People's Republic of China (PRC) : News & Discussions

Dec 4, 2017
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At Doklam, Chinese troop levels rise at feverish pace even as temperatures dip
COLONEL VINAYAK BHAT (RETD) 12 December, 2017


Stand off area as of 10 December, 2017 | Digital Globe, Vinayak Bhat

Troop buildup near Doklam increased in November-end, fresh satellite images show; additional mortar positions, a gun position, vehicles, troop accommodation now visible.

A Chinese buildup of troops and military infrastructure near the contentious Doklam plateau has gained pace in November, with fresh satellite images showing new mortar positions, hardening of gun positions and evidence that more than 5,000 troops could be deployed within 5-10 km of the conflict point.

The buildup can be seen in latest satellite imagery of 3 December that has been accessed by ThePrint. The deployment seems to have increased since the resolution in August when both Indian and Chinese troops backed off from a road construction site in Doklam after a tense standoff that lasted more than two months.

The significant buildup is visible at several locations southwest of Yadong town, all within a 5-10 km aerial distance from the spot where Indian and Chinese troops had faced off earlier this year. This presence of almost nine battalions is in addition to the troops that China has deployed just 50 km behind in the Chumbi valley, as reported by ThePrint in October.

Over 300 heavy duty trucks, fresh tunneling into the mountains to set up gun positions and creation of several buildings to accommodate troops indicate a Chinese resolve to stay ready for action even through the winter.

Satellite images confirm that work is progressing at a feverish pace even in the winter. The images show at least nine three-storey buildings that are occupied and almost 300 large vehicles, suggesting that almost one division of troops are located in areas ahead of Yadong town.

Infrastructure developments

The People’s Liberation Army or PLA continues to develop infrastructure on a large scale in this area south and southwest of Yadong town.

The platoon and company posts have accommodation for more than a battalion of troops. The single-storey barracks have been replaced by massive three-storey buildings with possible underground and/or camouflaged parking.


Infrastructure developments | Vinayak Bhat

The signal centre has been greatly improved with an earth receiving station, four large dish antennae, two huge aerials and a solid-wall fencing. It also has a slightly raised platform, possibly for future deployment of vehicle-based radars

Roads and tracks are being widened and developed all around. Large cranes, earth moving equipment and construction material can be seen almost everywhere. Certain areas defiladed from Indian defences are being leveled, probably for future constructions.

Troop buildup

There is also a massive buildup of troops just below the conflict area of Doklam. A large number of vehicles are seen parked near the riverside. In some areas, vehicles are seen hidden under camouflage nets. A number of tents have also been observed under camouflage nets.

A number of vehicles, including many small vehicles, are seen around the three-storey buildings, suggesting these buildings are also occupied.


PLA troop build up | Vinayak Bhat

Improvement of defences

The satellite images suggest that a continuous improvement of defensive positions has been on since June 2017. All previous posts and also the new positions have been connected with a maze of well dug communication trenches.


Improvement of defences | Vinayak Bhat

Most of the important positions have been afforded the protection of wire fences. Some posts can be seen to have infantry mortars positions.

At two places, mountain sides have been cut large enough to make gun positions, possibly for howitzers and/or multi-barrel rocket launchers (MBRLs).

Hardening gun positions

The old gun position has been improved to harden the shelters for guns. The shelters have further been provided with a layer of compressed earthen protection. Moving into the gun pit or scooting from the gun position would now be very easy. A second position is being constructed, albeit at a slow pace, possibly not to give out the direction of fire.


PLA hardening of gun position | Vinayak Bhat

The satellite images confirm that work is progressing at a feverish pace even in the winter months. An additional infantry mortar position has been created in the second half of November. A comparison of November and December images also suggests that the troop buildup increased at the end of November.

At Doklam, Chinese troop levels rise at feverish pace even as temperatures dip
 

Ashwin

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@Ashwin Sticky please. BTW, the forum needs to have a "Country Watch" section for posts like these, not under "International Relations".
This will be on India - China relations?

For now, we have decided to not go for Country wise sections. Its an experiment, let's see how it goes.
 
Dec 4, 2017
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This will be on India - China relations?

For now, we have decided to not go for Country wise sections. Its an experiment, let's see how it goes.

International Relations is mostly political and only a small part relates to the military aspect. Military relations need to have a separate section as we'll be discussing that part much more than the political relations in this forum. Maybe the title can be renamed as 'India-China Military relation'

Also, country watch would be helpful in keeping track of general developments.
 
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Manmohan_MMY

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Nov 30, 2017
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China using satellite phones to spy on Indian Army in Ladakh

After the diplomatic defeat in Doklam, China is on a 'spying mission' in the military encampment of Demchok in Leh. The village has been the site of frequent stand-offs between the Indian Army and the People's Liberation Army (PLA).

Ahead of the 20th round of India-China border talks between National Security Adviser Ajit Doval and China's State Councillor Yang Jiechi in New Delhi this week, intelligence sources told India Today that Beijing is using three Thuraya satellite phones, banned in India, to gather information about the Indian security apparatus in Ladakh.

The satphones were found active around 35 km northwest of Demchok from 3.45 pm to 3.41 pm on November 15, the sources said. While one of the satphones was in contact with three Chinese numbers, another Thuraya contacted 13989****05, which too was active in China, the intelligence sources added. Security agencies in Ladakh are on high alert after the revelation.

Though the three phones were active several times in Tibet and once inside Arunachal Pradesh in 2015, 2016 and even this year, they were not operational in Demchok, the sources further added. According to Minister of State for Home Affairs Hansraj Ahir, it is not uncommon for neighbouring countries to spy on India. "Therefore, the Defence Ministry works in tandem with security and intelligence agencies to foil spying attempts. We won't let such spying missions succeed," he told India Today.
On the border talks with China, Ahir said, "NSA-level talks are routine to maintain relations with neighbouring countries. Such dialogues will continue."

Security expert and Major General (Retd.) GD Bakshi told India Today that China has been consolidating its military after President Xi Jinping became more powerful. General Bakshi too mentioned the satphone 'spying' incident. "Chinese troops are still in Doklam; India should not be complacent. China may intrude into some other sector and even Doklam to build pressure on India," he said.

General Bakshi suggested that India should strongly raise its concerns at the NSA-level talks without being dominated by the Chinese side. "Otherwise, China will continue with its domineering attitude."

source : http://indiatoday.intoday.in/story/china-spying-on-india-ladakh-satellite-phone/1/1114691.html
 

Seiko

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Dec 1, 2017
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Gods Own Country
China's great push forward: PLA's foreign military outposts a threat to India?


On the day that the Donald Trump administration unveiled its first national security strategy that identified India as "a leading global power and stronger strategic and defence partner" and described China as a "rival", Beijing had a quiet announcement of its own.

On December 18, People's Liberation Army (PLA) officials for the first time confirmed that China was "planning to explore the possibility of more foreign military outposts in Africa, West Asia and other areas", to add to the PLA's first overseas base in Djibouti opened in July.

The aim, PLA advisors told the South China Morning Post, was "to protect [China's] expanding overseas interests in the Indian Ocean Region".

The announcement came as the Trump administration, for its part, outlined a vision to mount a robust opposition to China's fast-expanding influence and presence in the Indian Ocean Region (IOR) and Asia-Pacific. Trump's strategy explicitly identified China and Russia as "rival powers" that seek to "erode American security and prosperity". The Trump administration said it would "seek to increase quadrilateral cooperation with Japan, Australia, and India" and "help South Asian nations maintain their sovereignty as China increases its influence in the region".

The strategy left unsaid how Washington plans to do so, especially as many countries have, in Trump's first year in office, gravitated deeper into China's economic orbit even as the US President has spoken of "America First" and withdrawn the US from the Trans-Pacific Partnership trade deal, the region's biggest counter till date to Chinese economic influence.

On the economic front, China is powering ahead with its One Belt, One Road infrastructure plan. The December 18 announcement by the PLA now hints at how Beijing's military footprint in the region is also set to grow.

Six months after opening the first overseas base in Djibouti, signs are that China has ambitious plans to beef up its first outpost. In September, the PLA conducted its first live-fire drills in its new base in the Djibouti desert, a drill that carried its own significance as the first PLA live-firing deployment overseas (outside of UN peacekeeping missions) since the 1979 Vietnam war.

Mathieu Duchatel, Senior Policy Fellow at the European Council on Foreign Relations and co-author of China's Strong Arm, Protecting Chinese Nationals and Assets Abroad, notes that behind this changed calculus for China and the spurt in recent activity in spreading its overseas footprint was a key turning point in 2015, when the PLA was pressed into service for the mass evacuations of tens of thousands of Chinese nationals from unrest in Libya and Yemen.

Following Djibouti, two additional IOR bases are already being considered, according to Chinese planners and media reports. China has reportedly had preliminary discussions with the Seychelles, while many Chinese observers believe that Gwadar in Pakistan would be a natural location, given that it's also being developed as the hub of the China Pakistan Economic Corridor. China is also building or managing ports in Sri Lanka and Bangladesh.

These developments, Duchatel says, suggest China's foreign policy is undergoing a transformative shift away from its traditional 'non-interference' to a gradual 'militarisation' of foreign policy. CPEC, he says, is further moving this shift into uncharted territory, with tens of thousands of Chinese nationals expected to move into one of the world's most unsafe countries.

