XI JINPING ON SINO-INDIAN RELATIONS

March 28, 2013 by

Global Geopolitics & Political Economy

B.RAMAN

In his first visit abroad as the President of China since assuming office on March 14,2013, Mr.Xi Jinping is scheduled to visit Russia, Tanzania, South Africa and the Republic of Congo from March 22-30 and attend the fifth BRICS( Brazil,Russia,India,China and South Africa) summit on March 26-27 in Durban, South Africa. In the margins of the summit, he is scheduled to have bilateral talks with Prime Minister Dr.Manmohan Singh.

2. The PLA Daily of March 21 has carried a report disseminated by the official Xinhua news agency the previous day on an interaction which Xi had before his visit with representatives of the Chinese media as well as media representatives of the BRICS countries based in Beijing.

3.In addition to Xi’s views on the importance of BRICs as an economic co-operation organization, the Xinhua report as published by the PLA Daily highlights the views expressed by Xi on Sino-Indian relations.

4. To quote from the Xinhua report as published by the PLA Daily:

“On Sino-Indian ties, Xi said, to jointly follow a path of peaceful development and development through cooperation not only meets the common interests of China and India, the two largest developing countries in the world, but also does a great service to Asia and the world at large.

“Speaking highly of the important headway in bilateral ties in recent years thanks to concerted efforts of the two sides, Xi urged both countries that are pursuing development at a faster pace to seize the opportunities and take solid steps to bolster cooperation and exchanges in all fields, accommodate each other’s core concerns and properly handle their problems and differences.

“On the boundary problem, Xi said it is a complex issue left from history, and solving the issue won’t be easy. But he said he believes “as long as we keep up our friendly consultations, we can eventually arrive at a fair, reasonable and mutually acceptable settlement.”

“Pending the final settlement of the boundary question, the two sides should work together to maintain peace and tranquility in border areas and prevent the boundary question from affecting the overall development of bilateral relations,” the President added.”

5. Two significant points in his observations need to be underlined. Firstly, he talks of China’s “core concerns” vis-à-vis India and not core interests. Xi and other Chinese leaders talk of “core interests and major concerns” when they talk of China’s relations with the US, Japan and the ASEAN countries. When they talk of core interests and major concerns, they have in mind Taiwan and sovereignty issues relating to the islands in the South and East China Seas.

6. While Xi has not spelt out what are the core concerns of China vis-à-vis India, one could assess that these probably relate to the activities of the Government-in-exile of His Holiness the Dalai Lama from Indian territory, China’s sovereignty claims relating to Arunachal Pradesh and India’s strategic relations with Vietnam and Japan.

7. Of late, the Chinese have been accusing the Dalai Lama’s set-up of orchestrating the self-immolations

English: Indian Prime Minister Manmohan Singh,...

English: Indian Prime Minister Manmohan Singh, left, and Chinese Premier Wen Jiabao shake hands after a signing ceremony held at the Great Hall of the People in Beijing Monday, Jan. 14, 2008. Singh called for expanding business opportunities with China in construction, education, financial services, and tourism in a speech Monday to business executives at the start of a state visit (Photo credit: Wikipedia)

in the Tibetan areas of China. It is likely that the reported revival of the activities of the Tibetan Youth League (TYC) and other pro-independence elements in the Tibetan diaspora in the West could be interpreted by Beijing as adding to its concerns.

8.Even though the Chinese have not openly taken up these issues, the likely impact of the Chinese concerns on this subject on our bilateral relations with China has to be continuously monitored and assessed.

9. As I had pointed out in the past, the Chinese attitude on the border dispute with India has been less confrontational than their territorial sovereignty-related disputes with Japan and the ASEAN countries, particularly Vietnam. In the case of India, they have accepted over the years “mutual accommodation” as one of the principles that should be followed in any border settlement. While they are prepared for mutual accommodation in a border settlement with India, they never talk of mutual accommodation in their disputes with Japan and the ASEAN countries. It is this Chinese acceptance of mutual accommodation with India that should explain the absence of rhetoric when they talk of the border dispute with India as contrasted with the rhetoric in their statements on the South and East China Seas.

10.China’s nuanced policy in matters relating to sovereignty disputes with India is evident from Xi’s recognition of the border issue as a complex problem on which the two countries should keep negotiating while maintaining peace and tranquility across the border and without allowing the dispute to affect the over-all development of the bilateral relations.

11. This is a formulation with` which India need have no quarrel. Neither India nor China has been transparent on the progress in the border talks. As a result, one does not know where the two countries are stuck up. The conventional belief is that the lack of progress is due to India’s opposition to China’s demand for the transfer of Tawang in Arunachal Pradesh to China.

12. In the absence of details regarding the present stage of the talks, there has been no contribution by the non-governmental community of analysts to the search for options to find a compromise solution. There is a need for the two Governments to be more forthcoming on the border talks so that the search for a compromise solution could be intensified. Ultimately, public and political opinion in India has to accept a border settlement .Keeping them in the picture will facilitate this. Since India too has accepted the principle of mutual accommodation, a compromise has to be found which will not seriously affect the national interests of the two countries. Why not the two Governments appoint a small core group of non-Governmental experts from the two countries to come up with alternate ideas that could be mutually acceptable?

13. On the question of China’s core concerns regarding India’s strategic relations with Vietnam and Japan, there is no reason for India to be defensive or apologetic about them. India’s relations with Vietnam and Japan do not pose a threat to China whereas the increasing presence of the Chinese Army in Pakistan-Occupied Kashmir (POK) and Gilgit-Baltistan and of the Chinese Navy in Gwadar in Balochistan do pose a threat to India’s security. The Chinese have been indifferent to India’s core concerns on this. There is no reason for India to be sensitive to Chinese concerns regarding its relations with Vietnam and Japan. (21-3-13)

( The writer is Additional Secretary ( retd), Cabinet Secretariat, Govt. of India, New Delhi and, presently, Director, Institute For Topical Studies, Chennai, and Associate of the Chennai Centre for China Studies. Twitter: @SORBONNE75)

Copyright © 2013 B. Raman.

