Making China great again: Xi grabs power to resolve current contradictions, but could trigger new ones

“The superior man,” says the Analects of Confucius, “cannot be known in little matters but may be entrusted with great concerns.” As an ardent scholar of Confucianism, it appears that President Xi Jinping has taken this advice to heart. In March, Xi orchestrated the abolition of constitutional term limits for assuming presidency effectively making him the “chairman of everything” for life and entrusting him with the great concerns of party, military and state.

Xi’s consolidation of power likely has two objectives. The first is personal – Xi seeks to cement his legacy. Since Mao, no other Chinese leader has crafted such a cult personality. Having christened himself “Core Leader” at the 18th Party Congress in 2016, he has now firmly entrenched “Xi Jinping Thought” in the constitution, placing him on par with Mao Zedong and Deng Xiaoping.

The second is great power ambitions. Xi has set very clear timelines for achieving the “China dream”; otherwise known as the “two centenaries” – “moderately well-off society” by 2021, and a “democratic, civilised, harmonious, and modern socialist country” by 2049. By mid-century, Xi intends for China to become a “a mighty force” that would be an active “constructor of global peace, contributor to the development of global governance, and protector of international order.”

Xi is aware that China is at a critical juncture. He believes the time is right for China to reclaim its place in the world; and to supplant Western powers – especially America – as the leader of the international system. To view Xi’s power play as selfish dictatorial ambition, then, is superficial. Instead, it has more nuanced implications for China and the world.

First, Xi understands that the Communist Party requires a new social contract with its citizens. Over the past 30 years, China’s trailblazing economic growth has created a prosperous middle class and skilled professionals – many of whom now demand a better quality of life over high growth rates alone. Secure with his own position, Xi might be in a position to experiment with political reforms that could address this contradiction, and advance his “better life” agenda – including improving “deliberative democracy” by politically empowering local officials and creating new channels for public accountability.

Second, the pace of institutional reform will increase exponentially. As China becomes a global power, Xi understands that “going out” will require new standards for transparency, governance and performance in the economy if he is to sell “socialism with Chinese characteristics” to the rest of the world. Already, the National People’s Congress is assembling to consider enacting such reforms this year. Perfecting a unique blend of state control over industry and free markets will require painful and complex restructuring of administrative and economic institutions – and Xi wants an uninterrupted stint to see these reforms through.

Third, Xi has staked his legacy on the Belt and Road Initiative – the key instrument for his ambition of integrating Asia into a governance architecture that is more politically and economically cohesive than its sub-regions. The BRI must overcome several regional competitors to achieve its ultimate goal: creating new markets for high end Chinese goods in Europe. And Xi has made it clear that he is willing to use coercive statecraft to achieve this objective: ranging from Doklam-esque standoffs with India to “debt trap diplomacy” with smaller neighbours. With Xi at the helm, Asia must brace for a forcible attempt to reconstitute its geographical, political and cultural borders.

Fourth, Xi sees the reunification of democratic Taiwan with the mainland as a critical pre-condition towards achieving the “great rejuvenation of the Chinese nation.” Already, Taiwan is a souring flashpoint between the incumbent super power – America, which recently voted to increase government and civil society interaction with Taipei – and China’s rising ambition. Xi’s consolidation of political power, coupled with his agenda for institutional and functional modernisation of the army, and militarisation of the South China Sea point towards rising tensions on this front.

Finally, Xi faces the Putin paradox: massive concentration of power creates political losers; many of whom will often seek to exact violent revenge. Xi’s expansive anti-corruption drive, renewed political interference in companies, and rigid ideological control over public spaces have not all gone down well with China’s elites. At the same time, Xi will now also be seen as singularly responsible for policy failures – ranging from the economy to foreign affairs. Having amassed enormous power he must somehow craft a successful model for political transition when he does step down; or else face dire consequences for himself and for China’s stability.

Xi’s power grab will likely be a turning point in history. It brings stability at a time when China’s comprehensive national power is at its highest since ancient times; even as America and other Western democracies struggle to manage the international order they created. Simultaneously, China is a state and society in flux – high economic growth has created new political expectations and demands; and China must now shed its export led manufacturing strategy to embrace a new investment led model for the economy.

