Current Affairs

Xi Jinping has disappeared and he is not going to India for the G20 next week. Is there more intrigue or is it a matter of tension between India and China that excuses him from the summit. But like everything in China, you just do not know what the truth is, just a matter of the protagonist disappearing from view and reappearing when all is well. There is of course speculation that Xi is ill, because he has missed other meetings, but of course this is speculation, but if a government is capable of shutting the outside world out, then all you are left with is speculation.

WPR thinks that Xi Jinping is not going to the G20 because of the border tension between India and China, which has flared up again. The Indians have taken umbridge with the Chinese, who they accuse of falsely widening their borders, but this is a continuation of the arguments that have dominated the Indian press and government for the past couple of months and years. Though Xi Jinping and Narenda Modi met at the BRICS meeting and all seemed fine, the tension has ratcheted up since their meeting, because India claims that China has included its land on new maps.

The contested land has been a thorn in the side of diplomatic relations for years. Though the area has been heavily fought over between the Indians and the Chinese, the fact that it has de-militarised has not stopped both the Chinese and Indian military going into the zone. There have been battles and some fatalities, but the armies entering the zone are without conventional weapons and they have fought battles with fists and clubs. The Indians have also accused the Chinese of casing their batons with barbed wire and the fisticuffs have nearly come to full combat, as each side accuses the other of crossing into territory that they claim.  

But it is not only India that is challenging the Chinese map makers, Vietnam, Malaysia and the Philippines have  also vocalised their displeasure at China’s grab for territory. Why does it matter you may ask yourself, especially as tensions have been ratchetted up by a map that is going to be taught in schools. Vietnam is arguing for territorial integrity, it is a matter of where Vietnamese jurisdiction begins and ends, especially when China contends that the whole of the South China sea is their territory. The land grab in the Philippines may be well known, the reality is that the movement away from antagonistic argument has been underpinned by Filipino resistance to the aggressive posturing of the Chinese navy.      

Included in the map is the reintegration of Taiwan and of course disputed territorial waters with Japan. The map makers have created a mess, they have included disputed territorial waters, countries, islands and seas that not only make the arguments circulating international courts more resonant but they have also included territory that is newly argued within the map. China has asked for calm, but all the countries that have been affected are aghast at the territorial over reach that China has claimed.

But is this really the reason the Xi Jinping seems to be boycotting the G20. There are other arguments of course, but the disappearing premier would argue that China has other contentious issues to deal with, especially the economy, which is not only sluggish but has some very deep technical problems. The Belt and Road, which is a trillion dollar gamble is eating away at the fiscal security of the state as more countries are coming closer to defaulting on their interest payments. The IMF are questioning why and how they should bail out countries that have brought into cheap credit for projects.

Like the life span of any politician, dictator or autocratic government that does not have a sight of tomorrow, the time for paying for expensive projects has come to the fore. Unfortunately for a lot of these countries the government no longer exists and it is a short step into the realisation that once the B&R has been completed, there is a realisation that debt plus B&R has bankrupted the government with interest payments. Countries such as Pakistan have taken away subsidies for fuel because they need an IMF bailout. Countries that are struggling with debt have restructured, devalued their currency and further cut subsidies in an effort to meet their debt obligations.

But there are other problems, there has been a transference of debt to private Chinese banks to continue projects, this has further eroded the ability of a nation to control expenditure, when levels of debt have negated the patience of the banks who have also been saddled with national debt from the Evergreen and other construction projects that are constraining the Chinese economy to perform.

Biden is disappointed that Xi will not be going to the G20, he believed it was an opportunity for rapprochement with the Chinese state.  Biden believed that this was an opportunity for America and China to get around a table and begin talks that dialled down the tensions that have been affecting the relationship between the US and China. Xi and the wolves of the foreign office have been moaning that the US is placing pressure on Chinese industry to stop the progress of China and its position as a world power. But it is also an international argument of whether China itself is a responsible player. China like Russia argues that it is not an expansionary power, it is an up-and-coming power that will challenge the hegemony of the United States, where America is overstepping  its power.

America for its side is being sidelined by the expansion of the BRICS, it is arguing that China is expanding its sphere of influence not only in Asia, but Africa and South America (its own backyard). But the problems are deeper and it is about the next industrial breakthrough that America is according to Xi, keeping China out of the technical loop. The movement to develop the next set of micro-chips is causing consternation among the Chinese, because the equipment and know how are by-passing the workshop of the world and moving their production to India, Vietnam and Thailand.

Though the Chinese economy grew by 4% last year, the economy is sluggish, there is widespread unemployment among the twenty somethings  and poor relationships between some employers and other problems and other issues that have already been tipped on. China, has problems, which are in the long term going to affect the economy and drag down growth. It is not just that China has been growing at an extraordinary rate that makes the problems more acute, but it is that China is expanding militarily and pushing arguments that just do not make sense.

China needs Taiwan, it is the microchip maker to all the industrial arguments that China makes against the US. But the fact that production is moving to other countries does not seem to have been a significant factor in the thinking of Xi. His aggressive approach towards Taiwan has alienated Taiwanese assimulants and pushed the country towards a more independent mindset. The KMT have tried to bring the argument of reunification to the fore in the upcoming election but the likelihood is that the ruling party will retain power.

The US has continued to support the Taiwanese and further sales of military equipment have not only increased tension with mainland China but also is leading to Taiwanese industry,(the microchip processor plants) to invest elsewhere – other than China. The defacto argument is that with the aggression that China demonstrates against the Taiwanese, the likelihood that China will retain its standing as the workshop of the world  is diminishing, especially as the United States has made it a priority to invest in India and other economies. Production of cell makers has already begun to move away from the Chinese mainland, which is also causing problems for China’s economy.

The movement away from the industrial argument has not been helped by the debt accrued by the industry that is meant to move China away from industrial production.  The insurance and banking sector are exposed to the industrial complex and the property industry, there is a shortfall of close to a trillion US dollars from these areas, whether the government will step in again is a question that keeps the bureaucrats awake at night, but it is whether the state will just disappear someone that keeps the business’ wary of making to much noise.

China needs to re-evaluate its arguments, it needs industry and it needs its banking sector and insurance companies to thrive, but the reality is that Chinese industry itself is moving out of the mainland market and looking to finance projects in other countries. How China transforms from a country dependent on primary resources is the question that is causing the technocrats to scratch their head. Other worry-some arguments come down to the demographics of the state, falling birthrate, ageing workforce and unemployment for graduates. Each argument a concern for the technocrats, but Xi has to move China beyond these arguments and find China a stable argument rather than challenging the nations on their borders and their territorial integrity.