Tuesday, 24 February 2015 00:13
Learning lessons the hard way
China has been over time attempting to spread its influence to all parts of the globe using its economic power. A history of perceived abuse and exploitation by the imperialist colonial powers going back to the Opium Wars fuels this drive.
Analysts claim that in 2011 China was the world’s sixth largest international investor. However, in the real politic world of international intrigue and the evolution of democratic political reality in certain critical parts of the world, China has recently come in for some shocks.
Take Lanka. Lankans are well aware of the strong influence China has had over Lanka’s economic development; going back to the time of the Rubber Rice Pact in the time of the aftermath of the Korean War, through a mixture of grants, soft and commercial loans, China is involved in a large number of infrastructure development projects in all parts of Lanka.
Politically too China has shown the intention of asserting herself. Some time ago the Chinese Ambassador in Lanka met with the leaders of the Tamil National Alliance shortly after the TNA team had returned from India after a series of meetings. The TNA team has told the newspapers that the meeting was at the express request of the Chinese Ambassador. The TNA stated that they had covered a lot of ground in discussions with the Ambassador, including the visit of the TNA delegation to India.
The recent election of President Sirisena has been seen as a shock to China. China’s seemingly-generous, lavish and profitable financing of projects in Lanka was seen as some commentators as a way of ensuring the re-election of former incumbent Rajapaksa.
China probably underestimated the resentment among Lankans to the high interest rates on some Chinese loans for projects and the questionability as to whether these were truly Lankan priority projects or Chinese priority projects imposed on Lanka.
Interventions such as the Hambantota Port with berths pre-allocated to China, visits of Chinese submarines and warships to the Colombo South Port and the land reclamation in the sea off the City of Colombo, in which a Chinese Government-owned corporate entry has been granted a secure extent of land, contrary to the existing legal regime on foreigners owning land in this ‘Wonder of Asia,’ are deals regarding which there has been criticism within Lanka.
"It is interesting to see where China will be in two decades’ time. Will the Exceptionalists carry the day and will China end up being a seething pot of nationalist hate, bent on taking revenge from the world, for the past injustices imposed on China by the imperialist powers? Or will the Universalists win through and, will China end up a rich and affluent, extra-large size “XL” Singapore Inc., with warlike intentions only being manifested in corporate board rooms? Non-Chinese planners project that China in 20 years will be a near peer power bumping up against the United States of America in terms of economic and military capability, having aggressive intentions with its neighbours and nation states which do not do China’s bidding"
Indeed, as soon as the new President took over, there were calls for these projects to be scrapped. But a quick visit by a Chinese Government Special Representative combined with a reality check on the Lanka side on the dire state of the economy, and the negative effect on other foreign investors if the Chinese were summarily kicked out, has resulted in a more rational ‘review’ being called for, especially on aspects of due process being followed.
China would note that President Sirisena’s first foreign visit was to India. Prime Minister Wickremesinghe has gone on record saying that the previous Rajapaksa administration ‘tried to play China against India and India against China’. Prime Minister Modi has declared to President Sirisena that “our security and prosperity are indivisible”. The two leaders also planned a visit to Colombo by Modi around March. But the Foreign Ministry in Colombo is also said to be planning a visit by Foreign Minister Samaraweera to China soon.
A frustrated Indian External Affairs South Block Babu has been quoted in the newspapers saying: “I hope I’m wrong, I really do. But increasingly what we are seeing carries the shades of what we’ve already seen under Rajapaksa, not anything different and new.”
The Indo Lanka Civil Nuclear Agreement will also be a new pie in the sky in this extremely convoluted triangular relationship!
China is expanding its sphere of influence in all parts of Asia. There is an ongoing dispute over some rocky outcrops in the South China Sea, the Scarborough Shoals. The row between Japan and China over five islets that lie between them resurfaced again recently, when the Japanese Government decided to buy the three islands it does not already own from their private owner.