“Our mission is a call to action,” declared Xi at the 19th Party Congress, “let us get behind the strong leadership of the party and engage in a tenacious struggle.” If Xi can carry out his mission, he will not only oversee the arrival of China as a great power, but will also emerge as arguably the greatest leader China has ever known in modern history.

Source: Times of India, March 30, 2018. 

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Modi in Asia: Staring down the dragon while embracing it

With the conclusion of his three-nation tour of China, Mongolia and South Korea last month, Prime Minister Narendra Modi capped a frenetic first year of diplomacy. It is becoming apparent that the emphasis on the Asian region will continue to be an imperative for the rest of his term. In this past year alone, the Indian Prime Minister has invested about twice as many days visiting the ‘east’ — Asia, the Indian Ocean Region and the Pacific — as against his ‘westward’ travels.

Is this a reinvigoration of India’s Look East policy? Does it mean relatively less importance to the West? And, what are the drivers of this policy? Barring the notable absence of West Asia from his travel schedule, it is clear that ‘Engage Asia’ has been the predominant mantra of Modi’s early days in office.


This Asian focus is decidedly different from previous efforts by Indian leaders to integrate with the neighbourhood. Those efforts were driven by the idea of demonstrating Indian leadership in a particular geography, or they were manifestations of south-south solidarity, or they were necessitated by security concerns emanating from across the border.

The current effort is something more. It is primarily aimed at completing two specific national projects, while at the same time positioning India at the helm of global affairs.

The first national project is to complete ’20th century India’: future-proofing Indian infrastructure; installing enough energy to power the nation; connecting the country with its periphery and beyond via roads, rail, ports and airports; developing manufacturing bases to employ the millions entering the job market each year; and investing in housing, agrarian and other social infrastructure that most developed economies take for granted.

Modi’s Asian thrust is designed to find partnerships, technology and funds to complete this 20th century project. The Atlantic countries do not have the financial capacity to invest in large infrastructure and energy projects. They do not have the political room to commit to carbon-intensive industrialisation. And they no longer have the wherewithal to offer 20th century inputs (equipment, energy and technology) for an insatiable India.

All of these are readily available to the east of India. Consider this: China, Japan and Korea between them have close to US$5.5 trillion in foreign exchange reserves, funds desperately needed for this 20th century project.

There is a coincidence of needs as well. Each of these economies needs to invest in new geographies. They need to generate wealth out of what are now stagnant reserves. These are countries that have successfully completed their industrialisation projects and need to find outlets for investment in the industrialisation of others. That’s why China has become the biggest provider of energy-generation equipment to India and wants to build high-speed trains here. It is why South Korea wants to build nuclear reactors and ports in India. And it is why the Japanese want to set up industrial corridors in India. Asia is also the source of most of the energy needs that are indispensable to this national project. Be it gas, uranium, coal variously sourced from Australia, Mongolia, Central Asia and the Middle East, this region offers India plenty of energy opportunities.

When Modi travels to these countries, it is tacit recognition that the response to Indian requirements carried forward from the last century reside there.

Then there is India’s ’21st century project’, driven by innovation, based on new technologies, located within digital economies and fueled by enhanced human capacity. This is the service-sector paradigm that India is already experiencing, and for which India needs high end solutions at rock bottom prices. For example, most of the 6 million new internet users India adds each month operate on handheld devices priced around the US$50-100 range on connections priced at a fraction of a dollar. Here too it is Asian countries — China, Taiwan and South Korea — that dominate the market. The expansion of this market, which will happen in tandem with the Digital India, Make in India, Skilling India and Smart Cities initiatives, will only see the market dominance of these Asian countries increase.

However, here is the poser: can India manage this Asian engagement while balancing an increasingly expansive China? This is the second element of the ‘Engage Asia’ mantra that Prime Minister Modi seeks to address.

Most Asian economies have their largest partnership with China and will always be looking over their shoulder as they define new partnerships with others. China’s soft expansionism is being driven by its economic weight and through its pursuit of creating new political and economic governance institutions, like the AIIB, that will offer it a new dimension of power. Its One Belt, One Road project seeks to redefine and recreate Asia’s geography.