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INDIA-CHINA TIES UNDER NEW CHINESE LEADERSHIP

February 3, 2013 by

Global Geopolitics & Political Economy

B.RAMAN

China, which already has a new party leadership since the Party Congress in November last, will be having a new State leadership from next month.

2.Mr.Xi Jinping, who took over as the General Secretary of the Communist Party of China (CPC) and the Chairman of its Central Military Commission (CMC) in November last, will be taking over as the State President from Mr.Hu Jintao at the end of the National People’s Congress (NPC) next month. Mr.Li Kekiyang will be taking over as the Prime Minister from Mr.Wen Jiabao.

3. One does not know much about the personal leadership style of Li , but from what one had seen since November, Xi will not be a carbon copy of Hu. He is more smiling and relaxed, more forthcoming, less bureaucratic and less formal in his interactions with his colleagues and juniors.

4. He believes that military strength comes out of economic strength and that further developing the Chinese economy should have the primacy of attention. He also realises that China’s economic gains might be diluted if corruption is not controlled and that corruption among public servants comes not only out of greed, but also out of an unhealthy desire for status. Austerity in personal and public life is, therefore, stressed by him..

5. During his first visit to Guangdong after taking over, many noticed the conscious lack of ostentation in his travels and interactions. Lack of ostentation is emerging as a defining characteristic of his leadership style. It remains to be seen whether he is able to retain it as the State President.

6.In China, the leadership transition takes different routes in the Centre at Beijing and in the provinces. At Beijing, it takes place first in the party and then in the State. In the provinces, it often takes place first in the provincial administration and then in the Party. As a result, one can err in assessments.

7. In Tibet, for example, hardliners owing loyalty to Hu and his policies, have moved into new leadership positions in the administration. From this, it will be wrong to conclude that the hardline policies of Hu will be followed by Xi too. In the provinces as in Beijing it is the party that exercises the command and control over the administration. We have to wait to see what kind of party leadership emerges in Tibet, Xinjiang and Inner Mongolia before assessing whether we might see new minority policies with Xi characteristics.

8. Under the leaderships of Mr.Jiang Zemin and Hu for nearly two decades, one had seen two constants in Chinese foreign policy—- the anxiety to keep in step with the US and the EU in economic matters sans allowing nationalistic urges to distort its economic policies and to keep testing the waters for a more assertive role in the region without needlessly provoking the US. These constants, which are adjudged by the CPC as in its national interests, are likely to continue under Xi too.

9. Four other constants are also likely to continue—- the strengthening of strategic and economic relations with Russia and India, keeping a wary eye on Japan and slowly expanding its interests in Pakistan. Pakistan will continue to be an important factor in China’s South Asia policy and we have to keep a wary eye on it. It will be suicidal to think that China’s interest in Pakistan will ultimately decline. It won’t.

10. The new Party leadership has already made it clear that there will be no dilution of its territorial sovereignty claims vis-à-vis Japan in the East China Sea, some ASEAN countries in the South China Sea and India across the Himalayan border. It will follow nuanced approaches in relation to Japan, the ASEAN countries and India. While it has not hesitated to make vigorous policy moves in relation to its claims in East and South China Sea, it has avoided a confrontational posture towards India.

11. China, under the new leadership, will continue to maintain peace and tranquility across the Sino-Indian border without making any unilateral concessions in the Arunachal Pradesh sector. Keeping the issue alive without letting it become a tinder-box will be the policy.

12.China does not have a policy of countering India by developing a foothold in South Asia. Rather South Asian countries have a policy of countering India by inviting China to their lands. China has no policy of a necklace of pearls in the region, but the countries of the region have separately and independently been following a policy of putting a Chinese shackle on Indian hegemonistic urges. How are we going to deal with it?

13.It is in our interest to keep the Tibetan heart beating in this region. Decades of suppressive policy from the days Hu was posted as the party in charge for Tibet have not been able to crush the independent spirit of the Tibetan youth and monks and their desire for the return of His Holiness the Dalai Lama to Lhasa. The self-immolations since 2009, which have reached the figure of 99, are an indication of the total failure of the Chinese suppressive policy in the Tibetan areas. Suppressive policies towards the Uighurs in the Xinjiang province have also failed to produce results. One hears reports of stirrings of ethnic/Buddhist separatism in Inner Mongolia.

14. Under the leaderships of Jiang and Hu which came to power after Deng Xiao-Ping, China has emerged as a major economic and military power of the region, but the suppressive minority policies inspired and fashioned by Hu with his experience of association with Tibet have made China’s peripheral areas inhabited by ethnic, religious and cultural minorities, despite their economic development, pockets of increasing anti-Han alienation. Hu’s rigid line on talks with the representatives of His Holiness has led to an indefinite suspension of these talks.

15. Without more liberal and empathetic minority policies China’s periphery will continue to be its Achilles Heel. Now that Hu will no longer be there, can one expect a policy change in a positive direction? Xi has not given an indication on this subject so far either at the November Party Congress or subsequently. He seems to believe like other Han leaders that rapid economic development and integration will weaken separatist sentiments. Tibet has shown that this is unlikely to happen.

16. Without showing an open interest in developments in the Tibetan areas, India has to find ways of quietly working for more empathetic policies by the new Chinese leadership.

17.There have to be two constants in India’s relations with China. We must continue to expand and strengthen the economic bridges with China and the regional co-operation mechanisms with which both countries are associated. Secondly, taking advantage of the more nuanced Chinese attitude to India in relation to the border dispute, which is less contentious as compared to its attitude to its sovereignty disputes in the East and South China Seas, we should be exploring the possibility of mutually acceptable border adjustments in the Arunachal Pradesh Sector instead of depending on an eternal status quo.