The prospect of a Chinese 'string of pearls', littoral military bases in the IOR, set up with the aim of encircling India, has preoccupied strategists for many years. Today, it's not only India that is driving China's calculus but its growing global footprint. The pearls are growing in number, and the string ever longer.

Chinas great push forward: PLAs foreign military outposts a threat to India?
 
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BMD

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China to receive Russian S-400 systems in exchange for political support

China to receive Russian S-400 systems in exchange for political support
World» Asia

Last week, Chinese officials supported the position of Russia on both the Crimea and the Ukrainian conflict. Soon afterwards, it was reported that Russia sold S-400 air defense systems to the Celestial Empire. The contract was evaluated at $3 billion. Is there a connection between these events? China can wait, but it can not wait now.

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"We are opposed to any nation gaining independence through a referendum. As for the Crimea, there are peculiarities to it. We know the history of the affiliation of the Crimea well," acting director of the Department for European and Central Asian Affairs of China's Foreign Affairs Ministry, Gui Congyou said, as quoted by the South China newspaper. Deputy Head of the Department of CPC Central Committee on International Relations, Zhou Li said: "Russia and China face various challenges. But I can say with certainty that soon we will face even greater challenges. We have to fight together, protecting the interests of our countries. The main thing is not to let the Americans drive a wedge between our countries," said the official.

On Thursday, it was reported that Russia was selling S-400 Triumf systems to China. Beijing intends to buy at least six divisions of the renowned missile systems worth more than three billion dollars, the Vedomosti newspaper said with reference to its sources. Noteworthy, Rosoboronexport officials refused to comment on the news, whereas a representative of the Federal Service for Military-Technical Cooperation refuted the information.

Should Russia develop this scheme of cooperation with China? To do this, one needs to know China's immediate needs and be able to bargain. The principle is as follows: China gives Russia strong political support (what Russia needs a lot), and Russia gives China its arms.

Some Russian experts critically pointed out the fact that the above-mentioned statements were released from "minor Chinese officials." However, China's top diplomats, unlike their European counterparts, do not demonstrate vivid emotions and outspokenness. "This is considered disadvantageous and even dangerous, because statements from top officials are extremely difficult to disavow without losing face afterwards. In China, in order to voice sharp transitions from one diplomatic platform to another, there are positions of "Acting Head of Department for Europe and Central Asia Affairs" and the like. Both of those second-line officials turned out to be in the company of Russians - diplomats and journalists - just in time and used the chance to their advantage. The world has every reason to think over the problem," the South China newspaper said.

Russia should try and make China's top officials speak out as well. In light of aggressive policy of the United States in the Asia-Pacific region, which is expressed in discussions of war with China, up to a nuclear conflict, China desperately needs modern air defense systems, and it is Russia that can give them to the country.

Chinese military expert Li Jie said in an interview with People's Daily that "S-400 can quickly improve our air and missile defense and ensure rapid absorption of related technologies." "S-400 is a vertical launch system, they are capable of striking any target in any direction, including aircraft and missiles. More importantly, the S-400 is particularly suitable for interception operations with strong electronic interference in the background. These are very important advantages in future wars," said Li Jie. The expert believes that "on the issue of Ukraine, Western countries show all-sided pressure on political, economic, military and other Russian systems, especially after the fall of oil prices. Given the acute shortage of investment, Russia remains in an urgent need of help from China." The expert expects a "sincere first step" from Russia, and the sale of S-400 systems to China could be such a step, he believes. Li Jie noted that China had no achievements in military technology, for example, in the engine-building industry, but cooperation with Russia may help fill this gap.

"China is trying to pull everything it cal from Russia, - Mikhail Karpov, a sinologist, Associate Professor at the Higher School of Economics told Pravda.Ru. - China is the main beneficiary of the evolving geopolitical situation in the world. The country will be achieving its goals with Russia's help. China may like our territories. Russia already provides an opportunity to the Chinese people to migrate. The Chinese take direct participation in the capital of Russian businesses too. The peculiarity of Chinese policy is known throughout the world. They will go deep into Russia against the background of the geopolitical situation. From their position, they are right, they are acting in their own interests."

From the point of view of the expert, Russia's large gas contract with China was a "head feint before the United States," to show the Americans that "we are with China." "In fact, the commercial component of the agreement is not clear. To a large extent, this is a political component. It still remains unknown what the contract will eventually lead to, given big problems with the development of the gas fields under the contract," said Mikhail Karpov.

Andrei Devyatov, Deputy Director of the Institute of Sino-Russian strategic cooperation, secretary of the Union of Russian military sinologists, does not believe the Chinese either. "From the time of Sun Tzu, the Chinese policy is an endless path of tricks," he told Pravda.Ru. As for the S-400, the expert believes that the Chinese took advantage of the moment, when Russia found itself in the dollar trap. "It was Russia that had to sell the systems to China," he said.

However, three billion dollars will come to Russia as a compensation for the non-delivery of French Mistrals. This is not the amount that could solve the problem of Russia's dollar liquidity.

After all, China needs to understand that after Hong Kong, it will have Macau that has already announced its readiness to hold a referendum on further principles of relations with mainland China. The situation in Hong Kong was stabilized quickly, but the referendum in Macau became a previously unthinkable challenge for Beijing. It appears that China will continue to deal with Washington's pressure in the Pacific Rim in the future as it is very easy to provoke a military conflict for the possession of islands there. China needs to make its own first sincere step towards Russia - give the country political support on the top level.

As for the "penetration" into Russia, these fears are exaggerated. In the western and northern parts of China - those that border on Russia - are home to only six percent of the Chinese population. The Chinese do not like the Russian climate, it is too cold for them here. Russia needs to learn to work with China.

In the spring of 2014, the Kommersant reported that Russian President Vladimir Putin authorized the delivery of S-400 systems to China. This summer, the head of the presidential administration, Sergei Ivanov, said that the first foreign recipient of the S-400 system will be China; he named a preliminary delivery date - 2016. The first missile regiment of S-400 was deployed in the Moscow region in 2007. The second one - in the Kaliningrad region. In 2010, China bought 15 multi-channel anti-aircraft missile systems S-300 from Russia. Each of those systems can simultaneously direct up to 12 missiles. Yet, those missiles have no control over the sky over Taiwan. The S-400 can do it.


See more at China to receive Russian S-400 systems in exchange for political support
 

RISING SUN

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China faces protests after investment scheme collapses
Chinese authorities are struggling to quell protests following the collapse of an investment scheme police say took as much as USD4.7 billion from millions of depositors.

The implosion of Qianbao.Com adds to a string of failures of Chinese financial ventures blamed on fraud or mismanagement that have prompted protests and complaints of official indifference to the suffering of small investors.

In a separate case, the founder of an online lender was sentenced in September to life in prison on charges he defrauded investors of USD 7.7 billion.

On Monday, hundreds of people marched in freezing weather in the eastern city of Nanjing in Jiangsu province, where Qianbao was founded in 2012, shouting for the government to take action.

A video shot by a demonstrator showed police carrying some people away while others shouted, "The Jiangsu government is beating people!"

"Don't organise and don't participate in illegal activities," the official Xinhua News Agency told readers in a report on Qianbao.Com.

Depositors protested in Nanjing on December 12 after they lost access to online accounts, according to Zhan Jianfu, an employee of an auto dealership in the western city of Mianyang. He said he invested several hundred thousand yuan (tens of thousands of dollars) in Qianbao.

"We failed to get a response and some of the investors were intercepted and beaten up," Zhan said in a telephone interview.

Qianbao, Chinese for "Wallet," had as many as 200 million registered users, according to Chinese news reports. The founder, Zhang Xiaolei dubbed "China's most notorious swindler" by one newspaper turned himself in December 26 to Nanjing police, who are leading the investigation.

Unlike some legitimate Chinese investment vehicles that spun out of control, police and news reports describe Qianbao as a brazenly fraudulent Ponzi scheme.

The company, which moved to Shanghai in 2015, promised returns of up to 60 per cent a year. Depositors were paid what Qianbao said were wages for simple tasks such as watching online ads.

Some of the 30 billion yuan (USD 4.7 billion) raised from depositors was used to buy businesses including a soccer team and a producer of glycerine, but only 20 of the more than 70 companies Qianbao said it owned really existed, according to a statement by Nanjing police.

Profits were too small to pay such high returns, so Qianbao used money from new depositors.

The newspaper Huanqiu reported that in an interview Saturday while in police custody, Zhang "made it clear Qianbao's collapse was due to his own greed," but said reckless investors also had to accept the consequences. "The two sides used each other in a frenzy of chasing fame and fortune," the newspaper wrote.

Photos released by Xinhua show the balding, bespectacled Zhang in handcuffs and a blue vest as he talked to investigators.

Ambitious investment companies have flourished as Chinese authorities allowed an informal finance industry to grow over the past decade to support entrepreneurs who can get scant credit from the state-owned banking system. The national bank regulator estimated in 2015 the underground finance industry had grown to USD1.5 trillion.

The internet has helped them attract money from working class or rural depositors, many of them financial novices with little knowledge of the risks involved. Many lend to factories and retailers or invest in restaurants, car washes and other businesses, but inexperience and poor risk control means a downturn in business conditions can bankrupt them.

Beijing tightened control as defaults mounted following the 2008 financial crisis. Finance as a whole has come under tougher scrutiny after a 2015 plunge in stock prices led to accusations of insider trading and other offenses.

