When the Eurozone crisis was spreading its root to more and more countries, the economic trouble did not spare BRIC countries as well, these countries are those which are considered as the future economic superpowers, and many developing as well as developed countries acknowledge the potential BRIC has to support and troubleshoot the current financial crisis.
BRIC countries are considered to be future powerhouse taking in account their current growth rate and demographics statistics. Although at present they are not any big economies except China. Still taking some responsibility, BRIC countries pledged $60 billion (US) to depth wrecked Eurozone. The amount is the part of contribution to the IMF’s financial firewall to help the debt-wracked 17-nation Eurozone. Out of which India has pledged $10 billion.
With the Eurozone crisis strengthening, many economists have started doubting on the capabilities of BRIC and the current behaviour of these economies that they can be future powers. Prominent corporate executives in China as well as in the west are doubting the sputter in the Chinese economy. It is believed that local and provincial officials are faking the economic statistics to project China as the country of continuous growth.
It was only recently that India started feeling downturn in its economy and world critics of BRIC were writing in full flow. However downturn in the economy of India is more because of the domestic reasons than that of external reasons. [Read: Indian Economy Slowdown; Government Policies and Euro Crisis]
Not Just India, But Brazil is also expecting a slow growth rate this year. Brazil’s finance minister has lowered the forecast for the South American country’s economic growth this year, blaming the global financial crisis.
Finance Minister Guido Mantega says Brazil’s gross domestic product is now expected to be 4 percent during 2012, against a previous prediction of 4.5 percent growth. However, The latest weekly Brazilian Central Bank survey of private economists is forecasting even lower growth this year, putting it at 3.1 percent.
In China there are certain evidences of slowing economy, for example record-setting stores of excess coal have been accumulated at the country’s biggest storage areas. This is not because of excessive mining, but because the Chinese thermal power plants are now burning less coal to due to the decrease in the electricity demand. However, the local and provincial government officials are forcing the plant managers to avoid giving the details about the slowdown in the production of power.
There are various criteria that are considered while measuring the economy of a country. Gold and the strength of a country’s currency is one criteria, the production and consumption of steel and electricity is also one important criteria. Rate of electricity production and consumption in China is very carefully followed by foreign investors and by even some Chinese officials as the gold standard for measuring what is really happening in the country’s economy at the moment. Since gathering and reporting of data in China is not transparent. Electricity consumption, volume of rail cargo and the disbursement of bank loans are the things to follow in China, since their official data may be seriously manipulated.
Keith Bradsher of The New York Times writes that the executives and economists in China and the west roughly estimates that the effect of the inaccurate statistics was to falsely raise a variety of economic indicators by 1 or 2 percentage points. That may be enough to make very bad economic news look merely bad.
China has been blamed for manipulating its currency as well as economic data to keep itself on the top and attractive for foreign investors. Studies by the institutions like Goldman Sachs have suggested that Chinese statisticians level out the quarterly growth figures, under-reporting growth during boom years and overstating growth during economic downturns.
Corporate executives and economists said, even though cities and provinces are overstating economic output, corporate revenue, corporate profits and tax receipts, there is a big difference in what is being reported and what is the actual status. According to them government urges businesses to keep separate data and records to show improving business results and tax payments that is not true.
Chinese government doesn’t like to see any growth rate in negative, hence they tell the power managers to report any negative changes as zero or no change, said a chief executive in the power sector as quoted by The New York Times.
The journal also got the opportunity to talk to another top corporate executive in China who had access to real electricity grid data from two provinces in east-central China which are centers of heavy industry, Shandong and Jiangsu. According to the official, electricity production in both the provinces had fallen down by more than 10 percent in May when compared to the data of May last year. He also believes that the story is same int he western China as well. However the government officials reports that the electricity production has indeed slowed down, but not to the negative levels.
Rohan Kendall, senior analyst for Asian coal at Wood Mackenzie told the New York Times that the coal which is being accumulating at Qinhuangdao port has reached 9.5 million tons this month, breaking the previous record of 9.3 million tons as coal arrives on trains faster than needed by power plants in southern China.
It is not just about the Qinhuangdao port, other three largest coal storage areas in China — in Tianjin, Caofeidian and Lianyungang — are also at record levels, an executive in China said.
