Biden actually means more trouble for Beijing

Hemant Adlakha, Honorary Fellow, ICS and Associate Professor, JNU

The Communist Party of China has allegedly forbid state-controlled media from choosing sides between Trump and Biden. The leftist intelligentsia had hoped to see hostile “mad king Trump” continue for four more years. The “nationalist” left is also accusing the pro-reform, pro-market neoliberal “right” of pretending to be blind to the fact that “Sleepy Biden” will bring more trouble for Beijing.   

With president-elect Joe Biden not declaring himself winner yet and President Donald Trump refusing to concede defeat, China’s pro-US elite too appears to be confused and divided. Unlike what the international press would want us to believe, that is, overwhelming opinion in China does not see a “Red” or “Blue” White House would bring a turnaround in the worsening Sino-US relations. The truth however is the continuing unclear verdict of November 3 vote is causing ugly ideological spat in the open among the Chinese elites. In the ideological battle being fought on the country’s “lively” social media, there are the anti-US leftists on one hand and the pro-US rightists on the other. The two rival groups are popularly referred to as fanmei and qinmei in Chinese respectively.

From the outset, the leftists in China firmly maintain the American elite will never be friendly towards China. A blog post under the name Weile zuguo qinagsheng, or “For the Prosperity of the Motherland” recently declared, “Given the US imperialism’s aggressive character and its natural tendency to loot and plunder, the United States cannot be friendly with China. The United States will always look at China as an enemy and it can never cooperate with China. The US and China can never enjoy a ‘win-win’ relationship.” Therefore, most Marxist scholars in China uphold the view that a more internally chaotic America augurs well for China. No wonder several leftist commentators have welcomed the turn of events in the past couple of weeks making it clear that President Donald Trump is refusing to accept his electoral defeat and is actively engaged in a coup to overturn the elections and establish “individual” dictatorship.

A recent article in one of the country’s leading leftist current affairs and news platform claims, as compared to a stubborn, inveterate and incorrigible Donald Trump, the Democrats are out-and-out believers in exporting their ideological doctrine. “Scores of NGOs, public intellectuals in China are receiving funds from the US Democratic Party. For example, ‘Wildcat’ – a fake women’s rights blog on Weibo has fallen silent following the closing down of the US Consulate in Chengdu. Why? Because its source of funding has been cut off,” the article proclaimed. Further, the leftist commentators are also pointing out, with the prospects of Biden sure to become the 46th president of the United States, several Chinese public intellectuals – a euphemism China’s leftist scholars despicably employ to describe “pro-US” intellectuals – who had been quiet in past four years have suddenly resurfaced on the Chinese social media, thanks to Trump’s foreign policy of “isolationism” and massive funds cutting to pro-democracy intelligentsia abroad.  

China’s leftist intelligentsia, which disdainfully lambasts those pro-America Chinese who are keenly following this years’ US presidential election, broadly tags them into three types: first, large majority who look at the US election as a source of great amusement. They can easily switch sides from supporting Trump or Biden. It really doesn’t matter to them who eventually enters the White House. What they need to do is to pull a chair to sit, spread enough munchies and beverages in front of them and watch the election ‘drama’ being played out on TV. What they hope to see is Biden winning with a thin margin and Trump adamantly refusing to step down; the white supremacist Trump supporters thronging the streets wielding guns and swords, and Biden fan-followers not far behind. These Chinese are most happy to see 50-50 election outcome tearing the United States apart.

Of course, a small faction among this group would love to see Trump emerge as the winner. This group subscribes to the view that to oppose China has become the US national policy and to contain China is the consensus position of both Democrats and Republicans. But Trump being more blunt and ruthless, like the past four years have shown, another four Trump years will be a good wakeup call to all those “confused” pro-US Chinese. At the same time, there is another small faction who thinks the Democrats, under the curse of “not fully advocating anti-China policy,” will be relentlessly egged on by the Republicans and therefore will be forced to implement a more hardened “anti-China” policy. As a result, the pro-US Chinese will be forced to turn against whoever leads the US administration.

