Recently, China has become a hotspot of various issues including power tussles, diplomatic clashes, health crises and trade war with many countries. A global manufacturing hub and economic powerhouse which  was dictating the world economy is now at odds with everyone.

The reasons are multifold. Many countries have urged their industries to lessen their dependence on imports from China. There is an indication that ‘Made in China’ wave is over and a major reshuffle of the global supply chain is in the works. 

This shift was not triggered by the Wuhan virus outbreak. Actually, the US-China trade war that started two years ago paved the way for change and the Chinese policies and actions did not adhere to international norms.

But the economic might of China has silenced almost everyone. In the current bipolar configuration, middle powers are adopting hedging strategies toward China and the US by siding with Beijing on economic issues while moving to Washington on security issues. 

In the past two months, China’s ties were hit due to:

• The closure of a US consulate in the country’s southwest Chengdu as a retaliation to a similar move from the US. 

• Border clashes with India, which remains tense and unresolved. 

• An end of the so-called “golden era” of relations with the UK. 

• War of words with Australia, bringing relations close to an all-time low. 

• Imposing a draconian national security law on Hong Kong, earning international condemnation. 

• Facing international ire on human rights issues especially on Uighur Muslims.

• US considering Chinese Communist party as a “threat to freedom everywhere”, and analysing that China’s IP theft cost hundreds of thousands of jobs across Europe and America.

• Chinese scientists, students and others have come under more scrutiny abroad.

China's eminence in world economy

Amid the coronavirus pandemic, IMF’s forecast says, China’s GDP will grow by 1.2 per cent in 2020, while France, Germany, the UK, the US and Japan will witness negative growth. 

In 2008, China had single handedly prevented the world economy from collapsing and the saying goes that “when China sneezes, the world catches cold”. 

When Chinese demand for copper diminishes, Latin America is hit. Decline in car imports hit Germany. Decline in computer and audio equipment  demand hurts Japan. Korean exports are totally dependent on Chinese domestic market. Australian exports of coal and iron ore to China brought currency at par with the US dollar but a drop in demand crashed the Australian dollar.

Since 1979, when China opened up to foreign trade and investment and  implemented free-market reforms, it has been the world’s fastest-growing economy, with GDP growth averaging 9.5 per cent through 2018, described by the World Bank as the fastest sustained expansion by a major economy in history. 

Thus, China has become the world’s largest economy (on a purchasing power parity basis), manufacturer, merchandise trader and holder of foreign exchange reserves. 

High profile initiatives such as ‘Made in China 2025’, Belt & Road Initiative, have made China a major global player. However, its incomplete transition to a free-market economy has irked other economies since it gives unfair advantage to Chinese companies.

Economic bullying and muscle flexing

China’s revisionist policy has been unrelenting. Under Mao Zedong, China more than doubled its size by annexing Tibet and Xinjiang, making it the world’s fourth-largest country in area. Under Xi Jinping, China’s expansionism increasingly threatens its neighbours, big and small.

Starting with the Boxer Rebellion, which was anti-imperialist and  anti-foreign narrative of ‘a hundred years of humiliation’ by CCP, ‘China Dream’ or idea of ‘making China great again’, all articulates the idea of making China an empire as in the past, with the timelines as such China Dream 2021, Made in China 2025 and major power by 2049. 

In consonance with this idea, China has advanced its territorial claims, bulldozed the smaller nations with its economic might and its propaganda machinery has penetrated the world over selling ‘Chinese characteristics’ to the world. There has long been a question of whether Beijing could be authoritarian at home while acting responsibly and constructively abroad and the notion that ‘with power comes the responsibility’ went for a toss.

Some key points are:

1. Belt & Road Initiative:  Also known as One Belt, One Road, it is one of President Jinping’s most ambitious foreign and economic policies. It aims to strengthen Beijing’s economic leadership through a vast number of infrastructure projects which costs around $8 trillion and encompasses 65 countries. Focus is mainly on infrastructure investment, construction materials, railway and highway, automobile, real estate, power grid, and iron and steel.

2. String of Pearls: The theory relates to Chinese intentions in the Indian Ocean region by building a network of their military and commercial facilities and relationships along its sea lines of communication. Critics argue that String of Pearls is a Chinese notion of encircling India by refurbishing ports in various countries around the Indian subcontinent.

3. Nine-dash line: It refers to the undefined and vaguely located demarcation line used by China and Taiwan, for their claims of the major part of the South China Sea. The contested area in the South China Sea includes the Paracel Islands, the Spratly Islands, and various other areas including the Pratas Islands, the Macclesfield Bank and the Scarborough Shoal. The claim encompasses the area of Chinese land reclamation known as the “Great Wall of Sand”. 

4. South China Sea verdict: International Court verdict, which went against the Chinese maritime infringement, was completely ignored and dismissed by China thus showing scant regard for international opinion, norms and  decorum.

