A Follow up on The Chinese Checkers and Corona The Chinese Chernobyl
The World
wants China to be like it!
China
wants the World to be like it!
General
Things are moving quite rapidly globally. The Virus is raging on,
under control or making a comeback depending on where you are. Equally Chinese
aggression, Chinese Diplomacy, and China led New World Order are being debated
hotly. Makes one wonder. Is China the only country in the world?
However certain events suggest that things are not rosy. Outward appearances could
bely the actual inside health. Within China itself things seem to be
“IFFY”. Hence it is time to take a dive into China to see what is
happening there.
Corona Virus Scene
Has the virus come back home to roost in Wuhan? The entire city of
11 million is now being tested. Shulan, in Jilin Province has seen an
outbreak. It has set off alarm bells in neighboring provinces. Typical
Chinese reaction. A Party official(s) has been sacked. 100
million under lock down. The point is that China is not out of the woods. The
Chinese reaction represents a paranoia. The Virus will haunt them.
Unfortunately, it does not react to communist edicts. As the
Virus continues to rage globally, as it will, the stigma on China will keep
magnifying. The danger China faces is that the power of
democratic politicians to sway people and deflect their shortcomings. The
Chinese Communist Party has vastly underestimated. Democracies can be more
venal than
autocracies since politicians practice survival and blame game on a daily
basis. If Governments must survive their failings, China and Corona offer
perfectly legal targets to aim at. Politicians will not miss it.
100 Nation Effort
100 nations have backed a joint Australian and European Union
proposal to inquire into the origins of the Virus. Xi Jinping has
offered a comprehensive review after the Pandemic recedes. That might never
happen. These democracies have suffered, and their people hold China
responsible for the pandemic. India has also joined in. These are also the
more affluent nations. Hitherto fore China has been dealing independently with
each and squaring them off. Things seem to be changing. Can China hold off
countries whose determination stems from the suffering of their
people? How determined are these countries? It is already being assessed
internally that the aggression of Chinese ‘Wolf Warrior” diplomats who have
often derided and threatened other systems and countries has only succeeded in
stiffening the anti-China sentiment. A push for an independent inquiry
into the coronavirus outbreak is significant. It will either force China to be
more transparent or harden anti-China sentiment depending upon how things play
out. Chinas rise and attitude is viewed as a threat to national interests. That
is coming across very clearly unless of course one is from
Pakistan.
Global Leadership Role
There is a question mark on the Chinese global leadership.
China contributed
just US$50 Million to WHO after USA
withdrew support. Even Bill Gates, an individual, has donated six times more.
The EU leaders raised US$8 billion to
develop drugs and vaccines to fight the pandemic. China made no financial
commitment. China is now offering US$2 billion to WHO. State media
propaganda praises Chinese Leadership, Communist Party, and China as a world power. It highlights
decisive Chinese response and shows the rest of the world as struggling. China saving the world is a
great theme when failed mask diplomacy, rejection of substandard
kits and PPE sold at exorbitant prices is hidden. An internal debate has
however started where views are that, no matter what the international
situation is, China must manage its own affairs well (which is a tacit
admission that it has not). Xi Jinping has urged Chinese to be “mentally and
professionally prepared for the worst-case scenarios”. Chinese expect a
global backlash. More hostile than the Tiananmen crackdown backlash. Overall the
fact is that China is not only unwilling to assume leadership but does not have
the capacity, resources, and experience. This is co related by the fact that it
contributes truly little to the UN also. The entire outlook of China can be
summed up as - ‘China First, Second and Third’’. Rest be damned.
Unemployment and Loss of Jobs
It is reported that 80 million people have lost jobs, 20% Chinese
households can survive 2-3 months without income and 40% a couple of months
more. This is based on a survey of 120000 people by China Household Finance
Survey and Research Centre, Chengdu. The situation is so serious that South
China Morning Post has run a series of six articles on job loss and
unemployment. Estimates of migrant workers in China vary from 175 to 290
million. Around 1/3rd are out of jobs. 8.7 million new
graduates have come out of universities. Very few have jobs. 150 million
self-employed business are facing steep fall in revenues. Many are
folding up. Even before the pandemic, factories were closing but people could
get jobs in an expanding service sector. That virtuous transformation is
disrupted. Service sector jobs are vanishing, factories are closing and workers
facing layoffs. Salaries are down to a quarter in many cases. Many
jobs are traditionally under the radar and hence there is no unemployment
insurance. China’s regional disparity is huge. The situation in
smaller inland cities and rural areas is believed to be worse. People in inland
provinces and poverty-stricken areas are losing their lifelines. Overall
the situation is not dissimilar to our migrant scene. Ours has been magnified
by international media. Severe censorship has hidden theirs. It is my hunch
after reading the entire series of six articles that our social welfare schemes
and benefits seem far better. However the stark issue is that China has major
problem. Most of the jobless people of this generation have not faced
this situation before in their lives. The unrest and instability potential is
huge.
BRI
The BRI continues in a state of virtual
standstill. Projects remain on the backburner for most countries. Lockdowns and
closures continue to disrupt supply chains including from China. Migrant
Chinese workers have been quarantined or repatriated or banned. Most African
nations are asking China to forgive the debt. Countries include Angola,
Nigeria, Congo, Equatorial Guinea, South Sudan, Seychelles,
Mauritius, Zambia, Botswana, South Africa, Zimbabwe, Ethiopia, Kenya, and Sudan.
