Archive for ‘GeoPolitics’

30/10/2014

United States praises China’s growing role in Afghanistan | Reuters

The United States welcomed China’s growing role in trying to ensure Afghanistan’s stability on Thursday, saying a Beijing conference of foreign ministers on Afghan reconstruction this week shows its commitment to the region as Western troops pull out.

Chinese President Xi Jinping (R) and Afghan President Ashraf Ghani Ahmadzai attend a signing ceremony at the Great Hall of the People in Beijing October 28, 2014. REUTERS/Lintao Zhang/Pool

The comments, made by a senior State Department official, are rare U.S. praise for Beijing, which this week hosts Afghan President Ashraf Ghani on his first visit abroad since assuming office in September.

Washington and Beijing, which have typically contentious relations on geopolitical issues from Iran to the South China Sea, have both said they see Afghanistan as a point where their security interests converge.

On Tuesday, China pledged to give Afghanistan $327 million in aid through 2017, more than the $250 million contribution it has so far offered since the fall of the hardline Islamist Taliban regime in 2001.

“China’s view of engaging in Afghanistan over the course of these past few years has really changed significantly, and in our view, in a very positive direction,” the official told reporters during a telephone briefing.

On Friday, foreign ministers from Asian and Central Asian countries will gather in Beijing for a fourth round “Istanbul Process” conference on Afghanistan, which China hopes will help boost development and security there. White House counsellor John Podesta will attend the meeting.

“It’s a real demonstration of China’s commitment to Afghanistan, to its role in the region and one that we greatly welcome,” the official said.

via United States praises China’s growing role in Afghanistan | Reuters.

28/10/2014

Putin Turns to China as Russia’s Economy Is Weakened by Sanctions – Businessweek

Defying the U.S. and Europe is forcing Russian President Vladimir Putin to aid his biggest rival to the east. To avert a recession, Russia is turning to China for investment, granting it once restricted access to raw materials and advanced weapons, say two people involved in planning Kremlin policy who asked not to be identified discussing internal matters. Russia’s growing dependence on China, with which it spent decades battling for control over global communism, may end up strengthening its neighbor’s position in the Pacific. With the ruble near a record low and foreign investment disappearing, luring Chinese cash also may deepen Russia’s reliance on natural resources and derail efforts to diversify the economy.

“Now that Putin has turned away from the West and toward the East, China is drawing maximum profit from Russian necessity,” says Masha Lipman, an independent political analyst in Moscow who co-authored a study on Putin with former U.S. Ambassador Michael McFaul. China is wasting no time filling the void created by the closing of U.S. and European debt markets to Russia’s largest borrowers. A delegation led by Premier Li Keqiang signed a package of deals on Oct. 13 in Moscow. Among them were an agreement to swap $25 billion in Chinese yuan for Russian rubles over three years, a treaty to protect companies operating in Russia and China from having their profits taxed twice, and cooperation on satellite-navigation systems and high-speed rail. To promote trade, Export-Import Bank of China agreed to provide credit lines to state-owned VTB Group and Vnesheconombank, Russia’s development bank, as well as a trade finance deal with Russian Agricultural Bank.

Russia’s economy is more vulnerable than it’s been since the collapse of the Soviet Union in 1991. Unlike then, Russians are united in support of their leader, and with $455 billion in foreign currency and gold reserves, the country isn’t broke, according to Lipman. “The economy was much worse then, but Russia was in a much better position geopolitically because it had the support of the U.S. and Europe,” she says. Putin spokesman Dmitry Peskov didn’t respond to requests for comment.

via Putin Turns to China as Russia’s Economy Is Weakened by Sanctions – Businessweek.

17/09/2014

Is China Ready to Step Up and Invest in India? – India Real Time – WSJ

While Chinese companies have been great at peddling their products in India, they have been surprisingly reluctant to invest here. China has invested less in India than even Poland, Malaysia or Canada have.

President Xi Jinping’s three-day visit to India starting Wednesday is likely to include some massive pledges to try to remedy this imbalance.

