CHINA IN TRANSITION

JAYADEVA RANADE, President, CCAS May 2014

I will focus on what is happening in China in the last year or two which, somehow to my fortune, has not been covered in depth. I will also, as the Chinese say that it takes a bold man to go against the current, put across a point of view that goes against the stream of the speeches which I have heard this morning. I do not take as benign a view of what China’s ambitions are. While I do accept that we must seize whatever opportunity we find, at the same time I think we should not have a defeatist mind set, which is that they are already too powerful and we must make the best of what we can.

First, let me talk about the domestic scene in China which is very much like ours in India. I think it is undergoing a tremendous change. And Ambassador Ranganathan did pick up on something I am looking at. There was an incident involving Bo Xilai who is a former Politburo member. And I think even today people have not really grasped the extent to which that episode represented a political phenomenon -- a phenomenon for change. Throughout 2012 - 2013 in fact, we noticed a churning in Chinese politics such as we have not seen in the past. It was almost like an American style of political campaign that was going on there for part of the time! And Bo Xilai pulled out all stops in his attempt to enter the Politburo Standing Committee -- he used the Maoist card by fanning revolutionary songs, engineering a revolutionary-style campaign and various other things. But in the end he was unsuccessful in his bid. But a couple of things did happen from in his failed attempt. For one, we are seeing the reverberations even today when whole lots of people closely associated with him, including one of his closest supporters Zhou Yongkang, who was the ‘Security Czar’ and Politburo Standing Committee member along with a lot of his supporters, have been rounded up and they are either in jail or in waiting charges. The latest rumour circulating in Beijing in the last three days is that Zhou Yongkang’s own arrest is imminent. So let us see whether it happens or not, but his eldest son has been picked up as has his brother-in-law. 

The other thing that happened as a consequence of Bo Xilai’s failed attempt was, if I put it like a journalist would, the ‘gathering of the clans’. All ‘veteran’ leaders of the Chinese Communist Party got together and they saw the bid for power as a threat to the Party -- the Party Centre as it were -- and they joined hands. They therefore packed the Politburo Standing Committee with Party stolid apparatchiks. The first fallout was that: 

1) there was no successor of the next generation who was selected and among the younger cadres only Xi Jinping and Li Keqiang were brought in; 

2) second was that all these veteran leaders, regardless of the faction they represented, backed Xi Jinping one hundred per cent.

And here let me digress a little bit. I have always held for the last few years that there is no gap between Hu Jintao and Xi Jinping -- and I think that is confirmed now. Xi Jinping and Hu Jintao, his predecessor, have operated very closely together. We can see that in the manner in which the top appointments in the PLA were effected even before the 18th Party Congress and this could not have been done unless both were on the same page. Further, the Beijing Party Chief was appointed by Hu Jintao months before the Party Congress and that appointment is always held by the person who has the confidence of the CCP chief and could not have been done unless Xi Jinping had approved it. Evidence is that the same man was promoted and continues. Also, the Tibet Autonomous Region Party Secretary was appointed many months earlier reportedly at the behest of Xi Jinping. What I think is the final point, and those of us who have been in the bureaucracy will understand, that Xi Jinping picked up Hu Jintao’s personal secretary of the last 25 years and appointed him as the Head of his Personal Office in the Central Military Commission. That is a key appointment. No one does that unless he has absolute confidence in that man as well as good relations with that man’s former ‘boss’. So that is the situation as I see it and that part of the transition has taken place. 

We can see that Xi Jinping has emerged as probably the most powerful man in China today. Let me take a bit of risk here in the presence of people who are experts and say that after Mao Zedong, we are for the first time seeing a leader as powerful -- as overtly powerful -- in China today. Deng Xiaoping was certainly powerful but he remained in the background. Today we have Xi Jinping. He is the Party Chief, he is the Military chief and he is the President of China and additionally he is the head of the Leading Small Group on Foreign Affairs and he is the Head of the Leading Group on National Security. He has captured the Chairmanship of the National Security Council, which was set up very recently at the Third Party Plenum. He has taken over the economic policy, which has not been done over I think for the last so many years and to that extent Li Keqiang was sidelined at the recently held Plenum. Xi Jinping has taken over that job. And he heads the Leading Group set up for the Comprehensive Deepening of Reforms. So he is, in fact, totally in charge And it is this strength that he got which enabled him to pronounce on something which we referred to earlier this morning as the ‘China Dream’. The ‘China dream’ has been in the air for quite many years, but he spelt it out. And it is not just a dream like an ‘American dream’ which is an individual thing. It is a collective dream and it is muscular and robust. It is not a China dream that talks only about putting money into the people’s pockets -- that is something everyone wants and is a laudable thing. He also talks about the rejuvenation of China and that is shorthand for the recovery of all the territories that China claims which is of the old Qing dynasty which includes large chunks of India as it is today. So it is not an innocent dream. It also represents Xi Jinping’s ambition to go down in history and to have his, shall we say his prescription, introduced into the Chinese constitution and Chinese lexicon within a year of his taking over power. 

