November 29, 2016

South Asia: New Global Cold War Theater



India always seems to be euphoric whenever there is US-Indian interaction either on trade, strategic partnership, military cooperation, or sharing intelligence. Now there is new US bonbon dubbed as “Logistics Exchange Memorandum of Agreement (LEMOA)”.

LEMOA provides a framework that would allow both the militaries of countries to use each other’s land, air, and naval bases for logistics support, replenishment of supplies, and repair of assets including in calamities for humanitarian relief.

It is not an agreement to set-up bases either of the countries but to seek support in shape of food, oil, transportation, medical aid, billeting, lubricants, spare parts, and repair and maintenance etc. such as in case of joint military drills on deferred payments. In fact, LEMAO is not a new pact and was first mooted in earlier this 2000s.

By either means, Indian delight is beyond any sense since it is not in the least bit likely to cash in on LEMAO because India has no strategic interests in Americas. Although it might pay off United States, but only to a limited extent, after chafing relations with Pakistan over F-16 and hold up of $300 million in military reimbursements.

This rift in Pak-US relations aggravated Pakistan and malfunctioned trust between two countries greatly. United States hence banked on India in search of surrogate strategic partner in the region however India strategic location cannot serve US interests except new cold war adversary, China. Yet again, India hugely lacks the capability to threat “Giant” China across all sectors and its intrusion in Afghanistan or any kind of engagement in Middle East is verily unnatural and intolerable for the people of those countries.

United States after annoying Pakistan; had to rely on India to maintain its influence in the region especially when it has pushed Turkey back to Russia and is now short of friends globally. Indian total submission to US, only in abhor of Pakistan and China, without any shared interests is helping US cause. India is quite contended with so-called “Defense Technology and Trade Initiative (DTTI)” and “Strategic and Commercial Dialogue (S&CD)”, the nodes to strengthen Indo-US ties.

“While the strategic dimensions of the India-US relationship have seen very important positive strides in recent years, as embodied in Indian Defense Minister Manohar Parriker’s ongoing visit to the U.S., the commercial side has been a little underwhelming”, said Dhruva Jaishankar, fellow for foreign policy at Brookings Institute India.

He further added “U.S. goods exports to India have grown only 22 percent since 2008, and other trade indicators, including in services are not impressive. Indian exports have not grown in the past two years despite a much healthier economic outlook.”

Preposterously, both counties’ dailies are projecting it a landmark in US-India defense collaboration or “practical engagement and exchange” by US Defense Secretary Ashthon Carter, admitting the lack of applicability in earlier treaties. India is exceedingly charmed by US support for Nuclear Supplier Group (NSG), Missile technology Control Regime (MTCR) or being declared major non-aligned NATO ally, and now Major Defense Partner (MDP) but none of these fail to realize any definite benefits so far.

Horrid over New Silk Road or OBOR (B&R Initiative) for the mammoth $140 billion, Washington does not want Beijing to take control of South China Sea and make a strong footprint in the region, denying Pentagon the access to Western Pacific and unexploited gas and oil reserves.

The OBOR proposes to configure a Pan-Eurasian connectivity potentially touching 65-nations, 4.4 billion people, around 30% of the global economy, and a total infrastructure need of around $5,000 billion ($5 trillion) besides building-up a hypermarket of nearly 10-times of the size of the US market in the next two decades. PwC notes about $250 billion in projects that have either been built already, recently started construction, or have been agreed on and signed in relation to B&R.

“The $46 billion China-Pakistan Economic Corridor (CPEC) has the potential to unblock vast swathes of South Asia, with Gwadar, operated by China Overseas Port Holdings, slated to become a key naval hub of the New Silk Roads (Sputnik News).” Bangladesh-China-India-Myanmar (BCIM) is yet other project in B&R initiative.

Now US “Pivot to Asia” is more perceived as a map to contain China’s growing political and economic clout in South Asia using India as its proxy in the region. India has at all times skeptic with its nuclear armed neighbors, China and Pakistan. Besides China and Pakistan; Russia and Iran, surprised by rapid Indian foreign policy rapprochement, also closely monitoring Indo-US “deals”.

India tags Pakistan for hundreds of thousands protestors holding Pakistan flags demanding freedom in Indian-occupied Kashmir (IoK). Whilst, according to Indian official figures, there were only 150-militants in IoK last years and over 700,000 military troops are deployed to fight mere 150-militants!

International community has been wickedly silent on killings of tens of thousands of Kashmiries, human rights abuses and nearly 7,000 cases of sexualized and gendered violations accusing Pakistan for catastrophe. But if India requires almost 01-million forces to control a small territory, doesn’t it necessitate the substantial evidence to United Nations that who is the guilty party and destabilizing the region?

