Welcome to The India China Newsletter. In this issue, I'll be looking at some early Chinese perspectives on the situation in Afghanistan, and how to separate some of the bluster and propaganda (of which there is currently a lot) from what China's likely strategy and policy on the ground may turn out to be.
I will also look at:
- A few recent takes on the buffer zones on the India-China border and where the long-meandering talks may be heading
- How China's Covid curbs are impacting key supplies for Indian manufacturers -- another reminder of how deeply intertwined and reliant supply chains still are
- What the new or (renewed) focus on “common prosperity” may mean for China’s private sector and for the wealthy
As you would expect, the disastrous manner of the U.S. exit and the terrible chaos of the last few days has been seized on by Chinese state media as a big propaganda win. The main message has been two-fold:
1) That this shows US “unreliability” towards its allies
2) That it validates China's political system as proof that democracy can't be imposed on countries by the West.
Both those messages have been repeated widely both at the official level and in the Chinese media.
Hua Chunying, the MFA spokesperson, had this to say on August 20:
The major changes in Afghanistan once again show that democracy imposed and transplanted by others will not last or be firm.
Facts show that democracy cannot be predetermined or overstretched. There is no set model of democracy. To give you an analogy, cold milk on a daily basis doesn't agree with a Chinese stomach and chopsticks are not often used by Americans. A meal of hamburger or steak with fork and knife is not the only way to get one well fed. Democracy is not Coca-Cola, which, with the syrup produced by the United States, tastes the same across the world. Many Chinese prefer Beijing-based soda drink branded Arctic Ocean.
What is democracy? Who gets to define it? How to judge whether a country is democratic? These rights should not be monopolized by the US and its few allies. For us, a key criterion is whether the country can meet people's expectations, needs and aspirations. In this sense, Chinese democracy is people's democracy while the US' is money democracy; the Chinese people enjoy substantial democracy while Americans have democracy only in form; China has a whole-process democracy while the US has voting democracy that comes every four years....
The top one percent own, govern and have it all. Is this democracy? People like George Floyd cannot breathe, gun violence runs rampant and racial discrimination and hate crimes are deeply entrenched. To whom the US belongs? Can the US government win support from half of its people? Which party in the US can represent the interests of all American people? American political scientist Francis Fukuyama recently wrote that the difference in COVID-19 response has shown limited state capacity, low social trust, poor political leadership and other signs of democratic deterioration. Look at the consequence of US promotion of the American democracy across the world. In which intervened country have the people enjoyed real peace, security, freedom and democracy? Iraq, Syria or Afghanistan?
Democracy should be tangible rather than empty slogans. It should not become spiritual opium that fools or numbs the people, still less an excuse for attacking and smearing other countries and maintaining one's own hegemony. Ganging up in the name of democracy, wantonly interfering in other country's internal affairs and even arbitrarily suppressing normal development of other countries and people's legitimate right to better lives is more undemocratic than anything else. It is autocracy, hegemony and totalitarianism.
Also on the messaging front, this piece by Zhou Bo in the New York Times, headlined "China is ready to step into the void", got quite a bit of attention:
With the U.S. withdrawal, Beijing can offer what Kabul needs most: political impartiality and economic investment. Afghanistan in turn has what China most prizes: opportunities in infrastructure and industry building — areas in which China’s capabilities are arguably unmatched — and access to $1 trillion in untapped mineral deposits, including critical industrial metals such as lithium, iron, copper and cobalt. Though critics have raised the point that Chinese investment is not a strategic priority in a less secure Afghanistan, I believe otherwise.
Chinese companies have a reputation for investing in less stable countries if it means they can reap the rewards. That doesn’t always happen so smoothly, but China has patience. Although the presence of U.S. troops went some way toward preventing armed groups from using Afghanistan as a haven, their exit also means that a 20-year war with the Taliban has ended. Therefore the barriers for Chinese investment on a large scale are removed. China is of course a major buyer of the world’s industrial metalsand minerals to fund its economic engine.
One of China’s current long-term strategic investment plans is the Belt-and-Road Initiative, an effort to finance and build infrastructure across the region. And Afghanistan until now has been an attractive but a missing piece of the enormous puzzle. If China were able to extend the Belt-and-Road from Pakistan through to Afghanistan — for example, with a Peshawar-to-Kabul motorway — it would open up a shorter land route to gain access to markets in the Middle East. A new route through Kabul would also make India’s resistance to joining the Belt-and-Road less consequential.
