The boom in India's trade with China, Galwan one year after, and who gets called a 'traitor' in China in 2021

Welcome to today's newsletter.

Apologies for the week-long hiatus. Work and other commitments meant I wasn't able to put out an issue at the start of the week (I usually aim for one on Tuesday/Wednesday) but this slightly longer issue will hopefully make up for that and cover this week's developments.

I'll be looking at:
- The latest India-China trade figures, what it tells us about the current state of trade, and implications
- Chinese sportswear brand Li-Ning is dropped as the sponsor of India's team at the Tokyo Olympics
- A look at some of the commentaries as we approach the June 15, 2020 Galwan clash anniversary
- The curious case of a Chinese national apprehended along the India-Bangladesh border
- India asks China to open up to its nationals, but why that likelihood appears very dim for now
- The branding of some Chinese scholars and writers as 'traitors' for an exchange program with Japan and what it tells us about the current zeitgeist
- The e-commerce boom in China's often overlooked western provincial economies

India's trade with China is up a whopping 70% in the first five months of this year, according to Chinese customs data :

Trade between China and India soared 70.1 percent in US dollar terms in the first five months of this year to $48.16 billion, according to Chinese customs data released on Monday. Specifically, Chinese exports to India grew 64.1 percent year-on-year from January to May, while imports surged 90.2 percent.

If anything, these extraordinary growth rates show that China-India trade has largely shrugged off the impact of the political tensions caused by the border friction last year, bouncing back quickly. Bilateral trade in 2020 declined 5.6 percent to $87.6 billion, the lowest since 2017, data from Chinese customs showed.

COMMENT: Even accounting for the slump in the first few months of 2020 — and that Indian trade figures are slightly lower - these are pretty robust numbers and by some way, the highest on record for the first five months of any year. They no doubt reflect the huge surge in imports of a range of medical supplies amid the critical shortages of the second wave. The numbers should also be a very sobering reality check on the decoupling debate of the past year. By way of contrast, the total figure for the first five months of 2019, pre COVID, was $36.8 billion.

The Global Times report on the figures, linked above, somewhat unsurprisingly underlined the political implications:

The importance of China's economic recovery to the Indian economy has risen to a level that won't be easily dismissed by certain political tensions.

Moreover, it is not just politics that presents challenges to bilateral trade. Over the years, some in India often criticized the country's trade imbalance with China, which represents nothing but a trade structural problem due to their different economic development stages. It requires long-term planning and efforts to address the trade deficit issue.

The most recent release of customs data showed that China has been importing from India at a much faster rate than ever these days, which in part reflects its efforts to at least alleviate an ongoing trade imbalance issue to a certain extent.

This is an aspect that needs attention from the political elite in India. At a time when the South Asian nation's economy is facing unprecedented pressure from the second wave of coronavirus outbreak, positive progress like the robust trade growth with China could offer clues for its recovery. Will such trade performance generate any geopolitical impact on bilateral ties? People will have to wait and see.

The Indian Olympic Association unveiled Team India's kits for the Tokyo Olympics - kits sponsored by Chinese sportswear brand Li-Ning. The apparent incongruity, amid talk from the Indian Government on 'no business as usual' and the many measures aimed at making life difficult for Chinese firms in the Indian market from TikTok to construction companies, seemed to have push the government to rethink the sponsorship:

"We are aware of the emotions of our fans and we in a IOA have decided that we will withdraw from our existing contract with an apparel sponsor," IOA president Narinder Batra and secretary general Rajeev Mehta said in a statement. "Our athletes, coaches and support staff, will wear unbranded apparel."

There have been calls for boycott of Chinese products since tension had increased at the LAC between the Indian army and Chinese troops last year. "We are thankful for guidance by the Ministry of Youth Affairs and Sports in making this decision," Batra and Mehta said.

COMMENT: The announcement a day after the unveiling reeks of bad planning, the left hand not knowing what the right hand was doing, and could have been entirely unavoidable. This ended up getting quite some attention in the Chinese press as "yet another example" of India's "intentions" towards China and also elicited a statement from China's Foreign Ministry asking India to not "politicise" such things.

Jayadeva Ranade gave an interview on the one year anniversary of the Galwan clash:

The first thing we have to understand that there is no trust between the two. The Chinese have ensured that we cannot trust them. They have disregarded every agreement and confidence-building measures that had been set up with great difficulty. So there is no trust. Whatever happens now, we will have to feel our way and see what steps are coming. I personally do not think that there will be unilateral moves by India. There will have to be equal moves or reciprocity by the Chinese. Only then can things can move ahead.

What we read in the Chinese media about the gratuitous advice they give us about refraining from or leaving the border aside is a very convenient kind of argument. It is like we can do what we like to you, but you have to listen to us as to how to proceed further. I think that is not the way things are going to be.

So China will have to start negotiating on an equal platform and only then hope for things to move forward. China has very few friends today. There have only two Pakistan and North Korea.

Qian Feng and Hu Zhiyong spoke to Global Times about the LAC situation:

Qian Feng, director of the research department at the National Strategy Institute of Tsinghua University, told the Global Times on Wednesday that most Chinese and Indian soldiers have disengaged. Albeit consensus failed to achieve in the remaining areas (such as the Hot Springs and Depsang Plains), the standoff scale is much smaller with a less significant impact.