In India’s sense of its own role and position in global affairs, such Chinese dominance is unacceptable. New Delhi’s running dispute over the 4000km border with China also complicates the bilateral relationship. India’s existential dilemma for the 21st century, then, is to ‘stare down the dragon while embracing it’.

This is where the US, a predominant Asian power, comes into play. It offers India two playing cards. First, it encourages others in Asia, such as South Korea and Japan, to participate in the India story in all sectors without the fear of China. In fact, this US gambit of midwifing Asian middle-power cooperation from arm’s length is a seminal arrangement for the ‘congagement‘ of China. Second, the unassailable US lead in security, defence and other high technology segments gives India a qualitative edge in its bilateral negotiations with China.

When Prime Minister Modi landed in Mongolia and South Korea on his way back from China, he was signaling that he intends to challenge the narrative of the Asian century as being a Chinese century. He was signaling that he intends to break the Chinese stranglehold in the Asian imagination of its future. He was signaling that here is an India willing to live up to expectations and take its rightful place as a major Asian power. Put simply, he was embracing the dragon while staring it down at the same time.

Photo by Flickr user Narendra Modi.

In the News

The Curious Case of India and China

October 28, 2013, 9:36 am Comment

Original link is here


Kyodo News-Pool/Getty ImagesManmohan Singh, left, prime minister of India, holding talks with Xi Jinping, president of China, sitting right opposite Mr. Singh, in Beijing, China, on Wednesday.

During his recent visit to China, Prime Minister Manmohan Singh of India said that when the two Asian giants shake hands, the world takes notice. Although the statement stands true, the real question to ask is whether the media and the security and diplomatic community in the two countries make much of this handshake. It can be argued India-China relations comprise a slew of missed opportunities, and these two have added yet another chapter to this narrative.

In recent years, India and China have engaged in a strategic dialogue, the term “strategic” being used loosely. The fifth edition of the dialogue was hosted by New Delhi in August. The leaders have been able to have uninterrupted annual summit-level talks, interact at annual meetings of the so-called BRICS countries and meet on the sidelines of Group of 20 and other global forums. India and China have had abundant high-level engagement.

Yet the conversation has not evolved. A 20th century grammar continues to define what surely must be the most important 21st century partnership. The only visible sign of deepening engagement remain the trade ties between the two countries that both governments use liberally to demonstrate the imagined “closer relations” and “successful” conduct of diplomacy.

It can be no one’s case that the growth of India-China trade relations has been facilitated by government actions. The relationship has grown despite the unwillingness of the two governments to go beyond contentious issues that are a carryover of the past. Two phases have defined this trade relationship: the Karol Bagh-Guangzhou phase, where the New Delhi shopping district among others in India saw a flood of cheap goods from Chinese manufacturing hubs, and the Mumbai-Shanghai phase, in which bigger enterprises in each country began to engage in trade.

Small business owners and traders in both India and China saw an opportunity and initiated a process of economic engagement that led to the flooding of Indian markets with affordable Chinese products, including mobile phones, firecrackers and even idols of Indian gods and goddesses. The entrepreneurs working at the bottom of the business pyramid crafted the first wave of Sino-Indian economic engagement, often taking huge risks and working under regimes unfavorable to conduct of business.

Increasingly these small traders have had company. Large industrial houses in Mumbai and Shanghai and other business centers have seen value in the relationship. Indian companies have been procuring high-value equipment in power, telecom and manufacturing sectors at competitive prices, and are now even raising commercial loans at favorable rates in China. Chinese businesses are showing an interest to invest in India’s infrastructure sector and are seeking increasing share in the growing consumer markets. The business communities have created this economic relationship based on opportunity and needs.

On the other hand, the governments in New Delhi and Beijing have shown remarkable consistency. Pedantic and unwilling to display leadership in resolving or nullifying the political hurdles, both governments have been guilty of holding back the economic integration of the two Asian giants.

