A weekly bulletin offering news and analysis related to the Middle Kingdom. This week, the usual round-up of the news — and learnings from a visit there.
Xin Nian Kuai Le!
This was the big holiday week in China as people across the country celebrated the beginning of the Year of the Pig. So here’s a new year’s special for the readers of Eye on China. This week’s newsletter is divided into two sections. The first section has a quick round-up of the big stories. In the second section, I’ve put down some of my thoughts after a visit to China in late January during which I met with a cross-section of people and participated in an India-China young scholars forum.
As always, I would love to hear feedback and wish you all a very happy Year of the Pig.
1. The Big Stories
- Trump-Xi Meet Unlikely: During his State of the Union address, Donald Trump emphasized that any US-China trade deal must involve structural change, i.e., the end of unfair trade practices, reduction of trade deficit and protection of US jobs. Further talks on a deal are set to take place in Beijing next week with Steven Mnuchin and Robert Lighthizer leading a “large team.” The deadline for a deal is March 1, but don’t hold your breath. Trump’s ruled out a meeting between him and Xi Jinping before the deadline, although he will be in Vietnam at the end of February for a meeting with North Korea’s Kim Jong Un. Perhaps, the most positive signal to come out of the talks next week could be an extension of the deadline. Whatever happens with the deal, the broader Sino-US competition will continue. Politico reports that Trump is expected to sign an executive order banning Chinese telecom equipment from US wireless networks before a major industry conference at the end of February. A bipartisan group of US lawmakers has tabled a bill that would reimpose sanctions on ZTE if it fails to live up to US laws and the deal with the Trump administration. The US’s EU ambassador Gordon Sondland, meanwhile, wants the two sides to band together against the Chinese. “We should… combine our mutual energies — we have a $40 trillion combined GDP, there is nothing on the planet that is more powerful than that — to meet China and check China in multiple respects: economically, from an intelligence standpoint, militarily,” he said. All of this comes together in the concerns around Huawei. This week the embattled Chinese tech giant offered to soothe tensions with Poland by building a cyber security center. Norway’s intelligence chief, meanwhile, has warned about Huawei’s “close connections” with the “Chinese regime.” The Norwegian police intelligence agency PST, in its annual security evaluation, accused the Chinese government of stealing information from Norway’s cyber domain through technology provided by Huawei. The Chinese embassy in Oslo called the allegations “ridiculous,” while Hu Xijin, the editor-in-chief of Global Times, was at his abrasive best calling the the Norwegian market “a mosquito to China.”
- EU’s China Focus: These reports indicate a shift in the debate in Europe around Chinese tech companies. Reuters reports that the European Commission is looking at ways in which to balance economic and security interests. The report says that the EU is considering proposals that would effectively amount to a de-facto ban on Huawei equipment for next-generation mobile networks. This, however, is likely to be looked at in the broader context of the EU-China relationship, which is also set for review. The EU’s foreign policy chief Federica Mogherini has said that member states discuss “relations with China at one of the next Foreign Affairs Councils in Brussels, ahead of our annual Summit with China that this year will be in April.” This Kevin Allison piece articulates the EU’s conundrum rather succinctly: First, Chinese tech footprint in European networks, such as in the UK, is rather large, compared to that in the US; second, it is important for the EU to keep in mind the implications of excluding Chinese companies on the broader Sino-Europe relationship; and third, the time and cost imperatives of decoupling Europe’s networks from Chinese technology could be a critical factor in any decision.
- Xi’s Mass Appeal: The Spring Festival is not just a time for a break but also some good old fashioned politics. So Xi addressed a reception at the Great Hall of the People, highlighting achievements of the past year and the leadership’s agenda going forward. In addition, like most years, this time around too, Xinhua tells us that Xi took the opportunity to play up his “people-oriented approach.” He spent time at hutongs in central Beijing. The report says that Xi spoke to residents about heating solutions in winter, electric bills and the preparation for the lunar new year…He also went to check to see if a public toilet was clean. It further adds that Xi also greeted deliverymen on duty, stressing that priority should be given to solving employment problems and creating more jobs. However, with the weakening economy, the jobs issue is likely to continue to become problematic. NYT reports that as the slowdown hits, “thousands of Chinese workers are holding small-scale protests and strikes to fight efforts by businesses to withhold compensation and cut hours. The authorities have responded with a sustained campaign to rein in the protests, and most recently detained several prominent activists in the southern city of Shenzhen late last month.”