The second types are those who according to the leftists are big fans of President Trump. The leftists accuse them of “living in China but dreaming of America.” For these Chinese, Trump is almost a semi-god or a hero. They have no qualms in their motherland going to tatters while they worship the Unites States. Furthermore, they are in awe of Trump not only because he is being tough on China but because Trump’s protectionism and “isolationist” policies are helping America regain its core values and are rescuing both the United States which is already in decline and rescuing the humankind. In other words, Trump is the only saviour of humanity.

There are not many such people in China. They are easy to identify. They include pro-market “liberals” such as Caixin editor Hu Shuli, the Beijing-based think tank Charhar Institute, economist Justin Lin Yifu, and the author of Wuhan Diary fame Fang Fang, etc. and several other elites from culture and art circles. But they are harmless.

In the third category are those whose hope for the reversal of currently hostile US attitude towards China rests on Biden. In this group, one faction seriously thinks China’s national strength is lagging far behind the US. For they believe though China and the US are destined to collide but because the enemy is stronger it is only wise on China’s part to maintain policy of appeasement at least as long as China grows in strength. Another faction in this group of US supporters believes the past four years under the Trump administration have been rather “abnormal.” They consider the four years under the second term of Obama presidency – called “Chimerica,” as a normal phase in China and US bilateral relations.

Making a dig at the Global Times editor, Hu Xijin, the leftists claim he couldn’t even wait for the final outcome of the vote count and used a fake Twitter account to make an appeal to Biden to revive the Sino-US “marriage.” A couple of weeks ago, Hu Xijin found himself at the receiving end of a fury of attack by leftist scholars for inadvertently stating “Reform and Opening Up is Chinese people’s natural choice.” Besides, the so-called “US worshippers” – as the public intellectuals such as Hu Xijin in China are called by the leftists, are also drawing flak from the leftists because of their feigned “ignorance” of not seeing Democrats as the bigger devil as compared with the Republicans. Unlike Trump who ensured America’s global hegemony accelerates into eclipse for reasons too well known to all, Biden is both a true believer of “liberal multilateralism” and “Cold Warrior.”

Finally, convinced that Biden’s core foreign policy team comprises of Obama “old hands,” the leftist Chinese commentariat no doubt apprehends continuity of Obama administration’s legacy under Joe Biden, especially in the US policy toward China. China International Relations University Professor Chen Zheng, an influential foreign policy analyst recently wrote: “Although Obama administration did not openly declare China as the US strategic enemy, but Trump’s anti-China policy has been built on what he inherited from the Obama White House, that is, the failure of the US national strategy to continue to ignore ‘a rising China’.” In the last phase of the Trump presidency, the US not only openly and publicly started addressing the CPC-led China as the strategic enemy of the United States, but the Republican Party’s extreme right-wing elite was already pitching for US-China “decoupling” and pushing the world’s two largest economies into “Cold War,” Chen Zheng added.

To conclude, China’s leftist intelligentsia appears to be spot on in their assessment that in recent years – as also during the COVID era – the Republicans and Democrats as well as the US political establishment have struck consensus only on one issue, i.e., how to prevent China from rising. Joe Biden will be too happy to carry forward the consensus, the leftists in China are telling us.           

Originally published as Chinese Public Opinion Split over Biden by Nepal Institute of International Cooperation and Engagement (NIICE), Kathmandu on December 3, 2020.

Chinese Commitments in Afghanistan: A Strategic Calculus

Aadil Sud, Research Intern, ICS

Afghanistan has long been a country on the periphery of Chinese policy due to its inherent instabilities, the presence of foreign coalition forces and the influence of the West acting as a buffer against overt Chinese involvement. Well aware of Afghanistan’s reputation as a ‘graveyard of empires’, China has refrained from serious involvement with the country, supporting the Afghan-led, Afghan-owned policy propagated by the West instead. However, with the imminent withdrawal of coalition troops, China has found a security and diplomatic void it is suited to fill, adding to its pre-existing investments in the country.

