CIHS – Centre for Integrated and Holistic Studies

Date/Time:

Blog Post

CIHS – Centre for Integrated and Holistic Studies > china
Business Policy
0
1.13K

New India’s Rupee Goes Global & Dematerialized!

Oil and gas deals, gold imports, small & medium ticket trade payments must be settled in rupees. Russia jumping on to the rupee bandwagon is a big breakthrough even as India readies to overtake Germany as third largest economy.   K.A.Badarinath Two significant developments this week have made the trajectory on Indian rupee very clear. One, Indian government’s fancy idea of taking the modest rupee global has taken wings. And, there’s definitive movement forward on digitizing the rupee after having rejected calls for legalizing private crypto currencies. Both these movements point to the ambition and forward looking policy stance of the Indian government and Reserve Bank of India if one were to gauge the implications. First things first, how does one make Indian rupee a global currency to reckon with after Chinese Yuan or Renminbi that has emerged as the fifth largest trading currency in last few years? Some baby steps seem to have been taken with regards to the rupee though naysayers think that it’s more of positioning the Indian currency by ultra-patriotic Narendra Modi government and Hindutva forces. Using Special Rupee Vostro (SRV) and bespoke accounts to expand international trade and settle export import deals on rupee terms is good beginning to internationalize the Indian currency. By-passing the dollar, euro, yuan or pound sterling denominated trades is no doubt the first step. The advantage in settling trade deals against rupee is many folds. Apart from internationalizing the rupee, Indian payment systems and gateways get popularized across trading and currency community. Secondly, volatility in global currencies that hitherto rummaged our trading community and foreign exchange traders catering to a large community of Indian students and travellers may now have limited impact once the deals are squared in rupees. Russia, a large energy and strategic partner for India, became the first large economy to open a special rupee vostro account to settle trade deals in rupees. Gazprombank of Russia has already opened a rupee denominated account with UCO Bank. Two largest banks, Sberbank and VTB Bank from Russia are also in the process of opening such accounts through their branches in Delhi. This will give a big push to non-dollar, euro or Yuan designated trade between India and Russia that’s facing issues as it has been cut off from the Swift payment system globally after its attack on Ukraine. Sri Lanka, Maldives, several South East Asian, African and Latin American countries may also follow suit given their inclination to pursue non-dollar trade deals concluded in Rupees.   