In the eleventh round of senior commander-level talks that took place in Ladakh on April 9, senior representatives from the two countries met for 13 hours on the issue of disengagement at the remaining sites.

The two countries have been maintaining communication through military and diplomatic channels, said Qian, noting that due to the epidemic spike in India, face-to-face talks have been suspended, but the hotline and telephone communications are still available.

Some viewed the current China-India border situation much better than the same period last year. But experts warned that if the remaining stalemate persists, it will be detrimental to military-to-military relations and the stability of the western section of China-India border.

Hu Zhiyong, a research fellow at the Institute of International Relations of the Shanghai Academy of Social Sciences, told the Global Times on Wednesday that if the economy and epidemic continues to worsen in India, India might start a new conflict on the border.

"India has a political tradition of always looking for border issues to distract attention when there is a crisis at home," Hu said. "China needs to be very vigilant about this."

Shi Jiangtao, long-time reporter of the South China Morning Post who also had a brief career as a diplomat at the Chinese Foreign Ministry, had an interesting opinion piece, one that, safe to say, hasn't been articulated by any prominent voice in the Chinese media so far, at least from what I’ve seen:

Although countries such as India and Japan have geopolitical calculations in turning against China, there is no denying that their fears about China’s rise and Beijing’s hardline policies at home and abroad have become a driver in binding them with Washington.

Against this backdrop, it was commendable for Xi to call last week for efforts to “make friends” rather than enemies and put a positive spin on China’s actions to be seen as a “credible, lovable and respectable” power.

If Beijing is serious about not pushing New Delhi further away or even turning India into a permanent enemy, it should begin by setting aside grievances on the border issue and ending the stand-off.

COMMENT: It seems pretty clear to me, considering last year’s developments, that the PLA doesn’t seem to share this view…

A very curious developing story this week:

A 36-year-old Chinese man was intercepted by the Border Security Force (BSF) near the India and Bangladesh border today, officials said. He was detained in West Bengal's Malda district near the border over "suspicious activities", they said.

The officials said the man was arrested when he was trying to cross the border illegally. When the troops asked him to stop, he tried to run but was chased down and caught. He was then taken to a border outpost at Mohadipur for questioning.

During questioning, the man told security officials that his name is Han Junwe and he is a resident of Hubei in China. It was found that he reached Dhaka on June 2 on a business visa and stayed there with a friend. He later moved to the border district of Chapainawabganj and was trying to enter Indian Territory when he was caught.

He has told security officials that he has visited India four times and that he has a hotel in Gurgaon where several Indian nationals work. He said that when he was in China, his business partner would send him numbers of cellphone SIM cards in India. A few days ago, he said, ATS Lucknow arrested his business partner, Sun Jiang. The man said the ATS has also charged him and his wife in a case, due to which he was denied an Indian visa. He then arranged for a Bangladesh visa and tried to enter India from there, he has said.

A Chinese passport with a Bangladeshi visa, a laptop, 2 cellphones, a Bangladesh SIM card, an Indian SIM card and two Chinese SIM cards are among the items recovered from the man.

The BSF South Bengal Frontier has said in a statement that Han Junwe is a wanted criminal and all intelligence agencies are working together in this matter.

"He was intercepted at 7 am. We brought him to Kaliachak post and informed other agencies. He is being questioned by them," a senior officer told NDTV, asking not to be named.

The officer said the man doesn't seem to know English and they had difficulty communicating with him initially. "A security officer who knows Mandarin was then called," the officer said.

The Hindustan Times adds:

A four-member team of the Anti-Terrorist Squad (ATS) of Uttar Pradesh Police reached Malda in West Bengal on Friday morning to interrogate the accused and take over the case.

The accused has been identified as Han Junwe, a resident of Hubei. Interrogation by the BSF revealed that his alleged business partner Sun Jiang was arrested by the Anti-Terrorist Squad of the Uttar Pradesh Police an unspecified amount of time ago.

“Interrogation is still going on. We are trying to find out whether he was working for any intelligence agency or any organisation, which works against India,” said SS Guleria, DIG BSF (South Bengal Frontier).

Officials have seized a laptop, two iPhones, one Bangladeshi SIM card, two pen-drives, ATM cards, US dollars along with some Bangladeshi and Indian currency.

“During interrogation he said that he owns a hotel named Star Spring in Gurugram and has been to India at least four times since 2010. We are verifying his statements,” said Guleria.

When Jiang was arrested, he mentioned the names of Junwe and his wife in connection with illegal activities. The ATS then registered a case against Junwe and his wife in Lucknow, as a result of which he didn’t get an Indian visa. Junwe then procured a Visa from Nepal and Bangladesh and entered India.

“Investigation is going on and other intelligence agencies have been alerted. We are working together on the case. His laptop is being scanned,” Guleria added.