The diplomatic and security establishments have undermined attempts to move the conversation beyond borders, visas and historic suspicions. Now anything and everything in the bilateral relationship is a security discourse. Basin level conversations amongst water experts and river communities are increasingly treated as a ‘security narrative’. China’s interest in the growing ports and roads and highways sector is limited by an imagined ‘security threat’ and India’s development of its northeast, instead of being viewed as an investment avenue for Chinese firms, is perceived to challenge the historic sovereign claims of China.

The Beijing and New Delhi relationship is prisoner to such conversations around security, and in many instances these originate out of Washington, London and Canberra and are not necessarily organic Indian and Chinese debates. The idea of a contest in the ‘Indo-Pacific’ and growing ‘Chinese Hegemony’ are now finding space in bi-lateral conversations. As a result, India and China are nowhere close to integrating land, water, men, material, markets and resources – imperatives in realizing the immense potential of the relationship. Every engagement has an inflexion point and what some in the Indian research community wonder is whether the current summit is that point for the two countries. The question to be asked, therefore, is whether the current visit has injected new life in the path toward sustainable reconciliation.


Biju Boro/Agence France-Presse — Getty ImagesIndian army personnel at the India-China border at Bumla pass in Arunachal Pradesh, on Oct. 21, 2010.

Some aspects of the India-China relationship must be examined if we seek to address this. The first aspect must be the border. While the imprecise Line of Actual Control has been a source of occasional tensions between India and China, it has to be acknowledged that confrontations along the border have not taken a violent turn. Nonetheless, the frequency of such face-offs and the increasing military capabilities in the backdrop of rising nationalism on both sides amplify the possibility of such incidents spiraling out of control.

In this regard, the Border Defense Cooperation Agreement signed by India and China is a significant step that takes forward initiatives agreed upon by both parties to maintain peace and tranquillity along the border since 1993. Steps under the agreement, like the exchange of information regarding military exercises, the possibility of setting up of hotlines and an agreement to not follow or trail each other’s military patrols, are important, albeit incremental gains.

Naysayers continue to push pessimistic views. One school of thought represented by analysts like Brahma Chellany, argued that China used the Depsang incident in April 2013 to arm-twist India into agreeing to Chinese terms on border management. In the spring this year, Chinese troops had crossed deep into Indian territory and set up camp in Depsang Valley, Ladakh.

On the other hand, those (mostly the business community as of now) who see value in engagement want to move beyond the border issues and make it less significant to propelling economic relations. For them, the border agreement is a way to achieving this. Pessimists, however, abound, and instead of seeing the situation for what it is — full of opportunities, if one chooses to recognize them — they push a “status quo” line. The traction that this group is able to generate in the media and public sphere, which feeds off Sinophobia, completely overwhelms any counterview. Hence, a lasting border solution must be what the countries should seek, and the current arrangement can only be a temporary dressing for the festering wound that will hold the relationship back.

Both sides, sadly, have been petulant on the issue of liberalizing visa policies. The recent episode in which the Chinese Embassy issued stapled visas (signifying a refusal to recognize their state as part of India) for sportspersons from Arunachal Pradesh, and the resultant uproar from the Indian side killed the possibility of opening up the visa regimes. All that was required was some bureaucratic flexibility and magnanimity on China’s part and some creativity on India’s part – linking a liberalized visa regime to agreeing with India’s position on the Arunachal Pradesh issue (for visa purposes), without prejudice to historic territorial claims. Yet again, China maneuvered itself into a position from where retreat would mean a loss of face, and yet again India failed to grab the opportunity when it presented itself.

The trade imbalance of almost $20 billion with China continues to be a prickly issue, and the two missed another chance to address this when the visit failed to create pathways for increased Chinese investments in India. Although Mr. Singh articulated his interest in attracting Chinese investment to India before he embarked on his visit, concrete steps in this direction remain elusive. Chinese investment in setting up industrial parks and other infrastructure projects is one obvious hedge against the trade deficit.

Enabling the establishment of service centers by Chinese power companies in India is certainly a big step forward and a positive emerging from the current talks. This would allay concerns raised by some in the Indian security establishment on the proliferation of Chinese equipment in the power sector. These alarmist concerns related to the possibility that India, were it to purchase such equipment from China, could be stranded with the proverbial white elephants because of a lack of supply of spares and services.