Modi in recent speeches has thanked people of Azad Kashmir, Baluchistan, and Gilgit Baltistan in Pakistan for supporting them yet again how many times the world has heard of human rights abuses, killings or rapes in these areas? Instead, Indian spies on Pakistan soil have been captured who have been involved in handling, facilitating, and financing terrorism and to shush the voices of freedom in IoK, India is diverting world’s attention toward phony issues. And Washington, purposely patronizing Indian brutalities and sabotaging peace acts to contain China, Pakistan, and Russia.

New Delhi’s impulsive alignment with the Washington immediately threatens BRICS to disintegrate, undermining the region’s stability and turning the region into a theatre of new global Cold War. Modi is invariably committed to mar China and Pakistan even if the United States doesn’t impel India to do and he is not hesitating to knock down the interests of its unprecedented ally, Russia.

In case BRICS shatters, Russia will be forced to make a choice out of China and India. Though Moscow certainly would avoid to reaching such a stage but Indian capitulation with US might leave it with no alternative option.

“If India irrevocably commits itself to pro-US anti-China course then sooner or later India will inevitable come under pressure from Washington to loosen its ties with Moscow. This would most probably happen in the context of an artificially crisis, making it appear that the decision was Moscow’s rather than New Delhi’s or Washington”. (The Duran)

Eventually this leads to new strategic formations in the world; US and India on side and China, Pakistan, Russia, and Middle East on the other. By all reasons, Indian government and media is dancing on the tunes of the Washington to emasculate none but only itself and the region and people all over the places are getting amused on the their ostensible elation.

November 15, 2016

Belt and Road: How Mega Project of Six Magical Corridors Spurs Economic Growth


Boonyong, a Thai rice exporter, looks forward to lowering transport costs when a 845-km rail network connecting China and Thailand gets completed. Currently, his rice products are delivered by road and sea, which takes about three and five days, respectively.

“It will only take us around 18 hours to send rice to China by train, with the freight cost lowered to about one-third of that of road or sea transport,” said Boonyong, a Thai businessman who sells rice to China at an annual profit of over 50 million yuan ($7.68 million).

B&R THEME
Through B&R, China wants to synchronize nearly 4.4 billion people, over 60-countries, take control of 30% of the global economy and a total of $2.1 trillion of gross production focusing infrastructure, trade, policy, finance, and people.

WHAT IS ONE BELT, ONE ROAD (OBOR) OR BELT AND ROAD (B&R)
In 2013, China’s President Xi Jinping announced Silk Route Economic Belt (SREB) and the 21st century Maritime Silk Route (MSR) during his visits to various states. The composition of these two initiatives was named Belt and Road or “一带一路” or “Yídàiyílù” in Chinese.

Silk Road Economic Belt (SREB) is planned to link China with Europe through central and western Asia; and the 21st Century Maritime Silk Route (MSR) is intended to connect southern China with South East Asia and Africa by sea.

SIX (6) ECONOMIC CORRIDORS
China is mulling six economic corridors to give a strong impetus to integrated economic growth between Eurasia and Africa:

Corridors are set to run through China-Mongolia-Russia, New Eurasian Land Bridge, China-Central and West Asia, China-Indo-China Peninsula, China-Pakistan, and Bangladesh-China-India-Myanmar, said vice premier Zhang Gaoli.

CHINA-PAKISTAN ECONOMIC CORRIDOR
China-Pakistan Economic Corridor (CPEC) is the first of six corridors to start construction. This “fate changer” project is deriving a huge $51 billion investment in infrastructure, energy, and railway along with creating thousands of job and investment opportunities.

It is about 20% of Pakistan’s GDP, divulges the scale and scope of the project. The whole project could add up to about 4.5% to Pakistan’s GDP, enlarging an overall GDP growth of 9% of the country.

The construction of CPEC is being progressed on fast track basis and just about half of the project has already completed. Keeping in the significance of CPEC for both China and Pakistan, special troops have been deployed for its security, overseen by Pakistan armed forces.

WHY GWADAR PORT IS SO VITAL
Gwadar Port, core of the CPEC, would help China to transport oil of $200 million/day ($73 billion/annum) from over 100-days to just about 30-days, besides other trade and strategic advantages. Gwadar, 18m, is the deepest port (9m; nearly double of Jebel Ali) in the world and could facilitate an 120-births or ships against Jebel Ali 67-births.

We could imagine that if Jebel Ali Port with 9m depth and 67-births can make GCC grow to such extent, how greatly Gwadar Port with 18m and 120-birth can lead to Pakistan growth.

PARTICIPATING COUNTRIES
70-countries have actively participated in scheme and 30-countries have already signed cooperative agreements with China to build B&R jointly. There are around 900 deals in negotiation valued at $890 billion, including a rail link between Beijing and Duisburg, a transport hub in Germany.

PROJECT FINANCING
China is expected to invest an estimated sum of eye-watering $900 in 60-countries included in the program to shore up road, rail, and maritime trade by creating economic corridors. Infrastructure construction in Asia would require an annual investment of around $730 billion from 2015 to 2020.

