Djibouti

It’s in China’s interest to keep India in good humour and here’s why

(This is a reprint from NewsBred).

We could all look at clues emanating from a two-hour meeting between India’s foreign minister S. Jaishankar with Wang Yi, his Chinese counterpart, in Moscow on Thursday. Or trust the redoubtable Russian foreign minister Sergey Lavrov to have hefted his weight in making them shake hands. But frankly, it’s in China’s interests to keep India in good humour.

As the two troops square up within a punch’s distance in Ladakh, where even a guttural breath could spark off World War III, analysts have a meltdown that India could be facing a multi-pronged war on its borders, none more so than on its eastern, northern and western ones from two heavily nuclear-armed enemies—China and Pakistan. Most are failing to connect the dots that it’s China which presently is more encircled and it’s India which is the centrepiece in the coordinated move.

Agreed, India hosting the QUAD (Quadrilateral Security Dialogue) later this year doesn’t sound menacing at first glance. But the enormity of the moment won’t be lost on pros who know that India now has military logistical agreement with all three other members of the grouping: the United States, Australia and Japan. The one with the US (LEMOA) has been operational since 2016. The one with Australia was signed in June. Now, on Thursday, India and Japan, riding on the visible warmth between Indian prime minister Narendra Modi and his outgoing Japanese counterpart Shinzo Abe, have inked a similar military logistical deal. Who said nothing moved during the Corona?

Even as I write this, French defence minister Florence Parly would’ve left Indian shores after overseeing the official induction of 5 Rafale jets in the Indian Air Force in Ambala on Thursday. Don’t go by the innocent press releases marking the moment. In geopolitical and military sense, it carried a grave message for Beijing.

Quietly in the background, India and France have grown akin to blood brothers. It hasn’t happened overnight. As soon as the Cold War ended last century, India and France had signed a “strategic partnership.” Everyone talks of 36 Rafale jets but it isn’t much in public domain that Indian navy has already commissioned 2 of 6 Scorpene submarines being build in our own Malegaon dockyards. The third one is undergoing sea trials. India had signed a military logistics pact with France in 2018 itself. France was one of the few countries which had backed India’s decision to nuclear-test in 1998.

And this is all because like other members of QUAD, France too needs India badly for its considerable stakes in the Indian Ocean. The two countries could sign a secure communications agreement too which would allow the two navies to share maritime domain awareness. Even before Parly arrived in India, the two countries, along with Australia, had held their a trilateral foreign-secretary level dialogue on Wednesday. Surely, India-France are welcoming the likeminded in fold.

The domino effect of this all must not be lost on observers. LEMOA with the US has extended Indian navy’s reach in southwestern Indian Ocean due to French bases in Reunion island near Madagascar and Djibouti on the Horn of Africa. The logistical arrangement with Australia has bolstered Indian warships in southern Indian Ocean and the western Pacific.

There are two other logistical pacts—besides the US, Australia, Japan and France—which India has firmly secured under its belt. One is with South Korea, the other one is with Singapore. Now Indian officials are openly touting two more in near future—with the UK and Russia, the latter one possibly by the end of this year itself. Yes, Russia—you have heard it right.

And now comes something which completely has rattled the command of the Chinese Communist Party (CCP). India, Japan and Australia have launched a “Resilient Supply Chain Initiative” amongst themselves. In simpler terms, it means the three countries are looking for alternatives to China in terms of relocating industries and supply chains in Indo-Pacific.

Japan, which has considerable industrial presence in China, unlike India or Australia, is even incentivizing its companies to relocate to, say India and Bangladesh. It has taken badly the recent moves by China to intensify dispute in East China Sea. Australia is badly stung by the trade spats with China. The repatriation of Australian journalists by Beijing hasn’t helped matters. India of course has a war at door.

In essence, there is an attempt to disengage supply chains in strategic areas such as telecommunications, pharmaceuticals, automobiles, semiconductors etc from China. This has potential to fundamentally alter the geographical shape of cross-border industrial network in the region. It would hurt China where it hurts most.