Water made it to the laundry list this time and must be viewed as a significant positive as this must certainly be a first when China has agreed to such a conversation with a lower riparian. The two have agreed to share hydrological data on transborder rivers and exchange views on associated topics of mutual interest. This gives India the window to approach China with regard to the construction of dams on the Brahmaputra. Similarly, the memorandum of understanding on roadways and transportation identifies several areas for cooperation, including sharing knowledge in transportation technology, road construction standards, road safety plans, joint research and sharing experience related to public-private partnership models. This can be seen as laying the foundation for creating infrastructure to connect Asia.

Economics has proved to be a major factor in political reconciliation elsewhere. However, in the case of India and China, economic engagement is hitting a political wall. Only a political thrust can help realize what should otherwise seem inevitable: India and China becoming the world’s largest bilateral trade partnership.

India has to learn from others. The United States is implementing its pivot strategy in Asia in an attempt to create partnerships to balance a rising China, yet Washington has reached the $500 billion mark in its trade with Beijing. Japan, which had the most unfavorable image among Chinese according to a local opinion poll, manages a $300 billion trade engagement. Despite political differences and contests, there is pragmatism at work here.

Today, India requires $1 trillion of infrastructure investment every five years for at least the next two decades. China has the potential to be the largest stakeholder in this effort. Investments by China will also automatically create security hedges favoring India and help offset the trade deficit. In return, India offers China the opportunity to continue its impressive economic growth. Its capacities in steel, cement, power and industry can now be deployed in the transformation of India, and in return such economic ventures will boost China’s gross domestic product by some basis points. We are at that political moment when Asia could be integrated like never before.

Unfortunately, the two pillars of the dawning Asian century are still prisoners to their perceived insecurities and imagined magnificence. They seem condemned to “never miss an opportunity to miss an opportunity,” as one wise man had once remarked.

Books / Papers, BRICS


Original link is here 

The objective of this document is to formulate a long-term vision for BRICS. This in turn flows from substantive questions such as what BRICS will look like in a decade and what the key priorities and  achievements will be. It is true  that  BRICS is a nascent, informal grouping   and   its   agenda   is  evolving   and   flexible.   Therein  lays  the uniqueness of BRICS. The BRICS leaders have reiterated that  BRICS will work  in  a gradual,  practical and  incremental manner. Nonetheless, the grouping  needs  a long-term vision  to  achieve  its  true  potential for two reasons: (1) to dove-tail  the tactical and individual activities into  a larger framework and direction; and (2) to help in monitoring the progress of the various sectoral initiatives in a quantifiable manner.

The  Track  II BRICS dialogue,  under  the  chairmanship of India  in 2012, has been robust. On March  4th  – 6th,  2012,  academics and experts  from the five BRICS nations—Brazil, Russia,  India,  China and South  Africa— assembled  in  New  Delhi   for  the   4th   BRICS  Academic   Forum. The overarching theme was “Stability, Security  and  Growth.” This  theme is useful for understanding the motivation and ethos of BRICS as a platform for dialogue and cooperation on issues of collective interest.

The  dialogue  led to the drafting of a comprehensive set of recommendations for BRICS leaders  (Annexure 1). The  17  paragraphs that  capture the  recommendations to  the  BRICS leaders  were  reached through a consensual process between  60 academics and experts from the five countries. Forum  delegates  contributed a number of research and policy papers  that  formed  the basis for the enriching discussions. Each of these  papers  highlighted key  areas  for  cooperation, within the  overall construct of the BRICS agenda.  This  research led to a significant build-up of knowledge on BRICS. This  long-term vision document is an attempt to aggregate the dialogue and research that  has fed the Track II process so far and to build upon it.

Broadly speaking, the document is divided into four sections. The first, on ‘Common Domestic Challenges’, aims to pinpoint multiple areas in which sharing experiences and best practices within the BRICS Forum  will help to respond to common problems. For example, BRICS nations have vastly differing levels of educational attainment and healthcare policies. As large developing   countries with  significant  governance challenges,  but  also ‘demographic dividends’ and  other  drivers  of growth  to reap,  BRICS can greatly benefit from innovative ideas emanating from similarly positioned nations.

