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Indian Economy to Overtake China’s

We are headed to “a world-turned-upside-down moment,” which could come as early as 2016. “That’s when,” Businessweek tells us, “India, always the laggard, may pull ahead of China and become the fastest-growing of Asia’s giants.”

Analysts used to ask, “Can India Catch Up with China?” Now, it looks almost inevitable.

There’s no mystery for the change in narrative. In a five-week-long election ending in May, 541 million voters went to the polls, and most of them demanded fundamental change. They rejected the ruling Congress Party of the Gandhi family, which had dominated national politics since independence in 1947, and gave a newcomer, the charismatic Narendra Modi of the Bharatiya Janata Party (BJP), an absolute majority in the Lok Sabha, the lower house of Parliament.

China’s Economy Slides—and Capital Flees

In a few days, China’s official National Bureau of Statistics will report the results for both September, the last month of the third calendar quarter, and the quarter as a whole. Analysts generally expect growth of gross domestic product will fall slightly from the second quarter’s 7.5 percent. Bank of China, one of the country’s Big Four state banks, predicts the economy will expand 7.3 percent.

In reality, growth is far less than that. Especially indicative is electricity consumption, often viewed as a proxy for the economy as a whole and widely considered to be the most reliable indicator. Electricity was up 5.9 percent in June from the same month in 2013, up 3.0 percent in July, and down 1.5 percent in August. Notice a trend?

Some analysts are fond of saying that electricity is no longer as indicative as it once was because it tracks manufacturing and manufacturing is no longer the biggest sector of the economy, having been narrowly eclipsed by services, now about 46 percent of GDP.

For Hong Kong, Nothing Is Better Than Something

“Beijing is not going to lose,” said Jeff Bader to the Washington Post on Thursday, referring to the ongoing student-led democracy protests in Hong Kong. Because, as he puts it, people in Hong Kong “have very good lives” and “don’t see democratic development as the key to a good life,” Obama’s former top Asia adviser suggests the protesters accept Beijing’s proposed procedures for the 2017 election for chief executive, the city’s top political official.

His recommendation is wrong on many counts but especially because people in Hong Kong should not legitimize the upcoming electoral contest, the process that leads to it, or the rules that govern it.

Hong Kong’s Massive ‘Grand Banquet’ Protest

“While others are celebrating the big day of the country, we will set up a grand banquet in Central to fight for Hong Kong’s democracy,” wrote Benny Tai in the Apple Daily newspaper on Tuesday. “We welcome all pro-democracy supporters who are willing to devote themselves to this cause to join.”

Tai, a university professor and co-founder of the Occupy Central disobedience movement, was speaking in code. “Banquet” is now Hong Kong lingo for a mass sit-in demonstration; “big day” is October 1st, China’s National Day holiday; and “Central” refers to the city’s main business district. In effect, he was announcing that the long-awaited civil disobedience campaign in Hong Kong was about to begin.

Occupy Central was not always so excited. On September 2nd, Chan Kin-man, another co-founder of the organization, had signaled the defeat of the pan-democrats in Hong Kong by announcing that the movement was “close to failure.”

US Won’t Help Taiwan Build Subs, But Will Japan?

This month, there was a “flurry”of activity in Washington as Taiwan sought help in building submarines. Yet because American policymakers are more concerned about the reaction of the expansionists in Beijing than the needs of beleaguered defense planners in Taipei, Washington remained unmoved by the island’s efforts.

Taiwan, which Beijing views as its 34th province, is putting on a full-court press on subs so that it can remain a free society. In recent days, the American chief of naval operations, Admiral Jonathan Greenert, said he talked to colleagues in Taipei about submarines; a delegation from Taiwan was lobbying Congress for help; and Representative Ed Royce, chairman of the House Committee on Foreign Affairs, said the US supported the island building its own subs.