18.China prefers the status quo presently because its military position in Tibet, while steadily improving, does not give it overwhelming superiority against us. It should be the objective of our military policies that China, either on its own or through its increasing presence in Pakistan, is not able to achieve such overwhelming superiority. China’s interest in the status quo and in peace and tranquility across the Himalayan border will remain only so long as it has no asymmetric advantage over India. To deny it such an asymmetric advantage should be the aim of our quest for new dimensions of strategic relations with the US, Vietnam, Japan, and Australia. Our head-start over China in the Indian Ocean Region has to be maintained in co-operation with the US and Australia.

19. How to achieve a new web of strategic relationships without weakening the present momentum towards better bilateral relations is the challenge before our diplomacy and military strategists as we seek to engage the new Chinese leadership. (3-2-13)

( The writer is Additional Secretary (retd),Cabinet Secretariat, Govt of India, New Delhi, and, presently, Director, Institute for Topical Studies, Chennai, and Associate of the Chennai Centre For China Studies. Twitter: @SORBONNE75 )

Copyright © 2013 B. Raman – South Asia Analysis Group (SAAG).

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World’s Longest High-Speed Rail Line Opens in China

December 26, 2012 by



Bullet trains traveling 300 kilometers an hour, or 186 miles an hour, have begun regular service between Beijing and Guangzhou, shortening the trip from 21 hours to eight.


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Promise of a ‘Great Renewal’ Wafts from China

December 3, 2012 by

Global Geopolitics & Political Economy / IDN

By Shastri Ramachandran*

IDN-InDepth NewsAnalysis

NEW DELHI (IDN) – In the weeks, and months, ahead, there will be tomes written on the significance of the change in China’s leadership with 62-year-old Xi Jinping succeeding Hu Jintao as the new helmsman. The import of the epochal shift, like all things Chinese, may unravel rather slowly.

The obvious text, replete with promises of political reform, more equitable economic development, fighting corruption and the great renewal of the Chinese nation, would be read closely for underlying meaning by the world, including India, for the likely impact, big and small, of the new spearhead of the Communist Party of China (CPC).

If there were no surprises so far – in Xi taking charge with Li Keqiang as his No 2, in outgoing president Hu and former leader Jiang Zemin pushing through their seven nominees to make up the Standing Committee of the 25-member Politburo and four ‘princelings’ taking their ‘due’ place in the Politburo Standing Committee (PSBC) – it is because the moves were plotted and negotiated much in advance of the CPC’s National Congress.

The presence of the “princelings” – descendants of first-generation party revolutionaries – in the sixth generation of Chinese leadership are a reminder that the first post-Maoist ruling elite (born after 1949) is not without ‘organic’ links to the revolutionary era.

The seven may be united by their reformist credentials, which all of them, particularly Xi, are wearing on their sleeve at a time when China is facing severe tests at home and critical challenges abroad. The agenda set for Xi and Li is political reform, and political reform was the principal issue at the 18th National Congress which elected the Politburo and the PSBC.

Reform, in China, means fighting corruption and inequalities, and reducing the extreme economic disparity. In the aftermath of the Bo Xiliai affair, reform invariably means political reform; the ‘political’ part of it being exercises to keep out such political elements from party and public offices, and preventing their rise through party and government ranks.

In his first speech as party boss, Xi mentioned the “severe challenges”. “The people’s desire for a better life is what we shall fight for,” he asserted, leaving little doubt that he would strive to anchor economic reform in political harmonisation. He repeatedly referred to “the great renewal of the Chinese nation,” indicating that this might well be his theme song for rallying the Party to the cause.

India and beyond

For India, the leadership change in China, does not imply any dramatic turn. The fact that China did not pay undue attention, as the Indian media did, to the 50th anniversary of the 1962 war suggests that the new leadership may be looking more for areas of cooperation and convergence than confrontation. In the region, with the U.S. rooting for an Asia pivot, Beijing would like to be on friendlier terms with New Delhi. Bilaterally, China may focus on trade, as India is its largest trading partner with the target of $100 billion expected to be exceeded soon.

Under Prime Minister Manmohan Singh, ably aided and assisted by Shivshankar Menon as foreign secretary and national security adviser, India and China have enjoyed a long spell of warmth, unspoiled by the occasional irritants and hiccups. Singh’s special rapport with premier Wen Jiabao is unlikely to lose its effect overnight even in the changed political situation. Hence, it would be reasonable to expect a period of continuity, at least as long as the present dispensation in New Delhi continues.

Beyond India, China’s relations with the U.S. would determine the new leadership’s impact on the rest of the world. Change in China came within a week of the U.S. elections returning President Barack Obama for a second term. Obama faces multiple challenges at home and abroad; and, he needs China as an ally to cope with the economic situation at home as well as for dealing with issues threatening regional and global peace and security.

There are strategic compulsions for Washington and Beijing to walk hand in hand, at least in the short run. Until a Europe haunted by the political instability rooted in its economic crisis resumes its role as a dependable ally, the elections in Japan are concluded and a West Asia on the boil cooled down, president Obama may resist “internationalising” China’s thrust for “political reform”.

Political reform in China cannot ever remain solely an internal matter, but hastening to integrate China into the “global political system” could have disastrous consequences. If China goes down, in the process it could drag down the US as well as several other economies. It would be best to wait and watch how political reform unravels in China before coming to any conclusions, particularly conclusions for responding to or influencing the process.