Countries like Zimbabwe, Malawi, Djibouti, Ethiopia, Sudan, Madagascar, Kenya, Namibia and Bangladesh may also be willing to do rupee denominated trade deals. Current volumes and value of trade with these countries may be very insignificant. But, with big players like Russia joining the bandwagon, Indian rupee is bound to get the foothold it’s looking for in the global currency and trade markets. With over $ 800 billion merchandise trade clocked annually, there may be no reason why India should not have a say in determining payment terms. An equivalent value in services trade or more should add muscle to Indian negotiators seeking to make rupee settlements. While non-oil trade products and services deals may take a while to settle in rupees, oil and natural gas deals should be done in rupees. Given that Russia has emerged biggest supplier of oil after Iraq, Saudi Arabia, UAE and USA in that order, negotiation with Moscow on rupee denominated payment terms seems to have been concluded. Moreover, both India and Russia have long history of clinching oil deals in rupee – roubles during protracted cold war era. With Iraq, UAE and Saudi Arabia as well, there’s no limitation on India to settle oil and gas deals bypassing the US dollar or the euro. In the non-oil trade, small and medium ticket deals with a dozen countries can still be targeted.   Chinese President Xi Jingping may be more than willing to do a Yuan – rupee designated deals thereby disrupting virtual monopoly of US dollar and euro denominated deals. Given that India continued to be a big customer for China, non-dollar deals should be okay irrespective of the geo-political tensions and border disputes between the two countries. Gold imports are something that should move to rupee denominated settlements. With India being largest consumer of gold at about 1050 – 1200 tonnes annually valued at about $ 55 – 60 billion, New Delhi should begin rupee pitch on the bullion market. Gold is the second largest import item after oil and natural gas imports that range between $ 100 – 120 billion yearly. Second big development is modest rupee going digital on pilot basis that kicked off last few days beginning with Government securities. This is a definitive milestone in India’s banking history that goes beyond the British imperialist era. Rejection of cryptos as decentralized, speculative and block chain based currency in India was a difficult step but the right one. Having rejected private crypto currencies for commercial transactions, recognition as an asset and banks’ collateral, India’s foray into digital space through the rupee monitored and regulated by RBI marks a new beginning for the world’s fourth largest economy. As India prepares to surpass Germany and emerge third big economy internationally, phased roll out of e-rupee was the most desirable and sustainable option that Modi government and RBI has taken recourse to. This is in contrast with countries like Hong Kong that legalised crypto-currencies and El Salvador that set up a dedicated cryto-currency city. Central Bank Digital Currency (CBDC) or e-rupee has nothing to do or common with the private crypto-currencies. E-rupee is equivalent in value and acceptable to Indian government as much as the rupee in physical notes and coins. Even most advanced economies like US, UK and European geographies are grappling with the havoc unleashed by private crypto currencies that are speculative in values, not backed by an asset and mostly used for narcotic drug deals and laundering by terror groups internationally. It would

