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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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Dalai Lama says that India and China have great potential

The spiritual leader feels that both the countries are doing compassionate works

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Dalai Lama talks about India and China
Tibetan spiritual leader Dalai says that India and China can work together. VOA

New Delhi, Nov 19

Tibetan spiritual leader the Dalai Lama on Sunday said India and China have “great potential” and they could work together at a “practical level”.

“I think, a great potential… India and China combined are doing more compassionate work… At a practical level also. Imagine two billion people working together,” he told reporters here after inaugurating Smile Foundation’s initiative, The World of Children.

The spiritual leader, who has lived in India in self-imposed exile since 1959, said neither country had the “ability to destroy the other”.

“Whether you like it or not, you have to live side by side,” he said.

Underlining the ancient spiritual connection between the two countries, he said Chinese Buddhist Hsuan Tsang visited Nalanda (now in Bihar) and brought Nalanda Buddhist traditions to China.

“All thinkers of Nalanda are Indian. So Nalanda’s tradition is India’s tradition,” he said.

The Nalanda traditions had turned Tibetans, who were warriors, into more compassionate, peaceful and non-violent nation, he said.

“So sometimes in Delhi, teasing my Indian friend, (I say) if Tibet still remained in the previous way of life, like Mongols, Chinese invasion may not have taken place,” the Dalai Lama said in a lighter vein.

He said nobody in the world wanted violence but it was happening “because our minds are dominated by destructive emotions due to short-sightedness”.

“Nobody wants problems. Yet, many problems are our own creation.”

The Dalai Lama said the existing modern education was oriented to material values. India can take lead in improving the education system by combining modern education with ancient knowledge, he said. (IANS)

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Donald Trump Planning to meet Putin during his Asia tour

Donald Trump's first trip to Asia is the longest international tour.

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US President Donald Trump
US President Donald Trump. wikimedia commns
  • US President Donald Trump said on Sunday that he expected to meet his Russian counterpart Vladimir Putin during his Asia tour.

“I think it’s expected we’ll meet with Putin, yeah. We want Putin’s help on North Korea, and we’ll be meeting with a lot of different leaders,” Donald Trump told reporters on Air Force One before landing at the Yokota Air Base in Japan, Efe reported.

Putin is scheduled to participate in the Asia-Pacific Economic Cooperation (APEC) summit in Da Nang, Vietnam, which Trump will also attend as part of his long Asia tour.

The North Korean nuclear threat is expected to dominate Donald Trump’s meetings in Japan and the next two stages of his tour, South Korea and China, where he will have a highly anticipated sit-down with Chinese President Xi Jinping.

The remainder of the tour will be more focused on economic issues, with Trump scheduled to take part in the APEC meeting in Da Nang and then in the Association of Southeast Asian Nations (ASEAN) Summit and the East Asia Summit in the Philippines.

Donald Trump’s first trip to Asia is the longest international tour by a US head of state since the one then-President George H.W. Bush embarked on in 1992.

Bush became ill at the end of that trip, famously vomiting on the Japanese prime minister’s lap at a formal dinner before fainting.(IANS)

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‘Dalai Lama is a Political Figure under the cloak of Religion, Meeting or Hosting the Dalai Lama is a major offence’ Warns China

In April this year, China had reacted violently to a visit by the Dalai Lama to Tawang, in India’s northeast border state of Arunachal Pradesh, large parts of which is claimed by Beijing.

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Dalai Lama
The 14th Dalai Lama, Wikimedia

Beijing, October 21, 2017 : As US Secretary of State Rex Tillerson prepares to visit India next week, China on Saturday warned that it will be deeply offended if any foreign leader meets with or any country invites the Dalai Lama.

On the sidelines of the 19th National Congress of the Communist Party of China, a Chinese Minister dubbed the Tibetan spiritual leader as a “political figure under the cloak of religion”.

“Any country or any organisation or anyone accepting to meet with the Dalai Lama in our view is a major offence to the sentiment of the Chinese people,” said Zhang Yijiong, Executive Vice Minister of the United Front Work Department of the ruling Communist Party of China (CPC).

“Also, since they have committed to recognising China as a sole legitimate government representing China, it contravenes their attempt, because it is a serious commitment,” Zhang added.

China accuses the Dalai Lama of stoking unrest and secessionist activities in Tibet from where the spiritual leader fled to India in 1959 after a failed uprising.

The Dalai Lama has urged for more autonomy for Tibet.

Beijing opposes any country or leader keeping in touch with the Dalai Lama.

“I want to make it clear that the 14th Dalai Lama, the living Buddha handed down by history is a political figure under the cloak of religion,” said Zhang.

In February this year, Tillerson had told members of the Senate Foreign Relations Committee during his confirmation hearing that he is committed to promoting dialogue on Tibet and receiving the Dalai Lama.

Top US Democrat Nancy Pelosi had visited the Dalai Lama in Dharamsala, India, in May, and sought to draw the world’s attention to human rights in Tibet, triggering protests by China.

China resorts to different tactics if any country hosts the Dalai Lama. For instance, Beijing blocked a major highway leading to Mongolia, crippling the economy there after Ulan Bator hosted the leader late last year.

Mongolia later apologised and promised Beijing never to invite the Dalai Lama.

“Officials, in their capacity as officials, attending all foreign-related activities represent their governments. So I hope governments around the world speak and act with caution and give full consideration to their friendship with China and their respect for China’s sovereignty,” Zhang added.

The comments from the Chinese Minister also comes days after Tillersoon described India as a partner in a strategic relationship and said the US would “never have the same relationship with China, a non-democratic society”.

According to reports, last month China refused to fund travel for visiting scholars at University of California, San Diego, apparently in retaliation for inviting the Dalai Lama to be its 2017 commencement speaker.

In April this year, China had reacted violently to a visit by the Dalai Lama to Tawang, in India’s northeast border state of Arunachal Pradesh, large parts of which is claimed by Beijing. (IANS)