- No Encirclement: “I don’t think we are surrounded… Each country creates its own relationships, for its own benefits. Some of them result in good influences, some of them may not result in good influences.” That was MoS External Affairs VK Singh’s response to questions about a Chinese “string of pearls” strategy vis-a-vis India. He further stated that it was a conscious decision by the current government to continue engaging on the boundary issue via existing mechanisms while developing the relationship with Beijing in different areas and focus on people-to-people contacts, economics, commerce, investments in each other’s country so that “it brings down those fixations and hard stances which exist.” He added: “Whether it will succeed or not, time will tell. But it has been a good methodology to ensure that we soften some of things that we keep seeing in the boundary talks. That’s quite a succinct take on the Narendra Modi government’s China policy, which came in for some criticism by the Congress’ Rahul Gandhi this week. At a public event, Gandhi lashed out at Modi for caving into Chinese pressure during the Doklam episode. While the politics plays out, BRO chief Lieutenant General Harpal Singh says that the agency it will complete by December 2022 all 61 strategic roads assigned to it along India’s China border, spread across Arunachal Pradesh, Jammu & Kashmir, Sikkim, Uttarakhand and Himachal Pradesh. On a slightly different note, Times of India reports that India is looking to open a dialogue with China on Afghanistan, given discussions around a US drawdown and a possible deal with the Taliban.
2. Impressions from China – Based on my recent visit.
Over the past year, there has been a palpable thaw in the India-China relationship. That’s led to increased engagement and the return of worn out platitudes, such as talk of ancient civilisational and spiritual connections or the dance and duet of the dragon and elephant shaping the Asian century. But what’s the logic that’s driving this thaw and is it sustainable? A recent trip to China was instructive in understanding the perspectives from the other side.
First, despite the recent positive atmosphere and expanding trade numbers, there’s very little that’s organic about the India-China relationship. In other words, it is a relationship that is not just driven by the high politics and security and foreign policy priorities of New Delhi and Beijing but is also held hostage to it. This often leaves one with the sense of there being an inherent vacuousness to conversations, with interlocutors from both sides reiterating established positions, unable to move past differences. What’s therefore needed is for engagement to be channelised through lower levels of government and society, such as collaboration among businesses, partnerships in technology development, sharing of experiences in urban planning and management and so on. For this model to be effective, it is better if cities and provinces, as opposed to the central leadership, take the lead. Importantly, there appears to be an appetite for this developing in China, but much work needs to be done for such cooperation to take shape.
Second, given the lack of an organic logic, analysts in China tend to view the relationship with India primarily from the prism of the geopolitical competition with the US. Often conversations on the India-China dynamic tend to devolve into rants about US imperialism and our legacy of anti-colonialism. This has its upsides and downsides. For instance, increased frictions with the US and the perception of the Quad as a component of American strategy of containment have contributed to a shift in China’s approach towards neighbours like India and Japan. In other words, US-China frictions have opened up new opportunities. On the flipside, however, there’s also greater potential for mistrust to turn into hostility, given the deep misgivings about changes in US policy in China.
Third, there is increasing sensitivity and more importantly an effort at being responsive with regard to criticism of the Belt and Road Initiative. Yet, change will be slow. Some of our Chinese interlocutors seemed to describe BRI as an evolving phenomenon, which was being developed in line with Deng Xiaoping’s approach of crossing the river by feeling the stones. While that description is unlikely to inspire confidence in skeptical countries like India, one can view this as an implicit acknowledgement of the problems that BRI has encountered. This was further emphasized in conversations with a range of people across the academic, business and political spectrum.
However, along with that came the admission that making the requisite adjustments is not likely to be easy. That’s because while one might view BRI as a centrally-driven strategic programme, in practice its implementation involves a diverse set of actors that are often pursuing their own narrow interests. Resolving this friction isn’t easy even in the Chinese political model. Moreover, there appears to be a strand of thought that providing data and being transparent with regard to Chinese loans, investments and projects will actually increase friction with BRI partner states. The concern is that clarity will breed a sense of competition and therefore resentment. One can dismiss this argument as facetious, but what matters is the currency it holds with decision-makers and not its logical soundness.
While discussing BRI, the last point to note is that most Chinese analysts no longer seem keen on persuading New Delhi to join the initiative. Instead, the emphasis is on the possibility of doing joint projects in third countries, particularly in South Asia. That proposal is unlikely to get off the ground any time soon. Since the Wuhan meeting last year, the two sides have merely conducted joint training of Afghan diplomats. Something more tangible, say an infrastructure project in a third country, is still a long way away.
Fourth, policies with regard to Tibet and Taiwan are a reflection of factional politics and the power of the core leadership. In many ways, when one talks to one’s Chinese friends, it seems that everything that happens in the country, even celebrities being punished for tax evasion, is a product of factional shadow boxing. So one should take some of these statements with a pinch of salt. However, what I did find intriguing about discussions over Xi Jinping’s Taiwan policy was the view that US intervention was not the primary concern for Beijing in case it opted to use force. The key cost calculus is the threat of urban warfare and post-conflict management. On Tibet, meanwhile, the leadership appears to be split on what’s the best course of action, given the Dalai Lama’s advancing age. The Tibetan leader has in the past expressed a desire to return to China, and word is that factional politics in Beijing is one of the factors preventing him from doing so. This once again is discussed as a reflection of the limitation of Xi’s power, given his family’s connection to Tibetan Buddhism and the Dalai Lama.
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