This Third Plenum unveiled 300 reforms, all of them aimed at transforming China from a country where things are ‘manufactured’ to a country where things are ‘made’. The difference being that innovation, science and technology, research and education are all being given a lot of emphasis. And a lot of money has been poured in that and continues to be poured in to these sectors now. They also fixed a 7.5 per cent growth rate. They reiterated that China is a maritime nation, which was earlier stated at the 18th Party Congress. They also spoke about the ‘new Silk Route’ and the ‘Maritime Silk Route’. Both of which indicate the renewed thrust in western China and the remote, hinterland provinces. Of course that does impact on us and I will come to that later. 

This was at the conference on ‘peripheral diplomacy’ that was held in the last week of October before the Third Party Plenum. It did not get much attention and was not much written about because, I think, everybody was looking at the Third Party Plenum. But this is the first time in the history of the People’s Republic of China that such a conference has been held. It is important for two things:

1) It fleshed out the policies China will actually follow with regard to its neighbors; and

2) for the first time in its history, China decided to designate neighbouring countries as ‘friends’ and ‘enemies’. This has never happened before.

It was clarified by Prof. Yan Xuetong, Tsinghua University Professor known for his proximity to Xi Jinping. He clarified what was meant by this new policy. He said that ‘cooperative relations’ are what China has with very good friends like Russia and some countries in Africa. Then, he said, a ‘competitive relationship’ is what China has with countries like the U.S. He clarified while talking about the ‘new style of big power relations’ that it is designed to ensure that the ‘competitive relationship’ does not deteriorate into one of ‘confrontation’. He was that explicit. Then he said we have a relationship of ‘confrontation’ like with an enemy and he named Japan. And let me share one thing with you, in all the interactions with Chinese officials when Japan comes up for mention they go red in the face. and thump the table. 

Pieces of these policies are already being put in to place. Though there were a lot of references to Myanmar, and I think a member of the audience asked about that, it didn’t really come in for mention. For the first time since the time of Mao, China has again started playing a role in the internal affairs of another country -- of course at that country’s request – and that is in Myanmar. It has arranged three meetings so far when it has tried to broker a deal between the Myanmar Government, Army and the rebel factions in the North, which it had not done earlier. China of course has strategic stakes. It is also supplying money and arms and ammunitions to the ethnic Chinese groups. 

Pakistan and Nepal have been identified in November, by the Vice Minister of the International Department of the Chinese Communist Party while on a visit to Kathmandu, as two other countries that have been designated as ‘friends’ under this policy and who will benefit a lot from the largesse that China plans to give to them. So if you hear anyone saying we should not worried about what is happening in Nepal, I personally would discount it. I am worried. Forget the fact that we have cultural links with the Nepalese people. We are both supposed to be Hindus and they come to India for jobs etc. That is fine, but once the rail link comes through -- and it will come through – and if the Chinese establish a base in Lumbini which is just across the border all this will change. The China Association of Buddhists are now learnt to have taken over the proposed redevelopment of Lumbini. I think we need to be very careful. I am not saying Nepal is going to become inimical, but it will certainly be something that should cause us some sleepless nights.

Underlying all this is something which I think which is major and which Mr. Gopal and I were discussing last evening, namely the jostling going on between the US and China. The United States has been the number one target for all these years and certainly since China’s Modernisations started. And here I again come to the Prof. Yue Xuetong. He said there is no trust between the two and, explicitly in writing and during a talk that there has been no trust since 1989 between China and United States. That is the basis on which the two start. There have been number of articles written, particularly in the newspaper which caters to the public security apparatus in China, about what the US ambitions are. These they say are: to dismantle the Chinese Communist Party, introduce multi-party democracy and convert the present socialist command economy into a free market economy. They have expressed a lot of concerns about that. Again here I would come back to the Bo Xilai incident. They were convinced, as I am sure some of us with a similar background would be, that Bo Xilai’s security chief would not have gone to the US consulate unless he had the assurance of sanctuary. He didn’t get it, but that was because the timing was wrong. Xi Jinping was about to visit the US and the Americans did not want to queer the pitch. They remain quite worried. 

