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China shifting strategies through 2015

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New Delhi: China, world’s most populous country, scrapped its one-child policy in 2015, a year that also saw an upswing in ties with India with Prime Minister Narendra Modi visiting the country. The yuan was devalued, sending shock waves in stock markets across the world.

The country also witnessed two major tragedies when over 450 people were killed in a ship capsize in June and over 170 died in massive explosions in Tianjin city in August.

China came down heavily on the corrupt, with its crackdown seeing over 100 high-ranking officials being tried.

In a dramatic move, President Xi Jinping announced military reforms. A staggering 300,000 troops are to be cut, a move that was described as getting a step closer to China’s commitment towards peaceful development.

Parts of China and capital Beijing were left gasping as smog enveloped the region, leaving residents worried.

As the year comes to an end, China, one of the world’s biggest economies, saw an array of events.

One of the biggest developments for the country of 1.3 billion was allowing the two-child policy in an attempt to balance population development and offset the burden of an aging population.

It scrapped the one-child policy, a part of the family planning policy, introduced in the late 1970s. However, the plan will come into effect only from March 2016. It has been estimated that it would help raise the population to an estimated 1.45 billion by 2030.

On the diplomatic front, China reached out to its South Asian neighbours, including India. In February, Indian External Affairs Minister Sushma Swaraj visited China, paving the way for Prime Minister Narendra Modi’s visit.

Modi visited China in May. He started his three-day trip from Xi’an where he held summit-level talks during which the border issue, the widening trade imbalance, connectivity issues and “strengthening trust” were high on the agenda.

While in Beijing, Modi held talks with his Chinese counterpart Li Keqiang. A joint statement called for an early settlement of the boundary issue which should be pursued as a strategic objective and said that both countries were determined to actively seek a political settlement.

With India’s neighbour Pakistan, China’s relationship took a new turn with President Xi Jinping’s visit to Islamabad where he envisaged investments worth $45 billion and signed 51 agreements.

An important meeting was between President Xi and his Taiwanese counterpart Ma Ying-jeou, a first of its kind since the end of a civil war in 1949. The meeting took place in Singapore in November.

President Xi also made a state visit to the US in September where he along with his counterpart, Barack Obama, reached a consensus on cyber-security. He also visited Britain in October.

China’s strength, its economy, took a beating when the yuan was devalued on August 11.

The next day, it faced its second devaluation. These resulted in Chinese exports getting cheaper and imports into China more expensive. Stock markets around the world, including India, were hit.

This year, China has dealt sternly when it came to corruption as part of a campaign launched by President Xi when he came to power in 2013.

The low points were tragedies. The year began with a stampede at a New Year’s Eve celebration in Shanghai where 35 people were killed and over 40 injured.

On June 1, a ship with 456 people on board capsized in the Yangtze river following a tornado. A total of 442 were killed while only 12 survived. Two are still missing and presumed dead.

On August 12, a series of explosions ripped through a container storage station at Tianjin port. Fires caused by the initial explosions continued to spread uncontrollably throughout the next few days, causing eight additional explosions. It killed 173 people including firefighters, eight still remain missing and over 750 were injured.

In September, President Xi announced a cut of 300,000 troops. A round of military reshuffle in August saw the inclusion of younger officers. These changes were parallel with the military’s anti-graft campaign, which has so far removed 40 senior officers, as well as China’s increased efforts to modernise its forces.

This year, China made giant strides in science and technology. In November, the construction of the world’s largest ever radio telescope entered the final stage. China also manufactured the world’s first electric plane, started building its largest solar plant and built the world’s largest amphibious aircraft.

The Beijing residents coughed and rasped as the Chinese capital was shrouded in smog.

On the flip side, since late January, smog levels have increased at an alarming rate, prompting the government to adopt the world’s strictest emissions standards.