*The author is an independent political and foreign affairs commentator who has worked as senior editor with the China Daily and Global Times in Beijing. A version of this article appeared in DNA and is being republished by arrangement with the writer. [IDN-InDepthNews – November 30, 2012] [IDN-InDepthNews – November 30, 2012]

2012 IDN-InDepthNews | Analysis That Matters

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Media Giant Advances on Taiwan

December 3, 2012 by

Global Geopolitics & Political Economy / IPS

Dennis Engbarth

TAIPEI, Dic 02 (IPS) – Taiwan civic reform, journalist and labour organisations have mobilised against the acquisition of the large Next Media (Taiwan) group by tycoons linked with China. They say this threatens Taiwan’s news freedom and even the survival of its democratic political system.The Next Media Group owned by Hong Kong-based garment and media owner Jimmy Lai signed a contract in Macao Nov. 29 to sell four media operations of Next Media (Taiwan) for 600 million dollars to five investors, including Want Want China Times group president Tsai Shao-chung (son of controversial Want Want tycoon Tsai Eng-ming), Formosa Plastics Group chairman William Wong and Chinatrust Charity Foundation chairman Jeffrey Koo, Jr.

Taiwan media reported in mid-October that Next Media Group chairman Jimmy Lai planned to sell his Taiwan print and television outlets, namely the profitable Chinese-language Apple Daily, Sharp Daily, Next Weekly and the Next TV cable network to Koo, Wong and unnamed investors in the wake of losing substantial funds in his cable TV venture due to regulatory delays and difficulty in getting the channels onto operating systems.

However, concern over the proposed sale’s impact on Taiwan’s media pluralism, news freedom and democratic politics soared after a leading business biweekly, Wealth Magazine, reported in early November that Tsai may be behind the takeover.

Tsai, who is a major investor in Hong Kong’s pro-Beijing Asia Television, purchased the China Times, the terrestrial China Television (CTV) and CTI-TV cable television network in November 2008 and later purchased the China Systems Network, Taiwan’s largest cable TV service distributor in a deal approved by the National Communications Commission Jul. 25 this year. This was despite bitter opposition by media reform and civic organisations and ‘full court press’ assaults on critics including journalists, scholars and opposition lawmakers by Tsai`s media outlets.

Taiwan Democracy Monitor president Karl Hsu Wei-chun told IPS that the takeover by Next Media (Taiwan) by the five conglomerate tycoons who have major business stakes in the People’s Republic of China “will have a grave structural impact on Taiwan’s democracy.

“Anyone who has eyes can see that this is the method through which China is buying control over Taiwan, just as in Hong Kong in the 1990s,” said TDW’s Hsu.

Concern over the expansion of Tsai’s media empire was already manifested on Sep. 1 when nearly 10,000 journalists, students and NGO activists led by the Association of Taiwan Journalists (ATJ) participated in a ‘March Against Media Monopoly’ in Taipei City.

The imminent takeover of the Next Media (Taiwan) outlets, especially Apple Daily and Next Magazine, has reignited anxiety over freedom of expression, given the performance of Apple Daily.

Founded in 2001 by Lai after the success of Apple Daily and Next Weekly in Hong Kong, Apple Daily, known for a sensationalist and muck-raking style, has become one of top two national newspapers in Taiwan, neck and neck with the ‘Taiwan-centric’ Liberty Times. Both now have far more readership than the former market-leading conservative United Daily News or the China Times.

In the wake of Lai’s decision, student groups, including a ‘Youth Alliance Against Media Monsters’ held an overnight sit-in at the Cabinet building Nov. 27 and clashed occasionally with police. Labour unions, which had quickly organised in the four main Next Media units, held a vigil outside Next Media headquarters on the evening of Nov. 27.

The KMT government of President Ma Ying-jeou has remained largely silent, with Premier Sean Chen stating on Nov. 28 that his government “will respect the judgment” of several independent regulatory commissions on fair trade, finance and communications.

During a public hearing at the Fair Trade Commission (FTC) Nov. 29, scholars, journalists, economists and consumer rights representatives unanimously urged the FTC to veto or at least suspend approval until the national legislature enacts robust legislation to regulate media monopolisation.

ATJ President Chen Siao-yi stressed that Taiwan’s four national newspapers retain decisive “agenda setting” influence as television and radio news media and internet media get their news almost entirely from the four national dailies.

“If these tycoons gain control over 50 percent of Taiwan’s media, we will never know how much news will be lost and not published and how much of what is published is false,” Chen warned.

“Tsai Eng-meng’s WWCT Group will become a vertically and horizontally integrated hegemon if the purchase of Next Media is approved,” National Taiwan University economics department chairwoman Cheng Hsiu-ling told the FTC hearing.

Cheng estimated that Tsai would gain control of over 50 percent of the national newspaper market, 30 percent of the cable TV market and 19 percent of the wireless TV market, and warned this combination “will result in the concentration of advertising and circulation, and force the other two national newspapers out of the market.”

“We will be left with only one giant upstream source of ‘news’,” the NTU economist told IPS.

FTC Commissioner Sun Li-chun has promised that his commission would proceed with its review in a “transparent” manner.

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ASEAN Stumbles Again On South China Sea

November 26, 2012 by

Global Geopolitics & Political Economy / IPS

Richard Heydarian

MANILA, Nov 24 (IPS) – Against the backdrop of growing territorial tensions in the South China Sea, inflamed by a more explicit Sino-American rivalry in the Pacific theatre, the recently-concluded ASEAN Summit in Cambodia represented the best chance at bolstering regional security through peaceful, multilateral mechanisms.With the ASEAN (Association of Southeast Asian Nations) gathering coinciding with the pan-regional East Asia and ASEAN+3 Summits, Cambodia, as the current chair of the ASEAN, took centre-stage in a broader international gathering, which brought together leading Pacific powers such as the U.S., China, Japan and India.

Ahead of the ASEAN Summit, many commentators as well as regional leaders expressed their hopes for some form of diplomatic breakthrough to address festering maritime disputes in the South China Sea.

Recent months have also witnessed growing diplomatic pro-activeness by countries such as Indonesia to mend intra-regional rifts, especially between Cambodia and the Philippines, and re-focus diplomatic efforts on a peaceful and rule-based resolution of ongoing disputes. For instance, the Indonesian-proposed “six points of consensus” highlights the commitment of regional states to the 2002 Declaration on the Conduct of Parties in the South China Sea and the adoption of a legally binding regional Code of Conduct (CoC).