While China is being manipulative, the world doesn’t know where it is standing in terms of the economic disaster that is going on. If the ongoing claims against China’s policy come out to be true, then the world is surely standing at the worse place than what we all think now.
However, if we do not talk about electricity production, then even other economic indicators are showing some or the other signals of a possible slowdown in the Chinese economy. Fixed-asset investment has been growing at its weakest since 2001 and the annual growth rate for industrial production has dropped below 10 percent.
The National Bureau of Statistics, the government agency in Beijing that compiles most of the country’s economic statistics, denied that economic data had been overstated.”This is not rooted in evidence,” an agency spokeswoman said.
Stephen Green, a China economist at Standard Chartered Bank, said that the Chinese economy was still likely to recover this autumn as extra bank lending started to stimulate spending.
What a Rising Xi Jinping Means for China and the World
“Watch this man.” These were the three words used by the founding father of Singapore Lee Kuan Yew to describe a relatively unknown Xi Jinping while he was yet to become the President of the People’s Republic of China. Today, in addition to being China’s “paramount leader”, Xi is arguably the most powerful man in the world, and even if leaders across the world were doubtful about it till now, the developments in the previous week were sure to make them think again.
19th Party Congress: How it unfolded
Xi today, Xi forever?
The Communist Party of China assembled the previous week for its 19th Party Congress, a political summit that takes place every five years to decide upon the country’s future and the future is precisely what Xi has fixated his eyes upon. According to the current rules, Mr Xi must step down as the leader when his term ends in 2022 and as tradition dictates, a successor must be appointed. While only time will reveal whether Mr Xi steps down from the presidency at the end of his term, it increasingly looks that he is not keen to do so, having failed to hint towards any successor for the time being. His apparent intentions to stay put were further solidified with the appointment of the new members to the Politburo Standing Committee, the highest decision making authority in the country after the president. Each of the members appointed to the body is over 60 years of age, which means that they are highly likely to retire when their term comes to an end with the next meeting five years later. Interestingly, two-thirds of them are also known to be Mr Xi’s loyalists.
Xi Jinping Thought: A force to be reckoned with
“Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” or the “Xi Jinping Thought” for short was written into the party’s constitution at the end of the Congress. The thought consists of 14 principles calling for deep reforms, conserving the environment, the party’s complete control over the army, and the importance of the unification of the country. The development was highly publicised and with good reason. With the “Xi Jinping Thought” embedded in the constitution while still being in power, Xi Jinping has drawn comparisons from all over the world to Mao Zedong himself. Moreover, he has ensured that anyone that opposes him will do so at the cost of their removal from the party. When Xi asked the delegates at the end of his address for any objections, shouts of “meiyou” which means “none” rang through the Great Hall of the People.
Mr Xi has declared the start of a “new era” for China, and undoubtedly for the entire world. It is therefore important to ask what significance these developments hold for the country and for the world at large.
What this means for China
The inclusion of Xi’s thought in the constitution means that the same will be taught in schools, colleges, and other institutions throughout the country, infusing his ideology among the Chinese on a cultural level. Abraham Denmark, director of the Asia program at the Wilson Center puts it aptly when he says that the move “greatly increases, … broadens, and deepens Xi Jinping’s personal power within the Chinese system”.
The president has already found a wide support of the Chinese population with his push for modernisation and his crackdown on corruption has been hugely popular among the masses. Since his election in 2012, Mr Xi’s anti-corruption drive, famously known within the country as the “tiger and flies campaign” has either disciplined or expelled nearly a million party members. As his stance on corruption remains as stern as ever, many have come to view it as a political tool used by him time and again to get rid of political rivals. However, the corruption drive has undoubtedly proved to be effective and fruitful for the country’s business climate.
While Mr Xi’s crackdown on corruption has garnered immense coverage, the crackdown on humans rights activists and NGOs has not received its fair share. China has struggled for decades in its battle for free speech. In 2015, many human rights lawyers were detained and many international NGOs faced stricter curbs to keep them from functioning. As the president has left little room for any opposition within the party, the authoritarianism and censorship are by no means expected to be relaxed, ensuring that there is no opposition from outside the party as well.
