Tag: COVID-19

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

ICSLeave a comment

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

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

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

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

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

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

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

Rise in regional flare-ups

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

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

Living with the virus” is more costly

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

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

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

The logic of China’s “zero tolerance” policy

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

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

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

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

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

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

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

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

ICSLeave a comment

Shreha Gupta, Research Intern ICS

Image: Vaccine diplomacy and Nepal
Source: Griffith Asia Institute

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Shadow Banking and the Real Estate Bubble: Is Financial Crisis a Real Possibility in China?

ICSLeave a comment

Anushka Maheshwari, Research Intern ICS

Image: Property-hungry Chinese millennials and shadow banking could fuel a financial crisis
                    Source: South China Morning Post

The Chinese economy, due to the strict measures adopted by the government to curb the spread of the Covid-19 virus,  is back on track, with output back to pre-pandemic levels and a surge in credit activity. China’s financial regulators are having a hard time containing risks at home while limiting disruptions from abroad as the economy is opening to foreign investment. The fear of missing out has stoked the investors’ expectations and many people are now buying property for investment or speculative purposes, which Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, termed as “very dangerous”. The household debt in China had reached 150 percent of its disposable income in December 2020 driven by a rise in property prices and seems to be concentrated among the millennials. The youth of China is clearly banking upon the government to sustain this growth in real estate prices, but a major portion of this debt is financed by shadow banking. People’s Bank of China (PBOC) defines China’s shadow banking as “credit intermediation involving entities and activities outside the regular banking system”.Since this sector is outside the formal banking sector, it lacks a safety net that comes from being financially backed by the government through deposit insurance publicly guaranteed or ‘lender of last resort’ facilities by China’s central bank. This raises an important question: Is China on the verge of a financial crisis like the one faced by the US in 2008-09?

China escaped the 2008 financial crisis primarily because of its booming domestic market and little exposure to the overseas market for wholesale funding. But the contraction in capital inputs through foreign direct investment during the crisis and fall in exports made the government announce a $586 billion stimulus package to provide a boost to the economy. Major infrastructural activity, constituting 72 percent of the package was undertaken, and only 30% percent of this was financed by the central government. The rest had to be funded by the local governments, and since they couldn’t borrow funds themselves, local government financing vehicles had to take on debt on their behalf from banks. But banks had severe restrictions in terms of lending such as caps on lending volumes imposed by the PBOC, mandatory bank loans to deposits ratio, restrictions on lending to certain industries, reserve requirements, among others. Due to this, shadow banking activities grew along with an increase in fixed investment, driving economic growth but at a high cost, so much so that the corporate debt to GDP ratio reached a record 160 percent in 2017 as compared to 101 percent 10 years prior to it. 

The Chinese leadership claimed that it had successfully defused the housing bubble that had formed in China by the end of 2014 due to these shadow banking activities. So, in order to uplift the dampening economy in 2015, it eased restrictions on second-hand home purchases and the property market since then has been booming, with more households buying houses and property developers borrowing more to engage in construction activities. There are many factors causing an increase in shadow banking activities, which in turn contribute to the growing real estate bubble. Firstly, Chinese authorities are trying to sustain high GDP growth rates through credit borrowing which puts strain on financial institutions of the country. Secondly, zombie companies that have little to no productive use, are borrowing more and more simply to meet their current obligations. Thirdly, many state-owned and private companies in China have property subsidiaries, and property loans made to these subsidiaries are sometimes presented in the books as going to the parent company. This results in the share of property-related debt being much higher than what is available in the official data. The overall impact was that the amount invested in Chinese housing hit $1.4 trillion in June 2020, while the total value of houses and developers’ inventory, according to a Goldman Sachs report, had reached $52 trillion in 2019.

Image: Shadow banking in China has ballooned into a $10 trillion ecosystem that connects thousands of financial institutions with companies, local governments and hundreds of millions of households.
Source: Bloomberg Quint

The shadow banking system in China works independently of its monetary policy, amplifying increases in the money supply but working opposite when the restrictive interest-based policy is imposed. Thus, it can be inferred that in spite of the Chinese policy changes to curb the real estate sector, the negative role of shadow banking is why the bubble continues to build. President Xi Jinping’s statement in 2017 that “houses are built to be lived in, not for speculation”  clearly indicates that the PLA government is sensitive to this issue. The government in China has adopted stringent measures to stop the rise in property prices over the past few years, and the latest mandate in August 2020, restricted credit supply to both developers and investors. These new regulations that mandate all lending institutions to decrease the quantity of loans given to this sector are going to stay in place until the real estate cools off. There are two forms of shadow banking in China, one is the channel business of Chinese banks that hide some of their lending activities to keep them outside the purview of the auditors and regulatory bodies. The other is P2P(Peer-to-Peer) lending platforms like trust companies, factoring companies, etc. In order to contract both these forms, the Supreme Court in China has lowered the interest rates on microlending, which will make it unprofitable for lenders while the CBIRC(Chinese Banking and Insurance Regulatory Commission) has forbidden trust companies to finance developers that do not meet the necessary requirements of shareholders and capital or lack necessary licenses.