The  second  the  matic section focuses  on  ‘Growing  Economies, Sharing Prosperity’. Given  the  huge distance that  the  BRICS nations have yet to cover   in   tackling  poverty   and   providing   livelihoods  to   their   rising populations, there  is no option other  than maintaining and  accelerating economic growth.  This  section outlines the necessity of deepening intra- BRICS  and  worldwide   trade   and  economic synergies.   Additionally,  it documents growing energy needs and discusses how the economic growth imperative affects the BRICS discourse on climate change.

The third section, titled ‘Geopolitics, Security and Reform of International Institutions’, outlines an enhanced role for BRICS within an increasingly polycentric world  order.  Within the  United  Nations  (particularly the Security  Council), enhanced BRICS representation can institutionalise a greater  respect  for  state   sovereignty and  non-intervention. In  Bretton Woods Institutions, like the IMF and World Bank, BRICS seeks to reform voting  shares   to  reflect  the  evolved  global  system, different  from  that forged in the immediate aftermath of World War II. Finally,  as leaders  in the   developing   world,   BRICS  nations  seek  to  create   a  development discourse that better represent their aspirations.

The  fourth thematic section, on the  ‘Other Possible  Options for Cooperation’, outlines possible  developments to further collective engagement once the necessary prerequisites are achieved. At the present juncture, it  may  be  too  early  to  think of  BRICS  becoming a  formal, institutionalised alliance. However,  it  is important for the  grouping  to envision a commonality of purpose, continuity of operation and dialogue beyond annual summit meetings.

There are five prominent agendas  of cooperation and  collaboration that emerge from this  vision document. These themes are integral to the very idea of long-term engagement between  the  BRICS nations and provide  a framework for accelerating momentum and  increasing significance over the long term:

1.         Reform of Global Political  and Economic Governance Institutions: This  is the centrepiece of the BRICS agenda,  which  in many  ways resulted in the  genesis  of the  grouping. With  the  move  towards a polycentric world order,  BRICS nations must assume a leadership role in the global political  and economic governance paradigm and seek greater equity for the developing world. Over the coming years, they  must continue to  exert  pressure for  instituting  significant reforms within institutions—such as the United Nations Security Council (UNSC),  the World Bank, and the International Monetary Fund  (IMF). Various  suggestions outlined in this  report  provide  a constructive framework for enabling substantive reforms.

2.         Multilateral Leverage: There are multiple formats for engagement and cooperation in order to leverage the BRICS identity at the global high  table.  The  outcome of the  BRICS officials  meeting on  the sidelines of the  November 2012  G20  in  Mexico,  where  it  was decided  to  create  and  pool  a currency reserve  of up  to  USD  240 billion   is  one   instance  of  enhanced  intra-BRICS cooperation. Similarly, the  Conference of Parties, the  United Nations, and  the World  Trade   Organisation are  existing   cooperative frameworks,

within which BRICS countries can collectively position themselves by fostering  intra-BRICS consensus on issues  of significance. The United Nations is central to a multilateral framework, and there  is significant potential for BRICS to collaborate and  assume a more prominent  role   in   global   political   and   economic  governance, conflict  resolution etc.,  through institutions such  as the  Security Council.

3.         Furthering Market Integration: Global  economic growth  has  been seriously  compromised in the years following the Global Financial Crisis. Each percentage point  reduction in global growth  leads to a significant  slowdown  of  economic development within  BRICS which hinges  upon  a necessary component of economic growth.  In this   regard,   market  integration within  BRICS,  whether in  the context of trade, foreign investments or capital markets, is a crucial step  to  ensure that  the  five countries become  less  dependent on cyclical trends in the global economy.

4.         Intra-BRICS  Development   Platform:  Each   BRICS  nation  has followed a unique development trajectory. In the post-Washington Consensus era, developing  economies within BRICS must set the new development agenda, which in turn must incorporate elements of inclusive growth,  sustainable and  equitable development, and perhaps most   importantly,  uplifting those  at  the  bottom of the pyramid. The  institution of BRICS-specific  benchmarks and standards, as  well  as  more  calibrated collaboration on  issues  of common concern including the rapid pace of urbanisation and the healthcare needs of almost half the world’s population represented by BRICS, must be prioritised.

