China - The New Epicentre
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~ Rajendra Singh Bisht
24 NOVEMBER 2022
Recently, China has become aggressive with some of its neighbouring countries. For example, China has become quite forceful with Taiwan after United State politician Nancy Pelosi visited this country.
After her visit, and in retaliation, China conducted a military exercise near Taiwan, blocking its business activities with other countries.
In future, if China makes a military invasion of Taiwan, it may affect their trade relations and peace in the region. Taiwan has trade relations with China and imports goods from China amounting to $70.8 billion.
China has made tremendous progress in many fields; however, due to its stand on Taiwan and Hong Kong, many countries with trade relations have gone sour. America, Japan and Australia these rallying against China on the Taiwan issue.
When taking over Hong Kong from the British, China agreed to govern Hong Kong under the principle of “one country, two systems” where the city would enjoy “a high degree of autonomy for the next 50 years”.
But Beijing has taken increasingly shocking steps to infringe on Hong Kong’s political system and crack down on dissent. This stance of the Chinese government has annoyed the British government.
China’s aggression in Taiwan may trigger world war three, which will not be suitable for the people of other countries. It will not be a conventional war among nations; instead, it has a risk of being a full-blown nuclear war.
Some may argue that even though Russia and Ukraine are at war, it has not triggered WW3. To a great extent, it may be a valid reason because other NATO countries have not sent their troops to Ukraine to fight against Russia.
All the supplies to Ukraine are towards its defence against Russian forces.
But in the case of a China- Taiwan conflict, America and Japan may send their troops to Taiwan, whereas Australia might support Taiwan with weapons through the “Armitage Scenario” with the US. (US will ask Australia to support Taiwan, as Australia cannot directly intervene in Taiwan – China Conflict)
Consequently, on the other side, the superpower ally like Russia and neighbouring North Korea will support China which may further the chance of triggering an atomic war.
The president of China, Xi Jinping, is keen to unify Taiwan under a one-China policy. But the people of Taiwan want to remain independent as China has one party dictatorship constitution, and Taiwan has a democratic form of government.
Taiwan was a Japanese colony from 1895 till 1945, but Japan surrendered it to the Republic of China’s government after World War II.
Still, China doesn’t have a good relationship with Japan; they have a dispute over many islands, which may spoil their relationship further.
Moreover, Japan has recently expressed a threat from China. Also, China and Russia have recently conducted a military drill near the Sea of Japan.
This threat of Chinese aggression is changing Japanese statecraft and pushing the nation’s readiness for a confrontation.
CHINA and US
The US and China trade relation started in 1979 after signing a bilateral trade agreement between these two countries. America is China’s largest trading partner, importing $737 Billion and exporting $179 Billion.
On the other hand, the US is Taiwan’s strategic partner. Though the US has no diplomatic relationship with Taiwan, have a role to play under Taiwan Relation Act (1979).
Under this act, the United States have the policy to provide Taiwan with arms of “a defensive character and to resist any resort to force that jeopardizes the security or the social or economic system of the people of Taiwan.”
With that agreement in place, if China attacks Taiwan, the US may impose economic sanctions on China, putting China in great financial difficulties.
Though it may impact the American economy also, the shock will be significant because there is a vast imbalance between the import-export of these two countries.
On the other hand, though a trade war between the US and China will also have impact on the US economy, it will negatively affect the Chinese economy as China might face a $558 billion trade deficit.
Consequently, if the US doesn’t get goods from China, American life, like cars, household appliances, garments, festivals, industrial goods, and pharmaceuticals, will be disrupted too. In that case, the US will be at a loss also.
CHINESE ECONOMIC REFORM
China started economic reform on 18 December 1978. Deng Xiaoping is considered the father of Chinese economic reform. After the reform, China has uplifted 800 million people from poverty.
It has continued its rise to the present day and is now the world’s industrial powerhouse. It has become the second-largest economy.
The rapid Chinese rise from a backward society to an industrial powerhouse took 35 years. Though China’s industrialization started much after Japan’s reform, China has superseded it.