When Prime Minister Narendra Modi visited Japan recently, Japan pledged to invest $35 billion in India. President Xi is expected to try to eclipse Japan’s promises, possibly pledging $100 billion in investment according to some local reports. His meetings with Mr. Modi are predicted to lay the groundwork for a wave of Chinese money to build industrial parks and bullet trains.

Annual trade between India and China has galloped to $66 billion from $3 billion 14 years ago, something that underscores the rise of Beijing as the global manufacturing hub and India’s growing appetite for everything from phones to machinery from China.

While the trade relationship between the two countries has bloomed, foreign direct investment from China has not. According to Indian government statistics, the country has received a total of around $400 million from China in investment in the last 14 years. Even if you add the $1.2 billion of direct investment India received from Hong Kong, China is still well behind the $22 billion in foreign direct investment from the United Kingdom, $17 billion from Japan, $13 billion from the Netherlands and $1.9 billion from Spain.

It’s not that China doesn’t invest abroad. According to data from United Nations Conference on Trade and Development, China was the third biggest source of foreign direct investment last year, having invested more than $100 billion in other countries. In the seven years to 2012, it invested more than $25 billion in the 10 members of the Association of Southeast Asian Nations alone.

Chinese investment has tended to focus on the resources sector to power its economy. Much of it has gone into getting control of oil, natural gas and coal in Africa, Australia, Indonesia and elsewhere. India has not attracted much of this investment as it is a net importer of resources and has a heavily regulated energy sector, said Rajiv Biswas, economist for IHS.

“China wants to increase investment in India and wants Chinese companies on the ground there,” Mr. Biswas said. “Most of it will be in manufacturing and infrastructure space.”

Chinese companies may also be looking to move some of their manufacturing to India as they struggle with rising wages at home, said Ajay Sahai, director general and chief executive at Federation of India Export Organization.

If India can’t find better ways to fix its trade imbalance with China, New Delhi may want to increase taxes on some imports such as auto-components and pharmaceuticals to encourage Chinese companies to set up factories in India, he said.

“This will not only raise Chinese investment in India but also help in fixing the trade imbalance,” said Mr. Sahai.

via Is China Ready to Step Up and Invest in India? – India Real Time – WSJ.

17/09/2014

5 Things to Look Out for During Xi Jinping’s Visit to India – WSJ

Manan Vatsyayana/Agence France-Presse/Getty Images

1 INFRASTRUCTURE

Prime Minister Narendra Modi is looking for foreign capital and expertise to build “smart cities”, high-speed trains and modern airports of the kind that China has built for itself in the past decade. The two leaders are expected to sign a deal to bring bullet trains to India and may also reach an agreement for the building of world-class railway stations and airports.

2 INDUSTRIAL PARKS

The two countries laid the groundwork for Chinese investment in industrial parks in India when Indian Vice-President Hamid Ansari visited Beijing in June. Indian officials say they expect to ink deals worth $5 billion for two parks – one in the western state of Gujarat, Mr. Modi’s home state, and the other in Maharashtra. The idea is to make it easier for Chinese companies to set up shop in India.

3 BORDER TROUBLES

Territorial disputes that have long dogged Sino-Indian ties aren’t the focus of this visit, but are sure to come up. Two reports this week – one about an alleged incursion by Chinese troops in Ladakh and another about protests by Chinese civilians and troops against the construction of an Indian canal along the disputed border – have highlighted the unresolved issues. Even after 17 rounds of talks, no solution has emerged – don’t expect one during this visit either.

4 COMPETITION WITH JAPAN

Indian newspapers have been filled with anticipation about whether China will outdo its Asian rival, Japan, in promising investments for India. Earlier this month, Japan pledged to pour $35 billion into India over five years; China is expected to go further. Expect reams of analysis of Mr. Xi’s rapport with Mr. Modi. When Japanese Premier Shinzo Abe met Mr. Modi, they bear hugged.