India and China could point fingers at each other, and not just Finger 3 or 4, for the downturn of ties between two of world’s most populous nations. China could claim that it has had enough of India’s “running with the hare and hunting with the hound” attitude. India could do likewise. After all, China backs Pakistan both on its terrorism and hostility in Kashmir. But these are no better than academic discourse. The truth is India has moved firmly on its Act East Policy. And China has to look after its back. Like Doklam, this face-off ftoo is likely to end with a loss of face for the Dragon.

 

 

 

Why China is not bothered at the world screaming in its ears?

(This is a reprint from NewsBred).

There is a reason why China doesn’t give a damn to retaliatory measures by the United States, Europe, India or anyone else for that matter.

Individuals or nations don’t turn their back on overflowing coffers and even if they make noise, there is little by way of action on the ground—or ocean if you have South China Sea in mind.

The world today is a buyers’ market and China is stuffing yuan in mouths which open up with the honest intention of registering their protests against the Beijing.

The latest trade figures of China in June are breathtaking. When the world is said to be angry at Coronavirus pandemic and neighbours are traumatized by the Middle Kingdom’s bullying, China’s exports have picked up. The biggest shock though is that its imports have risen by 2.7 per cent too, implying that more money is reaching the pockets of distressed economies of the world.

This is not Cold War II—as analysts are fond of saying these days.  Soviet Union was an empire cut off by the liberal or western world. China, in contrast, doesn’t have an empire. It just has found a way to every central bank and command structure of the nations.

This is more than geopolitics. This is geo-economics.

We all had thought that it’s payback time for a boorish China, induced by the pandemic. Well, it imported $167.15 billion worth of goods in June 2020 and made a nonsense of the Bloomberg prediction of a 10 per cent slump. China meanwhile exported $213.6 billion which is a hike of 0.5 per cent.

If China could import as much as it exports—presently some $46.2 billion adrift—it could scoff at punitive actions by the rest of the world as not just economies but the global industrial chain and trade won’t move without its consent.

China’s imports have taken off since their domestic market today is worth 41.2 trillion yuan. It has grown at a breakneck speed in last six years, contributing 57.8 percent to GDP growth during this spell.

Interestingly, its trade surplus hasn’t dropped by much against the United States. In June, it was $29.41 billion compared to $29.91 a year ago at the same stage.

China’s imports of copper concentrate from the United States is its highest in nearly two years. It’s purchase of iron ore has jumped to 35.3 per cent since October 2017. The arrival of soybeans has climbed by 71 per cent. It has imported record meat, including offal, which is nearly 74 per cent up to the same period a year ago.

And this is cutting across all ideologies, without distinction between friends and rivals. For instance, China is about to open its money reserves for beleaguered Iran. Yet, the arch rivals of the Islamic Republic—Saudi Arabia—is the biggest exporter of oil to Beijing. China’s crude oil imports from the Saudi kingdom has risen by 15% in June. This record import is in the shadow of price war between Saudi Arabia and Russia, the world’s top oil exporters. This is when Moscow, as we know, is said to be the blood-brother of Beijing these days. On top of it, China has also boosted its inflows from Brazil, Norway and Angola.

India of course is a very minor trading partner for China since it imports a mere 3% of China’s overall exports. New Delhi could hurt mega business houses of China, especially the digital kind, but it’s not to say it is bringing beads of sweat on Beijing’s forehead.

India could feel that it has favourable neighbouring relations with the governments in Afghanistan and Bangladesh but China, against it, has brought Sri Lanka, Pakistan and Nepal in its fold. It’s planning to invest $50 billion in Bangladesh over the next couple of years.

China, further, has deployed its military infrastructure around Indian Ocean. It already has eight naval ships in these waters. It has sold 10 submarines to India’s neighbours—8 to Pakistan and 2 to Bangladesh. It has a naval base in Djibouti and a military surveillance capability on Myanmar’s Coco island. It’s offering land exchange to Myanmar.

So even though one keeps hearing the angst of world against China, in effect little is changing on the ground. It would take more than mere rhetoric to keep China honest. So far there is little to suggest that the world is walking the talk.

