CHINA, THE NEW SUPERPOWER

CHINA IS THROWING ITS WEIGHT AROUND IN EVERY CONTINENT, AT TIMES COCKING A SNOOK EVEN AT AMERICA. WITH CPEC, OBOR, AFRICA AND SOUTH CHINA SEA LAND GRABS, IT SEEMS CHINA’S MARCH IS UNSTOPPABLE. AT LEAST FOR THE MOMENT

By Sharad Gupta

INDIA got freedom from colonial rule in 1947. It faced three wars and a socialist regime till 1991 when economic liberalisation was set in motion. 

China, on the other hand, got rid of Japan’s imperialism in 1945 and overcame four years of internecine struggles to emerge as the People’s Republic of China in 1949. It kickstarted economic reforms in 1978 and became a net exporter soon after. Today, India is engaged in catching up with China in almost every sphere of economic life. China, on the other hand, has emerged as a global superpower, having a finger in almost every pie. 

China has proposed One Belt One Road (OBOR) involving over 70 countries. It is building a 2,442 kilometre-long China-Pakistan Economic Corridor (CPEC) through Pakistan-occupied-Kashmir (PoK) and Balochistan to the Gwadar port at a cost of $ 62 billion. It would give China access to the Arabian Sea and a shortcut to Central Asian countries. Since India has always staked its claims over entire Kashmir, CPEC is simply untenable to India.

China has bought huge tracts of land in Africa, besides investing heavily into agriculture, industries and infrastructure projects there. It has been building naval bases in Sudan and Somalia. It has in its pocket three mega infra projects in Zimbabwe, including construction of a new Parliament building. China also donated 20,000 metric tonnes of rice to Zimbabwe to overcome the drought.

Similarly, it has bought or leased huge tracts of land in Mozambique, Zambia, Ghana and Nigeria. It has also signed an MoU with Nigeria for a $ 6 billion infra development deal. Its engagement can be gauged from the fact that Chinese private security services have opened shops in Africa to provide security to their installations and personnel there. 

But how are Africans reacting to the Chinese ‘invasion’ of their continent? A number of studies and surveys have indicated that a majority of Africans are liking China’s indulgence, as it is improving their per capita income as well as infrastructure. After all, besides investment, China also pumps in $5 billion every year in aid and grants.

It is suspected of supplying technology, including nuclear weaponry, to rogue nations like North Korea. It is engaged in territory grabbing exercise in the South China Sea up to the very close shores of the Philippines, Malaysia, Vietnam, Indonesia and even Japan. It has not only created artificial islands but also built a runway on at least one of them in Spratly and Paracel group of islands. It doesn’t care two hoots for either international laws governing maritime boundaries or  judgements of international courts, tribunals or fora that might undermine its economic or strategic interests.

ASIAN SUPREMACY

China has constructed Hambantota port in Sri Lanka, besides some small ports in Bangladesh, Maldives, Sudan, Somalia and Tanzania. These are supposed to be the core of  its ‘String of Pearls’ strategy to encircle India – strategically and commercially. China has already struck friendly relations with Nepal, so far considered India’s closest ally, as its economy depended largely on India.It’s frequent incursions into Indian territory on Arunachal, Sikkim and Ladakh borders are basically aimed at cocking a snook at India’s sovereignty. 

It is because of these developments during past couple of decades that for the first time after the breakup of USSR, we are once again witnessing a bi-polar world.

Yes, China has undoubtedly emerged as the second global power – after the USA. Even America wants China to help it in containing North Korea while at the same time, sending its frigates in the South China Sea to deter China from its land-grabbing campaign.

America’s stated pretext for this exercise, however, is to keep the South China Sea open for international navigation. Though America might be feeling a challenge to its global hegemony, China is emerging as the fastest expansionist country – something like Britain, France, Portugal and Dutch used to do in the past. 

A former journalist Howard W French who has worked for the Washington Post and the New York Times has done an exhaustive research on China and its geopolitics. In a recently released book, Howard has emphatically claimed that the Chinese era is upon us.

