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Rise of the Dragon: Impending economic disaster or balancing of global power structure?

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Image courtesy freeliberal

By Gaurav Sharma

In the short span of three weeks this month, the Shanghai Stock Exchange shed a massive $ 4 trillion in stock value, sparking renewed suspicion on China as the economic counterpart to America’s hegemony in the global financial markets.

The abrupt crash, apart from casting a shadow on the strength of the Chinese currency and markets has also brought to question the reformist striving of Xi Jinping, who was given the mandate of not only sweeping-out rampant corruption from the Communist Party but also of economically empowering a burgeoning middle class.

But does the pitch alarm raised by Western media over the Chinese stock market plunge and notions of a Chinese “slowdown” hold any merit to predictions of an impending economic collapse or is it merely a classic case of jumping the gun via concoction of overblown fallacies?

Actual Situation

Almost as soon as it plummeted, the market bounced back with much gusto. Despite predictions that its growth would be laggard this year, the Chinese stock market has managed to sustain the 7 per cent quarterly growth rate it had aimed for.

Firstly, the notion that a vast majority of the Chinese population is invested in the stock market is a myth. The Financial Times has quashed this misconceived notion by stating that a meager 6 per cent of the Chinese people have invested in the market which largely include a small coterie of billionaires.

Moreover, the larger Chinese industrial workers do not have their wages held-up in stock options and neither does the elderly population have its retirement pension at risk. This is in stark contrast to the intertwined nature of the financial crisis that rocked the developed world in 2008.

(Employees had their salaries connected as part of stock-options with New York Stock Exchange and more than 50 per cent of the American population was invested in the stock market)

Secondly, the ‘free market’ in China is kept under close watch by the Communist Party, the founding and ruling party of China comprising of more than 88 million workers. Although many leaders in the party were indicted for corruption charges, people on the ground believe that with  the change in leadership, China would be restored back into a successful socialist society.

In fact, Xi Jinping has been described by the Economist as a leader enjoying ‘unusual popularity’, surpassing that of Mao Zedong, the renowned Chinese communist revolutionary who founded the Communist Party of China(CPC).

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In line with the new leadership of Xi Jinping’s ambitious ‘Going out’ strategy, China has shifted from an expansionary mode to an exporter of goods and services, a policy measure aimed to appease its South East neighbours of the hawkish military stance undertaken in the South China Sea.( Also known as ‘Peripheral Diplomacy’ in geo-political parlance)

Massive infrastructural projects spanning across construction of road, railways, bridges and hospitals have been put under the charge of Chinese state-owned companies in emerging nations such as Ecuador and the Galapagos Islands as part of its emergence into Latin America and the Pacific.

As a counterpart to US’ construction of the Panama Canal to link the Atlantic and the Pacific and serve as a detour of South America, China has decided to build a 170-mile canal cutting through Lake Nicaragua.

Under the One Belt One Project, China has mooted plans to revitalize the Silk route; comprising of the New Silk Road Economic Belt connecting it with Europe through Central and Western Asia and Maritime Silk Road providing China with connectivity to South Asia and Africa. China has also undertaken major construction activity in the Gilgit-Baltistan region, a disputed territory between India and Pakistan. It is building a 7000 megawatt power hydroelectricity plant in Bunji.  

For fostering such a development strategy, China has allocated a massive corpus of $40 billion to the “Silk Road Fund” to ensure financial flows within the network of global infrastructure plans.

Meanwhile, in the economic space, the Chinese state development bank has overtaken the World Bank in international lending. To add to the growing clout of its currency -the renminbi, China has launched an internationally funded organization called the Asian Infrastructure Investment Bank (AIIB), as a direct rival to the US-backed World Bank and the Asian Development Bank.

As a reminder of China’s emergence as the new economic powerhouse, the institution has drawn the support of 57 countries, including allies of USA. The unprecedented assent came despite attempts by the US to forestall such moves by kindling doubts about the loosening of lending standards.

Although the Eastern neighbors, Philippines and Japan refused to join the bank citing it as a plan to buy the loyalty of friends and working on “questionable” principles of governance and transparency, the bank is projected to grow to almost twice its size-from $ 50 billion to $100 billion.

The launch of the AIIB follows the establishment of the New Development Bank, popularly known as BRICS Bank– jointly funded by India, Brazil, India, China and Russia to counter IMF as a contingent reserve facility in 2010.