Read More
Human Rights Media Policy World
0
934

Tolerate Xi, No Other Option

Western powers may shudder at third term for Chinese President, India may be uneasy with the pit-bull, but then does world have a say? K.A.Badarinath “Over throw the dictator” posters and banners that donned Sitong Bridge overpass in Beijing. Similarly thousands of Chinese people gathered at one of the suburban town 45-kilometres away on eastern edge of Beijing protesting the repressive President Xi Jingping’s zero-covid 19 norms in three years. These two instances are symptomatic of unease and restlessness within Chinese population against Oligarchs and multi-billionaires controlled Communist Party of China’s government even as the prima donna leader President Xi gets ready for third term coronation. Rarest of the rare protests that ordinary working class people staged on Thursday demanding their right to travel to work places in Beijing is tip of the iceberg. Whatever may be the line pursued by official communist party organ, People’s Daily, information trickling across social media point to a section of Chinese people seeking change in the leadership. South China Morning Post’s story talks of the protests that have sent larger message to President Xi Jingping and the Communist Party of China’s five years once national congress that begins its week-long session on Sunday. “Say no to Covid test, yes to food. No to lockdown, yes to freedom. No to lies, yes to dignity. No to cultural revolution, yes to reform. No to the great leader, yes to vote. Don’t be a slave, be a citizen,” read banners during Thursday protests as per a dispatch of CNN. These liners sum up the ordinary folks’ aspirations in China. “Go on strike, remove the dictator and national traitor Xi Jinping” pointed to the intent behind protest very succinctly. Not that these protests, public outrage or demand for democratic governance structures would mean anything to the autocratic rule led by President Xi Jingping. Anointing Xi to the ‘core’ by central committee of CPC only reflects the sycophants that have filled in the high chair. After having secured the ‘iconic status’, there’s nothing that may come in his way from continuing his lacklustre regime for another five years. Upper age limit of 68-years may not be applicable to President Xi. Party’s rule book that limits the Presidency to two terms also may not be a limiting factor. If reports from outlets like BBC were to be believed, President Xi will continue as ‘supreme leader’ for his life time. Apart from revamping the seven member polit-bureau standing committee with his acolytes, President Xi may even be elevated to become chairman with executive powers, a post that was abolished at the twelfth national congress in 1982. Mao Zedong who shaped Communist Party of China in the formative years was the most popular and the only chairman of the leftist formation China had in aftermath of the long march. If President Xi were to get designated as the Chairman now or after five years, he’s bound to ensure that one of his stooges would be appointed as General Secretary with limited or no executive powers. The 25-member strong polit-bureau of the party to be announced next week end would have faces that are ‘very loyal’ to President Xi Jingping. Along with third term for President Xi and reorganizing party and government’s top deck, there’s every possibility that Chinese military, political and party doctrine would get rewritten. Western block led by US, Japan, Australia and some of their European allies are bound to mount fresh challenge to Chinese Indo-Pacific strategy apart from isolating China further on economic, trade and investments matrix. His signature projects like Belt and Roads Initiative that pushed lot many countries into the Chinese debt trap may get a leg up. China’s development and security initiatives would get redefined and fortified notwithstanding its own block making and criticism on dragon’s debt stranglehold. China under President Xi’s third term would try and re-assert on security front, reimagine and re-energise its economy that took a huge hit last three years owing to Covid 19 pandemic. In a bid to bring the disenchanted communist cadres together and give a fillip to the world’s largest military, President Xi may lean heavily on the ‘nationalist sentiment and emotional China centric appeal’ that’s very anti-thesis of Communist party’s ideological stand. Russia – Ukraine conflict that has had led to a huge energy crisis in entire Europe and China siding with President Putin serves as the perfect backdrop to CPC rewriting its doctrine on ‘development and security’. For India, the fallout of possibly a more stringent CPC line, will be huge given that Beijing – New Delhi ties got redefined especially after East Ladakh adventurism attempted by President Xi and his cronies in last two years.  On economic front, there could be significant challenges as India readies to replace China across supply chains network including Defence equipment and services. As India warms up to assume chairmanship of G-20 and China continues to hold reins of BRICS till June next year,  a huge change in bilateral and multi-lateral engagements in the region and beyond would shape the post-Covid 19 world. Also, with India being chair of UNSC as an elected member for two years, there’s likelihood of some churn in global organizations. As a write up in South China Morning Post put it, western powers led by US may not like a third term for President Xi Jingping, but do they have an option. They have to live with it and the world will have to tolerate him for perhaps his lifetime. India will have to move its pawns with care and caution keeping the independent and balanced security and foreign policy stand intact. (Author is director and chief executive, Centre for Integrated and Holistic Studies, New Delhi)