“We are hoping and expecting that there will be smooth and very productive results of these meetings as far as our advocacies are concerned,” said Philippine Department of Foreign Affairs spokesperson Raul Hernandez. “What is important here is to underscore the ASEAN centrality and, for ASEAN it has always been our position that any initiatives (such as the CoC) should first be accepted and approved by ASEAN and only then would it be presented to other dialogue partners.” His statements echoed Philippine President Benigno Aquino’s cautious optimism regarding a more unified regional stance on the issue of maritime security.

Interestingly, the Philippines has also been very busy with thawing out increasingly frayed relations with both China and Cambodia in recent months, hoping to build positive momentum ahead of the ASEAN summit in Phnom Penh.

The newly re-elected President Obama also called for easing of tensions among claimant states, warning against an escalation in disputes, while Secretary of State Hillary Clinton earlier identified the territorial conflicts as a ‘critical issue’ in need of urgent resolution.

However, much to the disappointment of some Southeast Asian nations, especially the Philippines and Cambodia – reportedly at the behest of China – once again blocked the inclusion of the South China Sea dispute in the summit’s agenda. After all, China has repeatedly warned against ‘internationalising’ the disputes, while actively sidestepping the issue in all recent regional multilateral forums.

In essence, Cambodia has effectively trammeled any development on the crucial issue of adopting a more binding CoC to not only rein in China’s growing territorial assertiveness in the near future, but to also lay down the foundations of a more robust regional approach to resolve intractable territorial conflicts in the long run.

Far from unprecedented, Cambodia’s recent move mirrored its earlier stance during the ASEAN Ministerial Meeting (AMM) in June, where it blocked the inclusion of maritime disputes in the final communiqué. While Cambodia’s actions during the AMM prompted a flash walkout then by the Filipino Foreign Secretary Albert Del Rosario, this time Manila resorted to a formal protest against Cambodia’s decision to once again block the issue from the ASEAN’s agenda.

“Among the principles that the ASEAN community has pledged to abide by is that of centrality; it should also be foremost in our minds as we address concerns in the East Asian maritime region. Prevailing tensions in the area stand to impact regional peace and stability,” President Aquino shrieked in his formal intervention during the ASEAN+3 Summit. “We reiterate our call on all parties concerned to avoid the threat or use of force, and to adhere to universally recognised principles of international law in settling disputes…because respect for the rule of law remains the great equaliser in the relations among nations.”

Aware of Cambodia’s cosy ties with China, Manila’s strategy during the recently-concluded summits was to rally the support of sympathetic and influential external actors such as the U.S., Japan, India and Australia to push for a binding CoC in the South China Sea and exert more pressure on Beijing against further military fortifications and adventurism in the disputed areas.

Refusing to stand idly by, the Philippine president reiterated his concerns in an intervention during the ASEAN+India Summit, emphasising India’s stake in ensuring regional maritime security. “Since a great deal of our (ASEAN and India) trade and resources flow through our seas, the Philippines views that ASEAN and India will mutually benefit from jointly addressing threats to maritime stability through peaceful means in accordance with international law,” Aquino stated.

During the ASEAN+Japan Summit, Aquino underscored the common interest of both Japan and ASEAN states to uphold the rule of law vis-à-vis ongoing disputes by stating, “The Philippines will continue to uphold this principle in its engagement with ASEAN, Japan, and other stakeholders, as the region strives to resolve overlapping maritime claims.”

Foremost in his mind, Aquino also urged the U.S. to play a more active role to stave off rising Chinese assertiveness.

“Each one of our nations has a stake in the stability of Southeast Asia. The United States understands this and, for this reason, has chosen to work with us to ensure the peace and continuous advancement of our region,” Aquino said during the summit, prodding greater U.S. involvement. “While we are all aware that the U.S. does not take sides in disputes, they do have a strategic stake in the freedom of navigation, unimpeded commerce, and the maintenance of peace and stability in the South China Sea.”

In a veiled criticism of China’s preference for a bilateral approach to the disputes, Aquino argued, “We have long said that if it’s a multilateral problem, you can’t have a bilateral solution.” Most interestingly, he also stated, “The ASEAN route is not the only route for us”, suggesting Manila’s possible recourse to greater military cooperation with the U.S. as well as other regional allies such as Australia and Japan, especially if the ASEAN continues to fail in providing a credible multilateral, rule-based approach to ongoing territorial conflicts.

All rights reserved, IPS – Inter Press Service, 2012.

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Kyrgyzstan’s Economic Nationalism Threatens to Choke Chinese Trade

November 24, 2012 by

Global Geopolitics & Political Economy / IPS

Chris Rickleton

BISHKEK, Nov 23 (EurasiaNet) – A surge of economic nationalism is making life uncomfortable for Chinese companies working in Kyrgyzstan.Faced with obstacles to trade and investment in the restive republic, Beijing is looking for ways to mitigate risk. Kyrgyzstan, Chinese officials know, is not the only place in Central Asia eager for business.

Case in point: Early this month, Kyrgyzstan’s parliament voted to ban Chinese trucks from entering the country. Accused of damaging roads and monopolising trucking routes, the giant lorries, typically the HOWO make, are the same types of trucks that have been plying the domestic market with cheap consumer goods and fuelling Kyrgyzstan’s re-export trade for years.

Ironically, Chinese companies paid with Chinese credit are repaving many of the highways the lorries may be forbidden from traversing.

That’s not lost on proponents of the ban, who, in addition to insisting they are protecting some 60,000 domestic truck drivers and loaders, also perceive their giant neighbour as a threat to Kyrgyz sovereignty. Temirbek Shabdanaliev, head of the Association of Kyrgyz Carriers, a lobby group that pushed for the ban, says that “parliamentary deputies showed their patriotism” with the vote.

As it stands now, the legislation has no legal force until President Almazbek Atambayev signs it. Yet such a motion would have been unlikely prior to the country’s 2010 uprising, which ushered in a more pluralistic and capricious political system, say observers.