Powerplay: China’s standing on the global stage
Donald Trump was among the world leaders who wished the Chinese president when he congratulated him on his “extraordinary elevation”. The reverence he holds for Mr Xi was quite apparent when he said: “some people might call him the king of China.” The surprise, however, came when North Korea’s Kim Jong Un congratulated the president on his “great success” since the two leaders are not known to be fond of each other. The intent here is clear. Both sides need a China that is continuously growing in power on their side in their stand against each other, and that means a closer association with Mr Xi. Chinese influence in the world is unlikely to stop there.
While speaking to CNN, James McGregor, author of “No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism”, mentioned that “given the chaos in Washington and also the dysfunction in Europe, the world is looking for leadership.” Mr Xi enjoys a great level of stability and largely unquestioned authority in a time where the leaders of Western democracies face intense competition at home. As such, his message to his party and to the world is clear: in the coming decades, China will “stand proudly among the nations of the world” and “become a leading global power. ” However, it will do so on its own terms, emphatically rejecting the Western political models.
These intentions are perhaps best evidenced by The Belt and Road initiative, China’s attempt at connecting Europe, Asia, and Africa with each other through a modern take on the Silk Route, into which it has already pumped hundreds of billions as loans and aid to countries across all three continents. While the project has been met with opposition from Japan, India, and the USA, many of China’s neighbours have expressed their support for it, which speaks of its influence on the global stage.
With the people’s army under the control of the party, Mr Xi also looks to achieve the twin goals of increasing the military might and the protection of China’s sovereignty. “We will not tolerate anyone, using any means, at any time to separate one inch of land from China”, he said in his address which is seen as a warning to both Hong Kong and Taiwan. Enhancing combat capability is also linked to the Chinese interests in the South China Sea, where its activities of building and militarisation of islands have received backlash from the international community.
“If one is big”, Mr Xi said on the final day of the Congress, “one must act big.” There’s no doubt that Mr Xi intends to put these words into action at the global level. Lee Kuan Yew once rightly pointed out about China that the world would do well to remember: “The size of China’s displacement of the world balance is such that the world must find a new balance. It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.”
A Lovers’ Quarrel: What Now for India and China?
When China’s Consul General to India Zheng Xiyuan addressed a gathering in the city of Mumbai earlier in the week he made an interesting comparison on the relationship between the two Asian giants. “Relation between China and India is just like the monsoon season,” he said. “There are different levels of rainfall in different years. And sometimes you have clouds as well.” It is not surprising how apt the statement is especially with regard to the past three years which have seen the tiger and the dragon compete for geopolitical influence in Asia and beyond and tussle over longstanding territorial issues. The latter of the two culminated in the 70-day long military standoff in Doklam/Donglang, which has since then deescalated. However, the monsoon sometimes surprises with a few delayed showers, and so has Beijing with a sudden change in its rhetoric towards New Delhi, from one of visible aggression to one which is seemingly cooperative.
Clashes between the two kept analysts across the globe busy, with the possibility of a full-scale military conflict a favourite topic of discussion for the political enthusiasts among the uninitiated. The Doklam episode was the final among a series of recurring conflicts. The most prominent among them included India snubbing China’s One Belt One Road (OBOR) summit in May flagging sovereignty issues due to the China Pakistan Economic Corridor (CPEC); a key portion of the OBOR which runs through a region of Kashmir controlled by Pakistan and claimed by India, and China’s repeated blocking of India’s move to get the chief of Pakistan based terror group Jaish-e-Mohammed listed as a global terrorist with the UN. The relations had already taken a downturn with India’s entry into the Nuclear Suppliers’ Group being blocked by China on a consistent basis. Added to that, tensions reached a high with India’s decision to allow the Dalai Lama, seen as a separatist by China to visit the Tawang region which is claimed by China as Southern Tibet and by India as a part of its state Arunachal Pradesh. This happened despite repeated warnings from the Chinese that the visit would cause serious damage to diplomatic ties between the two countries. Did it?
