Posts tagged ‘Xi JinPing’

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.

15/09/2014

India’s Economy Looks a Lot Like China’s — In 2001 – India Real Time – WSJ

India today doesn’t look quite like the economic dynamo that, just a few years ago, some predicted would overtake China as emerging-markets champion.

But the race looks a lot closer if you account for one key fact: China got a 13-year head start on India in opening its economy and giving companies greater freedom to invest and produce. In exports, capital spending and foreign investment, India today is remarkably similar to China circa 2001.

That should both console and concern India as it gets back on its feet after three years of weak growth and high inflation. Console, since it suggests the country’s economy could remain on a China-like trajectory for years to come. But concern, because India’s delay could mean that the country has missed out on some big advantages that catalyzed China’s boom.

The latter point is especially worth considering given how assiduously India’s recently elected prime minister, Narendra Modi, is working to follow the blueprint for China’s export- and investment-driven success.

When Chinese President Xi Jinping visits the Indian capital this week he will encounter a recipe for economic revival that ought to look very familiar. Delhi is aiming to boost exports and raise India’s share in world trade by 50% over the next five years. “Sell anywhere,” Mr. Modi said in an Independence Day exhortation to global business last month. “But manufacture here.”

via India’s Economy Looks a Lot Like China’s — In 2001 – India Real Time – WSJ.

15/09/2014

China on track to develop Indian railways as Xi heads to South Asia | Reuters

China will pledge to invest billions of dollars in India’s rail network during a visit by President Xi Jinping this week, bringing more than diplomatic nicety to the neighbors’ first summit since Narendra Modi became prime minister in May.

China's President Xi Jinping attends a meeting with Venezuela's President Nicolas Maduro at Miraflores Palace in Caracas in this July 20, 2014 file photo. REUTERS/Jorge Silva/Files

The leaders of Asia’s three biggest economies – China, India and Japan – have crisscrossed the region this month, lobbying for strategic influence, building defense ties, and seeking new business opportunities.

Beijing’s bid to ramp up commercial ties in India comes despite a territorial dispute that has flared anew in recent years, raising concerns in New Delhi, where memories of a humiliating border war defeat in 1962 run deep.

It follows a pledge by Japan to invest $35 billion in India over the next five years – including the introduction of bullet trains – and a drive to deepen security ties during talks earlier this month between Modi and Prime Minister Shinzo Abe in Tokyo.

India and China are expected to sign a pact that will open the way for Chinese participation in new rail tracks, automated signaling for faster trains and modern stations that India’s British-built rail system desperately needs, having barely added 11,000 km of track in the 67 years since independence.

China, which added 14,000 km of track in the five years to 2011, is also pushing for a share of the lucrative high-speed train market in India, which it says would be cheaper than Japanese proposals.

“India has a strong, real desire to increase its cooperation with China and other countries to perfect and develop its rail system, and has concrete cooperation ideas,” Assistant Chinese Foreign Minister Liu Jianchao told reporters ahead of Xi’s trip.

“India is considering building high-speed railways, and China has a positive attitude towards this.”

China’s consul general in Mumbai, Liu Youfa, told the Times of India last week that Chinese investment in the modernization of India’s railways could eventually touch $50 billion.

Beijing is looking to invest another $50 billion in building India’s ports, roads and a project to link rivers, part of an infrastructure push that Modi has said is his top priority to crank up economic growth.

Chinese investment will also help narrow a trade deficit with India that hit $31 billion in 2013.

via China on track to develop Indian railways as Xi heads to South Asia | Reuters.

15/09/2014

With eye on China, Modi’s India to develop disputed border region | Reuters

India has eased restrictions on building roads and military facilities along its disputed border with China, as the new government seeks to close the gap on its neighbor’s superior transport network and take a stronger stance on Beijing.

Indian environment minister Prakash Javadekar told Reuters he had relaxed environmental rules within 100 km (62 miles) of the contested border in remote Arunachal Pradesh in order to speed up construction of some 6,000 km of roads.

The move, which also allows for the construction of army stations, arms depots, schools and hospitals in the sparsely populated Himalayan region, was announced days before Chinese President Xi Jinping visits India on Sept. 17-18.

“This is about defense preparedness,” said Javadekar. “On the Chinese side of the border, not only have they built good roads, they are building up their railway network. Our army faces problems because of the bad quality of roads,” he added.

Work on the roads will start in the coming months.

via With eye on China, Modi’s India to develop disputed border region | Reuters.