Economically, it has not only overtaken Japan, but it has also superseded Britain, France and Germany.
It will be pertinent to mention that if the Chinese economy grows in the same spirit, it may surpass America shortly. A forecast states that China will become the world’s largest economy in nominal GDP by 2028.
China’s 5 top trading partners are America, Hong Kong, Japan, South Korea and Vietnam. Hence, China needs to maintain good relations with these countries to become the world’s largest economy by 2028.
CHINA and INDIA
India has a $79.16 billion trade with China. These two countries are the biggest market for each other due to their population and growing economy.
However, due to the stand-off at the Line of Actual Control (LAC), the relationship between these two countries is souring.
The militaries of both countries were face-to-face with each other at the border till recently. However, after the 16th round of military-level talks, the two countries decided to pull back their armies.
It is a good sign that both countries have resolved disputes through dialogue. But there are some more areas where the two armies are still eyeball to eyeball.
According to the government of India, China illegally occupies approximately 38,000 sq. km of Indian territory. It is developing infrastructure in disputed areas at an unprecedented pace in the Line of Actual Control (LAC).
It is the main contention between the two countries, as India wants China not to develop infrastructure in disputed areas. If China stops its activities in LAC and improves relations with India, it would be good for its trade as India is a significant importer of Chinese goods.
There are nearly 4,000 Chinese directors in Indian companies, so China’s stakes are significant.
However, the more extensive argument that comes forth is about the intention of China. Should China care about territory in Leh – Ladakh or risk trade with India, which makes up just 5% of its total trade?
CHINA’S RELATIONSHIP WITH OTHER NEIGHBOURING COUNTRIES
Besides India and Taiwan, China has a border dispute with other neighbouring countries like Vietnam, Philippines, Indonesia, Japan, South Korea, North Korea, Singapore, Brunei, Nepal, Bhutan, Laos, Mongolia and Myanmar.
It has trade relations with these countries, and if their relations deteriorate further, this can put China in a significant trouble.
With these neighbours, China has total imports and exports worth about US $288 billion. Vietnam alone has US $ 182 billion in trade with China
Due to the trade imbalance, its manufacturing sector can be influenced, and there is a likelihood of widespread unemployment in China.
It would not be suitable for China if its neighbouring countries broke trade relations or if the US and the EU imposed sanctions.
CHINESE BELT AND ROAD INITIATIVE
The Belt and Road Initiative (BRI), formerly known as one Belt One Road (OBOR), is a global infrastructure adopted by the Chinese government in 2013.
This project will cost an estimated US $ 4-8 trillion in 36 years (from 2013 to 2049).
The original Silk Road arose during the westward expansion of China’s Han dynasty from 206 BCE -220 CE. At that time, the road passed through many countries, for example, Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, India and Pakistan.
Modern China’s belt and road initiative, sometimes referred to as the new silk road, primarily aims to grow its economic and political power and create the right conditions for China to build a high-technology economy.
Under this initiative, China has invested in many countries. Currently, the Belt and Road Initiative is spread across all continents.
It passes through forty-three countries in sub-Saharan Africa, thirty-five in Europe and Central Asia, twenty-five countries in East Asia & Pacific, twenty countries in Latin America & Caribbean, eighteen countries in the Middle East & North Africa and six in Southeast Asia, like Afghanistan, Bangladesh, Maldives, Nepal, Pakistan and Sri Lanka.
Many countries have land routes, while others have sea routes through dedicated upcoming ports.
These nations have signed a Memorandum of Understanding with China and is the largest bilateral lender for public sector loans across Africa and elsewhere.
Though China has a border dispute with some East Asian countries, for example, Vietnam, Indonesia and the Philippines, the initiative continues.
CONCLUSION
China is a significant and influential country now. Its economy is growing at a fast pace, and it has the intention to maintain that growth rate.
It can only be held when it keeps sound and harmonious relations with all the countries with whom it has trade relations. If China grows, then it will help other developing countries to grow too.
If China wants to maintain its economic growth, it should prevent hostilities with America, the EU and its neighbouring countries. Any dispute must be peacefully resolved.
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