China’s rise inspires awe

S P SETH

China’s rise inspires awe, a combination of fear and admiration. The fear is much more pronounced among some of its neighbours, involving claims and counter-claims of sovereignty over a clutch of islands in the South China Sea and East China Sea. In the South China Sea, the Philippines and Vietnam are particularly at odds with China as it has sought to physically occupy/encircle the disputed islands/islets. In some cases, China is also said to be creating new island (s) out of a submerged coral reef (s) turning them into military facilities/bases to project power and threaten its neighbours. Admiral Harry Harris, new chief of the US Pacific Command, sounded the alarm in Australia recently about a string of islands China has dug out and leveled, posing a threat to stability in the South China Sea, which has some of the busiest sea-lanes carrying global trade.

This is what Admiral Harris reportedly told a dinner at the Australian War Memorial: “China is creating a great wall of sand with dredgers and bulldozers over the course of months.” He added, “When one looks at China’s pattern of provocative actions towards smaller claimant states, the lack of clarity on its sweeping nine-dash line claim that is inconsistent with international law, and the deep asymmetry between China’s capabilities and those of its smaller neighbours—well, it’s no surprise that the scope and pace of building man-made islands [by China] raises serious questions about China’s intentions.” In other words, China is posing a threat to regional stability. According to Professor Michael Wesley, director of the Asia Pacific School at the Australian National University, “This marks a real ramping up of US determination and resolve in the region, reflecting a realization that China is determined to play hard ball in the South China Sea.” In other words, the US is unlikely to let China get away with it. Indeed, this looks like a delayed follow up to President Obama’s declaration of the US “pivot” to Asia announced in the Australian parliament in 2011 during an earlier visit.  

And how will the US go about dealing with the China threat? One way is to forge a common strategy with member states of the Association of South East Asian Nations (ASEAN), as a number of them are contesting China’s sovereignty claims in South China Sea. For instance, ASEAN member states might be encouraged to form joint maritime patrols. As commander of the US 7^th Fleet of the Pacific Fleet, Vice Admiral Robert Thomas, reportedly said, “If ASEAN members were to take the lead in organizing some thing along those lines, trust me the US 7^th Fleet would be ready to support.” Rebutting the idea that China threat might not eventuate, Admiral Harris reportedly told the dinner gathering in Canberra that, “As we like to say in navy circles, hope is not a strategy.”

The US already has security alliances with some regional countries though they are not specifically directed against China. It periodically holds military exercises with its regional alliance partners. Australia, for instance, is a strong regional ally, and has not made any secret of its concern about China’s regional claims, at least the way it is pursuing them. Similarly, Japan is a US ally and Tokyo is involved in, what looks like, a tit-for tat situation with China over a clutch of islands in the East China Sea, with a potential for military clash. And Japan is also helping Vietnam and the Philippines by supplying naval patrol boats and the like to help them face the Chinese threat. By virtue of its security linkages, the US is already  bound up with regional defence. As Professor Alan Dupont of the University of NSW in Sydney said, “We need to work with our nearest neighbours to persuade China that it is not in their best interest to militarize South China Sea and there would be consequences in doing so.”

But Beijing doesn’t seem terribly perturbed, being quietly confident that the countries in the region will have no choice but to accept the new realities of power. This was reflected in a strong rebuke from China to Australian foreign minister Julie Bishop’s criticism of China’s air identification zone over disputed (with Japan) islands in the East China Sea. The Communist Party of China newspaper, The Global Times, said at the time that Australia (and other countries, for that matter) would be forced to adjust its rhetoric to the realities of international bargaining power. It added, “Bishop calls for standing up to China, but what resources does she have to do so with?” In economic terms, Australia’s future seems tied up with China as its biggest trading partner.

Other regional countries might not be as heavily dependent on trade with China, but it is emerging as the economic powerhouse for the region and, indeed, for the world. China-floated Asian Infrastructure Investment Bank  (AIIB) is an example of its economic clout that will supplement its growing military power. Starting by the end of this year with an initial Chinese capitalization of $50 billion, AIIB seems to be making a healthy beginning with many countries already signing up as its foundation members. Despite US pressure, some of its closest European allies like Britain, Germany and France are keen to be part of it. Japan, which has a prominent role in the Asia Development Bank, doesn’t appear to have been invited. India, Asia’s second largest country, is in it. The US’s major Asia-Pacific ally, Australia, has also made a decision to be part of it as soon as some matters about its functioning are resolved.