Under ousted President Kurmanbek Bakiyev, Kyrgyzstan’s economy became hooked to re-exporting Chinese goods to other Central Asian countries. Kyrgyzstan surpassed Kazakhstan as Central Asia’s leading importer of Chinese goods in 2009, its low tariffs effectively promoting Beijing’s trade interests in the region.

Bakiyev was no great negotiator, says Shabdanaliev. According to the trucker association head, Bakiyev’s administration signed a bilateral agreement with China in 2007 that permitted Chinese lorries to weigh up to 55 tonnes, including cargo. That marginalised local drivers who often operate smaller trucks.

At the start of this year, officials cut the upper limit to 48.5 tonnes, although corrupt border officials often overlook regulations, Shabdanaliev says.

“China’s wealth is good for us. It can enrich the country,” Shabdanaliev told EurasiaNet.org. “But in bilateral negotiations we must defend our national interests. If we let our guard down time and again, there won’t be a national interest to defend.”

Parliament’s Nov. 1 action, initiated by the nationalist former speaker, Akmatbek Keldibekov of the opposition Ata-Jurt party, came just days after a brawl between Chinese workers and local residents at the Chinese-operated Taldy-Bulak Levoberezhnyi gold field. The incident forced workers to abandon the site.

Writing in the Chinese press, the head of the Chinese Chamber of Commerce in Kyrgyzstan blamed “opposition parties” for creating “an unstable and risky situation” for foreign investors. He implied politicians were stoking fear of China to further their own business interests. The Chinese Embassy in Bishkek refused EurasiaNet.org’s request for comment.

These types of disruptions have not gone unnoticed in Beijing, where officials know they have other export options, says Alexandros Petersen, a China expert and author of The World Island: Eurasian Geopolitics and the Fate of the West. Beijing is investing in road infrastructure across the region.

Petersen argues that Chinese decision makers are “hedging their bets, building the Khorgos Special Economic Zone in Kazakhstan and opening new customs houses at the Kulma Pass to Tajikistan” to diversify its trade routes into Central Asia.

Moreover, while Kyrgyzstan’s liberal trade regime and WTO membership made it a convenient entry point for goods heading toward richer and larger markets, the country remains a small market in and of itself.

Recent events may force China’s trade chiefs to wonder whether Kyrgyzstan is worth the trouble, a pertinent question in light of the two-billion-dollar-plus proposed railway linking its western Xinjiang province with Uzbekistan via Kyrgyzstan. Many in Kyrgyzstan have loudly denounced that project, too.

As the current cargo row demonstrates, China’s economic might has not translated into political leverage in Bishkek’s halls of power. But on the streets, Beijing has friends: market traders and every day consumers.

Damira Doolotalieva – head of Kyrgyzstan’s Union of Traders, which represents entrepreneurs working out of two of Central Asia’s largest markets, Dordoi and Kara-Suu – has urged Atambayev not to sign the lorry law, warning of a potential backlash: Kyrgyz trucks carry only a third as much as their Chinese counterparts can haul.

Chinese carriers are thus cheaper, she says, and the extra expense of using Kyrgyz trucks will be passed onto local consumers. “Parliament has … taken a decision that will fall on the shoulders of regular entrepreneurs and simple people,” she said.

*Editor’s note: Chris Rickleton is a Bishkek-based journalist.

This story originally appeared on Eurasianet.org.

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Global Rebalancing – Implications For Asia

November 16, 2012 by

Global Geopolitics & Political Economy / IPS

Supachai Panitchpakdi

Nov 15 (IPS) – Although it remains the fastest growing region, Asia is already experiencing an economic slowdown, with gross domestic product (GDP) expected to fall from 6.8 percent in 2011 to slightly below six percent in 2012. Several countries – including China, India and Turkey – have been adversely affected by weaker demand from developed countries.

Given the headwinds from the international economy, some developing countries have since relaxed their monetary conditions and many of them have applied countercyclical measures that are helping to boost household incomes and to maintain a much needed shift from external to domestic demand, alongside the role of investment.

China, for example, has played a critical role in global rebalancing, being the chief engine of world growth since 2009 and having reduced its surplus markedly (from 10 percent of GDP in 2007 to two percent in 2012) as it shifted its economy towards domestic demand.

In China and other major economies in the region, however, internal rebalancing remains unfinished as private consumption should take on a greater role relative to investment. High wage growth will help to support this goal as well as helping to promote further external rebalancing.

High and volatile commodity prices also present a risk to the rebalancing process for the Asian region, because they can be a drag on growth. Rising oil prices, for example, act as an immediate dampener on aggregate spending in fuel-importing countries, contracting spending more or less immediately, whereas any spendi, Ang expansion from fuel-exporting countries occurs only after a lag.

However the main risk continues to be concentrated in the developed economies, where the United Nations Conference on Trade and Development (UNCTAD) has long been concerned that premature and excessive fiscal austerity is choking recovery and growth unnecessarily. The developing economies in Asia have played a major role stoking the engine of growth since the crisis, but this could be derailed if there continues to be a decline in consumer demand from their traditional markets in the advanced economies, and the effects of a reduction in this demand would of course have further spill-over effects if it provoked a downturn in Asian household and investment demand.

The second aspect of the rebalancing has occurred after the crisis. Global trade rebalancing has been largely due to the decrease in China’s exports and the increase in its domestic demand. Trade imbalances for many other East and South-East Asian (ASEAN) countries have not altered significantly. In 2011, the trade surplus of ASEAN as a whole had recovered to its 2007 level and it is currently similar in size to that of China, at about 100 billion dollars.

The rebalancing of the last three years has been due to a number of factors: the worsening terms of trade, especially for China, the decrease in international demand for products collaboratively (vertically) produced by East Asian countries, and the increase in domestic demand in China.

In practice, while China’s trade surplus is largely related to its trade with high-income markets, that of other East Asia countries is largely owing to trade with China. Indeed, the trade surplus of ASEAN countries with China has been increasing in the recent years.

