The USMCA, China and the Politicisation of Economic Intercourse

Uday Khanapurkar, Research Intern, Institute of Chinese Studies

Strategic competition between the USA and China continues apace in the economic domain with tit-for-tat tariffs and strengthened investment regulations. This reassertion of sovereignty has irredeemably politicised economic intercourse. The market share that a state’s productive agents command has, akin to a conventional resource such as oil, emerged as a veritably prominent component of national power, thus bringing the zero-sum character of the international system to the fore. So much so, that the restructured Free Trade Agreement (FTA) between the US, Mexico and Canada, or the USMCA, also reflects the adversarial tenor in US-China relations.

Much attention has duly been afforded to article 32.10 of the USMCA since it quite explicitly targets China. According to this provision, should any signatory to the agreement enter into an FTA with a non-market economy (read China), the other parties reserve the right to dismantle the USMCA following a six-month notice. Continue reading “The USMCA, China and the Politicisation of Economic Intercourse”

Re-emerging importance of South Pacific Islands

Ms. Prarthana Basu, Research Assistant, Institute of Chinese Studies

At the Pacific Islands Forum in September this year, Nauru, a ‘small’ island country, accused China of heavy-handed behaviour in its attempts to ‘buy’ its way through the region. This brings into sharp focus the increasing centrality of the South Pacific region in the tumultuous geopolitical landscape of the Indo-Pacific. The South  Pacific islands have come into prominence owing to two main factors: climate change, and several layers of power tussles, the most significant of which is between China and the US.

Climate change has had a devastating impact on several island countries of the region, including but not limited to flooding and tsunamis, which has also fuelled fears about its future consequences. On the strategic tussle front, China has invested heavily in these islands to counter Taiwan’s growing relationships in the region, such as with Nauru, Continue reading “Re-emerging importance of South Pacific Islands”

Understanding US responses to the South China Sea Dispute

Saurav Sarkar, Research Assistant, Institute of Chinese Studies

The National Bureau of Asian Research, an American non-profit research institution, recently published a study titled ‘Tenets of a Regional Defense Strategy: Considerations for the Indo-Pacific’. The study comprehensively outlines multiple challenges facing American policymakers in the near future in the Indo-Pacific region – ranging from tensions between India and Pakistan to the militarisation of the South China Sea (SCS).

While the study in itself deserves a read to better understand the present situation and potential crises in the region, there was one particular footnote that demands particular attention. In it, Admiral (Retd) Jonathan Greenert, former Admiral in the United States Navy, talks about his interactions with Admiral (Retd.) Wu Shengli, former Commander of the People’s Liberation Army Navy (PLAN), who made it clear to Greenert that China expected a more ‘forceful’ reaction from the US when it first began building islands in the SCS. The Barack Obama administration’s response, apparently, was not robust enough, which further emboldened China.

On 1 October in New Delhi, a conversation was held between former Australian Prime Minister Kevin Rudd and former Indian Foreign Secretary, Shyam Saran, on ‘Shift in Power Balance – India, US and China’. Continue reading “Understanding US responses to the South China Sea Dispute”

China-North Korea Relations under Xi Jinping

Gunjan Singh, Research Associate, Institute of Chinese Studies

North Korea has regarded China as its most natural ally and supporter since the Korean War. The relationship had begun to show signs of strain after the continued nuclear tests by North Korea and it became increasingly difficult since Xi Jinping came to power. The last Chinese leader to visit North Korea was Hu Jintao in 2005. Even though China is the only country helping North Korea manage its domestic problems and economic difficulties, the relationship has started to show signs of strain. Beijing will not totally abandon Pyongyang or push it towards a total breakup as the influx of refugees is a major concern for China and for its border security and regional peace. However, the last few years have highlighted that China is ready to use its leverage to steer North Korea’s behaviour in a more acceptable direction.

There were reports that Xi Jinping may visit Pyongyang on September 9 for the 70th anniversary of the North Korea’s Foundation Day. Continue reading “China-North Korea Relations under Xi Jinping”

Will Mounting Contestations in the Economic Domain Burden Chinese Innovation and Growth?

Uday Khanapurkar, Research Intern, Institute of Chinese Studies

China and the USA, the world’s two largest economies, are currently embroiled in an acrimonious two-front geo-economic tussle. On the trade front, a 10 per cent tariff on 200 billion USD of Chinese exports to the USA came into effect on September 24, 2018; with President Trump threatening further duties on 267 billion USD should the Chinese retaliate. On the financial front, the USA enacted a law in August, 2018, aimed at strengthening the Committee on Foreign Investment in the United States (CFIUS) in order that it may undertake more meticulous scrutiny of Chinese investments in the US and prevent undesirable technology transfers. Combined, these contestations in the economic domain put China under significant pressure.

To be sure, China is at a precarious stage in its economic development. Rising wages and an aging population entail that low-quality manufacturing and assembly cannot generate more growth. Investment spending experiences decreasing returns to scale. Continue reading “Will Mounting Contestations in the Economic Domain Burden Chinese Innovation and Growth?”

China’s tryst in the South Pacific

Prarthana Basu, Research Assistant, Institute of Chinese Studies

The focus of attention of geopolitics now lie greatly in the Indo-Pacific region, especially the South Pacific islands, which have gained prominence over the years due to varied reasons such as: climate change, geo-strategic importance etc. Even though the South Pacific islands are geographically located far-off in the middle of the Pacific Ocean they occupy a large portion which has proven to be of great strategic importance for all the major contending powers. Currently, this area shows great power struggle which is two-pronged: China and Taiwan and China and the US. Although Australia and Britain also happen to be major players trying to spread their influence over these islands, the South Pacific now happens to be one of the highly contested regions among these powers.

The allegiance of the South Pacific countries is grossly divided between Taiwan and China. While countries such as Kiribati, Marshall Islands, Palau, Nauru, the Solomon Islands and Tuvalu have established diplomatic ties with Taiwan, China is diplomatically recognized by the Cook Islands, Fiji, Vanuatu, Tonga, Samoa, Papua New Guinea, Federal States of Micronesia and Niue.

Chinese President Xi Jinping intends to increase his sphere of influence among those six countries which still remain under the ambit of its ‘breakaway province’, by upholding a summit for all the South Pacific countries in the month of November (dates if available) in New Papua Guinea, Continue reading “China’s tryst in the South Pacific”

The China Factor in Russia–US Equation

Dr. Atul Bhardwaj, Adjunct Fellow, Institute of Chinese Studies

Trump is no admirer of the post-war liberal international order. He is neither keen to invest to save NATO nor is he interested in subsidizing the United Nations. He wants to stop splurging and rely more on allies’ money and material to maintain American hegemony.

Besides saving precious dollars, Russia is the other crucial element in Trump’s strategy to halt the impressive march of China, its peer competitor. In his endeavour to get Russia back into the US camp, Trump has the full support of Henry Kissinger, the former secretary of state and national-security adviser under Presidents Nixon and Ford. Kissinger, a typical offensive realist is well- versed in the technique of balancing realism with restraint. He feels that in the best interest of realpolitik, America should be more restrained vis-a-vis Russia. Kissinger feels that Putin is not “a character like Hitler, He comes out of Dostoyevsky.”  Continue reading “The China Factor in Russia–US Equation”