Lack of official supervision has allowed grifters to attract money from investors despite a steady drumbeat of news reports about failed and fraudulent ventures, said Lin Changyu, a lawyer in Shanghai for the Yingke Law Firm.

"In some cases, their advertisements were even shown on (state-run) China Central Television or celebrities were invited to promote the schemes," said Lin. "Secondly, people were in greedy pursuit of high returns from the scheme and often ignored the potential risks."

Investors in fraudulent schemes rarely get money back because Chinese courts are reluctant to accept a lawsuit against someone who has been convicted of a crime, said Lin.

He said any remaining assets usually are confiscated. "The chances of investors getting their money back are extremely slim," said Lin.

Authorities often seem as keen to defuse protests as they are to help defrauded investors.

In one of China's biggest financial scams, authorities say depositors lost 50 billion yuan (USD 7.7 billion) in online lender Ezubo before it was seized by regulators in 2015. The founder, a high school dropout, and his brother were sentenced to life in prison in September and 24 other executives received terms of three to 15 years.

When Ezubo depositors vented their anger on social media and asked why authorities didn't act sooner, police phoned some to warn them against criticising the Communist Party online.

One depositor told The Associated Press police confiscated her computer and cell phone after she wrote online that she might file a petition with the national government. Zhan, the Qianbao investor, complained authorities might have made losses worse.

"The police shut down some of the factories in which Qianbao invested, causing the workers to lose their jobs and leaving us unable to get our money back," said Zhan.
China faces protests after investment scheme collapses
 

Shashank

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Dec 4, 2017
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How China Gifted The African Union a Trojan Horse To Spy On Them

An investigation by Le Monde Afrique has revealed that for five years, between midnight and 2am, computer services were reaching a peak in data transfer activity.(Image for representation)
New Delhi:
An investigation by a media house has brought forth Chinese espionage activities in Africa, after it was revealed that China was spying on them with the headquarters they “gifted” to the African Union in 2012.

An investigation by Le Monde Afrique has revealed that for five years, between midnight and 2am, computer services were reaching a peak in data transfer activity. The organization’s technical staff later discovered that the AU servers were all connected to servers located in Shanghai.

The glass tower was gifted to the AU in 2012 and the computer systems were fully equipped by the Chinese, which, according to the investigation, allowed them to open an undocumented portal so that Chinese administrators could access the AU’s computers. An unidentified AU official told Le Monde that with the discovery they had “taken steps to strengthen their cybersecurity.”

Soon after the report was published, Chinese Ambassador to the AU, Kuang Weili, reportedly said the story was “sensational” and “absurd.” He also raised doubts on the release time of the report as it came a day before the African leaders kick off their annual summit at the headquarters. China is said to have offered to configure them, which the AU declined. He also reportedly said that the story would not tarnish the relationship between China and Africa.

The investigation quoted other AU officials as saying that the Chinese were not alone, and according to documents gathered by Le Monde Afrique and The Intercept, the US and the UK have had their part in spying on the AU.

How China Gifted The African Union a Trojan Horse To Spy On Them
 

Himanshu

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Dec 3, 2017
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indopacfront.blogspot.com
The China-India tango

To those who have been paying attention despite the noise and fury of the domestic political scene, something very important appears to be changing between China and India. It is worthwhile for Pakistan to pay attention, especially bearing in mind that the Indian Ministry of External Affairs was the first to publicly congratulate China on getting the vice presidency of the Financial Action Task Force on that Friday when the rest of Pakistan was busy trying to figure out what exactly happened during those meetings.

“Congratulations to China on its election as Vice President of Financial Action Task Force at the #FATF plenary mtg. on 23 February 2018. We remain hopeful that China would uphold & support the objectives & standards of FATF in a balanced, objective, impartial & holistic way” is what that midday tweet from the official spokesperson of the ministry said, leaving us all wondering what exactly had happened there in Paris.

But it doesn’t end here. More recently, the Indian government called on all its officials to refrain from attending a ‘Thank you India’ rally being organised by the Dalai Lama in Delhi, which is an annual affair and always sees attendance by high-level Indian officialdom, as well as searing rhetoric directed towards China during the speeches that take place there. This time the event has been rescheduled and moved back to Dharamsala, where the Tibetan organisation is based, and will hold the rally on April 1.

There was no open advisory from the government to do this apparently, just a quiet word whispered to the Dalai Lama to keep things tame, and an internal communication letting government officials (including from the states) to refrain from attending. The gesture has been interpreted by columnists and observers of Indian foreign policy as a clear bow to Chinese sensitivities.

Beneath the surface, we see other indications that something larger than a regional flashpoint and a few irritants might be in the driving seat.​
What is interesting is that this bow comes after a flurry of articles in the Indian media announcing that China is hardening its positions in the Doklam plateau, the most sensitive point along the 4000 kilometre-long border between India and China because it is where three countries meet: China, India and Bhutan. The Chinese acknowledged the building of the new infrastructure on the plateau as early as January, saying in an official statement that they are building in their own territory (the area is, in fact, disputed with Bhutan, while India supports Bhutan’s claim).

In the first few days of March, reports in the Indian media began to talk of new helipads being built in Doklam, housing sufficient to put up 1,800 troops, artillery, trenches and increased air defences. Even in late February, there was mounting concern in India over these developments, with reports circulating that this was the first time that the Chinese hosted troops at that altitude, implying that their presence at the positions they held since August 2017, when last summer’s stand-off had come to a standstill, may be permanent.

As of a few days ago, this hardening of the Chinese positions in Doklam was officially acknowledged by the India’s defence minister. Yet, India’s diplomacy continues to favour going soft on Chinese sensitivities, by pulling away from the Dalai Lama as well as staying out of the ongoing crisis in the Maldives.

So what’s going on? One take is that India is doing all this with an eye to the forthcoming Shanghai Cooperation Organisation summit to be held in China this June. Additionally, reports are also circulating that a high-level visit from Beijing to Delhi could take place later this year, possibly with President Xi Jinping or Premier Li Keqiang. These are unconfirmed reports, but it is interesting to see that those Indian journalists who regularly interact with the external affairs ministry in Delhi are coming away with a sense that Indian diplomacy is now in pursuit of objectives that go beyond Doklam, the Maldives, Bhutan or Bangladesh or any of the other traditional regional issues that drive its foreign policy. And in the course of doing so, Indian diplomats appear to be willing to look past a few trenches and helipads in Doklam, and ‘Thank you India’ rallies in Delhi.

What might these objectives be? One clue might be provided by another fact that hit the headlines at the same time as all these other developments. “India-China bilateral trade hits historic high of $84.44 billion in 2017” the Times of India declared on Wednesday. This is a 19 per cent year-on-year increase, with Indian exports to China seeing a near 40pc increase in 2017.

Beneath the surface, we see other indications that something larger than a regional flashpoint and a few irritants might be in the driving seat in Delhi’s equation with Beijing. The appointment of Vijay Gokhale as the new foreign secretary in January of this year is another indication. A seasoned China hand, the diplomat who played a key role in defusing the Doklam stand-off of last summer and the former Indian ambassador to China, Gokhale has been placed in the position for a reason, and given his track record, heightening tensions with China is unlikely to be that reason.

Any warming of ties between China and India, or more specifically, any graduation of ties beyond the border dispute and overlapping regional agendas, has deep implications for Pakistan, as the events in the Paris meeting of FATF might have just given us a glimpse of. And such a warming of ties, if you look at the history, is almost inevitable, provided emotion doesn’t hold rationality hostage.

China and India don’t have a history the way China and Japan do, or even China and Korea. So whatever is pulling them apart is nowhere near as powerful as what is bringing them together: the growing ties of trade and investment. It is a matter of time before pragmatism prevails, and with the United States’ growing belligerence now spilling over into the economic realm with Mr Trump’s new tariffs, the pragmatic moment may well open up in 2018.
 

_Anonymous_

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Dec 4, 2017
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What Does China Want?
by Jeanne-Marie Gescher Apr 09, 2018, 3:42 pm
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Chinese PresidentXi Jinping. (GettyImages)

Snapshot
  • To even begin to reach an answer to that question, one has to understand China’s history and philosophy, and how they have shaped its leaders’ worldview.
Six months ago, addressing a landmark Congress of the Chinese Communist Party, President Xi Jinping declared “a new era of socialism with Chinese characteristics”. Xi also noted that “the wheels of history roll on” and “the tides of the times are vast and mighty”.

The West dismissed the “new era” as yet another party slogan, and the idea of history rolling on as rhetoric. Carefully read, though, Xi’s speech was the expression of an idea of order that, one way or another, is very likely to change the world. Understanding how and why is the question of our time.

“What does China want?” is the question of India’s day, asked by Indians with an understandable focus on tense borders and concerns about trade. Directed at the immediate present and the foreseeable future, it seems to demand a simple answer in the current state of affairs.

In reality, however, the only answers worth having depend upon an understanding of China’s past.

A good place to start is with ‘The Great Learning’, a short text that became the manifesto of a civilisation. Attributed to Confucius (551-479 BCE), it sets out a hierarchy of steps by which a ruler can build a strong and peaceful state, with the people contributing to the order of all.