Beijing is now also positioned to hold greater influence over the country’s political landscape. Afghanistan’s history tells us that one group is rarely in control of the entire country, and given the Taliban’s lightning takeover, it’s reasonable to expect some civil strife. China — already the largest troop contributor to U.N. peacekeeping missions among the five permanent members of the United Nations Security Council — has also registered a peacekeeping standby force of 8,000 troops — a move that could make it one of the largest contributors overall. If a U.N. peacekeeping mission is deployed to Afghanistan, Chinese peacekeepers, coming from a friendly neighboring country, will almost certainly be more welcome than those from afar.
The theme of China standing to gain got quite a bit of play in the Chinese press, too. Here's one example:
While much uncertainty remains, given the fluid situation in Afghanistan, there are huge opportunities for mutually beneficial cooperation between the two countries, especially in sectors such as utilities and mining, if the country under the Taliban's leadership pursues peace and development after years of war, Chinese business representatives and experts noted.
While some Chinese companies are involved in several major projects in Afghanistan, including the Aynak Copper Mine project, which is the second-largest copper mine in the world, many have been stalled or seen slow progress due to political instability in the country. With a major political shift, some believe that there could be a chance for those projects to resume.
"We would consider reopening it after the situation is stabilized, and international recognition -- including the Chinese government's recognition of the Taliban regime -- takes place," a source at China Metallurgical Group Corp (MCC Group), which is involved in the project, told the Global Times on Tuesday.
MCC Group won the right to mine its deposits for 30 years in November 2007, and the contract was signed with the Afghan government in May 2008. But after many years, the project, which is about 19 miles (30.58 kilometer) from the capital of Kabul, has yet to start operation due to safety issues, several sources told the Global Times.
Chinese companies have also been involved in some infrastructure projects in Afghanistan. As of 2020, Chinese enterprises had contracts for projects worth $110 million in Afghanistan, a year-on-year increase of 158.7 percent.
COMMENT: As you may have gleaned from the title of this post, I am somewhat skeptical and am not placing too much importance on what I think is mainly messaging points-scoring rather than real statements of intent of China stepping in on the ground in a dramatically changed way. I've been quite surprised how many observers are falling for this and assuming the latter. The report above itself notes how little progress there has been, for instance on the copper mine, in the last 14 years. It's implausible to suggest the situation has all of a sudden stabilised enough to change the fate of these projects overnight.
Andrew Small of the German Marshall Fund (also the author of the excellent book The China Pakistan Axis) made this point to me in an interview in The Hindu published on Monday. It suits both the Taliban - which is seeking international legitimacy - and China - which is enjoying rubbing U.S. noses in this disaster - to tend to overhype whatever is happening. As he put it:
Certainly you have seen this well-prepared propaganda operation on the Chinese side to make the most of the U.S. withdrawal and try to use this to indicate this should be treated as a signal to other U.S. allies. They’ve been preparing for the U.S. withdrawal for some time. I don't think they had anticipated it would be conducted in such a disastrous manner. So there's a certain amount of additional hay that they can make with this, but they didn't want to see this happen. That's very clear. They did not want to see the U.S. withdraw in advance of some kind of a political settlement in Afghanistan.
These are all the residual issues that are still there, and they know that the Taliban are prepared to make political promises on all of these questions. But the question is, what does this actually translate into on the ground? In the period in which they've been raising all of these concerns, they still see Uighur fighters showing up in Haqqani network camps. The question is still going to be for them: what is it that the Taliban are actually willing to do in that regard when they're actually in power? They can make all sorts of excuses in a war context, but there's a different standard if they're the government of the country.
You can read the full interview with Andrew here (partial paywall), you can also listen to our conversation.
While the Zhou Bo kind of grandstanding will tend to get a lot of coverage in coming weeks and months -- of huge new investments, new BRI projects, maps of Afghanistan showing all sorts of lines of roads and pipelines criss-crossing from China to Pakistan, many (or most) of which may or may not ever materialise -- we should note here there are a good number of other Chinese voices at this moment also exercising caution.
Here's what Pan Guang of the Shanghai Academy of Social Sciences told Guancha (usual disclaimer: translated with the help of software and cleaned up by me here and there, it conveys the meaning of the original but don’t take as a literal translation):
The biggest test we still have to face in the future is international recognition, as no country in the international community has officially recognised the Taliban regime. When the Taliban first came to power, only Pakistan officially recognised it, so how many countries will recognise it this time will depend on how well the Taliban do, whether they can form an inclusive government, how they treat women, etc. These are all important weighing factors.