But, he asks, “How will the coming China-driven world look?” How best should its neighbours and its rival superpower, America respond? He argues that China’s historical and cultural legacy governs its conduct of international relations. Howard shows convincingly that China’s goal is now to displace American as the lone global superpower.  

China’s recent land grab in the South China Sea is a fait accompli, given China’s superior power in the area. Arbitrators for the United Nations Convention on the Law of the Sea (UNCLOS) issued a 500-plus-page decision against China and in favour of the Philippines. They concluded that Chinese arguments had no legal basis. But China has unilaterally claimed much of the sea as its own. 

Similarly, China’s projection of economic might through the new Asian Infrastructure Investment Bank and One Belt, One Road initiative (OBOR), which intends to bind a huge swath of Asia to China economically via new land infrastructure and consolidated control of the seas, generates “a kind of fatalism about the futility of trying to defy it”. 

GAME CHANGER?

Some see the ambitious China-sponsored OBOR scheme seeking to connect UK, West Europe and Chinese locations by road/rail linkage through West Asia and Africa, as the world’s biggest infrastructure development project.

By achieving new connectivity, this has the potential to rev up the stagnant economies of over 100 countries currently hit by a world recession. It will bring about a massive increase in the movement of people and goods in the medium turn.

China’s recent spectacular land grab in the South China Sea is a fait accompli, given China’s superior power in the area

The reality, however, is that what is being presented by China as an economic game changer is a grand scheme to increase both the depth and range of Chinese economic influence in the world, which can readily morph into a political domination at short notice. The proposed Bangladesh–China–India–Myanmar Forum for Regional Cooperation (BCIM) – the 2,800 km economic corridor – is a component of the OBOR scheme. 

REAL DESIGN

Let’s look into the timing and objectives of the OBOR project. Most economists are convinced that Beijing has launched the OBOR initiative with much fanfare at a time when its own domestic economy is in recession. They believe, China’s demand for new construction in real estate sector has slackened. As economist Mohan Guruswamy has pointed out recently, China’s current domestic annual demand for steel is for only 700,000 tonnes. However, it has the capacity to produce 1.1 billion tonnes of steel.

For China, it would thus make good sense to produce more steel only if the surplus output is used for specific projects – building highways, bridges and tunnels or expanding roads under the OBOR.

However, even the ongoing OBOR scheme will not solve the problem of idle overcapacity in China’s steel sector. World Steel Industry estimates are that the European Union (EU), which usually has the biggest regional demand for steel, would need only 150,000 tonnes for this year, whereas China has an excess capacity of 300,000 tonnes!

It is the same with cement and other materials that are essential for construction and infrastructure building operations throughout the world. Domestic demand in China has been hit by an economic slowdown. The property and stock market bubbles have burst. This has created idle capacity, reducing the demand for cement.

However, Chinese forex reserves are still the largest in the world – by some estimates, amounting to around $1.3 trillion. Because of the world economic slowdown, much of this amount held in western banks, cannot be invested.

What better way to spend these idle dollars in a massive infrastructure development project, like OBOR? As economists point out, the yields from infrastructure projects may not be very high, but the duration of repayment from such projects takes a long time and the rate of return is better than going interest rates.

So, OBOR solves both problems for China: it uses up its idle dollars, ensuring that in terms of loans and tolls it will recover the money invested, and at the same time, keep its own factories running at full steam even as other major economies find it hard to keep their workers employed. In the process, struggling economies of smaller countries in Asia and Africa are helped in building their infrastructure – resorting to the ‘soft’ long-term loans on offer from Beijing. 

Even so, the OBOR may not see the kind of success the Chinese might have hope for. Many big and small countries, including the US and the EU, attended a recently concluded international meet in China to discuss the OBOR.