5 BREAKING OUT OF THE MOLD

Officials have raised hopes of a “directional change” and an “orbital jump” in Sino-Indian ties, which have long been bogged down by bureaucratic mistrust. Trade relations have flourished in the past decade, but are skewed in China’s favor– and investments have remained very low. Experts are hoping Mr. Modi – who worked with Chinese as chief minister of Gujarat – will adopt a pragmatic approach to push for Chinese money. If he succeeds, the visit may set the stage for an era of economic collaboration between the two Asian giants.

via 5 Things to Look Out for During Xi Jinping’s Visit to India – WSJ.

17/09/2014

Indian President flies out of Vietnam

President Pranab Mukherjee Wednesday wrapped up his four-day state visit to Vietnam and flew back to India.

During the President’s visit, India and Vietnam called for a peaceful, unfettered South China Sea, inked seven agreements including for direct Delhi-Hanoi flights and an extended line of credit for purchase of military equipment. Both countries also set a target of $15 billion bilateral trade by 2020

via President flies out of Vietnam.

17/09/2014

Project Mausam, India’s answer to China’s maritime might: Explained – News Oneindia

In a significant move, the Narendra Modi Government will soon launch ‘Project Mausam’ for countering Beijing’s growing influence in the Indian Ocean region. This transnational program is aimed at restoring India’s ancient maritime routes and cultural links with republics in the region.

'Mausam' to check China’s maritime might

Project Mausam: India’s answer to China’s ‘Maritime Silk Road

It is Narendra Modi Government’s most significant foreign policy initiative to counter-balance the maritime silk route of China.

The project emphasises on the natural wind phenomenon, mainly the monsoon winds used by Indian sailors in ancient times for maritime trade.

This initiative will enable India re-connect and re-establish communications with its ancient friends in the Indian Ocean region.

It would lead to an enhanced understanding of cultural values and concerns.

The project purposes to determine the Indian Ocean “world” – expanding from East Africa, the Arabian Peninsula, the Indian subcontinent and Sri Lanka to the Southeast Asian archipelago.

What is China’s maritime silk route?

It an initiative to develop regions along an ancient route connecting Western China with South and Central Asia.

The aim of this initiative is to strengthen China’s economic ties with various nations, including those within Asia and Europe.

It proposes China to work with partners to develop maritime infrastructure, especially ports.

Originally, the “maritime silk road” was proposed to foster cooperation and goodwill between China and the ASEAN countries.

The “maritime silk road” is parallel to the land-based “new silk road,” which runs westward from China through the Central Asian states.

The route is likely to see China further intensify its naval activities in the region.

It extends from its naval base in Hainan Island (South China Sea) to Bagamayo in Tanzania, Africa, with several of the ports encircling mainland India.

Hambantota (Sri Lanka), Gwadar (Pakistan), Chittagong (Bangladesh) and Marao Atoll (Maldives) are the ports being built by China as per the initiative.

What is Silk Route?

It is a series of trade and cultural transmission routes.

It connected the West and East by linking traders, merchants and other persons from China to the Mediterranean Sea.

It derives its name from lucrative Chinese silk trade, a major reason for the connection of trade routes into an extensive transcontinental network.

via Project Mausam, India’s answer to China’s maritime might: Explained – News Oneindia.

17/09/2014

Will Chinese President Xi be able to compete with Japan’s Abe for India’s affections?

Any adjustments in the India-China-Japan triangle will have an impact all across Asia.

East Asia has eagerly set out to court New Delhi’s new government. That’s obvious from the spate of state visits that have taken place of late between India, China and Japan. Earlier this fortnight, Prime Minister Narendra Modi visited Japan. Today, Chinese President Xi Jinping’s begins his first official state visit to India. Trade, investment and infrastructure are the buzzwords on the road towards deepening ties.

The complexities of the India-China-Japan triangle are far too intricate to be spelt out in a simplistic fashion. Will trade and investment become the motive force that will fashion ties, more so at the cost of pressing strategic realities that appear conflicting at times? Going by the school of interdependent liberalism, states will be propelled to adopt a cooperative framework by economic symbiosis and the web of multilateral international institutions and frameworks.