Declining western dominance?

A US and a Chinese flag wave outside a commercial building in Beijing, 09 July 2007. US Secretary of State Condoleezza Rice 06 July 2007 accused China of flouting the rules of global trade in its headlong economic expansion as the US administration "has not been hesitant" to deploy trade tools against China, including a complaint lodged with the World Trade Organization over copyright piracy. AFP PHOTO/TEH ENG KOON

American approach to the meteoric rise of China has been defensive, as a natural reaction to hold on to its fast slipping hegemonic power. It had castigated Britain for siding with the AIIB, saying that the bank would give China unilateral powers (26 per cent voting share).

While stating such an argument America innocuously forgets that under the Bretton Woods system, it possesses sweeping powers over the appointment of heads of World Bank while under the IMF quota it has almost four times as much power as China in its funding programs.

Europeans have pursued largely the same course, with the IMF being a puppet body in their hands. Back in 2010, almost every emerging market economy which was member of the IMF had opposed the Troika plan to bailout Greece through loans (a plan which would make it more indebted) and had instead argued for debt relief. The suggestions were ignored and have landed Greece to the brink of economic collapse.

Keeping in mind, the economic bullying that the world has seen through the domination of international financial bodies led by the US and EU, isn’t it appropriate for the world to side-line itself from the monopoly of US dollar and the Euro and instead settle financial exchanges in local currency?

Eurasian Dreams

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In line with China’s ambition for breaking the monopoly of the west in global financial transactions, Russia has made clear its plans for achieving economic independence by 2030.

Under the Shanghai Cooperation Organization (SCO), Russia and China are vying for merging China’s Silk Road plan with Russia’s Eurasian Economic Union. The fine-print of the plan is to fulfil Russia’s demand for capital, in light of the tighter western sanctions imposed against it while at the same time allow China the leeway to reach the west by crossing a single unified tariff zone.

Moreover, the membership to the SCO, which includes Central Asian nations such as Tajikistan, Kazakhstan, Kyrgystan, Russia, China and is expanding by the day. During the Ufa talks, Russian premier Vladimir Putin said that he will invite Iran to join the SCO while Azerbaijan, Armenia, Cambodia and Nepal will join the SCO as dialogue partners. Meanwhile, India and Pakistan will become full time members.

While critics view the rise of China with much suspicion, raising concerns that “American imperialism would now be replaced by Chinese imperialism”, a more correct assertion, will be that the rise of the dominant unipolar world after the cold war is being trampled over and replaced by a flourishing multi-polar realpolitik.

A multi-currency global financial structure spells doom for the American hijacking of the global economy. A new evolutionary phase in geopolitics is brewing, a welcome change indeed.

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China pays Tribute to Mahatma Gandhi, Celebrates Gandhi Jayanti in Beijing

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Mahatma Gandhi
Mahatma Gandhi

Beijing, Oct 02: China on Monday celebrated the 148th birth anniversary of Mahatma Gandhi, with the India Embassy in Beijing releasing commemorative postage stamps on the Ramayana.

Many Chinese nationals offered flowers to a statue of Gandhi at Beijing’s Chaoyang Park, while school children recited his famous quotes in Mandarin on a nippy overcast day.

“Gandhiji looked forward to a day when a free India and a free China could cooperate in friendship and brotherhood for their own good and for the benefit of Asia and the World,” Wilson Babu, Charge D’Affaires at the Indian embassy, said.

“Leaders of our two countries have been striving to build strong India-China relations based on Gandhiji’s ideals of world peace and respect for all human beings.”

In Shanghai, the Indian Consulate organised a series of events including a memorial lecture, screening of a documentary film and a painting completion for children of the Indian community.

Mahatma Gandhi has become increasingly popular in China, with many Chinese researchers studying his ideology of non-violence.

Mohandas Karamchand Gandhi was born on October 2, 1869, in Porbandar in Gujarat to Putlibai and Karamchand Gandhi. (IANS)

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India Progressing Better than US, China in Digital Healthcare

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Digital Healthcare
Digital Healthcare in India. Pixabay

New Delhi, Sep 22, 2017: India has progressed better than US and China in terms of its specialist doctors adopting digital modes to interact with patients and prescribe medicines, a study revealed on Friday.