China reacted with outrage and sent two naval patrol boats to waters near to the islets, which the Japanese call Sneak and the Chinese call Diary. A Chinese newspaper the Global Times went as far as to question Japanese sovereignty over the prefecture of Okinawa! The dispute borders around both countries Exclusive Economic Zones, in terms of the Law of the Sea Convention, ratified in 1982.
Pakistan is a particularly relevant case in point. From the time of Pakistan helping Secretary of State Henry Kissinger and President Nixon to pierce the seemingly-impenetrable Bamboo Curtain and normalise relations with the People’s Republic of China, Pakistan has been a target of US largesse.
In addition, China has made Pakistan a central part of its plan to for a network of ports, pipelines, roads, and railways that will facilitate China’s exports to the rest of the world and bring in raw material and gas and oil from Africa and West Asia.
The String of Pearls (the CIA label) or the Maritime Silk Route (which China’s President Xi prefers), whichever way you label it, gives Pakistan a key role. But China is growing increasingly squeamish about the dangers of Islamic terrorism emanating from Pakistan.
When the outgoing all-powerful Commander of Pakistan’s Army, General Kayani, was paying his valedictory visit to Beijing in October 2013, three Chinese of Muslim Uighur ethnicity took a car packed with explosives and blew it up in Beijing’s heart, Tiananmen Square, on the day before General Kayani was due to fly into Beijing. In December 2014, when terrorists killed 130 Pakistani school children in Peshawar, China sent swift condolences and utterly condemned the atrocity.
The Chinese complain loudly that the Pakistani authorities do not do enough to destroy havens of the East Turkestan Islamic Movement, a Chinese Uighur ethnic separatist group, operating out of Pakistan, working in China’s western Xinjiang region. Experts say: “China has a good understanding of almost everything in Pakistan, political, security or economic, that might affect their bilateral relationship, but there is one piece that they just don’t get – Islam.”
Myanmar, Tibet, India
On the Asian mainland, other than Pakistan, China is extremely conscious of the potential effect of the democratisation of Myanmar, until then a virtual Chinese pocket borough under the Burmese military, promoted by the ASEAN nations and the effect Western liberal democratic nations may have on the region.
Internal unrest in Tibet, fuelled by a spate of recent self-immolations, and an ongoing dispute with India over the Indian state of Arunachal Pradesh, is also internal and international political issues. The Indian Army is raising a number of new mountain divisions to station on the border with China and in Latah.
2012 was the 50th anniversary of the 1962 invasion of India by the People’s Liberation Army of China; there is resurgence in India, among the media especially, on the 1962 episode, where the PLA advanced into India, gave the Indian Army a bloody nose and pulled back into China.
It is reported that Deng Hsiao Ping, visiting the United States, had mentioned to President Jimmy Carter that China, which was having a border dispute with Viet-Nam at that time, would teach Viet-Nam also a lesson, in the manner China taught India a lesson in 1962. True to form, the PLA advanced across the China-Viet-Nam border shortly thereafter, although the battle-hardened Vietnamese veterans of the Viet Nam war against the USA put up a spirited defence, unlike the ill-prepared, ill-equipped and badly-led India forces in 1962.
US President Barak Osama being Indian Prime Minister Narendra Mode’s guest at the recent Indian National Day celebrations is another prick in China’s eye.
Russia and Mongolia
To the North, relations with Russia seem stable for now, notwithstanding Vladimir Putin’s antics in Ukraine and a history of border dispute. With Mongolia, China has ongoing issues over access to Mongolia’s humongous mineral wealth, which Chinese-owned State and corporate entities are eyeing.
Freedom of the seas
The freedom of the seas also has become an issue to China, with over 70% of its raw materials and oil and gas coming through the southern seas and the Straits of Malacca. One Chinese leader referred to this as ‘China’s Malacca Dilemma’.
The Chinese also have deployed naval assets to assist the international policing operation against Somali pirates off the coast of East Africa, mainly in self-interest, to protect their shipping routes. The first Chinese aircraft carrier is undergoing sea trials, a futile deterrent to the USA’s aircraft carrier groups based in the Pacific.
