expected to ensure socio-economic development and minimize regional disparity. China’s involvement in this project pertains to funding it. China is funding 85% of the project while the rest is funded by local contractors in Bangladesh. Interestingly the project was elevated to the ‘fast track’ status in Aril, 2016, emphasizing on China’s commitment of timely progress and delivery. This can be seen as an attempt by China to establish itself as a better alternative to India in the region, because one of the major issues flagged off by most countries in India’s neighborhood concerns New Delhi’s delivery deficiency. Infrastructure development in Bangladesh is also a strategically important sector for China to establish itself in, as it would increase greater dependence of Dhaka on Beijing. The biggest hindrance to the project so far has been the operational discontinuity caused by the Covid-19 pandemic. According to Bangladesh’s Road Transport and Bridges Minister’s briefing, the infrastructural progress of the project is 24.43% and the financial progress is at 30.52% until May.
Another important project undertaken by
China in Bangladesh is the Payra Deep Sea Port. The Payra shipping port is
situated at the Patuakhali region of Bangladesh on the banks of the Bay of Bengal. This
project will be given shape by China Harbor
Engineering Company (CHEC) and China State Engineering and Construction Company
(CSCEC). China’s interest in this project is not a matter of surprise as it is
strategically situated and falls in line with China’s string of maritime bases
across the Indian Ocean region. The total cost
of the port is expected to be between USD 11 billion to 15 billion. For long, China
has expressed its interest in building port projects in Bangladesh. The Payra
port project was inaugurated in
November, 2013, and started operating in 2016. This project holds great
significance for Bangladesh as it is expected to facilitate internal
development. The deep-sea port is vital for reinvigorating Bangladesh’s
internal connectivity which will boost its booming economy. Bangladesh has
however made it very clear that it is not meant to be developed as a Chinese
naval base, as has been the experience with Gwadar and Hambantota in the past.
Interestingly, China’s involvement in this project has not aroused suspicion in
India as well, primarily because it does not follow the ‘field
of dreams’ approach. The Payra
port will also be complemented by the Padma Rail Link project, as the latter is
expected to
create opportunity to construct a second line in this route and connect Barisal
& Payra Deep Sea Port. Even though there have been questions about the
feasibility of this project, from China’s perspective, projects like this help Beijing
engage its bloated state-owned enterprises and increase dependence of other
countries on China.
While Bangladesh’s ties with China have
been steadily growing, Prime Minister Sheikh Hasina has also maintained a
balanced relationship with India. Notably, she described Bangladesh’s relations
with India as ‘organic’
and ‘beyond a few billions of dollars of trade’
at the World Economic Forum in Dalian in 2019, reiterating her bonhomie with
India. Towards this end, New Delhi and Dhaka have made progress in
strengthening their connectivity linkages which have, for instance, manifested in
terms of the shipment of the cargo
vessel from Kolkata to Agartala via
Chittagong for the first time in fifty-five years. However, participating in
the BRI has been a strongly felt need in the Dhaka making China emerge as the
seemingly perfect fit to alter Bangladesh’s infrastructure deficit. The two
countries have increasingly shared more comfort in jointly developing
infrastructure projects which have been beneficial to both. While Dhaka
benefits with assistance in infrastructure development, Beijing also views this
as an opportunity to expand its geo-strategic footprint in South Asia. It is
important for Dhaka to draw lessons from fellow South Asian small-states like
Sri Lanka and cautiously engage with China. However, Bangladesh has been firm
on its view of engaging with China at a level that is mutually beneficial to
both. Infrastructure development has been at the heart of this relationship,
and is expected to strengthen further in light of the current Covid-19
pandemic. While the crisis has been a hindrance to the existing projects which
were under progress, it has also opened a new avenue for both the countries to
cooperate on health infrastructure. Bangladesh-s recent demand of priority for
cooperation from China reaffirms their willingness to cooperate. Towards this
end, Chinese Ambassador to Bangladesh, Li Jinming has reassured Bangladesh that
China will remain its ‘most
reliable’ partner.
