China is not the middle kingdom
It is the middle-aged kingdom
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Dichotomy
Why is China doing what it is doing? Two recent articles highlight the dichotomy of the situation. The article ‘China Talks of US Decoupling and a Divided World’ highlights the views of Zhou Li, a high ranker in CCP. He cautions China to prepare for - shrinking external demand, disruption of supply chains, coexistence with coronavirus over the long term, an outbreak of a global food crisis (in China?) and a resurgence of international terrorism (Tibetan and Uighur?). The Chinese economy is painted grim due to reduced exports, stalled production, blocked international logistics, raw materials lacking, and low productivity. Stable growth and job security are under high pressure. The other article talks of China’s Unconventional Levers of Power in World Affairs . The unconventional levers include building and exploitation of economic dependence, unfair practices, influence operations, capture of the elite, coercion through minimal force application but maximum reprisal promise, capture of international communication enterprises and creeping territorial expansion.
Things do not add up. A wannabe
superpower with a grim economic outlook does not go around antagonizing its
neighbors without a reason. We need to look elsewhere.
Historical Perspective
Recent
Chinese History
(1899 onwards) has five clear cycles. Significant events of each cycle are listed.
The Chaotic Cycle (1899-1948). Boxer Rebellion against the waning Manchu Qing
Dynasty, Beiyang
warlordism , Rise of Nationalists, End of imperialism, Proclamation of
Republic of China , Rise of Communists, Japanese invasion, Long March by
Mao (1934-35), Civil war, and Famine (10 million dead).
Mao’s
Great Leap
Cycle (1949-76). Annexation of Tibet, Great Leap Forward, Greatest Manmade famine (36-40
million dead), Sino Indian War, 10-years of Cultural Revolution, Nixon’s visit and Economic reforms.
Deng’s Consolidation Cycle (1977- 97). Open-door policy, Four Modernizations, One-child policy, Vietnam
War, Tiananmen Square incident, Reversion of Hong Kong reverts, One country two systems, Third largest economy and
Superpower aims by 2050.
The Cycle of Rise (1998- 2013). Second largest economy, Joining WTO, World’s biggest
exporter, Space entry, ASAT capability, Beijing Olympics, and Weathering global financial crisis. Aging demographics
surface.
The Overheated Expansion
Cycle (2013- till date). Xi’s lifetime presidency, efficiency and
anti-corruption drive, cooling economy, BRI
and CPEC , Made in China 2025, Military expansion and modernization, Trade war,
South China Sea claims, Wuhan Virus outbreak, Hong Kong crisis, and
Sino – Indian crisis,
Standout Issues. Chinese sense
of superiority is historical. It spurs the national ambition of attaining
Superpower status. Deng set that to happen in 2050. The current cycle has seen
extraordinary expansion of Chinese economic, military, and political power. The
‘China Dream’ of being a superpower was preponed to be achieved by 2030. Prima
facie it seems over ambitious. Till one sees the demographics. Also, the popular thinking that China has
long term strategic view of things is a myth not borne by its history. The past
century has been cycles of self-humiliation, internal strife, and revisionism
where the state has promised prosperity and nationalism for surrender of personal
liberties.
Demographic Compulsions
China’s large population, is aging fastest due to falling birth rates and rising life expectancy (see graph). Chinese birth rates are the lowest for 70 years despite easing the one-child policy. China has approximately 24 million marriageable males without brides. It explains bride trafficking from Pakistan! Its population is predicted to peak at 1.4 bn. Working hands and taxpayers are decreasing. Overall dependency is increasing (see graph). A smaller working-age population must support a bigger, retired population. Social security net is minimal in China. Every working Chinese must support two parents and four grandparents. Commonly known as the 4-2-1 phenomenon. China’s economic growth was based on labor-intensive manufacturing . The drop in labor force, increases labor costs, makes goods less competitive.
Race Against Time
The
Middle-Aged Kingdom will get old before it
gets rich. Beyond 2030, China’s economic growth faces a cap,
when the overall dependency ratio starts spiking. If China must
be a superpower, it must get rich before it becomes old and decline sets in. It
is a race against time to 2030.
