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China Report

China Report; 57(1)

An Introductory Note for the Articles

The Indo-Pacific region is now home to at least two competing regionalism road maps, China’s Belt Road Initiative (BRI) and Japan’s Free and Open Indo-Pacific Vision (FOIP). Through comparing their respective development trajectories, this article examines the relationship between these two regionalisation initiatives. Key lines of enquiry include the following: Is the interaction between the BRI and the FOIP Vision reactive, proactive or both? Why has each initiative changed its trajectory? How can we characterise these competing initiatives? This article by Stephen Nagy employs a regionalism matrix analysis that compares two different approaches, integration from a ‘rational-legal perspective’ with an emphasis on broad cooperation and state sovereignty from a ‘process-oriented perspective’ with a focus on exact goals. It finds that the BRI focuses on both a high degree of state sovereignty based on a ‘process-oriented perspective’ and exact cooperation. In contrast, FOIP stresses integration through a ‘rational-legal perspective’, broad cooperation and a shared rules-based order. Furthermore, there is a reactive interplay between these two regionalism frameworks that shape their orientation and influences their focus.

China’s contest with the global community has entered a delicate phase post the COVID-19 period. While the COVID-19 pandemic has exposed the non-responsible act of China in tackling the virus to prevent its spread outside the country, the recent aggression of the Chinese leadership on land and maritime domains in Asia has revealed the long-term international objectives of China’s ambitious foreign policy under Xi Jinping. As China attempts to rebuild its global image and profile post the pandemic and, most importantly, to reorder its global governance approach, Jagannath Panda in this article argues that Beijing may like to revitalise its focus on its Guanxi (relationship or networks) and Mingyun Gongtongti or ‘the Community with a Shared Future for Humankind’ (CHSF). In other words, China’s approach to Asia may take a new turn without Beijing shying away from its original intentions of dictating the Asian order.

Although involved in the age of globalisation, China has become more centralised. After the decentralisation from 1978 to 1993, the trend of centralisation has been once again strengthened since 1994, which was called re-centralisation by some scholars. Many scholars only focus on the period since the 18th CPC National Congress in 2012, but they fail to find out the root cause for re-centralisation. They ignore the fact that the 1994 Tax-sharing System Reform is an important sign of China’s re-centralisation, the answer may lie in it. In this article, Jun Yang and Shuyang Sheng analyse the 1994 Tax-Sharing System from the perspective of Weber’s theory of domination and find out that the anxiety of the new Chinese central government in the early 1990s was the motivation for both tax reform and re-centralisation. At that time, the new central government could rely on none of Weber’s types of legitimate authority to maintain efficient operations because the charismatic authority3 of central leaders had weakened since the era of Deng Xiaoping, and the new type of authority had not been established. In these circumstances, the central government was eager to reshape the authority to stabilise the centralised order, which was also the basic motivation for Tax-Sharing System Reform.

This article by Wing-Choong Lai and Kim-Leng Goh investigates the linkages of the movements in Renminbi (RMB) to the volatility of exchange rate returns of other currencies before and after the yuan devaluation on 11 August 2015. A comparison between the onshore Chinese yuan (CNY) and the offshore Chinese yuan (CNH) is made. Standard regression methods underestimate the tail dependence between yuan and other exchange rate volatility, as financial data are non-normally distributed, especially when an extreme event occurs. We apply Gumbel copulas to capture the presence of tail dependence between RMB returns and the volatility of exchange rate returns for 13 selected currencies and found dependencies not revealed by the standard ARCH models. The tail dependence has increased after the RMB devaluation, suggesting that RMB depreciation is associated with higher downside risks in these currencies. This is most obvious in the currencies of Asian and ASEAN-5 countries that have strong trade and financial linkages with China. The dependence structure has shifted away from the dominance of onshore CNY rates before the devaluation to the growing importance of more volatile offshore CNH rates after the devaluation. Hence, any large depreciation in CNH will lead to higher volatility in the other exchange rate returns, and the corresponding downside currency risks are higher than those of the CNY.

China’s deepening ties with the Republic of Belarus, combined with the latter’s geographic position between the EU and Russia (the veritable leader of the Eurasian Economic Union), stands to potentially benefit China’s bid to deepen economic cooperation with the European Union. More specifically, enhanced collaboration between Beijing and Minsk helps the PRC develop relations with the Eurasian Economic Union (essential to China’s ambitions to augment cooperation with Europe) while simultaneously providing a geographic avenue for China into the central and eastern European regions of the EU for the Belt and Road Initiative (BRI). Nevertheless, the degree to which Beijing’s stronger relations with Minsk will serve Chinese interests in connecting with Europe will depend in large on whether or not Belarus and the EU can overcome significant differences in their relationship, as well as whether the relationship between the European Union and the Eurasian Economic Union (as a partner of the BRI) takes on a cooperative or competitive nature.

During the Second World War, Ramgarh, a small town in northeast India, was the site of the 53rd Session of the Indian National Congress and the training centre for the Chinese Expeditionary Force. By uncovering the links between the two events and knitting them into the broader context of the Indian nationalist movement and China’s War of Resistance, this article by Cao Yin tries to break down the hegemony of the Eurocentric national narratives of the history of the Second World War in India and China. In doing so, it provides an alternative way of writing an entangled history of India and China during the Second World War.

 

I Special Articles


  • Sino-Japanese Reactive Diplomacy as Seen Through the Interplay of the Belt and Road Initiative (BRI) and the Free and Open Indo-Pacific Vision (FOIP)
    Stephen Nagy
    Abstract
     
  • Xi’s Post-pandemic Outlook on Asia: Between Guanxi and Mingyun Gongtongti
    Jagannath Panda
    Abstract


II Articles


  • Why China's Re-Centralisation Emerges in the Age of Globalisation?
    Jun Yang, Shuyang Sheng
    Abstract
     
  • Dependence Structure Between Renminbi Movements and Volatility of Foreign Exchange Rate Returns
    Wing- Choong Lai, Kim-Leng Goh
    Abstract
     
  • The Beijing-Minsk Partnership and Belarus’s Role in China’s Economic Relations with the European Union
    Anthony V. Rinna
    Abstract
     
  • An Indian Town’s Entry into the Second World War: Holding Together the Congress Party and Training Chinese Soldiers in Wartime Raj
    Cao Yin
    Abstract


III Book Reviews


  • Book Review: Daniel A. Bell and Wang Pei, Just Hierarchy: Why Social Hierarchies Matter for China and the Rest of the World
    Ravi Bhoothalingam
    Abstract
     
  • Book Review: François Bougon, Inside the Mind of Xi Jinping
    Jabin T. Jacob
    Abstract
     
  • Book Review: Gregor Benton and Hong Liu, Dear China: Emigrant Letters and Remittances, 1820-1980
    Rakesh Kumar Yadav
    Abstract
     
  • Book Review: Daniel C. Mattingly, The Art of Political Control in China
    Devendra Kumar
    Abstract

 


 

 

 

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