 

Soldiers have done their bit with lives; what are we doing for our India

(This is a reprint from NewsBred).

All of us are grieved for our dead soldiers in Ladakh. That all of us want a retribution. That the government is literally closing doors on Chinese telecom equipment which enjoys one-fourth of Indian market. That the Confederation of All-India Traders (CAIT), claiming to represent 7 crore traders, has called for a boycott of Chinese products. That the Prime Minister Narendra Modi and Foreign Minister Dr. S. Jaishankar have used the language the nation wanted to hear.

Most of us have also resolved to boycott Chinese goods. It’s also dawning on us though that it’s easier said than done. I mean our mobile phones run on parts supplied by China. Our consumer goods, electronics, toys, furnishings, textiles, luggage, watches, kitchen items, footwear and frozen food etc bear Chinese imprints. We are also heavily reliant on China in pharmaceuticals and automobile sectors. There are thousands—yes, THOUSANDS– of products we import from China. Our supply chains rely on China. Where do we start and where do we end?

If this is unnerving, you could forward the argument that the Chinese entrenchment in our system is creating millions of jobs in trade, kirana shops and logistics. That there is much ado about nothing since our exports matter only two per cent to overall China’s buying. That India’s loss would matter little to China which has economy five times ours size. Besides, how do I throw out my “Ganesha” and “agarbattis”?

This implies that we need a serious introspection. We want our government to hit China hard; we want our soldiers to spill their blood in inhospitable terrains; we appeal for funds to be raised for the martyrs’ families; we dominate hashtags on social media with our outrage but we don’t—or can’t—do anything else. We could urge boycott of China’s goods but please excuse us from doing it ourselves. There is one thing we want from the nation; quite literally the other we do in practice. We want our soldiers to make the ultimate sacrifice but won’t allow that little pinch in the pocket. Can a nation survive without the cost paid by its citizens?

The Confederation of All-India Traders say there are at least 3,000 Chinese products we could easily replace with our own. If you can’t put away your mobiles, make sure you aren’t buying out-and-out Chinese brands. In case of an IPhone or a Samsung, the profits go to those companies and not to component-makers in Shenzen. Besides, what does it take to delete at least Chinese apps from your mobile phones even if you swoon over tik-tok?

China is today only doing what superpowers have done all through since the Industrial Revolution. You loan out a huge amount to a poor or developing country on very generous terms and with a long window. When the debt becomes unpayable, you extract your pound of flesh in form of a nation’s resources.

That’s what China did with Sri Lanka who now has surrendered the critical Hambantota port which is such a critical military advantage to China overlooking India. It did the same to Djibouti which was forced to allow China a military base on its land. Angola is paying through its nose with crude oil on the debt it’s unable to service as per terms. Kenya is on the verge of defaulting on China’s loan extended for a railway link between Mombasa and Nairobi. It could soon be parting with its Port of Mombasa. South Africa is fearing a similar debt trap. There are endless such instances in Latin America, Europe, Asia and rest of Africa.

I am sure none of us want India to suffer a similar loss of sovereignty. That we want this trade disadvantage of $50 billion to be reduced to a nought.  That we are virtually funding China to hurt us. That if we could boycott the Chinese goods we could, it would reduce the trade imbalance by $13 billion in 2021.

Sure, we want Modi government to stand by us with tariff and non-tariff measures. That it must call out China which subsidizes its products, under-prices it, and makes our traders and manufacturers uncompetitive. Our government does—and could do more—to cushion our exporters. That self-reliance–Atmanirbhar—would create products, supply chains and jobs in due course. After all, in this Corona pandemic, we did manage with our supply chains and various local productions did come up.

Let’s not fool ourselves that Indo-China trade is beneficial only to us. It matters hugely to China. There are any number of investments it makes in India through the back channels of Hong Kong and vessel states. That’s why India has decided to screen direct foreign investments. That’s why India has chosen not to be a part of RCEP (Regional Comprehensive Economic Corporation) which would have only rerouted China’s gains. That’s why India has refused to grant market tag to China as neither its’ banks nor pricing is independent of this Communist state. The Modi government is showing its spine: We need to show ours.