China has lent US$143 billion to 49 African
governments and their state-owned companies between 2000 and 2017. All this is
under threat. Of course the status of the Flagship CPEC in Pakistan is too
well known. China is now shifting focus to concentrate on two nonphysical components
of BRI namely “Health Silk Road (HSR)” and “Digital Silk Road (DSR)”. These are
salvaging attempts. I do not see revival of work this year. The burden of the
BRI will be heavy and a drag on China.
Decoupling and Self Sufficiency
The decoupling and self-sufficiency process has started. Our own
‘Atma Nirbhar Bharat Abhiyaan ’ has been outlined. USA has started talking to
Chip Makers to shift out of China. Japan has offered 2 Billion to its firms to
move out. In fact most countries are coming out with their own ‘Atma
Nirbharta’ programs as per their requirements. There is a resolve not to put
health and other core security interests’ hostage to China anymore. There will
be second order effects. Relocation of global supply chains has also commenced
with companies looking for alternatives. The culmination will be less
dependency on China. Which means China has less/ reduced leverages. Also China
will lose that chunk of business for ever. Amidst all this one more thing which
is clear is that Huawei is being blocked very aggressively by USA. If Huawei is
blocked, areas /loopholes which China used to exploit for IPR theft will also
get blocked.
Military
There was news that modernization of their
military is likely to continue unabated. That is something I will take with a
pinch of salt. During recessionary conditions, one starts looking at life
extension / upgradation to match budgets. Replacing an old system with a new
one is a very costly and extensive process since an entire ecosystem must be
changed - new weapons, new storage, ammunition, spares, maintenance, and new
production. This cycle would have been interrupted. Most important is training.
PLA is a Conscript Armed Force. It needs high turnover rates of recruitment and
training. This part has been disrupted. The longer the virus lasts, greater
will be the problem for PLA which is a 2.3 million force. At some
point combat efficiency will get hit.
Hongkong
The Hong Kong issue is still playing out.
Demonstrations are happening and people are being arrested. It continues to be
a festering sore. China views it as a weak link in its security. Things are
working to a head.
Taiwan
There are repeated nationalistic calls within
the mainland to capture Taiwan. Everyone knows that it is beyond China to do so
now. It is like the Indo Pak scene. Whenever an incident happens, the clarion
call of nationalists is to sort out Pakistan or retake POK by force. Such calls
divert the attention of the masses from the main issue. Same there.
Economy
There is a lot of debate whether China will
have a V (quick rebound), U (deep and prolonged), L (slow) or W (up and down)
recovery. There is no clear answer. Which ever way it goes, it will not be
rosy. Its huge debt fueled economy makes it tough to start infrastructure
growth. There are suggestions that regional governments should start
major infrastructure projects. It is like asking Orissa or MP to build an
international airport instead of AAI. China has held back any major stimulus unlike
other nations. The official view is that it is not needed. The opposite view is
that any stimulus will only end up servicing debt. There is an export shock
which is expanding with the feeling that the worst is yet to come. The export
economy supports 112 million jobs. These are at risk. Recent South Korean data showed that in May, in ten days, exports fell 46.3
%. Chile’s export of copper (used in everything from cars to power
transmission equipment to smartphones) fell by 7.8% in April mainly due to poor demand from China
(worlds biggest buyer). These events are virtual canaries in the coal mine for
global trade and manufacturing. China is part of the coal mine.
Conclusion
One thing for sure, 20 years back, when I wrote my first
dissertation on China, it was a matter of ‘when’ and not ‘if’. Today there is
more ‘if’ in the China story and ‘when’ seems indefinite. Its superpower
journey has hit a detour. Whichever way it swings, there are implications for
India’s security interests and consequently for the Indian Armed
Forces. I reiterate - Ten feet tall Chinese do not exist. We should
not build up our adversary based on figments of imagination but should assess
him based on facts. The content for this article has been drawn from sources
within China and written mostly by China watchers in China. The facts are
presented as quoted and are available in references below. Please draw your
conclusions. Kahani Abhi Baaki Hai!
“If you know the enemy and know yourself, you need not fear
the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the
enemy nor yourself, you will succumb in every battle.”
― Sun Tzu, The Art of War
― Sun Tzu, The Art of War
Time
to keep track of the enemy as he is changing colors like a chameleon.
Not
in the Art of War. Plain common sense.
References
A very good overview of the ‘China within’.
ReplyDeleteDear Shankar, I very thorough research & finding yet again!
ReplyDeleteThe situation of China is very very bad indeed, both externally as well as internally.
This, is very an alarming & a worrisome scenario which endangers the stability of the entire world geopolitical & economic state adversely to almost a point of no return.
I still maintain my express views that this is not the time to find faults & punish the errant, but to offer global cooperation to overcome this jigentic Covid 19 & global economic health problems! China needs support & not castigation at this stage. It's collapse will have have night marish effects worldwide which must be avoided at all costs. Punishment can & must come later!
For I very in first line in my comments above, plz read A very.
ReplyDeleteExcellent analysis..totally agree that we need to watch China very closely and leverage what is best for India as a fall out of internal turmoils of China
ReplyDeleteExcellent analysis Sir
ReplyDeleteWebsite gave us helpful data to work.
ReplyDeleteI like your post. It is good to see this important subject can be easily observed...
Gwadar Port Pakistan
The challenges of China in future is very lucidly brought out sir.
ReplyDeleteA thought provoking analysis covering the economic aspects that needs to be addressed.
Well analysed
ReplyDelete