The Chinese interest in the political unrest in the Maldives Islamic Republic is also said to be based on the fear of the possibility of Islamic fundamentalist pirates locating themselves on an uninhabited Maldivian atoll and preying on ships carrying raw material to China across the southern seas.
In Africa too, China is increasing her influence. Access to raw materials is one reason. In addition, Chinese business people are involved in agriculture, animal husbandry and mining. In Zambia recently there was a shooting incident, where it was alleged that Chinese managers of a copper mine had opened fire at demonstrating workers.
A recent crackdown in Ghana over illegal mining in the gold rich nation resulted in the death of a Chinese miner and sparked a protest from China, underscoring the challenges of growing Chinese investment in African mining. Ghanaian officials say the growing presence of Chinese miners has become a ‘real national challenge’ as small-scale illegal mining by both Chinese and Ghanaians has spread across the country.
China has lavished development aid to many countries on the African continent. In Ghana, China has built the National Theatre in Accra, the capital city, and also wrote off the loans that paid for the construction costs. Recently it constructed as a gift a state-of-the-art conference hall to the Ethiopian capital of Addis Ababa, but there was a small pinprick – channel one on the interpreters’ sound system was Mandarin!
Chinese investment in development assistance to Africa exceeds that of the World Bank, with no annoying conditionalities on human rights and freedoms, etc. In Kenya too massive infrastructure investments have not earned China a good name. Criticism abounds that China is merely indulging a in a neo-Colonial exercise of extracting Kenyan raw material and export finished goods to Kenya, a yellow imperialism aping the white imperialism of yesteryear.
Confusion in Beijing
In other parts of the world – a vote to end austerity in Greece, plunging in commodity prices blowing a hole in Mexico’s finances – have caused confusion in Beijing. Two projects, a port privatisation in Greece and high-speed rail contract in Mexico, came a cropper recently.
Greece because, like the Chinese Communist Party (!), the Greeks’ newly-elected Syriza party asserted that strategic infrastructure should remain in Government hands. In Mexico a lucrative high-speed rail contract was shot down due to concerns of due process of unsolicited single bidder – China.
China has lent Venezuela $ 50 billion since 2007; Venezuelans openly question whether they can ever repay this! Argentina, which is in trouble because of a commodity prices crash, is drawing on Chinese credit to empower its currency reserves. Chinese banks have lent more than $ 30 billion to Putin’s Russia.
A senior Chinese Communist party official , has been quoted as saying: “These incidents have not been very pleasant, we have accumulated more outward investments but still lack experience in dealing with the political consequences of this economic activity!” – A difference from the Ugly American Uncle Sam, the British Bulldog and other powerful nations, who have much more experience in interacting with the developing world and their rulers.
Attempt to ‘win friends and influence people’
But China is not giving up its attempt to ‘win friends and influence people’. In July 2014 it set up the BRICS Bank, partnering Brazil, Russia, India and South Africa, labelling it the New Development Bank, a ghost World Bank, with a capital of $ 50 billion.
In October 2014 China led the creation of the $ 100 billion Asian Infrastructure Development Bank, a challenge to the Asian Development Bank. In November 2014 China announced a $ 40 billion donation to the Silk Road Fund, to be managed by another Chinese-backed development bank.
Remember the Maritime Silk Road a.k.a. the String of Pearls? This is all pure mercantilism – as Yu Yongdin, one-time advisor to China’s Central Bank, has said: “Business is business”. The move to set up Chinese-led new multilateral development banks is an admission that the hitherto unilateral approach is not working.
China’s economy has been growing at double digit rates over the last few years, although just now there is a slowdown due to the collapse in the European and America economies.