The PBOC has significant control over lending activity in China as compared to the independent decision-making possible in the U.S. markets, which implies that the situation in China is more stable. There are many structural differences between the shadow banking systems in China and the United States, such as in China, market-based financial instruments do not play as significant a role as they do in the USA. Also, in China, smaller banks went off-balance sheet as they were constrained by liquidity requirements as compared to the larger banks in the US that were constrained by capital requirements. All these factors considerably lessen the chances of a financial crisis like that of 2008-09. Also, the Chinese real estate market has higher-than-normal down payments, sometimes as high as 40-50 percent of the transactions as compared to the 10-20 percent in most western markets. This implies that the debt to transaction price ratio is low, which discourages people from the lower socioeconomic strata of Chinese society to purchase high-priced properties, thereby reducing the risk of defaults. The PBOC and the CBIRC stepped in to take over the Baoshang bank when it collapsed in 2019, whichhas both positive and negative implications.  On one hand, it indicated that the Chinese government may intervene in case of any crisis-related situations caused by defaults in the shadow banking sector, but on the other hand, it may also encourage risk-seeking behaviour from creditors depending on the government to back the financial system. The Chinese government is caught between trying to curb shadow banking activity in order to reduce system risk in the country due to the real estate bubble and ensuring liquidity in the economy. Thus, although the possibility of a financial crisis is low, China does need to reduce risks posed by its shadow banking sector and ensure financial stability.

It’s high time that BRICS should work towards Youth Empowerment

ICSLeave a comment

Dr. Sushmita Rajwar, Assistant Professor, Maharaja Agrasen College, University of Delhi


Image: BRICS 2021 Summit logo
Source: BRICS Youth Energy Agency

We have come a long way from when the term BRIC was coined by Jim O’Neil in 2001 which later included South Africa in 2010. We should remember that BRICS nations came together at a time when there were many changes in geopolitics. It was a time when the 9/11 attacks were changing world politics, China had joined the WTO in 2001, Russia was recovering from the 1998 financial crisis, and India also coming out of the sanctions imposed after the 1998 Nuclear test. The BRICS nations were seen as quite different from each other but there was a great deal of complementarity that existed – China was seen as the ‘manufacturing factory of the world’, India was seen as ‘pharmacy of the world’ and IT Power, Brazil as the ‘granary of the world’ and Russia was seen as the ‘energy hub of the world’ and later South Africa was included as it was the most significant country in the African continent. India also had most of the young population and China is the most populated country among all.

There are many expectations from this year’s BRICS Summit. 2021 marks the 15th anniversary of BRICS and hence, it is an opportune moment to review its work, as the theme suggests “BRICS@15: Intra BRICS Cooperation for Continuity, Consolidation & Consensus”.

One should also understand that the BRICS represents is not just a political configuration but the economic potential to give greater voice to the developing world. The young population of India has had to face many challenges during the pandemic in matters of education and training, finding decent jobs, mental well-being, and the digital divide and it is the right time for BRICS to prioritise these issues.

How can BRICS help?

The initiatives taken up by BRICS countries should prioritise issues of the youth. One of the most important outcomes of BRICS has been the establishment of the NDB in 2014. China hosts the headquarters of NDB & regional offices have been set up in member countries and there is a demand for opening a regional office of New Development Bank (NDB) in New Delhi also. The NDB has funded 18 development projects in India, providing assistance for      Covid-19 emergency relief,  the rapid rail transport network, metro, roads, bridges, irrigation, renewable energy, etc. India has already been granted a US$ 1 billion loan from the NDB for the Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGA). The NDB’s regional office in India would allow young people to gain employment opportunities as well as participate in the decision-making process in the new project proposals too. India can certainly focus on empowering youth by promoting new and nascent start-ups by the young population in India. The Make in India campaign of the Indian government has sought to encourage young entrepreneurs.

If we look in terms of challenges for the youth, there are many, but the China-India Galwan conflict in May 2020 has also raised tremendous challenges to BRICS solidarity and created a huge trust deficit. There has been a rise in strong anti-China sentiments among the youth. The results of the conflict was a series of economic sanctions against China by India – for example, the canceling of a contract by the Indian Railways and opposition to contracts being given to Chinese firms for the construction of the Rapid Railroad Transport System between Delhi and Meerut (this is the same development project that has been granted funding by the NDB in India). The Indian government banned 52 Chinese Apps in India including Tiktok, We Chat which was a huge business loss for these firms. Having around 200 million users of Tiktok in India meant that a sizable portion of this is youth. Indian influencers on apps like Tiktok were adversely affected and had to look for other applications,  losing around US$ 15 million last year.