Read More
Business Policy World
0
1.06K

Economic Divergence Unfolds

India has emerged as fastest growing economy with 8.7 per cent surge while China struggled to stay afloat with $ 5.5 trillion package  K.A.Badarinath It’s a tale in contrast. The two countries have always been viewed as competitors to gain global footprint, acceptability and reach. Presently, the two nations in question are going through a differential economic curve that depicts a picture in contrast. Without second guess, one would easily make out that it’s the economic story of China and India that are unfolding differently in the backdrop of a huge crisis in Eastern Europe and Baltic region, rise in commodity prices leading to huge inflationary pressures and thereby tightening of money policy by central banks. The humungous fiscal stimulus package announced by President Xi Jinping’s administration indicates that not everything is going right for China’s economy that’s in complete control of the Communist Party of China, its minions and the oligarchs. Protracted lockdowns in various cities of China owing to Covid 19 pandemic has pushed the dragon country’s economy into an abyss. While it struggles to stay afloat with positive growth, China has lost its exalted position as the fastest growing country. President Xi, cabinet, state council and CPC decision to pump prime the economy speaks volumes on the crisis that has rattled the world’s second largest economy. Ukraine war, disruption in its supply chains and resultant slide in manufacturing growth has led to rampant pink slips and loss of livelihoods. Bloomberg’s back of the envelope calculation put the fiscal stimulus at $ 5.3 trillion that President Xi’s communist administration has announced. From deep tax rebates, cheap loans, withdrawal of restrictions on automobiles buying to booster dose for e-platform companies, China seems to be trying every trick to get back the growth mojo. Already, Chinese monetary authorities and its central bank seem to have reconciled to the challenge faced in achieving downwardly revised growth of 5.5 per cent in 2022. Investment bank UBS forecast of 4.2 – 3 per cent growth in China has not only unnerved President Xi who’s preparing for third term coronation in September. Earlier this week, J.P.Morgan had also cut the China growth forecast to 3.7 per cent from earlier 4.2 per cent. There seems to be no easy way out of economic bind in which China has landed itself especially after the Communist regime went on a war path against the growth drivers like the big home grown technology companies and platform enterprises. David Qu, Bloomberg’s China economist may be right when he says that Chinese central bank has now only played a supportive role. And, the government’s fiscal measures had more space to support growth in the $ 17 trillion Chinese economy. Implementing the fiscal package may also pose a big problem as there’s reported resistance from states and local governments whose finances are already fragile, borrowings touching the roof and very little elbow room to undertake development projects. Otherwise, there’s no plausible reason for Xi’s administration to send dedicated task forces to 12 provinces to realize the actual economic package. In contrast, Indian that’s celebrating eight years of BJP government in office is on a virtual high. Prime Minister Modi’s decisive leadership to deliver on economic and development front has worked. India has emerged as the fastest growing economy globally displacing China with 8.7 per cent GDP uptick in fiscal year ending April 2022.  Incidentally, this is the highest growth posted by India in 22 years after 8.8 per cent reported in 2000. India with its $ 3 trillion economy is making waves globally with new partnerships and markets thereby creating new work opportunities for the aspiring youth. Having navigated the two difficult waves of Covid 19 pandemic relatively unscathed, India’s reading along with its partners like Australia, Japan and US to displace China with alternative and sustainable supply Chains. If one were to go by chief economic advisor V. Anantha Nageswaran, even in current fiscal, India’s economic growth has been estimated at 7.5 – 8 per cent. At this juncture, these projections may look daunting due to slide reported in January – March 2022 at 4.1 per cent. Economic resilience back home and deft management is what one can bank upon to realize this expansion. Core sector performance of 8.6 per cent spread over eight infrastructure areas during April 2022 provides enough optimism for maintaining the growth momentum in the Indian context. Given the government’s continued commitment to invest over Rs 750,000 crore across infrastructure areas, India will continue to be the brightest spot in the global growth sweepstakes. Given the hard work put in by Prime Minister Narendra Modi and his government in last eight years, retaining the tag of fastest growing economy should be celebrated as a big leap forward. This does not mean that Indian leadership should be carried away by the euphoria and not recognize the challenges like crude prices touching $ 120 as against budgeted $ 75 per barrel apart from surge in other commodities prices. If data available with credible agencies like International Monetary Fund (IMF) and World Bank are anything to go by, then India may be the only large economy that would post GDP growth beyond 7 per cent till 2025. Creating jobs for millions of unskilled, semi-skilled and low-end earners in rural hinterlands may have to be the focus while Prime Minister Modi’s government goes about methodically in economic integration to evolve India as a unified behemoth.  (Author is Director & Chief Executive of Centre for Integrated and Holistic Studies based in New Delhi.)