In the case of China, India and Japan, while investments  have taken precedence, the competitive race is far too obvious. Last fortnight, Japanese Prime Minister Shinzo Abe announced that this country’s private and public investment in India will double to $34 billion over the next five years. Within a fortnight comes Xi Jinping with his administration’s plans to invest around $500 billion overseas in the next five years, with big-ticket investments coming India’s way likely to exceed $200 billion. It is being suggested that China could spend $35 billion merely on power and highway projects ‒ almost the same amount as Japan’s total investment in India.

Growing trade deficit

It is apparent that cooperation through economic considerations has its share of hidden problems. India continues to be hurt by  the growing trade deficit with China, which stood at a record $ 36 billion in 2013-’14. In fact, China accounted for more than 50% of India’s current account deficit in 2012-’13. Indian exports to its neighbour fell nearly 10% during that period.

By seeking economic and military clout, could China reject the liberal regional order and seek to replace it with its own Sino-centric Asian order? China’s much-debated rise is always under scrutiny, given its role as Asia’s largest economy and the fact that it is the No. 1 trading partner for almost 120 economies around the world.

More so, in the strategic sphere, are Asian nations, including India and Japan, prepared to recognise such an order? So profound is the presence, rise and status of the People’s Republic of China that one is often confronted with a debate whether a potential Asian century could actually become a Chinese century.

The Chinese government chose to downplay Modi’s earlier indirect reference to China during his visit to Japan, where he took a swipe at the “18th century expansionist mindset of some countries”. But the reaction of state-controlled Chinese media over Modi’s remark was noticeably irate. Chinese media fervently cautioned against any attempt by Tokyo to structure a united front against Beijing with New Delhi as its pivot. All this very palpably falls into the realist paradigm of international relations, which posits that states often find themselves in a zero-sum contest for power and influence, where the prevailing international power balance remains a key determinant of the region’s future stability and strategic order.

Geo-strategic realities

Realignments in any part of the India-China-Japan security triangle will have far-reaching impact all across Asia. It should be remembered that Xi Jinping’s address at the 18th Party Congress of the Chinese Communist Party in 2012 contained a reference to “rejuvenating China”, which has been interpreted as an oblique reference to “reclaiming lost historical territories”. This approach could well have a direct bearing on Japan and India, with whom China contests territories and borders.

On another level, the camaraderie between Modi and Shinzo Abe speaks volumes. Systemic conditions present a favourable platform for the duo to guide their countries to “… the dawn of a new era in India-Japan relations”, as they agreed to in the Tokyo Declaration last fortnight. Moreover, providing cement for this approach, Modi underlined the significance of India and Japan being democracies, which affords them a solid basis to converge at various levels on the Asian stage. As for the ties between China and Japan, there could not have been a worse time for relations between them, with the bitter contest over the East China Sea amidst a rising tide of nationalist sentiment against one another in both countries.

Whether Xi Jinping will manage to find success in making inroads into Delhi and buying a sizeable share of Indian attention is too early to say. However, one thing is for sure ‒ it will not happen at the cost of Japan.

via Scroll.in – News. Politics. Culture..

17/09/2014

Is China’s promised $100 billion India investment more dangerous than its border policy?

Experts believe that China deliberately uses trade as part of its geo-strategic arsenal.

The script is almost predictable. Right before meetings of Indian and Chinese heads of state, something happens on the border to remind everyone that sentiment between the two countries is not exactly neighbourly. Last year it was a standoff in Daulat Beg Oldi about infiltration by the Chinese army. This year, with everyone excited at China’s promise to pump $100 billion into India, there’s another incursion by the Chinese into Demchok in Ladhak.

Chinese President Xi Jinping arrives in India today and will visit Ahmedabad on Prime Minister Narendra Modi’s birthday. But Chinese troops have also been reported to have moved 500 meters into Indian territory.

Beijing’s approach seems to be sweet-talking – this time taking the form of foreign direct investment – coupled with regular pinpricks that remind India that they have the stronger position on the border.