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.

China’s Infrastructure Development Projects in Bangladesh

Sayantan Haldar, Research Intern, ICS

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.

Geopolitics of Tibet’s Rivers for Lower Riparian India

Yash Johri, Research Intern, ICS
Shivi Sanyam, Advocate and former Judicial clerk, Supreme Court

Source: AsiaNews

Grave hostilities in Ladakh along the line of actual control (LAC) between India and China and actions on the part of government and business have dominated public discourse. External developments apart from those relating to Pakistan are rarely an issue in the domestic narrative but brewing anti-China sentiment amongst several parts of the populace has positioned our eastern neighbor in the national consciousness. While all eyes are fixated on the game of brinkmanship being played out on the LAC, it is an opportune moment to highlight another important area of contention: China’s management of Tibet’s rivers and the plausible impact on lower – riparian countries like India, this matter has arisen in the past and will certainly arise prominently, in the future.

We need to be better informed about this issue, therefore, it’s important to aggregate the cross-section of experience that exists on the issue from varying fields of business, government, law, climate studies, agriculture and others via analyses and interactions. As a student of China and Sino-Indian ties, one feels there are is a lack of dedicated efforts in the country to understand and prepare for the numerous complexities of our relationship with our eastern neighbor, especially with regard to the issue of management of the waters of Tibet. There is an urgent need to generate greater domain knowledge on this matter.

China in the present situation to deflect from the economic devastation that Covid – 19 has been inflicted on its economy and to divert the anger of its people with genuine grievances from the failures of the CCP, has kindled many of its rivalries. At this critical time, the mandarins of the middle kingdom have thrown caution to the wind and are acting unilaterally, disregarding norms and agreements, both bilateral and multilateral to further their agenda. There is a laundry list of enmities, many of these disputes are territorial and stem from China’s desire to maximize its economic and cultural influence.

It is in this political environment that there is a serious need for India to arouse consciousness nationally and build support at multilateral levels to put checks on China’s uninhibited dam building, water diverting and mining projects along the course of the Brahmaputra River (in China known as Yalung Zangbo). While the Chinese share hydrological data for the Sutlej and Brahmaputra, enabling us to anticipate water levels to prepare in time for flooding, they charge us a fee for that. It is interesting to note that, India does not charge its downstream neighbors- Pakistan and Bangladesh. Further, even though there have been numerous MOUs on sharing hydrological data, the latest being in 2018, they stop sharing data as and when they please, as was seen around the time of the Doklam crisis. There is little cooperation in addition to sharing hydrological data, while India has robust water sharing treaties with Pakistan and Bangladesh. It is estimated by Brahma Chellaney in his book, ‘Water: Asia’s New Battleground’ that until China has achieved its national objectives of power generation and river water diversion to its parched northern lands, it is unlikely to acquiesce to any agreement. India has on numerous occasions suffered from floods due to bursting of dams, polluted waters flowing into Arunachal due to upstream mining and construction activity and various other actions where the doctrine of ‘‘sic utere tuo ut alienum non laedas’’ (To use and exploit one’s sovereign property in such a manner so as to not harm the neighbor’s rights and interests) has not been followed.

China has a dual design on reigning in the Brahmaputra river with the future objective of not only generating power for the relatively underdeveloped region but also to divert waters of the Brahmaputra to their northern parts as the third phase of the South North Water Diversion Project (南水贝雕工程总体规划). The dam site they’ve chosen has been detailed by Chellaney in his book at Metog County, Nyingchi Prefecture, where they aspire to build a 38 GW(Gigawatts) generating facility (a capacity larger than the Three Gorges Dam), in comparison the Bhakra Nangal Dam generates a meagre 1.3 GW. Supporting infrastructure in the form of roads and railroads has already or are in the process of being constructed. This location near the Namche Barwa gorge is ideal for power generation given the steep natural fall that water takes before they enter India. Additionally, the point for the water diversion project is further upstream. This entire region is in the proximate area of Pemako, a region considered very sacred by Tibetan Buddhists – where there is vast virgin forests and varied flora and fauna. Further this region in particular is close to where the Indian and Eurasian plates converge thereby being prone to seismic risks.