Russia’s New ‘Energy Alliance’ with China

On the first of this month, Russian President Vladimir Putin and Chinese Vice Premier Zhang Gaoli both autographed a pipe section at a ceremony near Yakutsk, the capital of the Russian Republic of Yakutia. By the beginning of 2019, gas will flow through the section—and the rest of the 3,968-kilometer Power of Siberia pipeline—from Russian fields to Chinese consumers. Putin and Zhang called the endeavor, which connects two existing pipeline networks, the world’s largest construction project. 

Russia and China are fast building an “energy alliance,” as AFP termed it this month. Last October, Moscow’s state-owned Rosneft and Beijing’s China National Petroleum Corporation signed a “breakthrough” deal, giving the Chinese an equity stake in an oil field in Eastern Siberia. This May, Russia’s Gazprom and CNPC entered into a 30-year, $400 billion gas deal, another landmark agreement.

North Korea Parades Three American Prisoners

In a surprise move on Monday, North Korea permitted CNN to conduct three five-minute interviews with Kenneth Bae, Matthew Todd Miller, and Jeffrey Edward Fowle, the three Americans Pyongyang is holding for various reasons. In their comments, each of the captives urged Washington to do more to obtain their freedom.

It is virtually certain that the Kim regime arranged the interviews to obtain something from the US. It would seem, therefore, that something is up between Pyongyang and Washington.

As if reading from a script, each of the civilian detainees urged Washington to send a high-profile American to seek their release. This strongly suggests that the regime hopes to break the Obama administration’s sound policy of “strategic patience” with North Korea—a policy that refuses to deal directly with the Kim regime until it shows it can interact with the international community in good faith.

The Weak US Response to China's Aggression in the Skies

On August 19th, a Chinese J-11 fighter intercepted a US Navy P-8 reconnaissance plane in international airspace, 137 miles southeast of Hainan Island in the South China Sea.

Three times, China’s jet crossed directly under the slow-moving P-8, once coming perhaps as close as 50 feet. The J-11 also passed in front of the American craft “with its belly toward the P-8 to show its weapons loadout,” according to Pentagon spokesman Lieutenant Colonel Jeff Pool. “In doing so, the pilot was unable to see the P-8, further increasing the potential for a collision.”

Next, the Chinese pilot flew under the P-8 and then came alongside, bringing his wingtip within 20 feet of the Navy plane. Finally, the J-11 conducted a barrel roll over the P-8, passing within 45 feet. “The intercept was aggressive and demonstrated a lack of due regard for the safety and well-being of the US and Chinese aircrews and aircraft,” said Pool.

China Policy as Cliché

“President Obama has made it clear that the United States welcomes the rise of a peaceful, prosperous, and stable China—one that plays a responsible role in Asia and the world and supports rules and norms on economic and security issues,” said Secretary of State John Kerry in Hawaii last week, in a major policy address. “The president has been clear, as have I, that we are committed to avoiding the trap of strategic rivalry and intent on forging a relationship in which we can broaden our cooperation on common interests and constructively manage our differences and disagreements.” 

Some observers marveled at how many clichés and abstractions America’s top diplomat was able to insert into just one speech. Said Peter Jennings of the Canberra-based Australian Strategic Policy Institute, “Countries will be a little disappointed that after the secretary’s six visits to the region, US policy seems to be still largely aspirational but lacking detail on how to achieve these aims.”

China's Latest Attempt to Co-opt Christianity

Last Thursday, China Daily reported that Beijing plans to “establish a Chinese Christian theology.”

The new theology “should adapt to China’s national condition and integrate with Chinese culture,” said Wang Zuoan, director of the State Administration for Religious Affairs, at a seminar in Shanghai on the “Sinicization of Christianity.” In the words of the official paper, Wang believes that “Chinese Christian theology should be compatible with the country’s path of socialism.” 

China’s socialist path is atheistic, so Wang is attempting something that is theoretically impossible. Impossible attempts, however, are nothing new when it comes to China’s Communist Party and religion. Mao Zedong, the founder of the People’s Republic, had a simple solution to Christianity and all other forms of religion: he persecuted and banned them.