But could the proposed investment be as much of a threat to India as the border dispute?

Trading places

India’s total trade with China was around $65 billion in 2013-’14. Of that, only $14 billion were Indian exports heading into China, leaving India with a trade deficit of $36 billion. If oil imports are included, Chinese imports are responsible for nearly half of India’s overall trade deficit. This is a great many Indian eggs in one Chinese basket.

For many economists, this isn’t a problem. It’s simply the way efficient markets ought to function, with India buying the goods it needs from the most competitive seller. “The more competitive the trading partner, the more India should buy from it, and the bigger should be the bilateral trade deficit,” wrote commentator Swaminathan Aiyar last year. “China is the most competitive exporter of all, so India should run its biggest trade deficit with this country.”

Yet India does feel the need to reduce the trade deficit with China. Answering a question in the Lok Sabha earlier this year, minister of state for commerce Nirmala Sitharaman admitted that the balance of trade was heavily in China’s favour and that India was taking steps to address this.

“With a view to reducing the trade deficit with China, efforts are being made to diversify the export basket,” Sitharaman said.

via Scroll.in – News. Politics. Culture..

16/09/2014

Xi’s India visit highlights changing power dynamic – Businessweek

Chinese President Xi Jinping’s trip to India this week highlights subtle shifts in the regional power dynamic that are bringing warmer ties between the two Asian giants, challenging China’s traditional relationship with Pakistan, and opening a new chapter in Beijing’s ongoing competition for influence with arch-rival Japan.

Xi is due in New Delhi on Wednesday for a three-day visit focused on trade, investment and the resolution of decades-old border disputes. With the world’s second-largest economy and a proven track record at building highways, railways, and industrial zones, China has much to offer India as it seeks to upgrade its creaky infrastructure.

The visit is the latest sign of easing suspicions between the two huge countries — which between them have 2.6 billion people — dating from a month-long border war in 1962 that left around 2,000 soldiers dead. That conflict ended in a standoff with both sides accusing the other of occupying its territory.

Xi’s visit “will definitely enhance the bilateral political mutual trust,” Chinese Assistant Foreign Minister Liu Jianchao told reporters in Beijing last week.

While ties have been steadily growing for years, they’ve been given a major boost under new Indian Prime Minister Narendra Modi, who’s signaled he wishes to pursue a more vigorous foreign policy. Xi is the first Chinese head of state to visit in eight years, while the country’s prime minister, Li Keqiang, made India his first overseas visit shortly after taking office last year.

“Good relations with India are a key part of China’s regional strategy and Xi’s visit creates the opportunity for direct face-to-face communication on the problems that still exist, such as the border issue,” said Zhao Gancheng, Director of the Asia-Pacific Center of the Shanghai Institute for International Studies.

via Xi’s India visit highlights changing power dynamic – Businessweek.

16/09/2014

India says to defend China border after standoff ahead of Xi visit | Reuters

More than 200 soldiers of the People’s Liberation Army crossed into what India considers its territory in Ladakh in the western Himalayas last week, and used cranes, bulldozers and a Hummer vehicle to build a 2-km (1.2-mile) road within it, the Hindustan Times said.

A dog rests on the Indian side of the Indo-China border at Bumla, in the northeastern Indian state of Arunachal Pradesh, November 11, 2009. REUTERS/Adnan Abidi

Indian soldiers challenged the Chinese troops and asked them to withdraw, the newspaper said. Then, on the night of September 10, soldiers demolished a temporary track built by Chinese forces.

There was no immediate comment by India’s defense ministry.

Both China and India are trying to put a positive spin on Xi’s first summit meeting with Indian Prime Minister Narendra Modi since the Indian leader took office in May. He arrives on Wednesday after touring the Maldives and Sri Lanka.

The two countries are expected to ramp up commercial ties and open the way for Chinese investment in Indian infrastructure, including railways, but the contested border remains a stumbling block to better political ties.

via India says to defend China border after standoff ahead of Xi visit | Reuters.

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