We should acknowledge that over the years the Taliban have indeed changed with the times, at least compared to more than 20 years ago. For example, women are allowed to go out, work and receive education, and even the Taliban leader has recently been interviewed by a female presenter on TV, which was unthinkable 20 years ago. At the same time, however, we must not forget the point that the Taliban are Sunni Muslims and their religious claims are ultra-orthodox, one might even say religious extremist forces, and this essence will not change. The measures taken at the moment are only temporary, and it is possible that after a while the ultra-orthodox Sunni nature will gradually emerge.
So, you can say that the Taliban is not the same as it was more than 20 years ago, but its essence has not changed. We have to come to grips with this: on the one hand we have to acknowledge that the Taliban is changing, but on the other hand, some things are not likely to change.
Qian Feng of Tsinghua expressed concerns over terrorism in an interview to Global Times (Chinese), same disclaimer on the translation. The question from the reporter, I thought, is quite instructive and is a reminder that for all of China’s positive signalling, online views of the Taliban in China, I’d say, are widely negative and are pretty much summed up by the question.
Global Times: What kind of organisation is the Taliban? Many people have the impression that the Taliban is a terrorist or extremist religious organisation. On the other hand, the Taliban now has offices and spokesmen in Doha, and talks or contacts with major countries such as China and the US, which again deviates from the aforementioned image. Has the nature of the Taliban changed in the last few years?
Qian Feng: First of all, we need to be clear that we are talking about the Afghan Taliban, not the Pakistani Taliban (TTP). Many people are often confused between them. Although they are related to each other, they are two separate organisations with different natures and political objectives - the main objective of the Afghan Taliban is to return to power in Afghanistan, while the main objective of the TTP is to fight against the Pakistani government.
China, like many countries in the international community, has never identified the Afghan Taliban as a terrorist organisation, but sees it as a more fundamentalist, religiously radical organisation that once held national power in Afghanistan and represented the political ideas and interests of a section of the Pashtun population. As the situation in Afghanistan has changed, the Taliban are increasingly seen by most countries as a major force influencing the peace and reconciliation process in Afghanistan. As the situation has changed over the past two decades, the Taliban's own radical fundamentalist policies have slowly shifted towards a more moderate and pragmatic approach in order to gain more recognition at home and abroad.
Before 2001, there were elements who fled to Afghanistan under the Taliban or trained and engaged in anti-Chinese activities in Afghanistan under the patronage of al-Qaeda; after the war in Afghanistan began, there were also elements who fled to Afghanistan under the Taliban. Since the start of the war in Afghanistan, there have also been ETIM elements operating in the tribal areas on the border between Afghanistan and Pakistan. The current Kabul government is very active in fighting the ETIM, but it is often unable to do so because of its limited power. For the Taliban, there has been no policy framework at the top of the Taliban hierarchy to host the ETIM against China over the years, but due to the continued smearing of China's Xinjiang by ETIM elements, there is indeed some sympathy within the Taliban for the ETIM.
The most prominent threats to China's Xinjiang region from the turmoil in Afghanistan are two: terrorism and the proliferation of drugs. If the unrest continues in the future, the above two threats may increase, which China does not want to see and has to firmly oppose. However, it is important to note that the Wakhan Corridor, where China borders Afghanistan, is a treacherous and unpopulated area, with only about 90 kilometres of the border with China, and it is not technically difficult to "close the door".
The main thing China needs to guard against is not the risk of a spillover from the Afghan border to Xinjiang, but the possibility that the unrest in Afghanistan will spill over to Central Asian countries to the north, and to Pakistan and other countries to the south, and then to China, which is a real and growing possibility….
In addition to China, the US, Russia, India, Pakistan, Turkey and Iran are also important stakeholders that can have an impact on the situation. For Russia, Afghanistan is of great geopolitical value and will largely determine the success or failure of Russia's fight against terrorism and drugs - Russia sees its own domestic terrorism as coming mainly from the North Caucasus and is clearly influenced by exogenous factors in Afghanistan - which is consistent with China's position and interests. As a result, after the US withdrawal, Russia's involvement in Afghanistan has increased much more than before.
For India, it sees Afghanistan as a "strategic extension, security stabiliser and power amplifier": firstly, it is an "extension" that can be used to encircle Pakistan from the west and north. Secondly, security threats from the north-west have historically been the biggest factor affecting India's security, so India needs to ensure to the greatest extent possible that Afghanistan cannot become a haven for anti-Indian forces; thirdly, India hopes to expand its strategic influence through connectivity with Afghanistan. As a result, India's cumulative aid to Afghanistan over the past two decades has amounted to nearly US$3 billion, and relations with the Kabul government and Afghan civil society, including local leaders, have developed well. However, India and the Taliban have been at loggerheads for years, and if the Taliban's influence in Afghanistan increases further, it will, in India's view, mean that Pakistan's influence over Afghanistan will increase, which India does not want to see. That is why India is now more anxious and has to try to resume contacts with the Taliban.