The ‘get
rich before old scheme’ has four drivers. One. Productivity-enhancing reforms to
snare the rich and lazy as well as the poor and unable. Create inalienable dependence througha data
driven manufacturing web. Two. The BRI and CPEC; which debt trap poorer
countries. A slumlord mentality to
garner money and power at the bottom of the heap. Three. The ‘Made in China 2025 Plan’,
which envisages transformation of a low end ‘Made in China’ label to the high
end ‘Create in China’ symbol. Ten core areas were targeted for technological
ascendancy and high value returns. Huawei was part of this drive. Four. Build a
world class military to protect its interests and sort out rivals. The first
driver is the basic one. The others rest on that. Incidentally
the only two big economies with better demographics are USA and India. They are
China’s chief threats! Logical so far?
Everything was going great. Purring smoothly on
track barring the small blip of a ‘Trade War’. Till the Wuhan Virus hit
everyone for a six.
Enter the Virus
China realized the lethality of Wuhan Virus by
mid-January. China was being setback
irretrievably. On 25th Jan they
curtailed internal travel. Something was planned when Xi Jinping was out of public view
for about ten days. They ensured International travel continued to carry the Virus
out; to flatten the field.
When global supply chains were disrupted, everyone
realized that China had surreptitiously created dangerous dependencies. Clamor for decoupling commenced. As the virus spread, the BRI came to a grinding
halt. ‘Made in China 2025’ was endangered by an anti-Huawei campaign. Plan
Superpower was being broadsided by the Virus.
By third week of Apr there were calls for hard decoupling. India and ASEAN
were at the forefront to reap the relocation dividend. How to save a falling
economy? Plan 1. Gobble up attractive
assets affected by global stock market crash. That was resisted
internationally. Plan 2. Undermine decoupling. Enable relocation through
Chinese investment and tutelage. Only countries like Bangladesh agreed. India
was vying for Global Leadership also. Hence Plan 3. India and ASEAN had to be
forced into submission to re-establish global dependency on China. Isolation would then automatically end. India, a prime competitor, had to be dealt militarily.
Australia, Hong Kong, Taiwan, and others needed different
levers. The key
- derail relocation/ decoupling through coercive control taking advantage of a
weakening USA and a divided Europe. The BRI and Made in China 2025 would
eventually recover. The ‘Superpower 2030’ plan would go through with some
delay.
However any conflict with India could escalate
and slow down the economy unacceptably. Hence the Chinese aggression had to be
low key, calibrated, but belligerent to assert strategic control politically
and economically. The hallmark of the current Sino Indian standoffs is that
even till date Chinese deployments are not tactical. All they have tried is to demonstrate
force, manufacture victory, talk peace, and re-establish economic control so
that India cannot rise. Once that was achieved, the rest
would follow suit. In this context, China’s
Unconventional Levers of Power in World Affairs makes immense sense.
If
Galwan action had gone their way, China’s aim would have been achieved. However
that was not to be. India stood up and inflicted a bloody nose. China has realized
that it has miscalculated. Its superpower ambitions are at stake. It started
talking peace.
The Oldman’s Situation
An isolated China is in a two-front situation
with its biggest competitors. PLA is negotiating with the Indian Army after the
bruising it received at Galwan. Substantial
PLA forces will be tied down till status quo ante is achieved. Three US carrier
fleets pivoting around Taiwan in South China Sea are an overmatch for PLAN. The
USA is determined to not let China claim South
China Sea as its own. Other nations are aligning to this. Floods in central
China, periodic surfacing of the Wuhan Virus, Swine flu and Bubonic plague
outbreaks are adding to economic and social problems. Hong Kong situation is
still volatile. Banning of apps by India and Huawei’s ouster from UK and USA
will have a wider effect on the Chinese information game. Bank runs are surfacing. Bank withdrawals are
being limited. Combine it with Zhou Li’s views on economics – jobs, production,
exports, logistics, weak consumption. Problems galore.