The US, on the other hand, is opposed to it because it will weaken the post-World War 11 global financial architecture by creating a parallel structure dominated by China. The decision by some of its closest allies to join AIIB is dictated by the prospect of economic opportunities from investment in the vast infrastructure needs of the Asian region. With initial capitalization of $100 billion for AIIB, $50 billion from China, its financial role will expand over the years with China’s $4 trillion in foreign reserves. The economic potential of the AIIB is one major reason that US’ closest allies are prepared to go against its advice.

Another reason is that they would like to shape the governing structure of the AIIB so that it doesn’t simply end up being China’s strategic tool to supplement its political influence. Australia’s thinking in this respect gives some insight into it. Announcing his country’s decision to consider joining the AIIB, Prime Minister Tony Abbot said, “Key matters to be resolved before Australia considers joining the Asian Infrastructure Investment Bank include the bank’s board of directors having authority over key investment decisions, and that no one country control the bank” among other things. But China might not be too keen on replicating the governing structure and practices of the World Bank and International Monetary Fund. As Li Ruogu, a former chairman of China’ Export-Import Bank reportedly said, “This newly established institution cannot be a clone of the old ones [where the US and its European allies have preeminent roles]; we are working in a very different environment.” Indeed. China would want its own way and pursue its own national interests, and might not be averse to using its economic, political and military assets to that end.

Note: This article was first published in the Daily Times.

Contact: sushilpseth@yahoo.com.au

NPC highlights China’s problems

S P SETH

That there are problems with China’s rapid economic growth has been known for some years. After double-digit growth rates over many years in the past, China is now settling for single-digit growth. Last year it was 7.4 per cent, said to be the slowest in more than two decades. This year, as announced by Premier Li Keqiang, it would be “about 7 per cent”, half-a-percent down from last year’s aspiration of “about 7.5 percent”, and a “new normal” for the Chinese economy. Speaking at the annual session of the National People’s Congress (NPC), Li was quite candid about the problems facing China’s economy, even though its growth rate would still remain the envy of many countries. In his annual report card, he said, “With downward pressure on China’s economy building and deep-seated problems in development surfacing, the difficulties we are to encounter in the years[s] ahead may be more formidable than those of last year.”

After Mao Zedong’s death in 1976 and the end of the Great Cultural Revolution, which turned China upside down during the sixties and into the seventies, China was set on a high growth trajectory during the eighties under Deng Xiaoping as China’s new helmsman. Despite the great convulsion of the students-led democracy movement of 1989, put down by the army, Deng managed to keep the ship of the state on an even keel committed to keep the economy growing and to transform China into a strong country. In the process, he was prepared to discard communist ideology to favour capitalist growth but under the tight political control of the Communist Party of China (CPC). And he didn’t mind if this made some people rich and increased the rich-poor gap. It also greatly widened the gap between coastal regions as the favoured development zones and the interior of the country, as well as between urban and rural areas. Everything else was subordinated to the economic growth index.

In the process, over the years, such high-speed industrial development led to all sorts of problems. The growth of urban industrial centres encouraged developers and their party backers to virtually expropriate rural lands on the outskirts of overlapping boundaries, with nominal or very little compensation causing social tensions. Of course, such developments led to a tremendous boom in real estate prices, making developers very rich and contributing to a bubble/bust situation. So much so that some of these apartments and estates have no buyers because of the their high price tags.

Another serious problem from such high-speed development has been the plague of corruption from highest to low levels of the party and bureaucracy. President Xi Jinping has made the eradication of corruption as his crusade, and some high rollers in the party have become its victims. It sometimes has the look of a political purge and is causing some fear in the party ranks and among associated people, like relatives and cronies occupying cozy and powerful positions in state monopolies. And it is also said to extend to the military. But the high-pitched anti-corruption drive seems to go well with people who have been sick of everything goes in the system. Talking of corruption, Premier Li said in his NPC report, “Shocking cases of corruption still exist. Some government officials are neglectful of their duties, holding on to their jobs while failing to fulfill their responsibilities.”