Annually around September the Hurun Report is published in Shanghai by a luxury publishing and events group; it is a compilation of China’s wealthiest people. The report reflects important trends in the Chinese economy. A recent version of the report reveals that Zong Quinghou, a drinks tycoon who owns the Wahaha Group, regained the top spot he had occupied in 2010. His closest rival was Wang Jianlin of the Dalian Wanda Group, a property developer. The report discloses that manufacturing has displaced property development as the leading source of wealth for the 1,000 people listed.
What is of special interest is that two of those listed, media entrepreneur Yang Lan and Pan Shiyi, a property developer, are the most popular micro bloggers on the list, with more than 10 million followers each on the internet. Seven of the listed members have been named as delegates to the 18th Communist Party Congress to be held on 6 November.
These are the Red Capitalists whom the Communist Party of China is assiduously cultivating, successful businessmen who also are enrolled into the Communist Party and given positions to give capitalism a ‘Chinese communist face’.
Learning to be a great power
Zhu Feng, an international affairs expert at Beijing University has said: “We are the 800-pound gorilla in the room. China is learning to be a great power.”
Teufel Dreyer, a Professor at the University of Miami, says, of China: “There is a debate at the top. Some leaders assert that China must assert its interests in a more straightforward way, to get its hands on resources it needs to power its economy. Others say the country must continue to give priority to domestic development and solving internal social challenges.”
Recently, Red Princeling and former Chairman of a State-owned company, Qin Xiao, now heading an independent think tank – the Boyuan Foundation – made a speech at one of China’s most prestigious universities, Tsinghua, accusing the party hierarchy of replacing the enlightened values of democracy, freedom and individual rights with ‘Chinese’ ones such as stability of the status quo and the interests of the State being paramount.
Qin founded the Boyuan Foundation in 2007, together with investment banker and Red Princeling He Di, saying that “China needs someone to stand up and speak”. Quin in an interview with a newspaper published in Guangdong Province, the Southern People’s Weekly, said: “The Arab Spring showed that no matter how well a country’s economy performed, people will not accept dictatorial, corrupt government.” Also Wang Changjian, a scholar at Communist Party’s training academy for cadres, has pointed out that there seems to be a phobia against political reform.
Battle lines are clearly drawn
In China the battle lines are clearly drawn between the Universalists, who believe China must eventually converge on democratic norms, and the Exceptionalists, who believe that China must preserve and perfect its authoritarianism.
While Qin and the Boyuan Foundation represent the Universalists, Zhang Weiwei represents the Exceptionalists. Zhang recently wrote China’s evolution should be “as if the Roman empire had never collapsed and had survived to this day, turning itself into a modern state with a central government and modern economy, combining all sorts of traditional cultures into one body with everyone speaking Latin.”
This Exceptionalist point of view, which is a confluence of nationalism, rapidly-growing military capability and deeply-held feelings of victimhood are worrying. However, Chinese officials keep articulating the need for a ‘Harmonious World’ and decry the use of military force to resolve disputes.
It is interesting to see where China will be in two decades’ time. Will the Exceptionalists carry the day and will China end up being a seething pot of nationalist hate, bent on taking revenge from the world, for the past injustices imposed on China by the imperialist powers? Or will the Universalists win through and, will China end up a rich and affluent, extra-large size “XL” Singapore Inc., with warlike intentions only being manifested in corporate board rooms?
Non-Chinese planners project that China in 20 years will be a near peer power bumping up against the United States of America in terms of economic and military capability, having aggressive intentions with its neighbours and nation states which do not do China’s bidding. China is in its new avatar of using its financial clout for imperial, military and economic expansion in the world and is in the process is learning some hard lessons. These are reflected by similar developments at home. Economic growth is slowing; an ageing population is also slowing things down, more than metaphorically! The Chinese Communist Party’s tradition of the top cadre standing down and being replaced every 10 years in an orderly manner will definitely come under “democratic” stresses.
The old Chinese curse “may you live in interesting times” is going to be the case for the rest of the world, while China steers its way through these pitfalls, while at the same trying to ‘stand up’ and play a dominant role in world politics.
(The writer is a lawyer, who has over 30 years of experience as a CEO in both State and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)