Category: India & Southeast Asia

So, now every plebeian knows that China is destined against global values. It is not coronavirus; it is not the greed of acquiring land. It is not the theft of intellectual property. It is not the ambitious expansion of the BRI and make ‘the middle kingdom’ great again. It is not even the debt or vaccine diplomacy neither money-spinning planned obsolescence.

A. Tibet – a repeat of the West’s playbook

It started long back. Chinese forces moved into Tibet, a sovereign nation with hardly any military. The year was 1949. The Tibetan police and administration fought for almost ten years. Finally, in 1959, the young Dalai Lama (see of knowledge, which Dalai Lama means) fled to India. Almost thousands of Tibetans died in their struggle to keep their independence. Tibet lost its sovereignty. Han Chinese were transplanted to Tibet, and Tibetans became a minority in their own land. An alternate way of gerrymandering, i.e., changing the pattern of voting. So, if you initiate voting in Tibet, the outcome will favor China, not in Tibet’s interest.

The west willfully ignored Tibet.

It seemed like a repeat of their own playbook. Of whites displacing the Mezo American native Indians from their ancestral land – be it the Great American Highlands, the Mayan, the Olmec and Aztec in Mexico, or the Incas in Peru. It was a different land with its own cultural identity, far advanced, regal, and with its own rationale. Now, vanquished and destroyed completely. It is a story full of pathos.

The Spanish conquistador used the same playbook while destroying the Olmec, the Aztec, and the Mayan culture in Mexico and established a bastard generation. No, I am not using language. Actually, the native men were lined up and killed, and the native ladies were used as concubines. A hybrid progeny was born, and matriarchy established itself, replacing the native patriarchal culture. Portuguese repeated the same playbook in Brazil. Where the Europeans could not butcher, they plundered, and where they could not plunder, as in India, they established imperial order. Where that was not sufficient, they drugged. That is the China of 1820-1860.

Territorialism is not wrong

No one can blame Tibetans or the native Indians. It is their solemn right to protect their ancestral land. It is the equivalent of freedom or self-determination. Not that Mesoamerican natives were dumb, or the Tibetans were nubile. It is the barbaric marauding of locals using a little overpowering military technology. Gun and gun powder that was not seen or known to these cultures lost their destiny. In Tibet’s case, just a spiritual elevation of the culture that lost their ‘home and culture’ to eternity (remember, Bhutan is in a similar precipice).

The West, too, ignore Tibet. After all, China was reenacting the pages from the West’s own playbook. How could they take an objection against a (permanent) Veto power? You scratch my back, and I scratch yours. It was that simple.

B. Rise of a Demon (dragon)

Covid is just a simile; it represents several mutations that accumulate to evolve to form a variant and a deadly strain. By itself, Coronaviruses are not dreaded. We often get coronavirus infections. Covid is different; it is the survival advantage accrued through selective retainment of several mutations. Dragon, by itself, is not dangerous; it is the accumulation of dreaded mutations that make it a demon. China is not the concern; it is the perpetual accumulation of communist onslaught on its national identity that has resulted in a demon called China.

C. Wars live lopsided losers

If you are presuming that second world war and the loss of the axis forces, you are possibly close. However, I am alluding to the order and hegemony established by the winners that wrote the blueprint for global exploitation. The UN and its security council are a facade of exploitation. That veto structure itself is a grim reminder of the failure of the world order. China turned out to be a beneficiary of the Veto system.

D. Planned obsolescence

As though the west and the business never knew planned obsolescence. It was a willful ignorance towards such malpractices of building obsolescence into the design. Obsolescence is natural. However, planned obsolescence is the intentional insertion of weakness in products’ lifecycle to shorten their life. We, as customers, keep cycling our hard-earned money for buying products that dissipate faster.

Trade and businesses flourish while the commoner is depleted of the value for her/his earning. Cities, States, and Nations too run based on these taxes. Barack Obama instituted “Cash for Clunkers” after realizing the Gas Guzzlers were draining the dollar from the country. I am not sure if Biden or any President would initiate such ‘Cash for Clunkers’. Unlike the Gulf countries, which benefitted from Petro Dollars, China is the beneficiary of the “Obsolescence Dollar,” where the capitalist democracy willfully ignored the Chinese sly.

E. Free Trade and WTO

Free trades are a complex animal, and WTO is primarily the nemesis of the global order. Under the garb of expanding and widening their customer base, the West introduced and institutionalized WTO. As though a global institution was not enough, it institutionalized Free Trade Associations between select regions and countries. FTA’s wrote the storybook for the demise of local businesses. As a responsible nation, the US and other capitalist nations could have used retooling of the labor after the FTA vanquished their businesses. However, a nation dominated by capitalism left the small businesses to fend for themselves. Small businesses, farms, and back offices all vanished under the garb of the global village. The West again ignored. China turned out to be the major beneficiary.