The implications of this rebalancing are largely related to Chinese imports from the region. In this regard, the increase in Chinese domestic demand and the weak international demand for Chinese manufactures are resulting in a shift in the composition of Chinese imports. In practice, China imports relatively fewer goods to fuel its export sectors, and more consumption goods to meet the increasing domestic demand.

In this context, regional partners serving the Chinese export industry (those with vertical supply chain links with China) are likely to continue to be negatively affected as long as demand for Chinese exports remains weak. On the other hand, regional firms serving the Chinese domestic markets are likely to show continuous growth. However, a caveat is that China’s demand for final goods is still largely met by domestic producers, and thus the increase in domestic demand may not have large external spillovers.

A reduction in international demand for Chinese exports may also accelerate the transformation of the Chinese manufacturing industry towards higher value-added goods. This clearly depends on the extent to which Chinese firms are able to upgrade along the value chain and to capture market share in these segments.

If (or when) this occurs, it may have repercussions for the vertical integration of production processes in the region. In practice, Chinese firms could turn from vertically integrated partners into competitors of firms in more advanced countries. On the other hand, the process of manufacturing upgrading may benefit less advanced economies in the region, which are presently competitors of Chinese firms.

Ultimately, what is most important is that regional markets remain open, so that rising domestic demand in each country is met not only by domestic enterprises but also by those operating in other countries of the region. (END/COPYRIGHT IPS))

* Supachai Panitchpakdi is the secretary-general of the United Nations Conference on Trade and Development (UNCTAD).

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China’s New Leadership Led by Xi Jinping*

November 16, 2012 by

Global Geopolitics & Political Economy / IPS

AJ Correspondents

DOHA, Nov 15 (IPS) – State media report that Xi Jinping is to take the reins of China’s all-powerful Communist Party in a leadership transition that will put him in charge of the world’s number-two economy for the next decade.Xi, the current vice president and successor to President Hu Jintao, assumes power at an uncertain time with the party facing urgent calls to clean its ranks of corruption and overhaul its economic model as growth stutters.

His long-expected ascension as head of the ruling party took place at 0400 GMT along with the unveiling of a new Politburo Standing Committee, the nation’s top decision-making body.

According to tradition, the members marched out before the media in a pecking order agreed after years of factional bargaining, a process which intensified in the months leading up to the five-yearly reshuffle.

In a 20-minute speech broadcast live on Chinese state TV and worldwide, Xi admitted there were problems within the CPC that had to be resolved.

"The problems among the party members and cadres of corruption, taking bribes, being out of touch with the people, undue emphasis on formalities and bureaucracy must be addressed with great efforts. The whole party must be vigilant against them," he said.

Xi will consolidate his position at the apex of national politics by being named China’s president by the rubber-stamp legislature next March, for a tenure expected to last through two five-year terms.

Xi will also become head of China’s military, marked a break from the recent tradition of retiring leaders holding onto the post for a transitional period to extend their influence.

It meant outgoing leader Hu Jintao would relinquish all positions of power, giving Xi broader leeway to consolidate his authority.

"Xi Jinping is the chairman and he is the sole chairman, and what makes that important is that it gives him the independence, strength and power to exercise leadership," said China analyst and author Robert Lawrence Kuhn on Thursday.

The standing committee, which had nine members under Hu, has been slimmed to seven and includes Vice Premier Li Keqiang, which would set him on the path to be appointed premier from next March.

Other members include Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli.

They will be tasked with addressing a rare deceleration in economic growth that threatens the party’s key claim to legitimacy – continually improving the livelihoods of the country’s 1.3 billion people.

China is also bubbling with localised unrest often sparked by public rage at corruption and government abuses, and by myriad manifestations of anger among the millions left out of the country’s economic boom.

The communists have a monopoly on political power in China and state appointments are decided within the party.

The process began with behind-the-scenes horse trading and political deals.

It was essentially finalised on Wednesday when the party ended a week-long congress by announcing a new Central Committee of 205 people.

On Thursday, the Central Committee approved the higher leadership bodies, including the elite Politburo Standing Committee.

Factional politics

Observers believe two main factions have been jockeying for power, one centred largely on protégés of former president Jiang Zemin and another linked to allies of Hu.

Xi is considered a consensus figure who leans toward Jiang, while Li has long been seen as a Hu protégé.

Analysts say that despite rivalries between the two camps which are largely divided along patronage lines, they broadly agree that China must realign its economy away from a dependence on exports, while maintaining a firm hand on dissent.

The government ramped up security in Beijing and increased oversight on popular social media sites to prevent any criticism during the gathering.

The run-up to this year’s congress was unsettled by events surrounding Bo Xilai, a political star seen as a candidate for a top post until a scandal in which his wife was convicted of murdering a British businessman.

The sensational affair torpedoed Bo’s political career – he will face trial for charges of corruption and abuse of power – and added to the intrigue in the run-up to the transition.

Reactions

In the streets of Beijing, people gathered to watch as the new leadership committee was announced.

Many said they were hopeful the transition would lead China to a prosperous future.

"We are very satisfied with the new leadership line-up we just saw, we can rest assured now, and more importantly we have high expectations for the new leadership," said a tourist from Sichuan Province.

Across the Taiwan Straits, the Taiwanese are watching the situation very closely. China has long claimed Taiwan as a renegade province.

"To tell the truth, Xi Jinping has just assumed office, we are not very clear of his policy, direction and style, but after all I think he should be following Hu Jintao’s direction, because the cross-strait relation has been good so far, and he should follow through," said one Taipei resident. "That’s the best way."

"Xi Jinping has good relations with the Taiwanese businessmen, so I hope Taiwan’s economy will improve," said a young Taiwanese worker.

Meanwhile in Hong Kong, China analyst Willy Lam said Xi could take a harder line in foreign policy "in order to consolidate his power quickly."