5.   Sharing of Indigenous and Development Knowledge and Innovation Experiences  across   Key  Sectors:   Along   with   the   tremendous potential for resource and technology sharing and mutual research and development efforts, coordination across  key sectors—such as information technology, energy generation, and high-end manufacturing—would prove immensely beneficial for accelerating the BRICS development agenda. Moreover, the BRICS nations must share  indigenous practices and experiences to learn and respond to the immense socio-economic challenges from within and outside. This  vision document contains multiple suggestions for instituting such  sharing mechanisms through various  platforms and cooperation channels.

This   document  analyses  the   above   themes  in   detail.   Each   section concludes with  recommendations specific  to  the  chapter’s theme. The final  section contains synthesised suggestions which  serve as an outline/framework for enhancing intra-BRICS cooperation and collaboration. The  official declarations/statements of BRICS leaders  are available in Annexure (s) 2 to 5.


Global Times | Samir Saran and Abhijit Iyer-Mitra
Published on May 20, 2013 22:18

Original Link is here

In a significant act of political signaling and foresight, Chinese Premier Li Keqiang chose India as his first ever overseas destination after taking charge of the premiership.

He arrived in New Delhi on Sunday evening and held meetings with Indian Prime Minister Manmohan Singh first. He also met Singh’s cabinet colleagues and flew to Mumbai and met with Indian industrial leaders.

This visit is important in more ways than one. At the purely bilateral level, an excruciating border episode was just recently brought to a close.

On a global level, the two countries are dealing with a once-in-a-century churning in the architecture of global governance, while at the same time trying to shake of the lethargy that both economies have fallen prey to.

For the first time in many centuries, this continent has the wherewithal to define itself on its own terms. Capitals in Asia will lead the process of shaping the Asian project.

China and India must be partners in this effort, and to get there they need to deal with the hard questions, as the time for sweet talk is now over.

We need to start having brutally frank conversations on our legacy problems and on the more recent challenges.

The parroting of old staid positions and whispering of diplomatic sweet nothings will yield little and allow others to intervene and impose.

It is time for the two countries to grow up and resolve the disputed border. And even as this resolution is discovered, progress on the bilateral relationship must be insulated from this process.

For this to happen, political leadership in both countries will have to demonstrate courage to make their respective security establishments toe the line.

Economic integration is not and will never be the answer to this political poser alone. It can provide the motivation for seeking a resolution, but it is not the answer by itself.

In fact, it can now be argued that the political discord and public perception in both countries are limiting greater economic integration.

Trade shows signs of plateauing, with Chinese firms struggling for access to all projects in India, be they shipyards, roads or telecommunications, despite some early and spectacular inroads.

The two countries now need to realize that they are confronted with the political moment that has been deferred and delayed but cannot be denied. Strong and purposeful measures must be crafted.

There must be a bold statement on the border issue that no matter what the differences, incidents like that in Ladakh recently will not happen again.

While the border management pact recently offered by China may not be the answer, an equitable arrangement that prevents any troop movements remotely close to each other’s claimed territory must be worked upon.

This conversation cannot be delayed. And the process of arriving at this accord needs to be a lot more transparent. Opaque political discussions lead nowhere, and public opinion must be built and sought.

China’s engagement with India must transform from one that is largely seen as transactional, such as the selling and buying of goods and commodities, and more recently functioning as a lender, to one of being a long-term investor and stakeholder in the Indian economy.

Chinese money, businesses and investments must bet on India and be located in this country.

This cannot happen however until businesses and people in China begin to perceive India as a friendly destination, an outcome equally determined by Indian attitudes to China.

India for its part must seriously consider identifying special industrial zones that Chinese firms can develop as centers of large manufacturing and R&D.

There must be a complete, honest and meaningful revamp of the current visa regime. The level of visits is abysmal, and security considerations cannot determine the level of engagement between the two countries destined to be the largest trading partners in a decade or so.