China has been watching what the US can do and what its capabilities are. And they have been building asymmetric capability to deter the US. They can’t defeat them, but can deter them and delay them in the areas where it affects both countries -- and that is the Asia-Pacific, the South China Sea and the East Sea. Here they picked on, if you recall, two countries namely Philippines and Japan, both with security alliances with the US. The Chinese vessels came into waters claimed by the Philippines in the Scarborough Reef and the Philippines navy went to meet them though they are no match. America brokered a peace and Chinese vessels withdrew and the Philippines navy withdrew, but then the Chinese promptly came back and said this is ours. The US did nothing. All other countries in the region watched that. The Chinese then turned their attention to Japan and began needling them on the Senkaku Islands. There has been a lot of rhetoric by both the countries, but what is the role that the US has played – it has tried to broker a peace. In fact, during the last visit by a high level interlocutor from the US to Beijing he was told ‘why don’t you carry on to Tokyo and talk to them. We are okay’. That is the kind of confidence that the Chinese are displaying and on the sea that is the kind of aggression they display. 

I was reading just last week that the Party Secretary of Hainan said that every day we get fishing vessels coming into our waters and we send them back, sometimes after negotiations. The point is it is happening everyday and they are pushing them back and that is the aggressiveness that China is displaying. One may call it aggression or call it assertiveness. Whatever it is, they are taking territorial boundaries very clearly. To my mind at least since 2007 China has adopted a more assertive posture not only in the Sea of Japan or East China Sea but also with regard to other areas. The Asia-Pacific is the first test case where China and the US are both in fact pushing each other to assert influence. If you recall, some years ago the Chinese were in fact bold enough to suggest to the Americans that why don’t we share responsibilities in this area. You take care of Hawaii and that side and we will take care of the waters on this side of Hawaii. We will share intelligence with you and you don’t have to bother yourself and come into our area. The Americans obviously did not accept it, but that is the Chinese aim and they are continuously pushing for that. If you are not convinced by this let me dwell on another statement. On 20th February the present Chinese Ambassador to the US addressed an American audience and in that address he said, in polite language, words to the effect that you know we are in the Asia-Pacific, we belong to that region. We know that the US is an Asia Pacific country. It will be in that region. We also know that the US is a very strong country. To digress as bit here, they assess that the US may not be on the decline. They are very strong and going to remain strong for the years. That’s what he said. He also said that China is more indigenous to the Asia-Pacific than the America is and neither is from Mars. This was to an American audience. This is the confidence with which China deals with the countries like United States on its own soil. What China does affects everyone. Us it affects more. 

What they are continuously doing on our borders is a matter of concern. I don’t want to be jingoistic, but they certainly have claims on Arunachal, they have claims on J&K which has been spelt out. I have seen a couple of articles in their newspapers particularly the China Youth Daily where they talk about their claims on Ladakh and describe it as part of Tibet. I think, ladies and gentlemen, that is something we need to look at and not ignore.

As far as the international arena is concerned, certainly they are looking at maximizing the opportunity from the current global economic downturn. They have gone one better now. They have developed plans for a rail link from Beijing to Madrid and have started trying to talk to the various countries along the route to make an investment. In some cases they have offered to buy their national debt in order to have the rail link going. That is the kind of thinking they have. 

As far as the sea passage is concerned, they are building stakes there. They have been allotted deep sea-bed mining rights in the Indian Ocean just off Madagascar. That means they are going to be there for a really long time. A naval officer here said this morning that there is no need to worry. I think he is a bit out of sync. It is time for worry because they have 10-15 years lead time before they have their presence and that is how much time we have to get ready for their presence. That’s the way we should be looking at it and luckily that is the way the Naval Headquarters is looking at it. 

There are, nevertheless, lots of problems that China faces. Domestically I think the Tibet problem is really worrying them. Xinjiang too, but they are dealing with it as a terrorism issue and law and order issue. Tibet is more worrisome. Apart from that they are worried about the latest US initiative, which is not the pivot. The pivot’s military content also seems to have receded. It is the TPP and TPIP which has China worried. So far China has benefited from the WTO and international trade regime. With the TPP the standards are going to be raised and China is going to be disadvantaged. They realize this and are now talking about joining the TPP. We, on the other hand, are still nervous about the TPP. But unless we get our act together, I think we are going to find ourselves even worse off. Pakistan has links with the Uyghur terrorists actions and the Chinese authorities are aware of it. Some of them have mentioned it, but they try to play these down. In any case I don’t think that this is something that is going to upset China’s equation with Pakistan. 

Finally, let me just conclude by saying that there were very pertinent issues raised here today. My intention is not to, as some ne said, whine about what China is doing. My intention is just to alert you as to what China is doing and then to get you to think about what we can do to seize the opportunities that might present itself. I don’t think enough work has been done on that. We need to sit down and quantify really what are the areas that we need to look at and where can we go. I am not talking about military terms. I am talking about economic opportunities and opportunities for building our influence in the area which is of acute importance to us.