As China’s pollution levels having been rising, environment has emerged as an important public policy and health issue. Premier Li duly touched on it in his report when he told the NPC delegates that, “Environmental pollution is a blight on people’s quality of life and a trouble that weighs on their hearts.” China’s cities, like Beijing, are blanketed with smog and one often sees people wearing masks to minimize its health dangers. China’s acute environmental problem is largely due to the overriding primacy of development over other considerations and failure to devise a comprehensive integrated national policy factoring in other factors. But China is not the only culprit in this regard. It has been, like other developing countries, a late starter in economic development when enough damage had already been done to the environment due to industrial development in, what are now called, developed countries.

But there are indications that China is now taking environmental pollution seriously. A recent joint announcement with the US on addressing climate change suggested that China’s carbon emissions should peak by 2030, starting a downward process from then on. It will increasingly reduce the use of fossil fuels like coal, cut energy intensity, expand trials for trading in carbon emissions, use non-fossil fuels like solar, and further expand its nuclear energy sector. The environmental pollution is of great public concern. A documentary on the subject, Under the Dome, on China’s catastrophic smog went viral on the internet viewed by many millions before it was ordered to be removed for fear of “hyping” up people’s concerns. Indeed, before it was ordered to be withdrawn, the documentary won praise from China’s new environment minister, Chen Jining. He also said that China faced an “unprecedented conflict between development and environment.” Despite internet censoring of the documentary, President XI appears serious on the issue of climate change. He reportedly said the other day that China would punish “with an iron hand any violators who destroy ecology or environment, with no exceptions.” How successful and how soon environment would become an important determinant of China’s overall development priority would remain to be seen.

An important element of China’s modernization and building a strong country has been, and is, an emphasis on modernizing and expanding its defence forces. There are two reasons for this. First, China is seared by historical memory of its humiliation at the hands of, first, the west and then Japan. The two opium wars imposed on China by the British in the 19^th century are an illustrative example of the first. And Japan carried on its depredations through the thirties and during WW11. And now that China is strong it is determined to not let this happen again. But the flip side is that Beijing not only wants to be militarily strong to defend itself but it also wants to turn Asia-Pacific region into its regional enclave as, it believes, it was historically when China was the centre of the world.

And this is creating a lot of tension with its neighbours over sovereignty of some of the disputed islands in South China Sea and East China Sea. China is determined to hold its ground and has been increasing its defence budget by double-digit figures over several years now. Officially, China’s defence budget last year was $132 billion, the second largest after the United States where it is inching towards $600 billion. Justifying such rise, a spokeswoman for the NPC said, “As a large country, China needs the military strength to be able to protect its national security and people.”

All in all, the picture that emerged from the NPC session is of a country, led by the Communist Party of China under its general secretary Xi Jinping, who is also  President of the country, confident of steering the ship of the nation to revive China’s ancient glory. The important question is: will its neighbours accept China’s version of its history and geostrategic vision? That might be examined some other time.

Note: this article first appeared in the Daily Times.

Contact: sushilpseth@yahoo.com.au

        

NPC highlights China’s problems

S P SETH

That there are problems with China’s rapid economic growth has been known for some years. After double-digit growth rates over many years in the past, China is now settling for single-digit growth. Last year it was 7.4 per cent, said to be the slowest in more than two decades. This year, as announced by Premier Li Keqiang, it would be “about 7 per cent”, half-a-percent down from last year’s aspiration of “about 7.5 percent”, and a “new normal” for the Chinese economy. Speaking at the annual session of the National People’s Congress (NPC), Li was quite candid about the problems facing China’s economy, even though its growth rate would still remain the envy of many countries. In his annual report card, he said, “With downward pressure on China’s economy building and deep-seated problems in development surfacing, the difficulties we are to encounter in the years[s] ahead may be more formidable than those of last year.”

After Mao Zedong’s death in 1976 and the end of the Great Cultural Revolution, which turned China upside down during the sixties and into the seventies, China was set on a high growth trajectory during the eighties under Deng Xiaoping as China’s new helmsman. Despite the great convulsion of the students-led democracy movement of 1989, put down by the army, Deng managed to keep the ship of the state on an even keel committed to keep the economy growing and to transform China into a strong country. In the process, he was prepared to discard communist ideology to favour capitalist growth but under the tight political control of the Communist Party of China (CPC). And he didn’t mind if this made some people rich and increased the rich-poor gap. It also greatly widened the gap between coastal regions as the favoured development zones and the interior of the country, as well as between urban and rural areas. Everything else was subordinated to the economic growth index.