F. Lip service

Europe, the US, and all advanced nations paid lip service to the African continent. The west and industrialized nations nurtured China to build a bulwark against (erstwhile USSR) Russia. While Africa, its people, its flora, and its fauna were celebrated in pictures and stories and as audiovisual gimmickry of altruistic passion. The capitalist West found it very hard to bring technology to this continent. They may now realize it was a mistake to house a global manufacturing center in one locale in hindsight. Multi centrism is just a realization from the Chinese debacle. It is an afterthought, not a humane yearning of the capitalist democracy.

As we see, it is the willful ignorance of the West and the Industrialized nations that resulted in a demon’s rise (dragon). By itself, China did little, the West nurtured it from the outset, and like Covid, it is dealing with the adverse outcome in every sphere.

Shashank Heda
Dallas, Texas

How the US military is preparing for a war with China
https://asia.nikkei.com/Opinion/How-the-US-military-is-preparing-for-a-war-with-China

BRI and CPEC are already under financial and operational pressure to either scuttle or park their ongoing initiatives. India has no role to play in their self destructive implosions.

None of the infrastructure development projects carried out by China in Pakistan have any Pakistani contractors. From workers, to raw material to management, everything is being by the Chinese.

Obviously, where are the resources – workers know how to run kalashnikov, banks and military knows how to make money and management has never been honed. So, it is not a wrong decision not the Pakistanis execute the blueprint of CPEC. Anyways, it doesn’t fit the Chinese model of business. Irrespective of the country where they are building infrastructure, the Chinese companies are owning those almost 100%.

Now, let’s visit CPEC dynamics

China is truly constrained on funds and revenue, for several reasons – vast infrastructure projects that have doubtful ROI in immediate future, its over 50 ghost cities, its own military and cyber incursions and now the pandemic. Keynesian principle has not stimulated the economy, not because it lost relevance, however not utilizing the principles behind the principle.

Pakistan never has a culture of entrepreneurship

Barring individual efforts, the country has never offered a milieu for growth and industry. Neither does it have the ability to repay. More-so, recently China demanded a higher interest rate. If you calculate the payback interest and principle, you will realize these CPEC are costing Pakistani Rs. 8328 per person. Agreed, not all infrastructure should be considered from the perspective of tangible ROI. We need to factor in the opportunities it creates. However, in this case where are the revenues to service the loan?

Face Saving

It is graceful to not admit any of the above but to put the usual suspect, India. Skeptics may differ but the decision is left to the future to decide.

They know this will not solve their problem but facing is an art, that conjures the present, unlikely to save from the realities and future.

Pakistan accuses India of masterminding Belt and Road attacks
https://asia.nikkei.com/Spotlight/Belt-and-Road/Pakistan-accuses-India-of-masterminding-Belt-and-Road-attacks

https://economictimes.indiatimes.com/news/international/business/china-denies-cpec-intensified-pakistans-economic-risks/articleshow/68779043.cms

Ever Sold a Used Car without good cleanup?

The answer is no. Have you ever entered a showroom that makes you feel, you entered a warehouse? What if you want to sell and book more profit? Those who are in the stock market, know it well and they time the ‘sell’ when the shares are in the ascendency – a perfect time to book the best. Well, what would you do if you want the FDI to flow into your country? Showcase your country as one of the best destination to invest and do business. While countries like Singapore, Taiwan, South Korea, and Japan chose the organic route, China chose a superficial route, cleaned its car, and put it on display.

A Pompous Display

Well, I have been clamoring for data on China falsifying its GDP. Let me chastise China by sharing a simile. We know of several businessmen, who display false success despite their hollowed debts. Such is the case of China – huge (and hollow) infrastructure, glass bridges spanning deep ravines, tall (empty) cities and buildings, rich (and unemployed) population, massive navy (with ramshackle primitive) ships, huge (untrained) army, and massive (captured) land like Tibet and Xinjian, poverty upliftment (despite rising inflation and unemployment) and above all, an astute (more than Mao-size) leader. You may call it billboard, attractive and intuitive enough to catch the attention and impress.

The Ghost Cities

Below excerpts from Financial Review (Citation link included in references). Even the casual observer driving around China can see that something is wrong. You can see it in the industrial parks that are empty except for a small handful of factories, and in the government buildings that are so large it seems impossible that they will ever fill in with civil servants, and in the airports that only sporadically host an arriving plane, and in the glut of exhibition centres and museums that every town seems compelled to build.

Chengong China – Abandoned Ghost Cities

Economy of Scale

The world across – businesses operate on a specified margin (percentages) and for a manufacturer, those numbers slip further but are compensated because of volume, typically called, ‘Economy of Scale’. China operates on a massive economy of scale. It has smartly created a premium segment, a medium segment, and a low-end segment. So everything sells very well.