And, China’s campaign of island building in the South China Sea has caused concern among other regional players. China claims most of the South China and East China seas. (Karishma Saurabh Kalita, IANS)

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Amid Intensifying US China Trade Dispute, Indian Exporters Eye Gains

Orient Craft’s new unit in Jharkhand, one of India’s least developed states, will employ about eight thousand workers

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US, China, Trade Dispute, Indian Exporters
Orient Craft, one of India's largest apparel exporters, says it could benefit from increased business as the US-China trade war intensifies. This building in Gurgaon on the outskirts of Delhi houses its office and one of its garment units. VOA

As work on establishing a massive garment-manufacturing unit by one of India’s leading apparel exporters enters the final stages, the company is optimistic about keeping the machines humming. Slated to begin production in August, Orient Craft’s new unit in Jharkhand, one of India’s least developed states, will employ about eight thousand workers.

Inquiries from buyers in the United States, its biggest market, have increased in recent months as a trade dispute with China intensifies, according to A.K. Jain, who heads the Commercial department at Orient Craft. That is why he is upbeat about generating new business. “This is an unbelievable blessing in disguise,” he says. “It will give us an edge.”

Exporters in India are reaping the benefits of the trade war between the world’s two biggest economies as business with both countries jumps, according to Ajai Sahai, who heads the Federation of Indian Export Organizations.

“While overall exports have gone up by nine percent, exports to the U.S. have gone up by 13 percent and to China by 32 percent,” he says. And as the confrontation escalated last week after the two countries failed to reach a deal, his optimism increased. “Since the tariff hike is now substantial from 10 to 25 percent we feel we will have more advantage in market access.”

US, China, Trade Dispute, Indian Exporters
A slowdown in the Indian economy is being attributed to a drop in consumption by an affluent middle class. VOA

India is among a handful of countries set to benefit from the U.S.-China trade dispute, a report by the United Nations Conference on Trade and Development stated in February. “The saying ‘it’s good to fish in troubled waters’ could apply to some bystander nations,” the report said, pointing out that most of the Chinese exports subject to U.S. tariffs will be captured by firms in third countries.

While China has opened its doors wider to a range of agricultural products from India such as rice and sugar, exports to the United States have increased in areas such as chemicals, pharmaceuticals, jewelry, auto components and apparel.

“In various products we were losing out to China with a very narrow margin. With the hike, we are able to offset that,” says Sahai. “That is why the tariff war has presented us an opportunity to enter markets in the U.S. in some areas we were hardly penetrating.”

But even as Indian exports benefit, trade experts warn that clouds are also gathering over New Delhi’s trade relationship with Washington. In recent months, U.S. President Donald Trump has slammed Indian duties on some U.S. goods, saying that India is not providing “equitable and reasonable access” to its markets.

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Economists also warn that an eventual slowdown in global trade due to the U.S.-China trade spat will hit all countries including India, which is already staring at an economic slowdown

Growth in the world’s fastest growing major economy flagged to 6.6 percent in the last quarter of 2018 – it’s lowest in more than a year. It is not expected to fare much better this year.

The slump is blamed on slackening domestic consumption, which powers the Indian economy. Unlike East Asian countries, which have raced ahead on the back of exports, growth momentum in India is largely based on an affluent middle class snapping up goods such as cars, refrigerators, air conditioners and other consumer goods.

But there are concerns as automobile sales, the barometer of consumption, plunged to the lowest in nearly eight years in recent months.

US, China, Trade Dispute, Indian Exporters
Like other carmakers, the Hyundai showroom in Gurgaon has witnessed a decline in sales of cars in recent months. VOA

At the Hyundai car showroom in the upscale business hub of Gurgaon, near Delhi, a range of swanky models beckon customers, but there are few to be seen. This is in marked contrast to the last three years when buoyant automobile sales helped India overtake Germany to become the world’s fourth largest automobile market. That prompted car makers such as Hyundai, Honda and Toyota to expand their presence in the country.

“In recent years, March and April used to be good months. But now 20 to 30 percent drop is there in these months also,” says Gagan Arora, business head at the Hyundai showroom. “There is a slowdown in the whole industry. New buyers are not being added so frequently.”

Economists say while rising exports to the United States and China present a silver lining, the first challenge facing India’s new government due to take office after vote counting in elections is completed this week, will be how to restore overall momentum to the economy and see why consumers are not so willing to open their wallets. (VOA)