12/09/2014

China’s Xi Enlists Party Recruiters in Anticorruption Effort – Businessweek

Zeng Fanyue is a 24-year-old political science graduate student at Shanghai’s Fudan University. Politically speaking, she’s redder than red. “As a Communist Party member, I have additional social responsibilities. I should help people and do things for others,” she says, telling how she choked up with emotion during a ceremony in which she renewed her oath of loyalty to the party.

The government of President Xi Jinping, who’s also chairman of the Communist Party of China (CPC), says it wants more true believers like Zeng. At the same time, it wants to weed out the party’s corrupt members. Last year the number of Chinese joining the party dropped 25 percent as young people saw little to gain from joining an organization in convulsions over the prosecutions of party notables such as ex-Chongqing boss Bo Xilai and former Security Minister Zhou Yongkang. In just the first five months of this year, authorities investigated 26,523 officials, including seven at the ministerial level, for crimes related to their jobs, reported the official Xinhua News Agency on July 3. The CPC—now 87 million strong—is facing “severe dangers,” particularly from corruption, Xi warned in a June 30 speech.

Three weeks before Xi’s speech, the party had issued new recruitment rules, the first major revision in 24 years, that aim to further slow the growth of the world’s largest political organization. Only people likely to be so dedicated to party doctrine that they won’t succumb to the temptations of graft will be welcomed.

Ding Xueliang, professor of social science at the Hong Kong University of Science & Technology, says Xi and other top leaders became convinced China needed a smaller, purer party after close study of the collapse of Communist rule in the former Soviet Union. “The major problem they identified about the Soviet Communist Party was: No. 1, the senior cadres didn’t believe in party principles, didn’t believe in communism or socialism, and only believed in their own self-interest,” Ding says. “No. 2, within the cadre system—amongst the higher- and middle-level officials—there were extensive networks of corruption.”

via China’s Xi Enlists Party Recruiters in Anticorruption Effort – Businessweek.

11/09/2014

India and China in wary dance as Xi Jinping prepares for South Asia trip | South China Morning Post

Xi Jinping will start his first South Asia tour with a visit to Beijing’s latest investment in Sri Lanka, a US$1.4-billion port city development to include a marina and a Formula One track – all just 250km from India’s coast.

japan_denmark_tok332_45418663.jpg

The president’s trip to the site, next to a major Chinese-funded commercial port, will provide a vivid reminder of Beijing’s growing economic clout in India’s backyard ahead of his maiden visit to New Delhi next week.

Despite his hardline nationalist reputation, India’s Prime Minister Narendra Modi moved quickly to engage with traditional rival China after taking office in May, inviting Xi to India.

But he has also sought to stop India’s neighbours falling further into China’s embrace, choosing Bhutan and Nepal for his first foreign trips as prime minister and extending an olive branch of peace to arch-rival Pakistan.

That may not worry China too much. Modi’s close relationship with Tokyo, on the other hand, is likely to raise alarm bells in Beijing that analysts say he may be able to use to his advantage.

Indian Prime Minister Narendra Modi pictured in New Delhi earlier this month. Photo: EPA

Modi enjoys a particularly warm friendship with his Japanese counterpart Shinzo Abe, who welcomed him even as he was shunned by Western powers over claims he failed to stop deadly religious riots in Gujarat, the state he used to run.

Both India and Japan are wary of what many see as Beijing’s growing territorial assertiveness, and Washington is eager for them to step up their cooperation by way of counterweight to China.

“China is looking at India under Modi as a serious and credible partner as well as potential adversary.” POLITICAL ANALYST SHYAM SARAN

“China is concerned that we would get closer to Japan and to the US under Modi. They don’t want that to happen,” said Jayadeva Ranade, president of the Centre for China Analysis and Strategy in New Delhi.

via India and China in wary dance as Xi Jinping prepares for South Asia trip | South China Morning Post.

05/09/2014

China warns again of dark side of the mooncakes | Reuters

China’s crackdown on corruption, a scourge Communist Party leaders fear threatens their hold on power, is likely to last at least another five years, an official said, warning also against the mid-autumn tradition of handing out mooncakes as gifts.

Freshly-baked mooncakes pass along a conveyor belt at a mooncakes factory in Shanghai September 12, 2013.  REUTERS/Aly Song

Wang Qishan, secretary of China’s anti-corruption watchdog, was quoted as saying the government’s “campaign against extravagance and corruption” would continue for at least five years, the official China Daily said.

Wang’s comments, also reported on television on Thursday, were made in August at a meeting in Beijing.