At the heart of ‘The Great Learning’ are three ideas about knowledge that have become so obvious to China and the Chinese that they scarcely need repetition. The first, core, idea is that knowledge is central to the peace and security of everything, from households, to states, to the world at large. That idea is grounded on a second, and more fundamental idea, that everything in the present has its roots in the past and that, over time, those roots have come to include a lot of branches. The third idea, the consequence of the first and second, is that order requires a hierarchy of responsibility, with a mastery of the root-and-branch knowledge — described as “the investigation of things” — being the critical organising principle.

For China, the earliest past was a founding myth of a brother and sister, Fuxi and Nüwa, the sister rescuing the world from an ocean of water and the brother beginning the process of understanding the mechanics of the skies and the land. Fuxi and Nüwa were followed by a succession of “great men” who gradually uncovered the secrets of the cosmos, including the schedules of the seasons that enabled the people to settle and farm, and in so doing created the foundations of China’s world.

Essential to the discoveries of Fuxi and Nüwa, and those who followed them, was a shamanic idea of order. The goal was to find a way in which human beings could live peacefully and securely with each other within the parameters of the natural world.

The cosmos being so complex, and its changes being a fundamental feature, this would require the application of critical human qualities for observing and perceiving not just the visible but the invisible as well. The development of such qualities was at the heart of the Dao (or Tao), the way. As the qualities were developed, more and more knowledge was accumulated, and the settled world of the fields expanded to include more complex worlds of cities.

At one point, some questioned the shamanic idea of order, suggesting that future order would be best achieved under a single, responsible ruler, who would pursue the Dao for all. The shamans split: some became kings and advisers living in cities; others retreated to the wild world of forests and mountains.

While the Yellow Emperor is the most famous of China’s ancient, mythical, rulers, less well-known ones have equally, if not more, important roots. One was Shennong (2,800 BCE), famed for the fact that he worked among the people. Two others were Yao and Shun (2300-2100) who laboured night and day to deliver order to the people. China’s ideals of equality and hard work have a longer history than communism.

All of China’s earliest rulers faced the challenge of a Yellow River that often, catastrophically, broke its banks. Asking the ancestors for advice, one emperor (Zhuanxu; 2500-2400) was told to limit earth’s chaotic communications with heaven to the emperor alone. The idea of controlling communications for a greater order has a long history in China — as does the idea that man’s role in communications between heaven and earth should be focused on the material here and now.

A later ruler, Yu the Great (2200–2100) spent 13 years surveying every inch of the Yellow River and its surrounding land, and creating a map of nine provinces, each identified by specific geographical features that influenced its course. To this can be traced a Chinese passion for maps and a planning-based order that continues to the five year plans of the present.

In 1046, a new dynastic line of rulers, the Zhou, came to power. Their reign would last longer than any other, albeit divided into an early “golden age” and a later period of decline. The hallmark of the Zhou was a dedication to knowledge-based rule. But as the reach of their rule expanded, including large numbers of cities, whose leaders saw themselves as rulers in their own right, the attention to knowledge became increasingly directed to the acquisition of power.

By 700 BCE, questions about order were rising. Over roughly 500 years (to 221 BCE), as the Zhou state crumbled into a world of competing city states, a “hundred schools of thought” emerged. Some, like the man who composed the Daodejing, the classic text of the Dao, argued that the original shamans had been right about the importance of the natural order. Others, notably Confucius, thought that the mass rapid growth of the past necessitated a new idea of order. His ideas, including ‘The Great Learning’, were intended as a manifesto for an idea of order where the pursuit of the Dao was an ideal, but with more written rites, rituals and written principles required to keep both rulers and the people on track. Others, more concerned about equality, modesty and hard work, advocated a return to Shennong’s simple way of life, with Yao and Shun as models for virtue. Yet another argued that, with the old order unravelling, it was time to focus on strict rules and punishments for everyone’s security.

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Confucius

At the heart of all of the “hundred thoughts” was a core question of whether man was good or bad. If essentially good, as Confucius argued, rites and rituals would be sufficient to remind him of his responsibilities to wider society. If naturally flawed, however, only strict rules and punishments would work.

Almost all of the branches of today’s competing ideas of order (Chinese ideas and those in the wider world) can be found in this period. They include the branch that led to the 1949 victory of a communism attributed to Karl Marx.

Initially, divided more by ambition than ideals, the competing city states began to go to war. Some 100 in number in 470 BCE, during the roughly 200-year period known as “the warring states”, they would whittle each other down to seven. In the devastating process, new learning would emerge, including inventions in military technology, and the work of a general, Sun, that would come to be known in the West as ‘the art of war’.

From 270 BCE to 221 BCE, the warring states would battle each other down to one. While six of the seven largely adhered to the Confucian idea of “man as fundamentally good”, the seventh, an upstart state of Qin from the wild west, saw man as fundamentally bad. In 221, having spent over a hundred years perfecting a rule grounded in strict laws and punishments, Qin won the war of all against all. Its ruler (the emperor protected by the 10,000 terracotta warriors who survived him), then unified the once-warring states into an empire with, and through, a single language, currency and infrastructure.

Many lessons were learned from the time of the warring states. One was that the decline of a great power (then the Zhou, today the US) raises risks for all. Another was the importance of domestic ideas of order in winning battles with the outside. Yet another was repeated by Xi Jinping in his speech to the 19th party Congress: “History looks kindly on those with resolve”.

While the Qin empire fell to rebels, the subsequent rebel ruler, founder of the Han dynasty (206 BCE–220 CE), decided that while Confucian values had their place, strict rules and punishments were also key. Thus began “Confucianism”, the idea of man as “good-ish”: ‘The Great Learning’ for those who were able to learn; the power of the state for those who were not.

The Han restored an agricultural prosperity, but as time passed, three pressures emerged and combined to bring about its end. The first, external, were the steppe tribes to the north, proto Mongols, who coveted the produce of the settled world. The second, internal, was the rise of equality-seeking rebellions. The third, close to the seat of power, was ambitious advisers and generals, whose initial defence of the dynasty ultimately turned them into competing warlords in their own right.

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Sunzi

The Han eventually fell to a civil war known as the time of the ‘three kingdoms’ (220–280 CE). Each working with the same ways of thinking (including ‘the art of war’ that a general, Sunzi, had written early on in the time of the warring states), all three competing rulers struggled to find the new idea that would break the deadlock. One discovered a man, Zhuge Liang, whose devotion to the old shamanic ideas had given him extraordinary powers of observation and insight. Zhuge Liang’s strategies became the stuff of legend, inspiring centuries of Chinese, rulers and people alike. Grounded in an intense meditation on the forces of nature, it included an asymmetrical way of thinking that continues to influence policy today.

Not long after the civil war of the ‘three kingdoms’ ended, the first of what would be a succession of competing northern challengers descended. An era known as the “sixteen kingdoms” (304–439 CE) followed, succeeded by the divide of China itself, in an era known as the “northern and southern synasties” (420–589).

While the Tang dynasty would reunify the lands, from 907 CE, another succession of northern challengers would appear, culminating in the conquest of the Mongols and a Mongol Yuan dynasty that would rule for 100 years, before collapsing into rebellions that forced a Mongol retreat. The Ming dynasty would reunite the Chinese lands under Chinese rule but in 1644, they too would fall to the latest power from the North, the Manchu, who called themselves the dynasty of the Qing.

“Why so many repeated conquests?” was China’s biggest question of itself. The two leading answers were the attractions of a settled order that delivered economic wealth on the one hand, and the inevitable rebellions that followed an unequally divided wealth on the other. External threat and internal order were seen as complementary and critical features that determined the security of the state. It was a view that would be confirmed when the Taiping rebellion (1854–64) and the arrival of armed foreign imperial powers (from 1839) brought about the gradual collapse of the Manchu Qing dynasty, culminating in the “first” revolution of 1911.

Like the warring states period, however, that fall brought its own learning. With ‘The Great Learning’ ideal pulling China’s greatest minds into the state bureaucracy, by the mid 19th century, technical innovation had declined to the point that the late Qing state was unable to defend itself against both external and internal threats. At one critical point in the Taiping rebellion (often seen as a civil war), the Qing called upon a senior official with no military experience to raise a local army. When the official raised an army that delivered a decisive victory, a number of Chinese, officials and otherwise, began to think about saving their country themselves.

Some turned to rebellion; others decided to learn as much as they could about the science and technology that the West was using to such powerful effect in its Opium wars. Starting with an arsenal (scouted by one of the first Chinese to go to America, at the height of the American Civil War), bit by bit, they began to rebuild a country decimated by the Taiping rebellion. In so doing, they drew on the fundamental great learning principle that knowledge is everything, and on the longstanding convictions that endurance, hard work and asymmetrical thinking were essential to success. Driven by the deep love of a land that was not just a country but a civilisation, many of them came to be seen as heroes.

Chinese leader Mao Tse-tung (1893-1976), accompanied by his second-in-command Lin Biao (1907-1971), passes along the ranks of revolutionaries during a rally in Tiananmen Square, Peking (Beijing), 1966. (Keystone/Getty Images)

The Qing eventually fell by accident — a bomb-in-the-making that accidentally exploded in a provincial capital, whose secret revolutionaries included many officers and men serving in the imperial army. Anticipating discovery, the revolutionary officers advanced their plans and declared a state of independence that was swiftly followed by other provinces. As China began to look as if it would divide again, a cunning general brokered the abdication of the last Qing emperor, the declaration of a republic and the hurried transfer of power to a national assembly — with no time for a constitution. Within two years, the general, Yuan Shikai, had become president of the assembly; within a year after that, he dissolved the assembly, observing that the whole idea had been a mistake: “too many arguments; not enough results”. Briefly declaring himself emperor of a new “Chinese empire”, his early (natural) death opened the way to a new era of competing warlords.