A large number of young people also lost either one or both their parents to Covid-19. While the government has brought out some schemes to provide free education to such children or youth, we all know that it isn’t going to be enough. There can be many ways through which such people can be provided help. There is a need for the governments of the BRICS countries to look into providing adequate education and training to the younger population. India already has a strong network in providing tele-education to many countries. Therefore, an idea of starting a BRICS Virtual University where young people can choose to study from a variety of courses from different disciplines in hundreds of Universities in BRICS countries can be proposed. This would also enable them to gain suitable employment too. BRICS countries can also come together to help young people find suitable employment in these countries.

There are many Indian medical professionals working around the world. Many young people go to Russia for medical education and become trained doctors and paramedics. These young people can be provided employment in BRICS countries through a substantial framework.

Mental health needs special focus in India through education. The social structure of families, peer groups, religious associations, and caste associations have done little to address mental health issues. Despite the Central Board of Secondary Education (CBSE) making it compulsory to have counselors at schools, only 3 percent of private schools have done so. Solutions should firstly point out the need to recognise the problem and then make efforts to remedy it. Introducing mental health as part of the curriculum would really help school-going youth to understand the fundamentals and seek help when they need it.

India has a huge shortage of healthcare services. As per the WHO the density of doctors per 1000 people should be 1, while only 6 states in India have been able to achieve this. There is a huge shortage of doctors in many other states. Most doctors are also concentrated in urban areas, creating a shortage of medical professionals in rural healthcare. Suggestions to the  BRICS countries could be to create a pool of medical healthcare professionals that can help the youth.

BRICS countries can help in supporting the rural areas of India to enhance IT technology. Specialised training in IT for people living in rural areas should be initiated. NDB can also fund such training programmes to set up IT infrastructure in rural villages so that school and college-going students can undertake online classes. Since the pandemic is here to stay and online courses are becoming more and more feasible, IT centres can be established in rural areas with fibre broadband internet services that can provide space and services to students to undertake their lectures. 

The implications of the pandemic on a country like India are immense. Despite the help that India has been able to provide to different parts of the world, India needs support from the global community. By the time India hosts the G20 Summit in 2023, India should be able to boost its economy. Being part of the BRICS grouping would mean benefits for each other. Therefore, this is the right time India can push for BRICS to help support each other to recover from this pandemic.

The Indian Ocean Region (IOR) during the COVID-19 Pandemic

ICSLeave a comment

Ananya Raj Kakoti, ResearchIntern, ICS

The new world order has been in the making for long, and the COVID-19 pandemic has only acted as a catalyst towards its formation. The axis of power of this world order is tilting toward the geopolitical and geo-economic construct of the Indo-Pacific. This has also led to the subsequent rise of the Indian Ocean Region within the larger geopolitical context. This region has already been dealing with several non-traditional security threats; COVID-19 further adds to this. COVID-19 has not only severely affected public health on a global level, deeming it to be a pandemic but has also put the economy of the world in turmoil along with various geopolitical disruptions and security considerations.

The last decade has seen a rise in regionalism and also a shift of the axis of global power from the West to the East, especially in the context of the Indo-Pacific region at large, and particularly the Indian Ocean Region. The pandemic has ensured that the world can witness this shift and balance of power within the region at an accelerated pace. A post-COVID world will require states to find new alliances and geopolitical alignments to secure their interests. The Indian Ocean Region (IOR) is also witnessing a race among the rival powers to establish their authority amidst this chaos.

National interests and goals of the countries will be pivotal in determining the new geopolitical partnerships that the countries will get involved in the Indian Ocean Region to maximise their gains.

The lockdown led to an economic slowdown, which will force more countries to look for other sources of revenue outside their borders, leading to them being drawn into debt-traps. These traps will be used to their strategic advantages by the investing nations. The Indian Ocean island countries lack the capacity to take advantage of their maritime resources. They also have a hard time facing the threats of piracy, illegal drug-trafficking, and the flow of illegal migrants. The consequential socio-economic challenges put forth by the pandemic has highlighted the internal fissures, which can ultimately cause domestic political instability in a number of countries. Their economic vulnerability leads to increasing internal power conflicts, which are exploited by the external states, causing further fragmentation.

As the vaccine race takes its pace, Russia has already offered Sputnik V to UN employees for free, while China has extended its vaccine diplomacy to Indonesia. However, with its profess in vaccine development, India is on track to emerge as the leader in the new “vaccine diplomacy.” India is not only using this new tool as a way to gain strategic allies in its neighbourhood extending all over South Asia but also beyond its immediate border and all the way to Africa.