Read More
Policy World
0
1.04K

Gone with the wind: The Curious Case of Foreign Minister Wang Yi

Amrit Pal Kaur / New Delhi Chinese State Councillor and Foreign Minister Wang Yi was on a diplomatic visit to South Asia from 21st March to 27th March 2022. His visit to the region is significant for many reasons, including but not limited to the Russia-Ukraine crisis. As the trip advanced, it became clearer that the State Counsellor was trying to drum up support for the Chinese position on the ongoing crisis and that China saw it as an opening to push forward its diplomatic agenda, which has been stalemated since the Galwan Valley days. That State Counsellor Wang Yi would talk in warm tones to his Pakistani audience was expected, but he would subscribe to the resolution of the Organisation of the Islamic Cooperation, which included remarks on India’s domestic policies and issues, right before coming to New Delhi, defies all reasons. His discussions with Indian National Security Advisor Ajit Doval and External Affairs Minister Dr S. Jaishankar came to a nought, and his request for an audience with Prime Minister Modi was declined were some of the signs of how his impromptu escapade to New Delhi ended. His visit to New Delhi was being speculated, but the Chinese Foreign Ministry kept the details shrouded. However, the bigger question is why China felt the need to send the State Counsellor to India, given the relations between the two countries in recent history? Part of the answer lies in India’s position on the Russia-Ukraine crisis. India has asked both sides to keep the diplomatic channels open and resist the violent path to resolve the issue. India’s Permanent Representative to the United Nations Tirumurti has abstained from voting on the resolutions in UNSC on the Ukraine crisis, coming from either side, keeping its diplomatic options open while walking on a tight rope. It can be speculated that China sees India’s autonomous diplomacy as a favourable opening stance to its position, especially since the Chinese have been increasingly facing the music on account of their support to Russia. Gaining India’s support would have been significant. However, India’s position is far more nuanced than what is meeting the eye. To begin with, the Indo-Russia relationship is indeed based on strategic cooperation, which goes back many decades. Russia is India’s largest armament partner, covering over 60% of its ammunition inventory. It is an essential consideration for India, especially considering the less than cordial environment on Indian borders. Indo-Soviet bonhomie of the cold war days is also frequently cited to be the high-water mark of the relationship, but the lesser-known fact is that Indira Gandhi did not agree to sign the Peace and Friendship Treaty for nearly two years, and it came into being against the backdrop of Pakistani aggression and refugee crisis in 1970-71. In order to hedge and balance its interest in the fast-evolving geo-strategic conditions in South Asia, non-aligned India signed the Treaty with the Soviet Union. Nevertheless, the treaty is not the only reason, and critical geostrategic concerns and calculations inform the Indian stance. Historically, as a major Eurasian country, Russia has always had a bearing on Indian foreign policy since the colonial era. Central Asia and Afghanistan were seen as the buffer between the Russian Empire and British India. In order to protect its Indian territory, British Raj always tried to keep Russian expansion towards the south in check. The Anglo-Afghan Wars of the 19th century were essentially fought with this purpose. Also, the north-western region has been a sensitive zone because in its history, most attacks on India happened from the northwest, where the famous ‘passes’ in the Himalayan ranges would allow the attacking armies to come through. As a powerful territorial empire in the north, Russia has held strategic significance for India. Its influence on Central Asia, Iran and Afghanistan has been an essential consideration in the Indian foreign policy calculations as these countries are critical strategic partners. In order to maintain peaceful relations in the neighbourhood and keep harmony in the larger Asian context, Russia has its niche in Indian geo-strategy.  Another reason for the cautious Indian stance on Russia is, of course, the Dragon and its South Asian partner. Since the Crimea war of 2014, as the western pressure on President Putin increased, Russia has been walking into the Chinese orbit. For India, Russian decision making influenced by any third country is a possibility rife with pitfalls. Indo-Chinese relations have been sub-par for some time, and getting its strategic partner close to China is undesirable. What India would seek from Russia is support for its position in case if Galwan Valley like situation repeats. Assertive and revisionist China has been a cause of concern for the Asian region. The South China Sea disputes, East China Sea dispute, the Galwan Valley, and the Doklam dispute have piqued the world. Given these circumstances, countries like India have their concerns concerning geo-political issues. In this context, when President Biden calls Indian stance on Ukraine’ Shaky’ and the number of world leaders come to India in the guise of ‘bilateral relations, it cuts a rather curious picture as to why these dignitaries, including State Councillor Wang Yi, are making their way to New Delhi. First, about State Councillor Wang Yi’s visit, it can be derived that Indian reticence to criticize Russia outrightly on the Ukraine issue is seen as an essential toe-hold to persuade India to join China in supporting President Putin. Secondly, China is hosting this year’s BRICS summit and whether India decides to join or does not join will leave a significant impression on the leadership of President Xi especially keeping in mind the impending once in a decade leadership change in China which President Xi, in all probability, seeks to reverse. It will also send a message to the world about China’s rising power. Finally, in the context of the ripples created by the QUAD grouping in recent years, this BRICS summit will, in all prospects, seek to re-establish itself as a potent global force. For