It is now settled that China is the upper riparian power and reigns sovereign in these areas, following the NDA Government’s 2003 recognition of the Tibet Autonomous Region as a formal part of China. However, its exploitation of Tibet’s blue gold in the aforementioned megaproject and by way of numerous other projects such as the Zangmu dam (completed in 2014 with installed capacity of 500 MW), certainly affects the interests of lower riparian countries such as India and Bangladesh adversely. The NDA government’s action of course is only a cherry on top of the cake that was India’s concessionary foreign policy in the years post-independence. Other rivers such as the Irrawady, Mekong and Salween that also originate in Tibet have been heavily dammed leading to concerns in the countries of South-East Asia into which they drain. Given that many of China’s neighboring states have high dependency ratios (Food & Agriculture Organization data) relative to China for their water supply, with India (33.4%), Bangladesh (91.3% Including Ganga which originates in India), Laos (42.9%), Thailand (47.1%), Cambodia (74.7%) and Vietnam (58.9%), there is certainly a need for a mechanism to ensure a sustainable integrated river basin management. However, the Chinese style is to only deal bilaterally, if at all, as they have stayed away from any such multilateral arrangements, the Mekong River Commission being one of them. Further, China was one of three countries along with upper riparian Turkey that opposed the UN Convention on Non-Navigational use of International Watercourses in 1997, the resolution carried 103-3 with 27 abstentions.

Any questions pertaining to integrated basin management with China will in turn throw up our policy on Tibet, while as a rule – following country we must abide by past treaties and commitments but should certainly not leave any leverage we may have with regard to the land of the Dalai Lama of the table. The entire world is re-evaluating and taking a hard-look at their respective approaches to China, in the aftermath of the events in the Galwan valley, we must do the same.

The North-East of our country being a riverine civilization will feel the major brunt of China’s unilateral action in Tibet, which it refers to as its water tower. While the seven sisters are undoubtedly far away from New Delhi, and given our food surplus at the moment water security may seem like a distant concern. However if we are to act east, we must ensure our water security, not only for the purposes of agriculture, fisheries and the dependent communities but also to generate our own power.

Originally Published as The Great Sino-Indian Water Conundrum in The Guardian,15 July 2020.

The State of China’s Automobile Sector

Amidst the uncertainty regarding the trade war’s impact on Chinese industry, the automobile sector in China will remain profitable

Bhavana Giri, Research Intern, Institute of Chinese Studies

Photo: Visual China

Automobile sector in China is the largest in the world when measured by the number of units produced. Apart from domestic production, people’s demands for all kinds of vehicles in China are met by Joint Ventures (JV). For a foreign company to establish a JV, it is required to enter into a 50-50 partnership with a Chinese company in order to start production in China; a similar arrangement is required for foreign companies to export automobiles to China.

Automobiles from the US are one of the most significant exports to China, ranking just behind aircraft and agricultural output. With a trade value of more than $10 billion, this sector is of great significance to the ongoing trade war. Currently, the automobile sector in China is witnessing a downfall in output growth when taken as whole which is driven by a drop in the production of gasoline based automobiles. However, in the long run, China’s drive to lead in global production of new energy vehicles (NEVs) is slated to offset this downturn, even if the trade war continues. Additionally, the upper hand China has in the automobile joint ventures will also help to recover from the downfall. In contrast, the resilience of China’s NEV sector will adversely impact the competitiveness of its American counterpart.

Demand side conditions are highly favourable and will continue to be so. Three decades ago bicycles were the most popular mode of transport in China and most cars needed to be imported. Today, however, Chinese car makers are producing more cars than any other country in absolute terms. As can be seen from the data, the production of automobile in China increased from 9 million units in 2007 to 23 million in 2018. To be sure, economic conditions are currently turbulent in China.