President Xi Jinping announced that China would spend around $55 billion for the OBOR in the short-term. Significantly, this falls well short of the claims of $750 billion or so worth of investments that were made by it earlier, suggesting that perhaps the world’s most populous country would take its next steps more carefully and cautiously.

MAJOR UNCERTAINTY

In the end what may prevent the OBOR from becoming an attractive proposition for countries keen to move their imports/exports by road/rail is the cost factor. A researcher, Tom Holland, points out that land freight costs are always pegged higher than sea freight costs, because of the time factor. And surely the bulk of export/import items are not high priority items with a brief shelf life. So, most countries may prefer to continue using the sea routes for the movement of their goods – cutting down on costs.

As for the experience in Pakistan and Sri Lanka, both public and political reactions to the impact of Chinese projects have not been entirely positive. By using labour and other components, Beijing is believed to have recouped most of what it spent on building the Hambantota port complex. But hard negotiations continue between the two countries as to what further concessions Sri Lanka has to make to China.

However, it has been worse in Pakistan. Analysts have pointed out that the CPEC practically divides the country into two parts, with thousands of Chinese personnel expected to work in various manufacturing and power producing units. Over 15,000 Pakistan para-military troops provide protection for them from Baluchi and other insurgents, who have created problems during construction of the highways.

To make matters worse, two Chinese citizens have been kidnapped and killed by suspected miscreants a few days ago – causing some anger in Beijing.

COLONISING PAKISTAN

A Pakistani economist, Syed Akbar Zaidi, addressing a gathering in Kolkata recently did not mince words. He said: “It may seem to a visitor to Pakistan these days that the country has become a colony of China!” This, as he says, calls for more trade and business between India and Pakistan.

Zaidi quoted Senator Tahir Mashhadi, chairman of the standing committee on planning and development, who had described the CPEC corridor as “another East India Company is in the offing.”

The most dangerous fallout of the CPEC corridor, he said, would be that Pakistan’s foreign relations, especially those with India, will be determined by China. Observers are more worried about the purchase of scores of big and medium companies by Chinese businessmen in Pakistan, along with the acquisition of thousands of acres of agricultural land along the CPEC highway by China. What do the Chinese want to do with such large tracts of largely water-deficit land in Pakistan?

The most dangerous fallout of the CPEC corridor, would be that Pakistan’s foreign relations, especially those with India, would be controlled by China

Already there are reports that the Chinese intend to build new army bases on Pakistani soil. But, given the level of insurgency in Pakistan and keeping the rebellious nature of Baloch warlords, the future of CPEC doesn’t look very bright as of now. So, how will China, a superpower with the expansionist mindset, impact India? The answer is simple. India’s economy is bullish and the country is not a laggard in any way. India of 2017-18 cannot be mistaken with India of 1962.

We have the technology and the weapons.  We might be trailing China somewhat in firepower or military personnel, but this shortcoming is more than taken care of by our nuclear arsenal and our growing friendship with the other global superpower. Most importantly, global opinion is increasingly going against China. They might like to continue trade relations with China but few counties would like China to assume a role of the predatory state.

What about the border dispute? China has never accepted the sanctity of Sino-Indian border as earmarked by either WH Johnson or Henry McMahan, claiming that it was never given a copy of the boundary settlement done by then British rulers of India. It also rejects the Simla Accord signed between India and Britain, during which Chinese representatives too were present. 

Can the boundary dispute ever be resolved amicably? No diplomat or foreign policy expert feels it can ever be. Former External Affairs Minister Natwar Singh says candidly, “I don’t think it can ever be settled.” But, to ward off incursion threats or a repeat of 1962, India is strengthening its infrastructure along the Indo-China border -making roads and airstrips close to the border, besides strengthening our communication infrastructure as well. Army Chief Bipin Rawat too sent a tough message to Pakistan, China and trouble mongers within the country, by saying that India is fully ready for a simultaneous two-and-a-half front war (China, Pakistan) and also included in his statement internal security requirements) With world politics depending more on economics than military, there seems to be no imminent threat of another Sino-India war. 

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