For many, including the Chinese Communist Party, the aftermath of the 1911 revolution is a textbook example of the risks of democratic ideals without careful attention to the mechanics of order. When Chinese lands once occupied by Germany were passed to Japan at the end of the First World War, the lesson of internal order was seen to have been taught again. Another lesson, learned not for the first time, was the factional risks of armies.

In 1927, China was plunged into a civil war, triggered by a massacre of communists led by the leading internal power, the Nationalist Party, Guomindang. By 1934, the Communist Party would be led by Mao Zedong, an unlikely candidate at the outset, but one who had seen the possibility of combining a number of powerful ideas, both foreign and Chinese.

Mao’s ideas that were easiest for the West to understand were those that came from the West: primarily Marx’s idea of economic determinism. Less familiar were the organising principles that Lenin had designed for the purposes not just of winning a revolutionary battle but of maintaining revolutionary success. Far less visible were the lessons on resolve, taught by the Qin victory within the warring states; the importance of asymmetrical thinking, taught by Zhuge Liang; and the ancient belief in a golden utopia where a ruler would work as hard as his people, and all men would be equal.

Experimenting with the idea of order, Mao’s rule was controversial to say the least (even less visible to the West was Mao’s love of the Monkey King, a character created in the 16th century, who delights his readers with an earthy irreverence, and managed to confound even heaven with his supernatural powers). With the Great Leap Forward and the Cultural Revolution leaving China’s economy in rubble, today, the Communist Party considers Mao to have been “70 per cent right, 30 per cent wrong”. But internal unity had been established, and foreign powers had been repelled.

Included in that process was a “clarification” of Sino-Indian borders in the Himalayan boundaries of Tibet, that had come to hold critical strategic importance to the Chinese state. It was in 1962 that the tenth Panchen Lama (the highest ranking Buddhist teacher after the Dalai Lama, who had already left Tibet for India) wrote a secret memorandum to Mao, protesting at the price of unifying China and Tibet. Rightly or wrongly, in 1962, managing Tibet’s borders would have been seen as a matter of internal security.

China’s different ideas of order had already been seen by the West as a problem to be addressed. In 1958, secretary of state John Foster Dulles had officially committed the US to transforming China’s state-led socialism to popular democracy through a policy of “peaceful evolution”. Mao took exception, as have all Chinese leaders thereafter. Any dreams of trust vanished, and while economic globalisation would later gloss over the differences, the American idea of a mission to change China continued — until today, when the idea has become more of an inquest into how the mission failed.

Deng Xiaoping

Following Mao, Deng Xiaoping focused on repairing China’s broken economy. With five decades of his own guerilla thinking under his belt, he declared that “it doesn’t matter if a cat is black or white as long as it catches mice”. Attention focused on four key modernisations. The most important — the science and technology first identified by the 19th century self-strengtheners — ran through all the other three (agriculture, defence and industry).

Confronted with the contradiction of a communist party pursuing economic growth with both capitalist and socialist measures, Deng went back to the roots of communism. He explained that China had gone from feudalism to socialism too quickly, erroneously skipping Marx’s capitalist stage. The capitalist West (initially, particularly the highly successful overseas Chinese) was then invited to invest not just capital but technology in ring-fenced special economic zones (SEZs). Everyone’s energies unleashed (Chinese and foreign), the SEZs became rapidly expanding cities (a fishing village in 1978, Shenzhen, whose name means “deep ditch”, now has a gross domestic product (GDP) of almost $300 billion). The power of asymmetrical thinking was proven once again.

Over the following three decades, Deng and his successors rebuilt the Chinese state. In the process, they raised a mass rapid economic development that astonished the rest of the world. To asymmetrical thinking was added a deliberation that was grounded in the great learning conviction that a painstaking commitment to root-and-branch knowledge was everything. Five year plans began the day after each previous one had been completed: long-term plans were made for science and technology. A policy commitment to infrastructure led to a combination of state- and non-state investments, creating not only some of the most valuable transport and urban assets in the world but entirely new infrastructure-focused industries that have stretched the limits of nature and, whether directly or by replication, changed the maps of many other parts of the world.

At the same time, a new generation of self-strengtheners emerged, seeing themselves as complementing Deng’s reforms, and appearing as entrepreneurs. They included the founders of online businesses that now compete not only with Amazon, Facebook and Google, but increasingly with the artificial intelligence and quantum computing ambitions of the US-led West.

While many of China’s projects have been controversial, few countries in the world have not sought to emulate its “miracle”. Most assume that it is all about a magic set of economic policies. They are wrong.

By 2012, those to the right of party were happy, while those to the left saw a revolution betrayed. China had become one of the most unequal countries in the world (Gini coefficient of 0.49) and the poorer population was remembering Mao’s promises of equality. Added to this, the legacy of Deng’s exhortation to the party to maintain a modest profile as it rebuilt the country, had led to an increasing gap between China’s rising economic strength and its limited participation in the mechanics of the global order.

At this point, and perhaps not surprisingly, Xi Jinping, the first Chinese leader to have been born into and grown up within the party, and the only leader to have headed the party’s central school (a combination of a wide-ranging think tank and a political academy, which pursues its great learning not only in the roots and branches of China’s story but in the story of the world at large), came to power.

What does China want? If one takes a look at the last five years through the roots and branches of the past, it is reasonably clear.

Immediately upon coming to power in 2012, and with the party’s primacy increasingly being questioned, Xi declared a dream of a great rejuvenation of China. Within a year, almost certainly referencing not only China’s history but Alexis de Tocqueville’s The Old Regime and the Revolution (the greatest time of danger for a state is when it reforms), Xi launched both a mass line campaign and an anti-corruption drive.

Invented by Mao, the mass line is a sustained process of engagement and reflection directed to winning the critical battle for a public opinion. A tool of many new leaders, the anti-corruption campaign was designed to address not only corruption, but factionalism and anticipated opposition to new policy ideas.

Both campaigns included a strong focus on public examples of the kind of modesty and hard work that Yao and Shun had long ago established.

In late 2013, Xi set out key policies for his first term of office. While the policies referenced some of the West’s hoped-for economic liberalisation, they also set out the most comprehensive plan for reform ever put forward: economic, political, legal, military, social, cultural and ecological. Supported by a new leading group for comprehensively deepening reform, year by year, Xi proceeded to lay the foundations of the dream described.

For an India concerned with borders, relevant reforms included a restructuring of the military, a concept of a “common community of destiny”, that would begin to add Chinese ideas to the old Western global order, and a Belt and Road that would take China’s accumulated experience in infrastructure-based development to the wider world. They also included a commitment to becoming a modern socialist country that would take its place as a world leader by 2049, the hundredth anniversary year of the 1949 revolution.

For an India concerned with trade, with a strong interest in software, and an increasing role in global growth, the reforms included a powerful focus on science and innovation, with an Internet Plus and a Made in China 2025 that would integrate the internet with traditional manufacturing to transform the economy. Xi noted that China’s biggest advantage as a socialist country was its ability to “pool resources in a major mission”.

Other commitments included achievement of a xiaokang, moderately well-off society by 2021, global leadership in innovation by 2035, and the promotion of an “ecological civilisation” to address the roots and branches of environmental challenge, including climate. Meanwhile, the party made it clear that the socialist market economy is about markets with Chinese ideas of order.

Understanding, as Sunzi’s ‘Art of War’ would tell you, is not endorsement. Quite the contrary, understanding is essential to the great learning that enables states and people to navigate their way through a world that is constantly changing, even if we can’t always see and appreciate the change at the time that it is happening.

At the end of his party speech in late 2017, Xi noted that both China and the world are in the midst of profound and complex changes. Few could disagree with that. While the US-led West asks itself how it “lost” China, other countries might take a look at China’s roots and branches and think not just about what China wants, but why it wants it.

Change is certainly here. As Zhuge Liang would say, what matters is how we see it.

What Does China Want?
 
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China’s Science & Tech Surge: How It Happened And What It Means For The World
by Sanjay Anandaram Apr 09, 2018, 3:40 pm
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Representative image

Snapshot
  • China will be a globally dominant technology superpower by 2050. It has the leadership, the policies, the resources, the capabilities, the will and the imagination.
The quip “the only thing worse than having your product copied in China is to not have it copied in China” from years ago resignedly foretold the importance of China: not having your product copied in China meant that there wasn’t enough demand for your product to be even copied! The mass producing and assembly of low cost (and knock-off) products of technology brands created the image of China as a country with shanzhai, slang for businesses that thrived on fake or pirated products.

All that was in the past.

Today, China is recognised as a rapidly emerging and evolving technology superpower with world-leading innovations in areas like drones, AI (artificial intelligence), mobile technology, AR/VR (augmented reality/virtual reality), renewable energy, semiconductors, mobiles and even self-driving cars, to name a few. It is determinedly and aggressively focused on becoming a technology superpower with the US in its sights: something recognised as being almost inevitable by leading think tanks, publications, companies and governments. Reverse innovation is already happening with American tech companies, especially those in Silicon Valley, adopting innovations pioneered by Chinese companies, like using QR codes, live-streaming of video, using drones to deliver products, in-app purchases and payments. Alibaba’s financial services affiliate, Ant Financial, allowed its 450 million users to log in to their online wallets by taking a selfie, before the iPhone did. Other Chinese companies like internet giant Baidu, China Construction Bank, and ride-hailing company Didi Chuxing use this technology to identify employees and customers.