5. Military bases in Indian Ocean: Getting Gwadar port in Pakistan on lease, launching first overseas military base in Djibouti, taking over the Hambantota port under loan duress from Sri Lanka, penetrating Maldives to bring it under Maritime Silk Road project. Such initiatives hint at sinister designs, perhaps to neutralise the so-called vulnerability of China, the ‘Malacca Dilemma’ and to encircle India.

6. US-China relation: Notwithstanding the trade wars with China, recently the US has ordered the closure of China’s consulate in Houston alleging a larger Chinese espionage effort using diplomatic facilities around the US. In retaliation China shut the US consulate at Chengdu ruining the bilateral ties. 

7. UK-China relation: It took an upswing in 2015 when Xi Jinping visited the UK with multiple investments into public and private sectors starting a  ‘Golden Era’. The honeymoon period is over and both countries have fallen out over issues including Hong Kong, tech giant Huawei and alleged human rights abuses against Uighur ethnic group. Recently, China has passed a new law that gives it sweeping new controls over the people of Hong Kong, usurping its freedom. 

UK suspended its extradition treaty with Hong Kong since under the new rule, the suspects could be sent to China, banned exports of lethal weapons and equipment used to suppress dissent. UK extended the offer of citizenship to the Hong Kong residents — 350,000 of whom have British National Overseas passports — and 2.6 million more who are eligible to apply. China has termed it as meddling in its internal affairs. 

It also banned Huawei from participating in Britain’s 5G mobile networks on security grounds and planning for legislation to completely remove the tech giant from the country by 2027.

8. Indo-China ties: In the recent past — first in Doklam and then Galwan — China has tried to capture territories with a blatant disregard to mutual cooperation and understanding helmed for so many years. 

Sakteng Wildlife Sanctuary in Bhutan, is now claimed by China saying the boundary between the two countries is not yet demarcated. Beijing further came up with a “package solution” to resolve the dispute with an eye on the Doklam & Siliguri Corridor (Chicken’s Neck). 

India retaliated by banning many Chinese apps, from one of the world’s fastest growing markets, including WeChat and TikTok which had a huge user base in the country.

9. Australia-China issues: Not a traditional rival though, but after Australia pushed for an inquiry into the origin of COVID-19, China imposed 80 per cent tariffs on Australian barley and sentenced an Australian man to death.

“Why should we drink Australian wine? Eat Australian beef?” China’s ambassador Cheng Jingye said during an interview which indicates economic coercion. Chinese state media has also published many articles against Australia. This brought Australia much closer to the Quadrilateral Security Dialogue (QUAD) and is ready to participate in the upcoming ‘Malabar Military Exercise’.

10. Canada-China: As Huawei CFO Meng Wanzhou’s extradition case in Canada proceeds, Chinese courts have begun formal charges against two Canadians detained in what was widely seen as retaliation.

11. France-China: Paris has been angered by many statements by Chinese diplomats, including a charge that the French had deliberately left their older residents to die in nursing homes. 

12. Germany-China: In addition to new questions on using Huawei for new 5G systems, Berlin’s worries have also grown about dependency on China for vital materials and pharmaceuticals.

13. Uighur minority: Many countries have criticised China’s mass detention of Uighurs and other Muslim minorities in Xinjiang, as human rights  advocates call for sanctions and legal measures.

14. Diplomatic issues: In the past several weeks, at least seven Chinese ambassadors — to France, Kazakhstan, Nigeria, Kenya, Uganda, Ghana and the African Union — have been summoned by their hosts to answer accusations ranging from spreading misinformation to “racist mistreatment”.

Xi’s regime

Xi Jinping is rallying his people against the world opinion in an effort to hide his misgivings and to retain his ultimate hold on the Chinese Communist Party (CCP) by being the President for life. He has turned the narrative around COVID-19, steering it from a story of incompetence and failure into one of victory over the illness, a victory achieved through the unity of the party. It was even reported that the virus came from the US military.

At home, the threat of unemployment is looming large over the economy and prolonged unemployment will cost the party its “Mandate from Heaven”. 

Chinese leadership has antagonised everyone at the same time. There is something wrong with the policy-making process as Deng Xiaoping called the ‘over concentration of power’ that leads to policy mistakes. It’s because nobody dares to tell the leader that this is a bad idea.

What next?

Balance of power needs to be restored in the Indo-Pacific region and the US has taken an initiative. It will signal a strong but shared intention among Asia’s regional powers as well as Europe that the liberal security order and economic transparency is preferred over Chinese hegemony. 

Beijing should understand that the way the world needs China, it also needs the world. Affected countries will need to play their part in helping to forge a new international alliance on dealing with Beijing: one that acts  against Chinese pressure and at the same time seeking positively to engage with China's rulers on the big global issues that matter.

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