"So we expect, perhaps, possible military confrontation with Japan, the Philippines and Vietnam over sovereignty disputes concerning the islands in the South China Sea and the East China Sea.”

In Japan, the new leadership was cautiously welcomed. Its foreign ministry said Japan wants to develop "mutually beneficial" relations with China’s new leaders.

"We really hope that the mutually beneficial relationship based on common strategic interests will be further developed and enhanced with the new leadership" of China, the ministry’s Deputy Press Secretary Naoko Saiki said.

In North Korea, leader Kim Jong-un welcomed China’s new leadership and pledged to continue to develop bilateral relations.

*Published under an agreement with Al Jazeera.

All rights reserved, IPS – Inter Press Service, 2012.

This article may not be republished, broadcast, framed, or redistributed without the written permission of IPS – Inter Press Service. Republication of this material without permission from IPS, the copyright holder, constitutes a violation of United States and international copyright laws and may result in legal action.


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Asian Giants Poised to Outshine USA and Europe

November 11, 2012 by

Global Geopolitics & Political Economy / IDN

By Jaya Ramachandran

IDN-InDepth NewsAnalysis

PARIS (IDN) – The economies of China and India are poised to outshine those of the United States and Western Europe over the next half century, though an overwhelming majority of the Chinese and Indians are unlikely to attain the living standards of citizens in the rich industrial countries, predicts a new study.

Titled Looking to 2060: A Global Vision of Long-term Growth, the report expects the United States to cede its place as the world’s largest economy to China, as early as 2016. India’s GDP (Gross Domestic Product) is also projected to exceed that of the U.S. over the long term.

2060_oecd“Combined, the two Asian giants will soon surpass the collective economy of the G7 industrial nations – Britain, France, Germany, Italy, Canada, USA and Japan. Fast-ageing economic heavyweights, such as Japan and the euro area, will gradually lose ground on the global GDP table to countries with a younger population, like Indonesia and Brazil,” says the study by the 34-nation Organisation for Economic Co-operation and Development (OECD).

Using a new model for projecting growth in the 34 OECD members and 8 major non-OECD G20 economies over the next 50 years, the report forecasts global economic growth of 3 percent annually, with sharp differences between the emerging-market economies, which are expected to grow at a much faster pace, and the advanced countries, which will likely grow at slower and often declining rates. Cross-country GDP per capita differences mainly reflect differences in technology levels, capital intensity, human capital and skills.

“The economic crisis we have been living with for the past five years will eventually be overcome, but the world our children and grandchildren inherit may be starkly different from ours,” said OECD Secretary-General Angel Gurría. “As the largest and fastest-growing emerging countries fully assume a more prominent place in the global economy, we will face new challenges to ensure a prosperous and sustainable world for all. Education and productivity will be the main drivers of future growth, and should be policy priorities worldwide.”

The report expects that the shifting balance of long-term global output will lead to corresponding improvements in living standards, with income per capita expected to more than quadruple in the poorest countries by 2060. The increase could even be seven-fold in China and India, it says. Subsequently, the gap that currently exists in living standards between emerging-markets and advanced economies will have narrowed by 2060.

“But large cross-country differences will persist. China will see more than a seven-fold increase in per capita income over the coming half century, but living standards will still only be 60% of that in the leading countries in 2060. India will experience similar growth, but its per capita income will only be about 25% of that in advanced countries,” predicts the study.

“None of these forecasts are set in stone,” Gurría said. “We know that bold structural reforms can boost long-term growth and living standards in advanced and emerging-market economies alike.”

Thus, OECD research shows that wide-ranging labour and product market reforms could raise long-term living standards by an average of 16% over the next 50 years relative to the baseline scenario, which only assumes moderate policy improvements.

World GDP

The report forecasts major changes in the composition of world GDP – taken as sum of GDP for 34 OECD and 8 non-OECD G20 countries. On the basis of 2005 purchasing power parities (PPPs), China is projected to surpass the Euro Area in a year or so and the United States in a few more years, to become the largest economy in the world, and India is projected to surpass Japan in the next year or two and the Euro area in about 20 years.

The faster growth rates of China and India imply that their combined GDP will exceed that of the major seven (G7) OECD economies by around 2025 and by 2060 it will be more than 1½ times larger, whereas in 2010 China and India accounted for less than one half of G7 GDP. Strikingly, the combined GDP of these two countries will be larger than that of the entire OECD area, based on today’s membership, in 2060, while it currently amounts to only one-third of it.

“Such changes in shares of world GDP will be matched by a tendency of GDP per capita to converge across countries, which however will still leave significant gaps in living standards between advanced and emerging economies,” explains the report.

Over the next half century, the unweighted average of GDP per capita (in 2005 PPP terms), is predicted to grow by roughly 3% annually in the non-OECD area, as against 1.7% in the OECD area. As a result, GDP per capita in the poorest economies will (in 2011) more than quadruple (in 2005 PPP terms), whereas it will only double in the richest economies.

China and India will experience more than a seven-fold increase of their income per capita by 2060. The extent of the catch-up is more pronounced in China reflecting the momentum of particularly strong productivity growth and rising capital intensity over the last decade. This will bring China 25% above the current (2011) income level of the United States, while income per capita in India will reach only around half the current US level.

Income gaps

Despite this fast growth among “catching-up” countries, the rankings of GDP per capita in 2011 and 2060 are projected to remain very similar. Even though differences in productivity and skills are reduced, remaining differences in these factors still explain a significant share of gaps in living standards in 2060.

Additionally, in a few European OECD countries and some emerging economies differences in labour input will also continue to explain a sizeable share of the remaining income gaps. Indeed, for some European countries, where ageing is more pronounced and/or older-age participation rates are low, these factors are enough to cause a widening in the income gap with the United States, despite continued convergence in productivity and skills levels. [IDN-InDepthNews – November 11, 2012]

2012 IDN-InDepthNews | Analysis That Matters

Image: OECD

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