Observers predict that China’s GDP will decelerate in the near future and its leaders have urged precaution in this regard. The automobile sector, however is poised to remain buoyant, despite macroeconomic woes. The Chinese government intends to prioritise the preservation of automobile demand and supply by providing subsidies and exempting consumers from purchase tax on electric vehicles. These subsidies will ensure that there will be no significant shock to the automobile sector.

China has become the biggest giant in the production of electric cars and bikes. With Domestic Value Addition (DVA) of more than 80 per cent, and a strong grip over the production of essential inputs such as batteries, the sector enjoys a substantially strong footing. Recent falls in automobile stock prices should not obscure this fact.

To the rest of the world, it may appear that China has struggled to make progress in automobile manufacturing. However, the situation has changed drastically with recent developments. China now possesses massive potential for substituting imported automobiles with electric vehicles. With trade talks in a state of disarray and the heightened possibility that China will reapply auto tariffs, it is also likely that automakers will be incentivised further to produce in China. With the exception of the luxury segment, which is less easily substituted, China’s automobile sector is likely to withstand the headwinds it currently faces. Moreover, with the Chinese government establishing stricter norms for controlling carbon emissions and attempting to reduce pollution in cities, the scope for domestic companies to defeat automobile giants such as Toyota, BMW, etc has escalated. The Chinese government is also granting special manufacturing permits to companies which are working to develop NEVs.

The electric vehicle world sales database shows that in 2018, 2.1 million units of electric vehicles were sold which is almost 64 per cent higher than that of 2017. China has advanced its position in this particular segment and has a share of almost 56 per cent of the total sales. Although companies like Tesla, Toyota, etc. are also developing electric vehicles they lack the cost advantage China has, and are, thus unable to capture the market. Several subsidies and tax cuts provided on purchases of electric vehicles further boost demand in the highly populated cities of China. This is illustrated by the fact that profits for BYD jumped 632 per cent jump in 2019. On the other hand Tesla, which is exporting to China in an increasingly hostile trade environment, lost nearly $700 million in the first quarter in 2019, despite robust demand.

Another factor that will support China’s automobile sector is technology transfer. Most automobile production in China happens by way of Joint Ventures (JV) between Chinese and foreign companies, which allows local companies to acquire know-how. The Chinese have also acquired automobile technology by heavily investing in foreign-based automobile companies. Therefore, China’s automobile sector is unlikely to reel in the long-run. Moreover, China is less dependent on foreign value addition than it used to be – its contribution to processing and non-processing value addition process in the production of automobiles is uninterruptedly increasing.

The optimism expressed above does not apply to the American automobile industry, however. To a large extent, US-based automobile companies are dependent on revenues from the Chinese market that their JVs enjoy and are, thus, highly vulnerable to disruptions in bilateral relationship between two nations. For example, automobile giant BMW, is not introducing a new model because of the environment of uncertainty created by the trade war. US automobile companies are experiencing sluggish production while on the other hand Chinese NEV start-ups and companies are scaling up their production.

Unlike others, the automobile sector in China will likely remain profitable irrespective of ongoing trade contestations and tensions, due to the Chinese government’s encouragement to develop NEVs. China’s NEV companies are poised to emerge as leaders in markets all around the world, as they race ahead their counterparts from the US, Japan, and Germany.

The USMCA, China and the Politicisation of Economic Intercourse

Uday Khanapurkar, Research Intern, Institute of Chinese Studies

Strategic competition between the USA and China continues apace in the economic domain with tit-for-tat tariffs and strengthened investment regulations. This reassertion of sovereignty has irredeemably politicised economic intercourse. The market share that a state’s productive agents command has, akin to a conventional resource such as oil, emerged as a veritably prominent component of national power, thus bringing the zero-sum character of the international system to the fore. So much so, that the restructured Free Trade Agreement (FTA) between the US, Mexico and Canada, or the USMCA, also reflects the adversarial tenor in US-China relations.