China is now adopting a position of "constructive engagement" in the situation in Afghanistan. As Afghanistan's largest neighbour, China has a strong political will to work with Afghanistan to promote the Belt and Road Initiative, and the Taliban's invitation to China to participate in Afghanistan's reconstruction and investment demonstrates the need to develop relations with China and improve its own economic and social base, regardless of the future political structure of Afghanistan. However, given the current political and security situation in Afghanistan, there is no immediate need for China to send military personnel to fill the so-called 'vacuum' left by the US military or to start investing in the country on a large scale now, both of which are also unrealistic options.
On the India-China border, an interesting argument from Praveen Swami on the situation along the Line of Actual Control after the latest disengagement, where there are now several buffer zones, and what this might mean for the longer term management of the border:
The disengagement process involves significant concessions by India. Yet, it also trades territory for time, giving India a chance to prepare for even bigger challenges.
Government sources familiar with the discussions have told Firstpost that agreement was almost reached at the military-to-military talks last week on Patrolling Point 15, north of Gogra, falling through only because the PLA was unwilling to move its position back as far as the Indian Army wanted. Army negotiators are, however, optimistic there will be forward movement on Point 15. The PLA also appears to discuss the even-more contentious arc in the sprawling Depsang Plains, from Point 9 to Point 13, which Indian troops are unable to access because the PLA has cut off patrol routes.
This much is clear, though: the agreement on Point 17A is a somewhat unhappy compromise. Although the official statement on the disengagement is conspicuously short on detail, Government sources say the agreement commits Indian troops to fall back to their permanent posts at Point 17, near Gogra, at the confluence of the Changlung La stream and the Kugrang river. In turn, the PLA will pull back to semi-permanent positions some two kilometres north-east of the LAC. Now, the statement suggests, India will suspend patrolling between Point 17 and 17A, an important concession. That Point 17A lies on India’s side of the LAC was never, before last summer’s crisis, contested by China…
Future negotiations on Point 15, similarly, could require more Indian concessions. Like Point 17A, the PLA has never disputed Point 15 lies on the Indian side of the LAC. In 2015, Army sources say, China even pulled back bulldozers found to be building a road one kilometre on the Indian side of LAC—acknowledging where the line in fact lay.
Even though India’s concessions might upset military hawks, the uncertain future of the China-India relationship means they make sound strategic sense. The crisis on the LAC has involved a grinding and expensive forward deployment, which has sucked-in ever greater numbers of troops. The Army has already repositioned two infantry divisions earlier committed to the I Strike Corps, facing Pakistan, and moved the Allahabad-based 4 Division and the Bareilly-headquartered 6 Mountain Division to guard Ladakh. Although media reports have spoken of a Strike formation being positioned in Ladakh, this is not the case: the I Corps’ Hisar-based 33 Armoured Division will remain in the plains, since its tanks have little relevance in mountain warfare.
Larger numbers of troops, moreover, won’t fix India’s problems. Logistics experts estimate China’s high-speed rail and roads could allow the PLA’s 76th and 77th combined-arms Group Armies to move up to seven division-sized formations into the TAR inside a week, and over 32 inside a month. The PLA already has all-weather road access to the 31-odd major passes across the LAC, linked to highways cutting across the TAR.
“Five kilometres more land we have or five kilometres less—this is not important,” Soviet premier Nikita Khruschev admonished Mao Zedong after the 1959 clashes in India. In 1962, India’s core mistake was believing the assertion of minor territorial claims, using inadequate forces, was more important than building robust defensive and deterrent capabilities. The disengagement process might just have avoided that trap.
Lt Gen HS Panag (retd) has a similar take:
The military aim of China was to prevent the development of border roads and infrastructure that could pose a potential threat to Aksai Chin and Galwan River Valley.
Keeping in view its military aims and our terrain compulsions, there is no way China would have agreed to restore the status quo ante April 2020 without imposing its terms.
As per my assessment, in the worst-case, we have agreed to a de facto buffer zone in the entire Kugrang River Valley and the routes leading north to LAC. As a best-case, two separate buffer zones could have been negotiated north of the Kugrang River along the two routes beyond PPs 16 and 17 up to the LAC. In either case, the buffer zones are entirely in areas that were under our control and which we actively patrolled up to April 2020.