According to the study, gap in US between the face-to-face medicines and medical representatives triggered mails narrowed down from 15 per cent in 2015 to 12 per cent in 2017. The study stated that digital channels are slowly but surely gaining ground over traditional ones. This year, the gap further narrowed to around 12 per cent.

 “India witnessed the narrowing of the gap between face-to-face tablet and medical representatives triggered mail from 34 per cent in 2015 to 8 per cent in 2017,” said the study conducted by Indegene — a company offering research and development solutions to healthcare and pharmaceutical enterprises.

The highest number of specialist who have adopted digital platform to deal with patients are Cardiologists, General Surgeons, Pulmonologists, Endocrinologists, and Oncologists.

(IANS)

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Journey of Indian Origin Harry S. Banga among Richest people in Hong Kong

Harindarpal Singh Banga is among the list of Top 50 richest people according to Forbes Magazine

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Harry S. Banga is one of the richest people in Hong Kong
Harry S. Banga is one of the richest people in Hong Kong. Pixabay

Hong Kong, Sep 11, 2017: He grew up in Chandigarh and never thought he would be a billionaire and one of the richest people in Hong Kong. But Harry S. Banga has done that successfully in the fields of commodities, ship management and asset management.

With a net worth of $1.02 billion, Harindarpal Singh Banga, as the chairman of the fairly young Caravel Group, not only figures among the list of Top 50 richest people (Forbes Magazine) in Hong Kong but is known as the tycoon who has staged a comeback in the commodities sector in a big way.

“It’s been a great journey. (I am) So proud of achieving what we have done. Obviously, there were a lot of ups and downs. Never realised on leaving Chandigarh that I will be where I am today. By the grace of god, it has been a wonderful and successful journey. One day I will write a book,” Banga told IANS during an interview in the swanky headquarters of the Caravel Group in the Central Plaza skyscraper in Hong Kong’s busy Wan Chai commercial area.

Banga, who started as a shippie, has reasons to feel proud.

He exited the Noble Group, in which he was a co-founder in 1988, just before it started crumbling on the business front. Setting up the Caravel Group in 2013 with an $800 million investment, Banga was soon back in the big league of Hong Kong billionaires early this year.

“We have three verticals within the Caravel Group. The first one is Asset Management. It is purely investing in liquid assets in equity, fixed income and debt investment and some private equity investment. The other part is brick and mortar business in Caravel International which has got two verticals. One is Caravel Resources under which we do the commodities business. Then we have Caravel Maritime and Caravel Fleet Management Limited.

“Today we are the third largest ship management company in the world. We have 450 ships under our management, close to $20 billion dollars of assets. Total officers and crew are about 18,000 — the majority of them from India,” he explained.

With operations spread in 19 countries across most continents, Banga says that doing business with China is easier.

“Seventy per cent of our total turnover comes from China. I have been dealing with China since 1983. Dealing with officials and corporates in China, I find them very easy to develop and do business with.

“Our business mainly focuses around China, which is the main consumer of commodities today. Today, we are the largest international trading company supplying iron ore to China. Total volume is 40 million tonnes. The originating countries are India, Australia, South Africa and Brazil. Caravel Carbon does the thermal coal business. Sixty per cent of that goes into China and 40 percent to India to power plants, cement plants etc,” he said.

Though his company has offices in India, the business dealing is limited.

“While in other countries in Europe, Australia, America it is either a green light or red light — it is all very clear. Though in the last three years it is changing, in India it is permanent amber light. So, you don’t know if it is red or green. They do come with a policy in India but it takes a long time to understand that policy,” said Banga, who was honoured with the Pravasi Bharatiya Award in 2011 by the Indian government.

“Ours (India) is not easy. We have religion issues, caste issues, language issues, states have their own issues. All these things are very challenging. New Delhi takes decisions. The implementation is in districts. It is a very different world there (in the districts). In Beijing, one guy decides, everyone implements,” he said.

Banga is worried that too many young people in India are getting education and skills, but not enough jobs are available.

“In India, we have the beauty product and health product e-retail company called Nykaa. That is one of the major investments that we have,” he added.

Born in Amritsar, Banga, 66, did his schooling and bachelor of engineering in Chandigarh before moving out in the 1970s.

“I became the youngest captain at the age of 27-and-a-half. I worked with companies in London, Geneva and Hong Kong, where I arrived in 1984,” he said.

Among other things, Banga has an eye for contemporary paintings and antiques. (IANS)