Back to the Virus. It is still raging. As the
virus continues some decoupling is automatically happening. People’s habits are
changing. In addition, big players like Apple and Microsoft are gravitating
towards India. Others will follow. It may appear that other countries are
highly infected by the virus and China is better off. However other countries and
communities have started coexisting with the virus better. The bulk of the
Chinese population is still not affected. Chinese strict lockdowns just kick
the can down the road. The problem is still ahead.
In May, Xi Jinping exhorted China to be prepared for the
worst-scenarios and PLA to prepare for war. The ‘Chinese
Century’ and superpower status by 2030 is receding. This was what
he had in mind. Decline of an aging China will be accelerated by lack of international
trust. Xi Jinping knows this. That is why he has now written to Global CEOs to
say that fundamentals of China’s long
term growth will not change. Xi Jinping has
not given up on his dream. His last gambit?
Postulates for India
If
China declines India must rise. So it is in India’s interests that an aging China
declines. Prepare and act accordingly. The odd finger at Pangong Tso is
irrelevant. Think beyond that.
India
rises despite setbacks and chaos. This is its history. Virus, China, Pakistan, Floods,
Earthquakes et al, affect India but cannot stop it. India underestimates its
greatest strengths – diversity, vitality, soft power, democracy, assimilation,
and trust. India has the skill set to rise. We the people along with
the government must capitalize on this.
The
Indian Armed Forces are strong enough to hold China at bay to let India grow.
If they are strengthened, India will grow faster. Respond accordingly.
Dealing with The Middle-Aged Kingdom
While Chinese
comprehensive national power, is much greater than India’s, it is not overwhelming.
On the contrary, India has the power to derail the Middle-Aged Kingdom. The
following needs to be strategically conveyed and executed.
Altering
the status of LAC unilaterally by China is simply not acceptable. We should not step back.
China cannot afford war and is not prepared for it.
Do not give
any trade concessions to China to appease it. Do not be in a hurry. Do not
buckle.
Dry out
Chinese seepage into our society. Deny data and information to China.
Ensure
Atma Nirbharta and relocation through wise policy and implementation.
Develop
international democratic alliances to counter authoritarianism and
expansionism.
Support
democratic movements in Tibet, Xinjiang, Hong Kong and Taiwan.
Thoughts of Silent Veterans
We have
heard many veterans talk on TV shows. This different view of a couple of strong
and silent senior veterans merits consideration: -
…. keep the temperature high in Ladakh. We have tied down
three Chinese divisions and some amount of his mechanized and air resources.
Keep creating tactical situations should he try to thin out. This will make it difficult for him to create
too much threat elsewhere. Many countries will be eternally grateful to us. We
are used to living and working with sparse resources. Not China… by now all our neighbors, among others, know
that China can at best make small tac gains against us…as regards degrading
China’s national power we are sitting pretty…
Nice Summation.
ReplyDeleteConsise and valuable options for india .Was a pleasure going through this.
ReplyDeleteExcellent analysis and summation. Salutations to you.
ReplyDeleteVery logical analysis. Focused on the big picture and trending on strategic issues. Refreshing and relevant . The authors analysis wisely steers clear of minor tactical issues on which some of our loud speaking tactical thinkers who call themselves ‘strategic thinkers’ or ‘defence Analysts’ have got bogged down. Compliments to the author.
ReplyDeleteVery logical and interesting,
ReplyDeleteGreat writer
Excellent analysis. Compliments to the writer
ReplyDeleteWhy has China attempted to alter the status quo suddenly..knowing the Indian army today can give it a blooddy nose just like Nathu La in 1967 and face off in Sumdorang Chu in 1986.W did it risk opening up a calm LAC now knowing India was deployed adequately in eastern Ladakh..The infrastructure push is a decade old as is the reopening of DaulatBagh airfield....China does not play it's hands for short term gains ever... What is behind this rush of blood.
ReplyDeleteExcellent ! Great suggestions on the way ahead to deal with this monster.
ReplyDelete