The lockdown has also come as a threat to the advancement of globalisation as the pandemic has forced the countries to look inward than outward to meet their needs. The interdependency because of globalisation also aided in forming alliances. With the Indian Ocean Region at the centre of geopolitical realignments, one must understand some important aspects while analysing these trends from the perspective of the geopolitical interests of the various stakeholders, comprising of island countries, regional power, revisionist power, and the hegemonic power. The realignments forced by COVID-19 has also threatened the idea of a ‘Free and Open Indo-Pacific’ in the Indian Ocean Region.

In the Western Indian Ocean, the inability to enforce the laws makes it vulnerable to drug smuggling, human trafficking, terror financing, and ease of terrorist and criminals movements both on land and at sea. This region has rampant illegal, unreported, and unregulated (IUU) fishing activities as well. The pandemic is further adding to the misery of the countries in the Horn of Africa through its uncertainties as they are still struggling with issues such as food insecurities, humanitarian issues, ethnic conflicts, economic challenges, debts, and locust swarms. One can witness an increasing competition for establishing naval bases, especially in the post-COVID-19 world order, amplifying the concerns about securing navigation routes as it signifies an intense race among the stakeholders to control the choke points.  One can also witness the rise in tensions due to the ongoing conflicts which threaten the freedom of navigation through the Strait of Hormuz, which is a critical passage in the global trade route in the Persian Gulf. The modernisation drive of the Pakistan Navy can disrupt the existing regional balance of power, especially because of China’s strong naval alliance with Pakistan. The Arabian Sea witnessed the Malabar Exercise, which saw the participation of India, the United States of America, Japan, and Australia, who form the ‘QUAD.’ This exercise concluded with the intent of sending a clear message to an expansionist China.

The Eastern Indian Oceansubregion is threatened by human trafficking, drug trafficking, piracy, and Jihadist militancy. The weaknesses of the littoral states around the Bay of Bengal acts as a catalyst to these problems. The region is also prone to extreme weather conditions, which further weakens the states. However, one can observe the changes in the Bay of Bengal region, as the naval capabilities of the littoral states are increasing. This proves that these states are becoming aware of the importance of their maritime zones, which can be observed in their capacity building operations to ensure the region’s security. The Bay of Bengal also witnessed the first phase of the Malabar Exercise involving the ‘QUAD’.

The reactive approach of the USA gives the impression that it is unlikely to play a significant role in shaping a new maritime system in the region. The existing national security perspective of America focuses largely on strengthening an advantageous political environment in the Middle East and the Persian Gulf, along with managing the Chinese naval presence. Although China does not have an officially recognised policy on the Indian Ocean, the Chinese involvement in the Indian Ocean Region can lead to a change in the regional balance of power, disrupting the existing security architecture. India, on the other hand, has come up with SAGAR, “Security and growth for all in the region” policy, and the Shangri-La speech vision of India for the Indo-Pacific is rooted in the concept of a free, open, and inclusive maritime order. India has taken up the approach of becoming a “net security provider,” considering the Indian Ocean Region to be in its backyard and intending to keep the Indian Ocean as India’s Ocean’ as pointed out by KM Panikker. Under ‘Mission Sagar’, India has been assisting Mauritius, Maldives, Seychelles, Comoros, Madagascar, and so on, with not only COVID-19 but also with dengue outbreaks. One can also observe increasing logistical and tactical interoperability of nations involved in the MALABAR series of exercises that facilitate enhanced situational awareness.

France is a littoral state to the Indian Ocean through its overseas territories allowing France to maintain a strong military presence in the region. Realising the importance of the construct, France announced its Indo-Pacific strategy in 2018. Although traditionally France has focused on the Western Indian Ocean, it is expanding its interest towards the Eastern front as well, while acknowledging India as a Strategic Partner in the region. For Germany, the Indian Ocean has become a “strategic and diplomatic priority” with its rising geopolitical and geo-economic significance. In November 2020, the defence minister of Germany announced their warship will patrol the Indian Ocean Region to manage China’s influence in the region.

Given the dynamic turn of events, stakeholders should move promptly to build a holistic maritime security system in the Indian Ocean. Priority should be given to strengthening maritime security and safety through capacity building and dealing with various traditional and non-traditional challenges. It is crucial to maintain stability and peace in the region, and hence, must be on the agenda of all the stakeholders involved, irrespective of their national interests. The Indian Ocean is important to India, and being located at the heart of the region, India should move beyond ‘sea denial’ to a ‘sea control’ approach and, given the present situation and opportunity, develop robust maritime diplomacy. The security dimensions in the Indian Ocean are bound to change, and it will be a deciding factor in the future of global power politics. The current world order will change, whether some like it or not, and the pace of the change has quickened surprisingly, because of a virus.