Read More
Human Rights
0
1K

Winter Olympics: China heading for isolation

Communist Party of China and President Xi’s track record of human rights violations and unabated expansionism have riled the world Amritpal Kaur / New Delhi Winter Olympics and Paralympics this year being held in China beginning next week were to be showcased as President Xi Jingping’s acumen and dexterity with which he engaged the world. If reports were anything to go by, it’s not working for President Xi Jingping and his Communist Party of China that’s burning midnight oil to prevent the country’s total isolation in the international community. First came the political and diplomatic boycott of Chinese winter Olympics by the world powers to send out a strong message against well documented human rights violations of Uighur muslim minorities. Though most countries may still send in their sporting contingents, their officials will skip to protest against abuse and genocide unleashed against Uighurs. Going back to its origin in 1896, Olympics have been touted as the bridge to mitigate differences among countries and forging a bond of friendship. On the contrary, Winter Olympics 2022 being held at Beijing have walked into a grave shadow of all round acrimony due to China’s arbitrary actions with a number of Southeast Asian neighbours’ boycotting the games. Looming threat of Omicron variant of COVID-19 and massive internet crackdown by the powerful regulator in China has also not gone well with sporting nations. Since the last decade, Chinese growth story has translated into its assertiveness and obsession for blanket security theology. Its resurgence has made China more vocal treading on the verge of covert violence. One dimension of such an upturn has been China’s territorial disputes with its neighbours like USSR and Myanmar but with varying outcomes that range between amicable solution and outright arm twisting. However, amicable solutions have been scarce and far in between.  In fact, the last amicable resolution of border dispute that China achieved was in 2011 with Tajikistan. On the contrary, the past decade shows a marked change in the Chinese modus operandi in dealing with such disputes. Since 2009 Beijing has been claiming unilaterally South China Sea its territorial waters by pushing forward Nine-dash Line which demarcates the whole of the water body as its territory. South China Sea has been a central to territorial dispute between China and its South East Asian neighbours. And, this got accentuated beginning 2013 when China started developing Spratley Island and Paracel Island region. The Chinese state has been claiming ownership of most uninhabited islands in South China Sea Zone at a fast pace. These Islands include Cuarton Reef, Fiery Cross Reef, Gaven Reef, Hughes Reef, Johnson South Reef, Mischief Reef, Subi Reef. Though Vietnam had been reclaiming some islands, what set the alarm bells ringing was the urgency with which Chinese started to develop these shoals. During 2014-16, China reclaimed more islands and territories than all other nations combined in the region’s history. Graver aspect of this Chinese belligerence is militarizing these islands. South China Sea is a narrow body which is also strategic as an important marine route that accounts for substantial world trade at over $ 3 trillion annually. Chinese attempt to capture scattered islands and fortifying them as its military zones has unnerved several of its friends and foes alike. Discreet reclamation of territories led to coining of term, ‘Salami Slicing’, that denotes Chinese attempt to expand its territory, one shoal at a time. Chinese expansionism has been in full display in its tussle with its India. Though settlement of Himalayan border issue has been an elusive phenomenon, over a period India and China had developed a mechanism to keep bilateral relations cordial while taking a piecemeal approach to disputed territory. Passage of Border Peace and Tranquility Agreement (1993) during the Narasimha Rao era is a case in point. Subsequently, technical agreements to manage the border issues were adopted after tough negotiations in 1996, 2005, 2012 and 2013. However, recent skirmishes in the high Himalayas including Galwan crisis, Pangong Tso tussle, Depsang Plain offensive in 2020 is a worrying signal. According to experts, China is engaged in salami slicing of Himalayan border by taking one post at a time. It has also been speculated that China is keeping the Himalayan fault lines simmering to hem India and gain simultaneous advantage in the Indian Ocean as an emerging blue water navy. This expansionist posture, mastering the seas around and major sea lanes of communication, it’s a crucial move in the strategic chess that China continues to play. Chinese arm twisting and expansionism is visible in the recently enacted Land Border Act (2021). On the face of it, the act charts the course that China is to adopt in the border determining process. It states that territorial sovereignty is inviolable and China would ‘resolutely defend territorial sovereignty and land border security.’ But, the trouble with this assertion is that only India and Bhutan do not have a settled border with China. Further, China’s ‘official map’ unilaterally claims entire Arunachal Pradesh, Barahoti plains of Uttarakhand and territory till 1959 claim line in the Ladakh region as its own land mass. The act of China declaring complete ownership of rivers running through its territory setting aside claims of lower riparian states had led to more disputes with neighbours. As far as India is concerned, its recently adopted Land Border Act has no validity since it has no veracity or solid ground. China seems to be waging a psychological offensive against its neighbors, through posturing, unilaterally declaration of unacceptable claims on disputed territories as well as constantly shifting goal posts.  Since the Sixth Plenary Session of Communist Party of China in November 2021, it has been obvious that President Xi would continue into his third term as Chinese President. He has already put himself in the list of great leaders of China next only to Mao Zedong and Deng Xiaoping with his thought enshrined in the Chinese Constitution. Winter Olympics for him could have been a virtual crowing, a cherry on top of

Read More