China's Militarist General Liu Yuan Promoted

Reuters reports that General Liu Yuan will be promoted to the Communist Party’s 11-member Central Military Commission in October. Liu, 62, could even be given one of the two vice-chairman slots when the Central Committee meets, sources state. His elevation is a certain sign that hard-line elements are fast gaining power in Beijing.

Liu, the political commissar of the General Logistics Department of the People’s Liberation Army, ostensibly earned the move up for his role in bringing down Lieutenant General Gu Junshan. The investigation of Gu, in turn, led to the dramatic detention of Xu Caihou, a former vice-chairman of the military commission and former Politburo member. Both Xu and Gu have been ensnared in what the party has termed “anti-corruption” probes.

Xi Jinping: The Putin of Asia

On Friday, Beijing marked the 120th anniversary of the start of the first Sino-Japanese War, which ended in a crushing defeat of China. This year—once in February and then in June—Xi Jinping referred to this anniversary, mentioning how the conflict resulted in Japan taking Taiwan from the Chinese state. China’s leader, who believes he must “reunify” his country, remembers 19th century grievances as if they arose yesterday.

Nobody tops Xi when it comes to irredentism, not even the fellow who called the breakup of the Soviet Union “the greatest geopolitical catastrophe” of the 20th century and who is now doing all he can to reacquire former Soviet lands. Vladimir Putin is roiling one country—Ukraine—but China’s supremo is now destabilizing an entire region, in a sweeping arc spanning China’s south to its northeast.

The Second Cold War?

“Do you believe that the US-Russian relations are now at Cold War levels?” CNN’s Candy Crowley asked Dianne Feinstein on Sunday. “Yes,” replied the chair of the Senate Intelligence Committee.

During the same interview, on the State of the Union program, Feinstein hinted at the problems of imposing sanctions on Moscow, even in the aftermath of the murderous downing of Malaysia Airlines Flight 17 last week with a missile almost certainly of Russian origin. “It’s difficult, because you need Russian help in so many things,” she said to Crowley. “The P5+1, Syria, and it goes on and on.”

The list was not always so long.

Russia and China Shun Iranian Nuclear Talks

The big story from Vienna is not that discussions this week with Iran over its enrichment of uranium are not going well. Such a failure was virtually inevitable. The big story is who is not in town for the ill-fated proceedings, an effort to stop what many suspect is a disguised nuclear weapons program. 

US Secretary of State John Kerry, British Foreign Secretary William Hague, French Foreign Minister Laurent Fabius, and German Foreign Minister Frank-Walter Steinmeier are all in Vienna for talks with their Iranian counterpart. The top diplomats of the remaining two members of the P5+1, the five permanent members of the Security Council and Germany, are no-shows, however. The foreign ministers of Russia and China, Sergey Lavrov and Wang Yi, are nowhere to be seen in the picturesque Austrian capital. Instead, Moscow and Beijing sent note-takers.

China’s Collision Course with Itself

Shi Yinhong, an international relations professor at Beijing’s Renmin University, has just issued a warning that Chinese leaders will not be deterred from engaging in increasingly provocative conduct. “There could be some tactical change in the direction of moderation but I cannot see any fundamental change in strategic orientation,” he told John Garnaut of the Sydney Morning Herald.

As Garnaut noted in messages to me this month, Beijing tells the world that “we will keep going and we will win.” Shi, however, has been saying that what the Chinese really mean is, in Garnaut’s words, that “we will keep going even though we cannot succeed.”

“How many times have you heard the Chinese described as pragmatists?” Arthur Waldron asked me this week. “They’re not.” At this moment, the University of Pennsylvania historian of China has put his finger on something especially distressing. Chinese policymakers work under a political system that now does not permit them to act pragmatically, cooperatively, or sensibly.

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