President Xi Jinping has promised to go after “tigers and flies” in rooting out rampant graft, a campaign that has brought down politicians and company executives in industries including oil, cars and healthcare.

The campaign has also dragged down sales of high-end products from the fiery sorghum-based liquor, baijiu, to mooncakes, both traditional popular gifts for smoothing business and official ties.

Wang criticized the tradition of giving mooncakes as presents around the Mid-Autumn Festival, adding that the practice created opportunities for graft, the China Daily said.

Mooncake sales have taken a steep hit ahead of this month’s festival. In key production regions, sales were half the level of last year, the China Daily said, citing the Wuchuan Association of Mooncakes.

via China warns again of dark side of the mooncakes | Reuters.

01/09/2014

State-owned enterprises: Fixing China Inc | The Economist

JIN JIANG is one of the world’s biggest hotel groups, managing five-star properties across China, a budget motel chain and a travel agency. It is also a state-owned enterprise (SOE), controlled by the Shanghai government. It has seen better days. The company’s best hotels played host to hundreds of foreign leaders in the past century, including Richard Nixon in 1972, when America and China began their historic rapprochement. But in recent years visiting dignitaries have opted for newer hotels over Jin Jiang’s musty rooms and tired furnishings.

When people think of Chinese state companies, they often have its giant banks or oil companies in mind. But most of the 155,000 enterprises still owned by the central and local governments are more akin to Jin Jiang: they are businesses that have little to do with the country’s economic or political priorities, and they have had a run of bad years, losing ground to private-sector rivals. That may be about to change. China is in the midst of the biggest attempt in more than a decade to fix the country’s brand of state capitalism, attempting to breathe new life into Jin Jiang and dozens, if not hundreds or even thousands, more like it.

There are two main problems with China’s SOEs today. First, they have failed to comply with the government’s order to focus on what are deemed to be “strategic sectors” such as aviation, power and telecommunications. These are industries that the Communist Party believes it must dominate in order to maintain control of an increasingly complex economy. But fewer than half of state companies occupy these commanding heights. Some 80,000 are instead in the economic lowlands: they run hotels, build property developments, manage restaurants and operate shopping malls. The temptations to branch out have been too great: relative to their private-sector peers, they have benefited from cheaper financing from state-owned banks, favouritism from local governments in land sales and a lighter touch from regulators.

Second, despite these advantages, SOEs have given progressively less bang for their buck. Faced with mounting losses in the 1990s, China undertook a first round of drastic reforms of its state-owned companies. There were mass closures of the weakest firms, tens of millions of lay-offs and stockmarket listings for many of the biggest which made them run a little more like private companies. That initially paid dividends. SOEs’ return on assets, a gauge of their productivity, rose from barely higher than zero in 1998 to nearly 7% a decade later, just shy of the private-sector average. But over the past five years, their fortunes have ebbed. Profitability of state companies has fallen, even as private firms have grown in strength. SOE returns are now about half those of their non-state peers. For an economy that, inevitably, is slowing as it matures, inefficient state companies are a dangerous extra drag. Jian Chang of Barclays says that putting SOEs right is “the most critical reform area for China in the coming decade”.

Until recently, however, few analysts thought that China had the desire or the ability to get back into the muck of SOE reform. Companies under the central government, such as PetroChina, the country’s biggest oil producer, were believed to be strong enough to resist the changes that would erode their privileges. At the provincial and municipal levels, local officials were thought bound to government-owned companies by ties of power, patronage and money. China was not expected to sit entirely still: gradual deregulation of interest rates and energy pricing was placing indirect pressure on state companies to operate more efficiently. But a direct, frontal assault on them of the kind waged by Zhu Rongji, then prime minister, in the 1990s seemed out of the question. Even when the party unveiled a much-ballyhooed reform plan last November and vowed to target SOEs, there were doubts about how far Xi Jinping, China’s president, could go. People close to the State-owned Assets Supervision and Administration Commission (SASAC), the agency that oversees China’s biggest SOEs, say that it was still dragging its feet at the start of this year.

But a flurry of announcements in the past few months shows that reforms are getting on track. There is no one-size-fits-all approach. Sinopec, Asia’s biggest refiner, is close to selling a $16 billion stake in its retail unit, a potentially lucrative opening for private investors. CITIC Group, China’s biggest conglomerate, is poised to become a publicly traded company by injecting its assets into a subsidiary on the Hong Kong stock exchange, for $37 billion. After its initial reluctance, SASAC announced reforms at six companies. They are to experiment with larger private stakes and greater independence for directors.

via State-owned enterprises: Fixing China Inc | The Economist.

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