It has been financed by Silk Road $40 billion, Asia Infrastructure Investment Bank (AIIB) $100 billion, and the incorporation of New Development Bank (formerly BRICS Development Bank) with an initial capital of $50 billion and to be increased up to $100 billion. B&R is backed by beefy China’s foreign exchange reserves valuing at about $3.2 trillion as of August 2016.

Chinese Ministry of Commerce tells that in 2015, Chinese enterprises invested nearly $15 billion in 49-countries within the framework of Belt and Road cooperation, a year-over-year increase of 18.2%.

CHINA IS ALREADY REAPING BELT AND ROAD BENEFITS
In the next five years, China’s imports are expected to exceed $10 trillion, outwards direct investment (ODI) to reach $500 billion, and Chinese outbound tourist visits will also rise to 500 million.

TOURISM TO FETCH REVENUE OF $200 BILLION
Belt and Road has a great potential to bring total revenue of $200 billion in tourism to countries engaged. In an ongoing tourism festival, a tourism official said that 150 million Chinese tourists are expected to visit Belt and Road countries in the next five years.

“Another 85 million tourists from those countries are expected to visit China, bringing revenue of up to $110 billion, he said at the Silk Road International Tourism Festival in Lanzhou, Gansu Province.” Between China and B&R countries, over 25 million tourists travel annually and the market is anticipated to expand quickly as the projects link more than 60-nations.

TACKLING INDUSTRIAL OVER-CAPACITY
China is facing acute industrial over-capacity and OBOR provides a great opportunity to block this monster dilemma. In 2014, China signed 44% of its new engineering projects with Belt and Road countries and the figure has escalated to 53% in the first 05-months of 2016.

TRADE WITH B&R COUNTRIES EXCEEDS $600 BILLION IN FIRST 08-MONTHS OF 2016
During the first eight months of 2016, China’s trade with Belt and Road countries have surpassed $600 billion, 26% of China’s total trade volume. For the same period, China has invested up to $10 billion in Belt and Road countries through AIIB and Silk Fund.

Deputy Head of Ministry of Commerce said that Chinese companies have established over 50-trade and economic cooperation zones in B&R countries, investing over $15.6 billion, earning host countries tax revenue of $900 million and creating 70,000 jobs.

YUAN INTERNATIONALIZATION
Trough B&R, China visualizes “more capital convergence and currency integration” and gradually lessening dependence on US dollar. The B&R countries will be pushed to trade in renminbi heading to yuan internationalization.

Some countries such as Russia, Mongolia, Kazakhstan, Uzbekistan, Vietnam, and Thailand are already broadly using renminbi for trade. “By the end of 2014, offshore renminbi deposits amounted to ¥1.6 trillion and offshore renminbi bonds reached ¥350 billion – a trend supported by the belt-road initiative. Moreover, this initiative calls for establishing a renminbi-nominated Asian bond market."

Targets 6.5% GDP Growth, 25-million New Jobs, and Reducing Poverty by 70 million
In 13th Five Year Plan, President Xi Jinping targets 6.5% annual GDP growth. Close down middle-income economic trap, raise annual per capita income to $12,600, create 25 million new jobs, and reduce poverty in rural areas by 70 million through urbanization policies.

CHINA’S ECONOMY
According to China Bureau of Statistics, China’s GDP grew by 6.7% on y-o-y in first three quarters of 2016, to reach $7.87 trillion.

Foreign trade declined for the same period by 1.9% to $2.61 trillion; exports dropped by 1.6% ($2.14 trillion) and imports plummeted by 2.3% (7.47 trillion yuan).

However, China continues to retain its global leading position on trade in goods with a rise in global market share from 11.2% in 2013 to 13.8% in 2015.

Foreign direct investment in (FDI) shoed a growth of 6% in 2015 and reached at $136 billion, ranked in top-3 in world, UN report says.

CHINA-AFRICA COOPERATION
Last year, in December, President Si announced at Johannesburg Summit in South Africa 10-major China-Africa cooperation plans worth of $60 billion in the next three years.

Vice-Foreign Minister Zhang Ming said at a news conference that China and Africa have signed at least 243 cooperation agreements of various kinds worth $50.7 billion since the summit.

“Among these agreements, Chinese companies’ direct investment and commercial loans to Africa surpass $46 billion, accounting for 91 percent of the total volume,” he said.

CHINA DEBT CRISIS
At the close of 2015, China reported total debt of 168.48 trillion yuan ($25.59 trillion). However, Li Yang, a Chinese expert is convinced that this debt is controllable and China would not suffer from debt crisis as the government owns enough assets to handle debt risk.

Li said that even taking the debt of local governments’ financing platform into account, the amount of total government debts at the end of 2015, reaching 56.8%, was still below the warning line of 60% set by the European Union.

In contrast, the current debt ratio of the Japanese government has surpassed 200%, and that of the US government and French government is over or around 120%.


Sources: The Market Mogul, USA China Daily, Maxxelli, Shanghai Daily, Lehman Brown, Yale Global, China State Council