So far, no agreement has been reached in the Hot Springs and Depsang Plains. A buffer zone east of Hot Springs up to Kongka La and east of the Bottleneck up to PP,10,11,12 and 13, are likely to be acceptable to the Chinese.
I reiterate what I have written many times before: until we bridge the huge differential in Comprehensive National Power vis-a-vis China, particularly with respect to the economic and military factors, we cannot challenge it. We require two to three decades of sustained economic development to raise our GDP to the level at which China is today. Military budget and reforms/modernisation are contingent upon the economy. Hence, the Modi government has adopted the correct strategy — swallow the bitter pill of buffer zones to diffuse the situation along the LAC and bide our time to challenge China when we are ready to do so.
It would be prudent to explain the strategic compulsions to the nation rather than to obfuscate and be in denial. Nothing is worse than a bluff in matters military, being called by a stronger adversary, as China did in April-May 2020.
COMMENT: Doubt what the last paragraph wishes for, will happen though.
The Economic Times reports on how China's recent Covid curbs amid the Delta variant local cases, which now seem to be broadly controlled, are hampering many key supplies for Indian companies. There have been restrictions on cargo flights out of Pudong in Shanghai and also at Ningbo port. The hope is these will soon be eased, but the figures are really startling:
Manufacturers of consumer electronics, including smartphones, have been forced to cut production by 10 to 30 per cent… This has hit supplies of components ahead of the crucial festival season in India. The development has further increased freight costs by 40 to 50% - having almost doubled in the past three months. China accounts for 60 to 70% of components used in electronic goods made in India.
COMMENT: If a once in a lifetime pandemic that began in China doesn’t spur serious policy, plus reflection from import-dependent manufacturers, to find/create alternatives to address this dependency - and this is key - on an urgent basis, what will?
“Common prosperity” is the phrase of the moment after it was flagged as a priority by Xi Jinping at last week’s central committee for financial and economic affairs meeting. The South China Morning Post has a report (partial paywall), worth reading in full, on what it means for China’s rich:
According to a statement released by the Communist Party’s Central Committee for Financial and Economic Affairs, Xi said now was the time to give the less well off a fairer deal. “We can allow some people to get rich first and then guide and help others to get rich together … We can support wealthy entrepreneurs who work hard, operate legally, and have taken risks to start businesses … but we must also do our best to establish a ‘scientific’ public policy system that allows for fairer income distribution,” the statement quoted Xi as saying.
As part of that process, the government would alter the tax and social security regimes and make a range of fiscal transfers to allow for greater upwards mobility and better access to education.
Some Chinese academics have long warned of the risk of conflict and chaos from allowing people in certain areas to get richer faster and form a “new bourgeoisie” of millionaires or even billionaires. Most of the millionaires or billionaires, particularly in the last decade, have emerged in coastal regions and the private sector….
In July, Zhejiang province unveiled details of its plan to build itself into a pilot zone for common prosperity by 2025. It will strive to reduce disparities in residents’ incomes and regional development, and form an “olive-shaped social structure” where middle-income households are the mainstay of the economy. According to the plan, the annual per capita disposable income of all residents in the province will reach 75,000 yuan by 2025, and 80 per cent of residents will have an annual household disposable income of 100,000-500,000 yuan, with the income gap between urban and rural residents to be kept at a “reasonable” level.
One of the major points of interest from last week’s meeting is the stress on the “third distribution” scheme, building on the first distribution of salaries and the second of tax and government fees. Under this additional scheme “excessive income” and “unreasonable income” would be regulated, and high-income groups and companies would be encouraged to “give more back to society”.
Ding Shuang, from Standard Chartered, said the aim of the third distribution idea was to use moral force to encourage people to give back to the community. “This is supposed to be voluntary, but I think a lot of rich people – even though they have done quite a lot of charitable work – will be under pressure and I think there may be more rich people giving money away,” he said. Nevertheless, taxes would remain the biggest tool to narrow the wealth gap, he said.
The vagueness of the “unreasonable income” had also raised concerns among businesspeople, Ding Xueliang said. “Entrepreneurs from the private sector will always say their achievements are based on the market and their hard work, but in China’s business environment, the government can easily catch them out on something,” he said. “That’s why many entrepreneurs are worried – when the authorities can catch them out, there are more than a dozen ways to punish them.”
That’s it for this issue!
A note to readers: this newsletter will come to you on an irregular schedule until end-October as I am working on a book project that is due then. A regular twice-a-week schedule will resume thereafter.
In the meantime, I’ll try and make up for the irregularity with occasional detailed issues like today’s, that try and go deep on a particular and hopefully timely topic of interest.
Thanks for understanding, and thanks always for reading!