In the process, over the years, such high-speed industrial development led to all sorts of problems. The growth of urban industrial centres encouraged developers and their party backers to virtually expropriate rural lands on the outskirts of overlapping boundaries, with nominal or very little compensation causing social tensions. Of course, such developments led to a tremendous boom in real estate prices, making developers very rich and contributing to a bubble/bust situation. So much so that some of these apartments and estates have no buyers because of the their high price tags.

Another serious problem from such high-speed development has been the plague of corruption from highest to low levels of the party and bureaucracy. President Xi Jinping has made the eradication of corruption as his crusade, and some high rollers in the party have become its victims. It sometimes has the look of a political purge and is causing some fear in the party ranks and among associated people, like relatives and cronies occupying cozy and powerful positions in state monopolies. And it is also said to extend to the military. But the high-pitched anti-corruption drive seems to go well with people who have been sick of everything goes in the system. Talking of corruption, Premier Li said in his NPC report, “Shocking cases of corruption still exist. Some government officials are neglectful of their duties, holding on to their jobs while failing to fulfill their responsibilities.”

As China’s pollution levels having been rising, environment has emerged as an important public policy and health issue. Premier Li duly touched on it in his report when he told the NPC delegates that, “Environmental pollution is a blight on people’s quality of life and a trouble that weighs on their hearts.” China’s cities, like Beijing, are blanketed with smog and one often sees people wearing masks to minimize its health dangers. China’s acute environmental problem is largely due to the overriding primacy of development over other considerations and failure to devise a comprehensive integrated national policy factoring in other factors. But China is not the only culprit in this regard. It has been, like other developing countries, a late starter in economic development when enough damage had already been done to the environment due to industrial development in, what are now called, developed countries.

But there are indications that China is now taking environmental pollution seriously. A recent joint announcement with the US on addressing climate change suggested that China’s carbon emissions should peak by 2030, starting a downward process from then on. It will increasingly reduce the use of fossil fuels like coal, cut energy intensity, expand trials for trading in carbon emissions, use non-fossil fuels like solar, and further expand its nuclear energy sector. The environmental pollution is of great public concern. A documentary on the subject, Under the Dome, on China’s catastrophic smog went viral on the internet viewed by many millions before it was ordered to be removed for fear of “hyping” up people’s concerns. Indeed, before it was ordered to be withdrawn, the documentary won praise from China’s new environment minister, Chen Jining. He also said that China faced an “unprecedented conflict between development and environment.” Despite internet censoring of the documentary, President XI appears serious on the issue of climate change. He reportedly said the other day that China would punish “with an iron hand any violators who destroy ecology or environment, with no exceptions.” How successful and how soon environment would become an important determinant of China’s overall development priority would remain to be seen.

An important element of China’s modernization and building a strong country has been, and is, an emphasis on modernizing and expanding its defence forces. There are two reasons for this. First, China is seared by historical memory of its humiliation at the hands of, first, the west and then Japan. The two opium wars imposed on China by the British in the 19^th century are an illustrative example of the first. And Japan carried on its depredations through the thirties and during WW11. And now that China is strong it is determined to not let this happen again. But the flip side is that Beijing not only wants to be militarily strong to defend itself but it also wants to turn Asia-Pacific region into its regional enclave as, it believes, it was historically when China was the centre of the world.

And this is creating a lot of tension with its neighbours over sovereignty of some of the disputed islands in South China Sea and East China Sea. China is determined to hold its ground and has been increasing its defence budget by double-digit figures over several years now. Officially, China’s defence budget last year was $132 billion, the second largest after the United States where it is inching towards $600 billion. Justifying such rise, a spokeswoman for the NPC said, “As a large country, China needs the military strength to be able to protect its national security and people.”

All in all, the picture that emerged from the NPC session is of a country, led by the Communist Party of China under its general secretary Xi Jinping, who is also  President of the country, confident of steering the ship of the nation to revive China’s ancient glory. The important question is: will its neighbours accept China’s version of its history and geostrategic vision? That might be examined some other time.

Note: This article first appeared in the Daily Times.

Contact: sushilpseth@yahoo.com.au