The Chinese trinity Baidu, Alibaba and Tencent (“BAT”) and many others are watched avidly around the world by technologists, entrepreneurs, investors and, increasingly warily, by countries. China’s massive investments in creating powerhouse manufacturing capabilities from the 1980s onwards made it the “Factory to the World” with “Made in China” the dominant theme. Today, it is rapidly moving to “Designed, Developed, Manufactured, Consumed in China”, and the world. Chinese brands like Lenovo, Haier, Xiaomi, Huawei, Oppo, Vivo, Alibaba, Tencent, DJI dominate major market segments. DJI (a unicorn valued at $10 billion), for example, is the world leader in drones with more than 80 per cent of its sales coming from outside China, including Apple stores.

How did all this happen? What will happen?

Leadership with An Aspiration for China and No Distractions

Deng Xiaoping’s famous advice “Keep a cool head and maintain a low profile. Never take the lead — but aim to do something big”, and “Hide your power, bide your time” were the leitmotif, as Deng and his successors, Jiang Zemin and Hu Jintao, forged ahead with reforms and institution-building that transformed China. Today, chemical engineer President Xi Jinping, recently elevated to a “core leader” on par with Mao and Deng, and the first party general secretary born after the Second World War, has decided to shed the “low profile” and confidently assert China’s power on the global stage, overcoming the centuries of inhibition brought about by subordination to foreign powers in the past. He unabashedly stated in a TV interview that “…when the ideals of the Cultural Revolution could not be realised, it proved an illusion”.

With term limits on President Xi’s rule being removed, his team of Vice-President Li Yuanchao, a masters in mathematics, Premier of the State Council Li Keqiang, an award-winning PhD in economics, and Secretary Wang Huning, a law professor, and others, is steadfastly focused on delivering on Xi’s “Chinese Dream”, that aims to restore China’s “lost national greatness” by a “great rejuvenation of the Chinese nation” by making China a “fully developed” nation by 2049, the 100th anniversary of the founding of the People’s Republic.

Secretary Wang Huning, the influential ideologue, proclaimed “cyber sovereignty” a Chinese policy term that argues that countries should be free to control the internet within their borders, including through censoring. He believes that such authoritarian rule is necessary for China to restore its national greatness after what the Communist Party has often described as a century of humiliation at the hands of foreign powers.

The Chinese leadership clearly sees dominance in technology alongside economic and political dominance as key to its goals of being a superpower. At the National People’s Congress in March 2017, President Xi declared science and technology to be key areas of the economy. Mao’s exhortation of “surrounding cities fighting from villages” from the 1920s inspired the marketing strategy of Chinese companies as they penetrate markets overseas and even China’s geopolitical “string of pearls” strategy!

Unencumbered by a questioning media, challenges by a combative civil society or an activist justice system, and without having to bother about consumer privacy, confidentiality and rights, China is ruthlessly focused on relentlessly executing towards achieving the Chinese Dream. Encouraged by Chinese policy and government personnel, Chinese companies have copied and stolen IP (intellectual property). The Cisco-Huawei case of 2003 with Cisco alleging IP infringements and copying by Huawei, is perhaps the most high profile of these.

On 15 August 2017, a New York Times op-ed authored by former directors of the US National Intelligence and National Security Agency, titled “China’s Intellectual Property Theft Must Stop” estimated that intellectual property theft by China costs the US a majority of its losses estimated at $600 billion a year. It went on to claim that Chinese companies have stolen from virtually every sector of the US economy, including the defence industrial base — laboratories, universities, think tanks and even the US government.

In 1994, Steve Jobs quoted Picasso to say “Good artists copy, great artists steal”, as he explained how Apple stole great ideas from everywhere and innovated. China copied and stole ideas and IP and is now innovating.

Self-Reliance and Firewalls

The ruthless focus on achieving the Chinese Dream is powered by a desire to be independent of foreign technology, and own the building blocks of the knowledge economy — semiconductors, renewable energy devices, electric vehicles, security and AI.

In 1994, former Chinese army engineer and Huawei founder Ren Zhengfei had a meeting with party general secretary Jiang Zemin, telling him that “switching equipment technology was related to international security, and that a nation that did not have its own switching equipment was like one that lacked its own military”. The Chinese government supported Huawei with access to $30 billion in “export financing”, according to a 4 August 2012 article on Huawei in The Economist.

Policies, emanating from achieving the Chinese Dream and global power, are oriented towards creating enormous state capacity and capabilities in designing, developing, testing, deploying tools and methods for high-tech engineering, in complex supply chains and technology project management. For example, the massive investments in mind-boggling projects (roads, railways, dams, bridges, ports, airports, cities, renewable energy) and manufacturing create incredible state capacity. The solar expressway in Jinan covering 5,875 square metres is designed to produce 1M KWHr per year, enough to power 800 homes, all from solar panels on the road.

China is also building the world’s fastest wind tunnel, testing a near-space spy drone, testing ways to build a 1,000-km tunnel to carry water from Tibet to Xinjiang, has over 200 of the world’s fastest 500 supercomputers, including the two fastest, published papers on detecting dark matter and carried out quantum entanglement from space (South China Morning Post, 31 December 2017).

It is already a world leader in renewable energy investments, with over $44 billion invested in 2017. After the US’s withdrawal from the Paris Climate Change accord last year, “China will provide technology leadership and financial capacity so as to dominate fast-growing sectors such as solar energy, electric vehicles, and batteries”, said Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis. Nine of the top 10 photovoltaic power module manufacturers are Chinese who cater to China’s enormous solar power appetite (with about 54GW being added in 2017 alone, greater than Japan’s entire solar power generation); Chinese electric vehicles (EVs) have over 50 per cent share of the 1 million cars sold worldwide in 2017. By imposing a 25 per cent tax on imports and providing incentives and subsidies to buyers, China is targeting seven million vehicles by 2025, with competitors lining up to take on even Tesla.

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There’s a strong focus on shifting away from low-value manufacturing to higher value-added, higher-productivity manufacturing, using big data, AI cloud technologies and robotics. Inspired by Germany’ Industrie 4.0 programme, China is implementing its “Made in China 2025” programme with a plan to substantially increase the amount of domestically produced components to 70 per cent from less than 30 per cent today. China spent $200 billion (2nd only to oil) in 2016 on semiconductor imports, 10 times more than what it produces, causing the government to target raising China’s production of semiconductors consumed to 50 per cent by 2020. To that end, Beijing is investing $150 billion into domestic chipmakers through 2025.

Russian President Vladimir Putin told students on 1 November 2017: “Whoever becomes the leader in this sphere (AI) will become the ruler of the world.” But it seems that the Chinese are the ones acting on it! China wishes to be on par with the US in AI by 2020, achieve major breakthroughs by 2025, and “occupy the commanding heights of AI technology by 2030” to be the world’s undisputed leader with $150 billion in AI-based revenues, by producing solutions ranging from the military to smart cities. Global consultancy firm PricewaterhouseCoopers predicts that this would add $7 trillion to the Chinese economy by 2030. With the average Chinese consumer consuming and transacting in orders of magnitude more than the American, there’s huge amount of valuable data from 1.3 billion citizens for the Chinese government and companies for use on their AI models. In addition, the Chinese government is using facial recognition software — through partnerships with Chinese tech companies like Yitu — to keep tabs on people. This aims to identify any one of the 1.3 billion citizens within three seconds with 90 per cent accuracy!

The Great Firewall of China

The so-called “Great Firewall of China” prevented the likes of Facebook, Google and others from competing in China. Non-internet-based Western tech companies have struggled to survive due to preference for local offerings and where consumer habits differ from those from the West. Uber gave up, Netflix can’t get started, Amazon is flailing and Apple is struggling to grow from its earlier peaks. This has resulted in the rise of several Chinese tech companies that provide services similar to the biggest names elsewhere, but have leveraged China’s massive market to become giants on their own. And now they’re innovating and even experiencing reverse innovation as many of their offerings are being copied by Western companies.

Market Power

China has effectively used access to its large, lucrative and growing market to get what it wants from Western technology companies.

Google re-entered China after eight years with Google Maps and Translate under strict rules such as requiring the servers to be hosted in China, with versions available only for China, and having AutoNavi (owned by Alibaba) provide navigation when users attempt to use Google Maps’ navigation! China’s recently enacted cybersecurity laws have forced Apple to hand over management of its Chinese iCloud data to a local, state-owned firm in China called Cloud Big Data Industrial Development Company, and Reuters reported that Apple will also hold iCloud encryption keys for Chinese users in China, allowing Chinese authorities access to user data. And Microsoft created a custom version of Windows 10 for the Chinese government that allows for Chinese encryption!