Much attention has duly been afforded to article 32.10 of the USMCA since it quite explicitly targets China. According to this provision, should any signatory to the agreement enter into an FTA with a non-market economy (read China), the other parties reserve the right to dismantle the USMCA following a six-month notice. Continue reading “The USMCA, China and the Politicisation of Economic Intercourse”

Re-emerging importance of South Pacific Islands

Ms. Prarthana Basu, Research Assistant, Institute of Chinese Studies

At the Pacific Islands Forum in September this year, Nauru, a ‘small’ island country, accused China of heavy-handed behaviour in its attempts to ‘buy’ its way through the region. This brings into sharp focus the increasing centrality of the South Pacific region in the tumultuous geopolitical landscape of the Indo-Pacific. The South  Pacific islands have come into prominence owing to two main factors: climate change, and several layers of power tussles, the most significant of which is between China and the US.

Climate change has had a devastating impact on several island countries of the region, including but not limited to flooding and tsunamis, which has also fuelled fears about its future consequences. On the strategic tussle front, China has invested heavily in these islands to counter Taiwan’s growing relationships in the region, such as with Nauru, Continue reading “Re-emerging importance of South Pacific Islands”

Understanding US responses to the South China Sea Dispute

Saurav Sarkar, Research Assistant, Institute of Chinese Studies

The National Bureau of Asian Research, an American non-profit research institution, recently published a study titled ‘Tenets of a Regional Defense Strategy: Considerations for the Indo-Pacific’. The study comprehensively outlines multiple challenges facing American policymakers in the near future in the Indo-Pacific region – ranging from tensions between India and Pakistan to the militarisation of the South China Sea (SCS).

While the study in itself deserves a read to better understand the present situation and potential crises in the region, there was one particular footnote that demands particular attention. In it, Admiral (Retd) Jonathan Greenert, former Admiral in the United States Navy, talks about his interactions with Admiral (Retd.) Wu Shengli, former Commander of the People’s Liberation Army Navy (PLAN), who made it clear to Greenert that China expected a more ‘forceful’ reaction from the US when it first began building islands in the SCS. The Barack Obama administration’s response, apparently, was not robust enough, which further emboldened China.

On 1 October in New Delhi, a conversation was held between former Australian Prime Minister Kevin Rudd and former Indian Foreign Secretary, Shyam Saran, on ‘Shift in Power Balance – India, US and China’. Continue reading “Understanding US responses to the South China Sea Dispute”

Rohingya Crisis: an opportunity for China?

Navreet Kaur Kullar, Research Intern, Institute of Chinese Studies,

The plight of Rohingya Muslims in Myanmar’s Rakhine state has drawn considerable international attention. The attacks carried out by the Arakan Rohingya Salvation Army (ARSA) on the security installations, sparked the Tatmadaw’s crackdown on the ethnic Rohingyas and thousands of them lost their lives and hundreds of thousands more got displaced. The bloodshed has smeared the international standing of Nobel Peace laureate Aung San Suu Kyi, who led National League for Democracy to a victory in historic elections of 2015. Her supporters have realised that she is either unable or unwilling to take on the military, which is still considered to be the most powerful institution in the country, despite the recent democratic reforms. Continue reading “Rohingya Crisis: an opportunity for China?”

Tightrope walk for incoming Maldivian president

Gunjan Singh, Research Associate, Institute of Chinese Studies

The results of the recent election in Maldives are an indication that a major challenge to the Chinese Belt and Road Initiative is emerging from the vicissitudes of domestic politics in BRI partner nations.The victory of Ibrahim Mohamed Solih of the Maldivian Democratic Party (MDP) in the island nation’s presidential election reiterates the fact that there is something very wrong with the direction of Chinese investment. In the last few years there has been a rise in sentiment against Chinese investment in the countries where the BRI is in play.

The election also strengthens the impression that in the South Asian region, China will have to work at multiple levels to counter Indian influence. Continue reading “Tightrope walk for incoming Maldivian president”