The action-packed episodes are in the past now and recent developments on the world stage are worth a second look. With no new conflicts brewing for the time being and a precarious lid on the existing ones, it has been nothing short of intriguing to see the evident tone of cooperation between the two frenemies since the Doklam issue has been resolved. China seems to have made good, even if ever so slightly, on blocking the move to designate the JeM chief as a globally designated terrorist by condemning the Pakistan based terror group along with the Haqqani Network and Lashkar-e-Taiba at the recent BRICS summit held in Xiamen. While the move has likely and arguably been made to protect its own investments in the country and doesn’t have any visible bearing on India’s repeated efforts as yet, the step is significant in projecting Beijing’s new viewpoint on the fight against terror based outfits on a global level which previously was limited to vague statements sighting requirement of solid evidence and further communication and coordination between the involved countries. Beijing has also snubbed Pakistan in its effort to internationalise the issue of Kashmir, maintaining its position that the matter is for them and India to resolve on their own. While there has been no change of position on the issue from before and there is no strain of ties between the two ‘all-weather allies’, the tone of the statement is a change to be welcomed by New Delhi in its prominent stand against terrorism on both the national and international level.
Speaking of change, India along with Japan remained relatively quiet in the South China Sea conflict, making no explicit mention of it in their joint statement when the Prime Ministers of both the countries met earlier this September. Improvements in ties aside, another likely reason could be that the issue has taken a backseat with the focus of China, Japan as well as that of the United States on the heightening tension in the Korean Peninsula.
However, with Trump’s undiverted attention on Kim, the South East Asian countries involved in the conflict may find it difficult to stand up to the Chinese on their own, should Beijing choose to push even further with its activities in the contested waters. Therein lies an important lesson for India. “The Chinese have demonstrated a pattern of creeping encroachment”, India’s former Ambassador to Beijing Ashok K. Kantha has said, and India would do well to remember that. Indians may see the disengagement from both the sides in Doklam as a diplomatic victory over the Chinese but the conflict is not yet resolved. China’s perceived soft behaviour may merely be an understanding on their part that perhaps the time to act is not now, more so that cooperation is the way ahead; something which has continuously and explicitly been implied by both the sides over and over considering what else is at stake.
As two large and quickly growing economies, India and China’s relationship with each other has been heavy enough invested in by both the countries for them to know different. This is not just evident from the business end, but also from the mixing of the two cultures as well. Bollywood movies are enjoying huge popularity among the Chinese audience. At the same time across the border, Mandarin as a language has acquired more importance over the years, with schools offering the same as an optional language growing in number. Opinions of the people on each other may change every now and then from favourable to not as much in polls, yet there is no denying their mingling.
In this lovers’ quarrel, as is with any other, while the occasional bickering is unlikely to give way (at least in the foreseeable future), reconciliation is perhaps always the key and a quick one for that matter. This is known by both, even if they may forget from time to time.
Can ‘Made In China 2025’ Turn The Innovation Wheel Towards China?
With the ‘Made in China 2025’ proposal, China is hoping to generate an innovative boost in its manufacturing industry with the aim to promote quality home-built products to the world. Originally introduced in 2015, Made in China 2025 is giving China 10 years to redress its IT and technology industry and implement innovative programs to develop its knowledge and industry accordingly. The goals are to increase the domestic and international content of core materials in high-tech to 40% by 2020 and then a whopping 70% by 2025. Opinions are still divided as to the feasibility of Made in China 2025, especially as foreign content represents more than half of all high-tech goods. At the moment, it doesn’t seem that China will be able to meet its goals. But the Chinese government is creating innovation centers to support its industrial development and approach the production of high-end equipment. Smart manufacturing, cloud computing, smart equipment that works almost without human interactions and the pursuit of innovative technologies are being encouraged throughout the country as a way to tackle the domestic deficit in high-tech production. Could China become a leader in the innovative and skilled industries?
China, formerly known as the kingdom of cheap unskilled labor
It’s difficult not to associate China with cheap products, and consequently inexpensive and unskilled labor. In the fashion industry, made in China may not always be synonymous with quality, but it certainly means that you get a damn cheap frock and sometimes that’s just what you want. The only way that bigger brands have found to tackle the competitive challenge of cheap labor is to promote quality, fair wages and innovative fashion technology to justify the price of their products. However, customers who research a bargain still turn to Chinese products. With its reputation for being the largest cheap labor factory in the world, China’s cheap products from unskilled labor are hard to beat if you’re price-conscious. With low wages and high productivity, China holds the place of an advanced capitalist – if not despotic – economy in the world market.
In other words, China has a major labor reorganization to address to become a competitive and innovative economy. Domestic skills don’t come for free.