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China’s enormous and growing domestic market is being leveraged for its global ambitions. China’s amazing growth has led to about 680 million people being lifted out of poverty over the period 1981-2010, with extreme poverty falling from 84 per cent in 1980 to 10 per cent in 2013, a per capita GDP of over $8,000 and a $11-trillion economy growing at over 6.3 per cent. The government’s thrust on balancing investment-led growth with consumption is on a sound footing as a large mass of Chinese consumers are now enthusiastically embracing technology products and services. With over 731 million internet users and 2017 online sales in excess of $1.1 trillion (forming 23 per cent of all retail sales and growing to 40 per cent by 2021), China is the world’s largest e-commerce market by far, overtaking the US’s $450 billion, according to data research firm eMarketer, with over 75 per cent sales taking place over the mobile phone. McKinsey says China alone now accounts for nearly half of worldwide e-commerce — up from less than 1 per cent only a decade ago. Goldman Sachs expects online retail sales in China to grow at an annual average of 23 per cent over the next four years. With global-scale supply chain clusters, global-scale consumers and global-scale manufacturing, the world needs China more!

China hosts innumerable events for the world’s top companies, entrepreneurs, investors, academics, policy makers, where the country showcases its opportunities and capabilities, and propounds its worldview on technology and policy. For example, the World Internet Conference, a Davos-style gathering, has been held since 2014 in Wuzhan, with the likes of Apple’s Tim Cook and Google’s Sundar Pichai in attendance.

Research & Development and Investment

According to venture capital database CB Insights, China filed for 631 AI patents, compared with the US’ 131 in 2017, and Chinese companies soaked up 48 per cent of all investment dollars in AI startups. At the 2017 Association for the Advancement of Artificial Intelligence Conference, where top experts gather, China presented 23 per cent of the papers (up from less than 10 per cent in 2012), compared with the US’ 34 per cent (down from 41 per cent in 2012).

Huawei, the $75-billion Chinese telecom behemoth, is the world’s largest holder of patents, with an estimated 50,000 patents to its name. As of 2016, about 80,000, or 45 per cent of Huawei’s workforce is involved in R&D across the world (including India), accounting for about 15 per cent of the company’s revenues. It is a member of 360 standards organisations, industry alliances, and open source communities, and holds more than 300 positions of responsibility within these organisations. According to the World Intellectual Property Organisation (WIPO), in 2015, it filed for 3,898 patents — making it number 1, up from just 456 in 2014. ZTE, Huawei’s Chinese competitor, filed 2,155 patents, coming in third after the US’ Qualcomm.

The US has, for the last 38 years, been the number 1 in patent filings under the patent cooperation treaty (PCT) system that covers 148 countries. In 2015, it again led with 57,385 patent applications, 6.7 per cent lower than the previous year. But China-based organisations fuelled much of the overall growth in 2015, WIPO said. Japan filed the second-highest number of PCT filings at 44,235, followed by China at 29,846. “The latest figures charting a rise in demand for intellectual property rights confirm a decade-long trend, where developments in China increasingly leave their mark on the worldwide totals,” said WIPO director general Francis Gurry. “China is increasingly amongst the leaders in global innovation and branding.”

The Economist dated 3 October 2013 reported, notwithstanding persistent charges of fraud and plagiarism, “by volume the output of Chinese science is impressive. Mainland Chinese researchers have published a steadily increasing share of scientific papers in journals included in the prestigious Science Citation Index (SCI — maintained by Thomson Reuters, a publisher). The number grew from a negligible share in 2001 to 9.5 per cent in 2011, second in the world to America, according to a report published by the Institute of Scientific and Technical Information of China. From 2002 to 2012, more than one million Chinese papers were published in SCI journals; they ranked sixth for the number of times cited by others. Nature, a science journal, reported that in 2012, the number of papers from China in the journal’s 18 affiliated research publications rose by 35 per cent from 2011. The journal said this ‘adds to the growing body of evidence that China is fast becoming a global leader in scientific publishing and scientific research’.”

In January 2018, the science journal Nature reported that China surpassed the United States in the number of articles published on Elsevier’s Scopus, one of the world’s top scientific databases, with an increase of 37 per cent in the number of citations of China-based authors in academic articles over the last five years. This serves as a telling proxy indicator for who is now massively investing in knowledge, and will harvest the power of that knowledge in the future.

China spends $371 billion (the US spends $479 billion) in purchasing-power-parity dollars on R&D representing 2 per cent of its GDP; It has 1,113 researchers per million (India has 156, while the US has 4,231 per million). Three hundred and one Chinese companies are among the top 2,500 global R&D spenders, spending $286 billion overall. They have R&D units around the world from Silicon Valley to Israel to European countries to Singapore and India. They are making acquisitions of IP-based companies and buying patents and licences. The incredible export-led growth over the previous decades generated huge forex reserves of $3.14 trillion (as of December 2017), that allows China to invest around the world. Its sovereign wealth fund, China Investment Corporation, with $800B under management, established in 2007, is the second largest in the world (after Norway’s $960 billion). It delivered an astounding 16 per cent return on its overseas assets in 2017. There’s no shortage, therefore, of capital for China to invest.

Education and Talent

About 10 years ago, as part of its “Made in China 2025” programme, Beijing launched the “Thousand Talents” initiative, where global top talent, especially those with patents to their name, from innovation hubs like Silicon Valley, were encouraged to move to China. There are generous incentives, compensation and support for the family. Areas like quantum computing, AI, gene sequencing, biosciences, renewables and security technologies are areas that have attracted interest. The employer, as elsewhere, shares in the inventions. Chinese engineers and scientists are sent for overseas training while international scientific and research networks are partnered with. The objective is to encourage local Chinese innovation by adopting, adapting and improving upon technologies acquired from elsewhere.

Outside of the Thousand Talents, there are several schemes to spur innovation across tech hubs like Beijing’s Zhongguancun Science Park (Z Park), Hangzhou and Shenzhen. Z Park currently has 10,000 foreign hires and is actively scouting for talent through its 10 overseas liaison offices. The “863 Programme” with a budget of $200 billion was launched in 1986 to stimulate the development of advanced technologies in a wide range of fields for the purpose of rendering China independent of financial obligations for foreign technologies. The Loongson computer processor, the Tianhe supercomputers, and the Shenzhou spacecraft emerged from this programme.

In 2015, China announced the Double Double World-Class Project, an initiative to develop world-class universities. A total of 42 universities are qualified to develop into a world-class level by 2050. And another 95 institutions — including the 42 universities — are designated to develop world-class courses. Amounts ranging from $70 million to $600 million per university were sanctioned.

China has about 78 million graduates with about 4.7 million completing a STEM (science, technology, engineering and mathematics) programme in 2016, the most for any country. China also produced over 30,000 PhDs. In 2015, China’s Tsinghua University dethroned MIT as the world’s top engineering school. The US and China each have four schools among the top 10 engineering schools (US News & World Report annual rankings) with four Chinese universities in the top 100 research universities of the world.

Impact of China’s Rise

China today is feared and respected for its technological prowess — a clear sign of a superpower. So much so that in February of this year, the US blocked the $580-million takeover of Massachusetts-based Xcerra, a semiconductor testing company, by SinoIC, a Chinese state-backed fund. Similar actions were taken by the US in the Lattice Semiconductor-China VC fund and Aixtron semiconductor deals. In 2012, the US House Intelligence Committee recommended to the Committee on Foreign Investments in the US that Huawei be blocked from making US acquisitions. Alibaba’s subsidiary Ant Financial’s planned $1.2-billion acquisition of Dallas-based Moneygram has been held up for review by US regulators. Britain, France and Germany too have expressed serious concerns over the growing investments and acquisitions by China in their countries. Web magazine Politico reported in July 2017 that Germany, France and Italy are urging the European Union to allow countries to control Chinese takeovers.

In 2015, the McKinsey Global Institute identified four categories of Chinese innovation: consumer-led (such as e-commerce, mobile payments, or online financial services), manufacturing-led (like consumer electronics or automobiles), engineering-led (such as the construction of high-speed railways), and research-led (for example, breakthroughs in the manufacture of semiconductors or the development of pharmaceuticals). The report’s conclusion: “China is already a global innovation leader in the first two categories and has the potential to become a world leader in the latter two. Our analysis suggests that by 2025, such new innovation opportunities could contribute $1 trillion to $2.2 trillion a year to the Chinese economy — or equivalent to up to 24 per cent of total GDP growth. To achieve this goal, China must continue to transform the manufacturing sector, particularly through digitisation, and the service sector, through rising connectivity and internet enablement. Additional productivity gains would come from progress in science- and engineering-based innovation and improvements in the operations of companies as they adopt modern business methods”.

With all of the above, the conclusion is inevitable: barring something absolutely extraordinary, China will be a globally dominant technology superpower by the middle of this century. That is, in just 32 years. It has the leadership, the mindset, the policies, the resources, the capabilities and most importantly the will and imagination.

As a passionate advocate of entrepreneurship and innovation, Sanjay Anandaram is involved with several industry, government and private organizations in fostering entrepreneurship. He has 25yrs experience as corporate executive, an entrepreneur, a VC and a mentor. He writes and lectures frequently on his favourite topic and is associated with several startups, including Swarajya

China’s Science & Tech Surge: How It Happened And What It Means For The World
 
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The Dragon Doesnt See The Tiger As An Equal
by Jaideep A Prabhu Apr 09, 2018, 5:20 pm
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Chinese President Xi Jinping (Greg Bowker - Pool/Getty Images)

Snapshot
  • The fundamental, unrecognised roadblock to India’s improved relations with China is that Beijing does not see new Delhi as an equal. India must earn the respect of its rival.
Protestations from New Delhi to the contrary, India’s relations with its larger northeastern neighbour have at best been fraught with tension that have boiled over to outright hostility at the worst of times. Given China’s consistent efforts to undermine Indian security and standing on the world stage, it is beguiling to see a not inconsiderate number of Indians expressing the hope that the twenty first century will belong to a partnership between the two countries that will reshape the international order to the benefit of rising powers; with greater contacts through education, tourism and trade, the border issue would diminish in salience.