Finally, the two must bilaterally develop a substantial conversation on the cutting edge of global governance issues, including issues of the global commons like climate change, water, health and medicine, and Asian security architecture, as well as issues of space and proliferation, of rules and mechanisms of economic governance, and on new arenas of maritime and ocean governance.

This dialogue must help discover common ground that the two countries can articulate and put forth for the consideration of the global community.

Such articulation will be the first step toward an Asian century. Ultimately a political Asia will be born when New Delhi and Beijing can assume parentage of this Asian geography that until now has only seen many guardians.

Samir Saran is a vice president and Abhijit Iyer-Mitra a program coordinator at the Observer Research Foundation, New Delhi.

Columns/Op-Eds, In the News, Politics / Globalisation, Uncategorized

Time for hard questions on Sino-Indian relationship’s future

BRICS, Columns/Op-Eds, Uncategorized

Generosity within BRICS offers China passport to power

The original article is available here


George Orwell once remarked “Whoever is winning at the moment will always seem to be invincible.” China’s long-running growth juggernaut has resulted in a steady conversion of China skeptics into believers, so much so that a Pew Global Attitudes report released in July 2011 indicated a widespread perception that China has either replaced or will replace the US as the world’s sole superpower, with the Americans themselves just about equally divided on the subject.

For the Chinese establishment, even as being the preeminent global power remains their ultimate aspiration, China’s own outlook has been far more pragmatic.

There is a realization that the critical vectors that fuelled China’s impressive growth have either played out or are near to playing out their potential.

Exports are slowing, and the near double-digit growth in domestic consumption leaves little room for additional growth without triggering unbridled inflation.

Compounding this is fast depleting surplus labor in China’s rural backyard and steady increase in wage costs, which have grown at an annual rate of 15 percent over the past years.

This and stagnating Western demand for goods are impacting China’s growth algorithm built around the premise of inexpensive labor and competitive exports.

China’s redemption as the preeminent global power is hinged as much on its capacity to sustain its economic momentum as in its ability to influence the principles, values and rules that define global institutional mechanisms and frameworks.

However, China’s stellar economic engagement with the world has not resulted in commensurate political weight or perceptional dividends within global institutions.

To realize its aspirations, China urgently needs to find a way around this predicament, and BRICS offers it a plausible option and opportunity.

BRICS is today the most promising entente of high growth economies. BRICS’ national economic and political transformation agendas are fuelling huge domestic demand for newer types of products and services. China is uniquely positioned to gain enormously from this dispensation.

Standard Bank estimates China is party in over 85 percent of intra-BRICS trade flows, which have grown by about 1,000 percent over the last decade to over $300 billion, and are estimated to reach $500 billion by 2015.

While intra-BRICS trade accounted for close to 20 percent of BRICS’ total trade in 2012, it remains disproportionately weighed in China’s favor. Hence in any BRICS growth story, China will be the biggest net gainer.

While the BRICS nations have formed a close bond between themselves, they haven’t consummated any traditional model of interstate alliance.

The model affords sufficient space to accommodate intra-group differences and independent strains of national discourse.

It is still bilateral relationships rather than allegiance to group ethos that predominantly inform the intra-BRICS economic and political dynamic.

Group identity and collective consciousness will result from co-creating and co-managing institutions and instruments. A BRICS development bank, a stock exchange alliance and a BRICS fund are all vital next steps.

For China to unleash and benefit from the full potential of the group, it needs to work on such initiatives. These will offer it a new economic landscape and will also help take the edge out of bilateral relationships.

However, for China to command the moral weight to realize its power ambitions through BRICS, it needs to morph from a trading partner seeking profits to a strategic ally helping shape a common world.

As the partner that stands to benefit the most from any expanded BRICS play, China needs to be singularly more magnanimous and mindful in accommodating the legitimate interests and aspirations of other member states.

A disproportionate generosity, whether it is in resolving bilateral disputes or legacy issues, or, sharing of power at BRICS institutions, independent of economic contribution and effort, will reap very rich political and economic dividends, while also permanently insulating China from the politics of power imbalance within the group.

Samir Saran is vice president at Observer Research Foundation and Jaibal Naduvath is a communications professional in the Indian private sector.