China is changing its stance about skilled labor and innovation
It’s because they understand the importance of moving from an economy that relies primarily on unskilled labor to an economy that is built on the innovation of educated labor, that the Chinese government is trying to improve vocational education. It comes as no surprise that China has been struggling with a shortage of skilled labor for several years as a five-year plan for the increase of training and recruitment of highly skilled workers by improving the competitiveness of vocational schools. With the government’s support, this five-year plan is also trying to address the Chinese mindset that has been trained to reject education in favor of cheap labor, aka the guarantee of immediate wage as opposed to the prospect of studying first and earning later. With almost 98% of employment rate for skilled workers, it’s easy to see the value of educated vs. unskilled labor. However, vocational studies delay the entry to the professional world and make it more difficult for the Chinese population to cope with everyday costs.
Nevertheless, those who are educated, are already driving an innovative spike through the Chinese manufacture industries.
World’s largest solar power plant
China’s province Anhui holds the world’s largest floating solar power plants, built on top of a flooded coal mining area. In fact, the floating solar power plant combined with the Longyangxia Dam Solar Park, a 10-square-mile land-based plant that is said to be the largest on the planet, has generated an increase of 80% of China’s solar power output at the beginning of 2017. From January to March 2017, the overall solar power generation reached 21.4 billion kilowatt-hours more than the previous year. For comparison purposes, a town of 1 million inhabitants needs 10 million kWh a year, so the increase only is enough to supply a small country. More surprisingly, the whopping boost in solar power comes as several solar plants have been standing idle because of issues with congested transmission infrastructure. At a time where renewables are becoming hugely precious, it’s easy to measure the Chinese competitiveness on the energy market.
Fast and effective 3D printing sector
One 3D printing manufacturer embraced the need for environmentally-friendly structures and policies and decided to perfect a new printing system that will change the Chinese take on poverty. WinSun Decoration Design Engineering Co built in a day a village of 10 houses using a customized 3D printed to print concrete parts out of recycled waste. The test village was built in Shanghai, using a hefty printer – 150 meter long, 10 meter wide and 6 meter deep – to print concrete constituents, and cement reinforced with glass fiber. Naturally, the houses didn’t pop out all assembled. The printer was set on creating separate parts that were then transported and assembled by people. This amazing experience could present a new possibility for the Chinese government to bring safe and hygienic houses in poverty-stricken regions of China. As this gigantic project progresses the need for high-quality 3D software and reliable 3D printer motors by domestic manufacturers – Moons is one of those high-end tech manufacturers that provide the relevant motorized parts for 3D printers – will increase. In a challenge at human scale, China has proven that innovation for the people is the best kind of innovation. Market competitiveness and economic power have been rejected for the sake of the less privileged part of the Chinese population.
The infamous transit elevated bus
It’s difficult to talk about Chinese innovation without mentioning the elevated bus that has kept the world in suspense. The bus that was designed to drive over the top of cars and that was planned to for testing over a 300 meters track along a roadway was unfortunately ruled out as a scam by the Chinese authorities. At first, it was financial difficulties followed by strange setbacks. But the Beijing police recently announced that they’re trying to recover the funds for each investor. While this sounds like an innovative failure, the transit elevated bus suggests a practical and creative solution to traffic problems. It’s likely that we’ll hear about it again in future, from a serious high-tech firm that wants to make a difference.
Communication with space
The Quantum Experiments at Space Scape is a research project in quantum physic. Based in China, the project is of international importance and has recently proven the ability to communicate from space using quantum photons. In what can only be described as a big leap for science, China’s quantum satellite has successfully distributed entangled photons between different base stations on Earth – with as much as 1,200 kilometers between them on the ground. While in theory entangled photons can remain linked across the distance, this has never been possible across such vast distances, and even less between the Earth and space. Whether this will allow us, in longer terms, to communicate more effectively with the space around the Earth or to reach so far unknown extraterrestrial civilizations is unknown. But it makes no doubt that this small step for the entangled photons is a giant step for science!
Made in China 2025 is a big claim. But the constant innovation that is changing the Chinese industries offers the possibility that maybe in the near future the world could rely on China for our renewable energy, 3D print technology, transport solutions and spatial explorations. Think big, or 不撒大网不得大鱼, as they say in China (bu sa da wang bu de da yu): Without casting a big net, you can’t catch a big fish.
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