Such aspirations are unrequited from the other side: it is a striking difference that Chinese businessmen returning from India are rarely as optimistic as their Western counterparts. Whereas CEOs from the United States, Britain, Germany and elsewhere are enthused about India’s growing middle class, the improving regulatory environment, and the massive opportunities it offers in infrastructure, services, defence and other sectors, the Chinese corporate class is more likely to complain about regulatory red tape, poor quality of human resources, as well as material, woefully lacking infrastructure, and the culture of middlemen and rampant corruption. This difference indicates more than just the other side of the coin — it reaffirms that the Chinese do not see India as belonging, with themselves, to the first circle among nations.

The fundamental, unrecognised roadblock to India’s improved relations with China is that Beijing does not see New Delhi as an equal. Incomprehensible to South Block’s mandarins confident in their own greatness, India remains for China a lesser power that could yet derail their aspirations for a Pax Sinica. Beijing, therefore, has never considered India in its own respect but as an appendix to its policies with other states.

A defining element of India’s self-projection on the world stage is the belief that somehow, it is an important nation. This could be seen in its first prime minister’s gratuitous commentary on international events at a time when India did not have the means to play a practical role in global affairs. In an audacious attempt, Jawaharlal Nehru tried to lead most of the world’s nations away from the superpower rivalry in a non-aligned third bloc. Delhi’s confidence did not come from its abilities but from a deep-rooted hubris that India simply was great; by virtue of its ancient civilisation, rich in philosophy, literature, science, architecture, and engineering, India deserved respect today.

Perhaps motivated by curiosity more than anything else, the world did accord India some attention in the early years of the newly-independent republic. With the passing of Nehru, however, so too did those giddy days. A planned economy that stumbled at every step, the constant moralising, and little contribution to alleviating the problems of the world soon put India back in the ranks of the “fly over” nations. Going by historic trends, India’s geographic size, population, and strategic location would have normally destined the country for an important global role but India’s leadership believe(d) that this was already so.

It is easy to bask in the praise of allies as India has done in recent years with the United States, and to a lesser extent, France, Israel and Japan. However, much to New Delhi’s discomfiture, it has not received the same deference from its unacknowledged rival, China. In fact, Beijing has studiously avoided reference to India in its policies except as a curt, off-handed afterthought. This disregard is apparent in the way Chinese policies are always presented as having their focus elsewhere but whose objectives may coincidentally impinge on Indian interests. For example, Beijing’s increasingly heavy footprint in Tibet has been portrayed as the integration of the forcibly annexed state into the mainstream of Chinese national life; however, the infrastructure, demographic transfers and military deployments coincidentally put pressure on the Line of Actual Control (LoAC) with India. Similarly, China’s sudden activity on nuclear non-proliferation is couched in the language of creating a non-discriminatory regime, though its real aim to stymie India’s admission into the Nuclear Suppliers Group is transparent.

After the Pokhran nuclear tests of 1998, China was initially silent, but later released a restrained statement expressing shock and urging India to disarm and sign the Non-Proliferation Treaty and Comprehensive Test Ban Treaty. China’s official position on India’s nuclear ambitions is that it is unfortunate, wasteful, and that New Delhi and Islamabad should sort out their differences peacefully; the China threat is a rumour of ulterior motives. Similarly, India’s missile tests have not merited a comment until the recent Agni V finally rattled China into seeking a hearing in the United Nations. Even then, Beijing’s greatest concern is New Delhi’s cosying relationship with Washington — and perhaps Tokyo — more than anything India has been able to achieve itself.

There is no acknowledgement of any consideration of India in China’s defence planning, perhaps studiously so. This has successfully de-linked the two Asian giants in most minds, though the yawning gap between the two states in terms of the size of the national economy, their militaries and infrastructural development has also contributed in some measure.

It is natural that a rising power like China has expansive interests. Yet, Beijing’s quest for influence has always tried to block New Delhi’s gains — such as the recent interest in Chabahar — or undermine India; Pakistan is the most glaring example. Competition between powers is natural, and no one can deny China’s legitimate interests around Asia. Yet, it is the tone in which they are pursued that ought to have clued New Delhi in on its neighbour’s thinking.

New Delhi may believe Beijing’s indifference to be merely a psychological game, but all indications suggest it is much more than that: Beijing does not see New Delhi as its equal. This is why the response to overtures towards resolving the border dispute have been met with flippancy. In October 2013, as well as during Xi Jinping’s visit to India (September 2014) and Narendra Modi’s stop in Beijing (May 2015), the Chinese army intruded deep into Indian territory and remained for days.

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China’s support for Pakistan is purely utilitarian — Beijing’s belief is that a lesser power like India can easily be distracted from global geopolitics by significant irritation from Pakistan.

Although the LoAC separating India and Tibet is quiet in comparison to the Line of Control between India and Pakistan, there has nonetheless been constant friction. There have been three serious incursions in as many years, during which the Chinese army camped inside India for weeks, before finally retreating to their side of the line.

There is also the matter of continued support for Pakistan — not just in terms of conventional military supplies, nuclear weapons and missile technology, but also in the form of substantial economic investments that could fundamentally alter Pakistan’s economic geography as well as Beijing’s support in the United Nations for Islamabad’s terrorist forces. This is not out of any shared worldview or camaraderie but is purely utilitarian — Beijing’s belief is that a lesser power like India can easily be distracted from global geopolitics by significant irritation from an even smaller state such as Pakistan.

The growing disparity in economic and military werewithal between India and China lends some credence to the latter’s attitude towards the former. More importantly, Indian leaders and society remain too focused on their domestic bickering to present a strong and unwavering image to the rest of the world. If New Delhi truly wishes to improve relations with the dragon, it must do so from a position of equality.

This means a far narrower difference in power and a demonstrated ability to achieve strategic goals — be they defence manufacturing or aid projects in the neighbourhood — in a timely manner. India must earn the respect of its opponent before anything fruitful may be expected of border talks and other summits.

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Jaideep A. Prabhu is a specialist in foreign and nuclear policy; he also pokes his nose in energy and defence related matters.

The Dragon Doesnt See The Tiger As An Equal
 
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Himanshu

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China, India are new vanguards of globalisation, says Chinese foreign ministry

Swaraj also called on President Xi, as part of a delegation of foreign ministers of the SCO.

China on Monday asserted that Beijing and New Delhi are vanguards of a new wave of globalisation and the guardians of a multi-polar world.

Chinese foreign ministry spokesman Lu Kang said in response to questions regarding the upcoming informal summit between Chinese President Xi Jinping and Prime Minister Narendra Modi in Wuhan that India and China are “important forces in promoting the multipolar world and economic liberalisation, and as well as ensuring regional and world’s peace, stability and development”.

Chinese Foreign Minister and state councillor Wang Yi and visiting External Affairs Minister Sushma Swaraj on Sunday jointly announced that a two-day summit between President Xi and Prime Minister Modi will be held in Wuhan from April 27.

On Monday, Ms. Swaraj separately met Chinese Vice President Wang Qishan. Mr. Wang is President Xi’s right hand man, and plays a key role in imparting strategic direction to Chinese foreign policy, including Beijing’s relations with the United States and Japan.

Local media reports said that Mr. Wang steers the newly formed Central Foreign Affairs Commission, with politburo member Yang Jiechi as its director.

Later, Ms. Swaraj also called on President Xi, as part of a delegation of foreign ministers of the Shanghai Cooperation Organisation (SCO).

Mr. Lu, in his briefing, highlighted the growing protectionism in the world, which included a brewing trade war with the United States, as the new basis for bonding China and India—the world’s largest emerging economies.

“The world is now faced with rampant unilateralism as well as the rising protectionism in the process of globalisation. All these trends have been closely followed and debated. So against such backdrop China and India have a lot to discuss.”

The Chinese position aligns with the stance adopted by India in supporting inclusive gloabalisation and rejecting protectionism. Earlier this month, NITI Ayog Vice- Chairman, Rajiv Kumar said in Beijing during his opening remarks at the China-India Strategic Economic Dialogue that the “cyclical and synchronised recovery in the world economy” had been “marred and disrupted by some unseemly protectionist noises that are coming out of the Atlantic basin in North America and Europe”.

Referring to major geo-economics shifts which China and India could sharpen, Mr. Kumar said Asia and the emerging economies could become the new drivers of global growth.

Mr. Lu in his remarks pointed out that “as newly emerging markets as well as developing countries with big populations … we believed the two countries (India and China) will continue to uphold the globalisation so that it is more inclusive”.

In the light of a “lot of shared interests, concerns and positions,” the two leaders in their meeting in Wuhan will take of long view of their ties, and tailor China-India relations to impact the evolving international situation.

Mr. Lu highlighted the two leaders “will discuss the changes that have taken place, and which are unprecedented in the past 100 years, and exchange views on the strategic, over-arching and long-term issues concerning our bilateral relations”.

Underscoring the global impact of the unprecedented summit, the spokesperson stressed that President Xi and Prime Minister Modi “will discuss the latest trends of the world so (that) there is a stable global development”.
 
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