‘Zero Waste’ Basket

Of course, the major segments are advanced economies and populated countries, but it shrewdly created multiple smaller market (segments) to sell its substandard products (the waste in a classic scenario) being pushed into these sub-optimally operating economies. Examples abound – from South East Asia, Asia, Africa to East Europe and Latin America. These smaller segments offer China a distinct advantage of recycling lesser quality to the multitude of countries in Africa and other struggling economies. Thus obliterating and reducing waste and saving further. These lower segments also provided a market (and a source of revenue) safeguards it from the whims of the leaders from these advanced economies who dictate terms to China or impose tariffs.

A Trojan Horse – The Land and the Sea Corridors

It is but natural to build a massive arborized network of road, rail, and sea lines to support its customer base and the raw material required to run its industry. Thus paving a way to the five land corridors and the South China Sea, that are central to this thoroughfare. The well known China–Pakistan Economic Corridor (CPEC), the Silk Road Railway (SRR) passing through Xinjiang, Kazakhstan, Belarus, Russia, Germany, and Poland, the China Central Asia to West Asia (CCAWA) Corridor, connecting Western China to Turkey, the New Eurasian Land Bridge, connecting Western China to Western Russia via Kazakhstan and the China Indochina Corridor, connecting Southern China to Singapore, thus establishing a conveyor belt for its State Controlled (Capitalist) the Communist Middle Kingdom. I encourage the readers to visit the link from the Council of Foreign Affairs site to see how China has gobbled up the economies of over 65 nations that have subscribed to its Land Corridors (https://www.cfr.org/article/belt-and-road-tracker)

Building Castle Cards on Keynesian Philosophy

However, BRI, CPEC, SRR, CCAWA, or the new islands or its own 50+ ghost cities – all are infrastructure projects. We all know, infrastructures are capital intensive, and consumes a lot of investments. As substantiated by John Maynard Keynes (aka Keynesian Economy), I agree that the infrastructure initiatives provide a foundation for growth. However, these are cost centers and not a profit centers and the immediate returns are negative. Thus, the only way to keep the wheels spinning is to feed this investment (mortgage) with profits from the accrued business. The key here is “PROFIT AND REVENUE”. Building infrastructure needs finance and people. State can provide finance but availability of disposable human resources indicates that people are deployable for building such massive projects, a reflection of unemployment. Thus, to keep the strife from unemployment at bay, it is best to utilize them for infrastructure construction.

Let us review such massive initiatives in the backdrop of dwindling global demand, rising middle class, and a COVID imposed lockdown. If bankruptcies are common across the globe, so are they ubiquitous in China. However, in China, the nation state funds these bankruptcies. Remember, no growing economy is spared from the ‘middle income’ trap, and China has a vast swath of population that has significantly jumped beyond poverty line to middle income. That indicates it has lost its cutting edge on small manufacturing, a competitive advantage in the past.

Revisiting the Phony Businessman

Let us revisit the phony businessman I described at the outset of this article. If you are that phony hollow bankrupt businessman, and you don’t want to declare bankruptcy, you have to display that COVID-19 is completely controlled, that the economy is not just bouncing but ‘dancing in the rain’. That’s fine for the gullible outsider, but what do we do with that internal strife?

Wars are a distraction to internal turmoil

China has no option but create a war-like situation. South China Sea Discord and The Indo-China Ladakh Skirmishes are a reflection of internal turmoil and a distraction from internal strive. Many thought Xi Jinping is opening several war fronts simultaneously. Is he stupid? No, he is not on a suicidal mission. That’s not what Sun Tzu taught him. He is a smart leader with a vision for China but he is running before he has to walk. He is too ambitious.

China is a nuclear power but not a (superior) military power, as against what it displays. History is rife and reminiscent with several examples, no one can open several war fronts simultaneously and so is true with China. Xi Jinping knows that opening multiple war theatres is a definite failure. Xi’s commitment to China is undeniable, and so the war theatrics are hollow too, especially given the sudden rise of Quad, like a Sphinx in the South China Sea. If Quad is a reality, than String of Pearls in equally an existential threat. Will that mean a war? Obviously not, China wants to intimidate but will not land itself in a war. However, the probability of war rises further, with increasing tariffs and escalation of a trade war because economy is the place where it hurts most.

Grand Deception

However, manipulating the fundamentals is a subterfuge and a grand deception for global investors. If you now recollect the example of the phony businessman, shared at the outset of this article, you will realize what I am talking about. Researchers from The Economist, Pew Research, Financial Times, or Harvard are very likely to share a similar opinion. All we have to do is keep a tight focus on fundamentals and let not China swerve us towards a ‘displayed’ billboard economy.

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Sources:
The Economist | The real deal
https://www.economist.com/node/21792859?frsc=dg%7Ce

https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative

https://www.afr.com/world/asia/chinas-ghost-cities-and-their-multibilliondollar-debt-20180404-h0ybjz

https://gnseconomics.com/2020/02/10/the-stages-of-the-collapse/