COMMENT: As a very tangential aside, I always find it curious how reports of the activities of suspicion-arousing Chinese citizens in India inevitably seem to end up mangling names. Junwe? Shouldn’t it be Junwei since there isn’t a character in Mandarin that could possibly be rendered was “we”? The mangling of names seems to happen every time, whether by accident or design (or maybe in some instances reflects the quality of their travel documents?), but it sure doesn’t make it very easy for reporters trying to find out who exactly these people are…

India has asked China to fulfill its earlier announcement on facilitating travellers who have taken Chinese vaccines, after it came to light that some 300 Indians who are in India but work and live in China, and had gone to great lengths to get Chinese shots which aren't available in India by travelling to Nepal, Dubai and the Maldives, were STILL denied visas by China's Embassy in Delhi.

The Ministry of External Affairs said, from The Hindu:

India on Thursday asked China to allow Indian citizens to travel to that country, especially those who work or study there, saying essential two-way visits should be facilitated keeping in view the fact that Chinese nationals are able to come to India.

The Ministry of External Affairs (MEA) also said that India supports the need for a follow up to the WHO’s report on the origin of the COVID 19, amid growing global calls to find out how the coronavirus emerged in the Chinese city of Wuhan in late 2019.

To a separate question on the proposal at the World Trade Organisation by India and South Africa to waive patents on COVID-19 vaccines and related products, MEA spokesperson Arindam Bagchi said,”We are happy to see that our initiative has gathered support from a number of countries.” On the issue of travel to China, he said India was in touch with the Chinese side in order to seek an early resumption of travel by Indian citizens to China.

He said though Chinese nationals are able to travel to India, Indian citizens are not being able to do so since last November including those who have met China’s condition of getting vaccinated with Chinese vaccines.

“We have been in touch with the Chinese side in order to seek an early resumption of travel by Indian citizens to China, especially for those who work or study there,” Mr. Bagchi said.

“While we recognize the need to ensure safety and strictly follow COVID- related protocols, essential two-way travel should be facilitated, especially keeping in view the fact that Chinese nationals are able to travel to India,” he said. He said Chinese nationals are able to travel to India despite the absence of direct connectivity.

“However, for Indian nationals, travel to China has not been possible since last November as the Chinese side had suspended existing visas,” he said.

In March this year, the Chinese Embassy in India issued a notification about facilitating visas for those taking Chinese-made vaccines, Mr. Bagchi said. “It is understood that several Indian nationals have applied for Chinese visas after getting vaccinated in that manner but are yet to be issued visas. Since these Indian nationals have apparently met the requirements laid down by the Chinese side, we hope that the Chinese embassy would be able to issue them visas soon,” he said.

Regardless of that request, these comments from China's Ambassador to India Sun Weidong this week suggest to me Beijing is in no hurry to open up to Indian travellers:

Recently, many Indian citizens, especially students, expressed on the internet their desire to go to China for study or to continue their study. I fully understand that, and I am gratified with their spirit of overcoming difficulties and making efforts for study.

As COVID-19 spreads across the world, all countries are taking due measures to prevent and contain the virus based on their own conditions. I believe this should be understood and observed by both Chinese and foreign nationals. International travel will increase the risk of infection and will have a huge impact on the travelers and the destination countries. Recently, Chinese city of Guangzhou once again diagnosed confirmed cases. Since May 21, Guangzhou has carried out a large-scale COVID test. As of June 5, the cumulative number of samples tested reached 16 million. China takes great efforts in containing the spread of the virus.

Let me be clear that the Chinese government attaches high importance to protecting the rights and interests of foreign students in China. Academic institutions are required to keep in close contact with those students abroad. They have made good arrangements for online courses, and properly addressed students' legitimate concerns and appeals. On the precondition of observing containment protocols, the Chinese authorities will study foreign students' return to China in a coordinated manner and keep in communication with relevant parties. On the premise of ensuring the health and safety of the Indian students, our Embassy will also encourage them to continue their studies in flexible and diverse ways and provide them with relevant conveniences.

This story was probably among the most debated in China’s social media last week, and is a fairly accurate snapshot of the current zeitgeist in the lead-up to the July 1 100 year anniversary of the Party. From SCMP:

Nearly 200 Chinese intellectuals who took part in a Japanese government-affiliated exchange programme have been branded “traitors” on Chinese social media, reflecting rising nationalistic sentiment in China.

They were sponsored to visit Japan by the Japan Foundation, which is overseen by the Japanese foreign ministry and funded by government subsidies, investment revenue and private sector donations.

The programme was started in 2008 to improve exchanges between the two countries, with 196 Chinese intellectuals having been sponsored as of 2019, the ministry said.

But participants have been criticised by some people online, after the visits recently came to their attention. He Bing, a professor at the China University of Political Science and Law, writers Jiang Fangzhou and Xiong Peiyun, and journalist Duan Hongqing were among those targeted.

Jiang was accused of promoting Japanese propaganda through her 2017 book One Year in Tokyo.

Responding on Weibo, Jiang rejected the accusation, saying the programme was a “normal cultural exchange” and denying “taking money from the [Japanese] ministry”.

Jiang said the reason for her three-month trip to Japan in 2016 was being “invited to communicate”. The foundation paid her living costs and research fees totalling about 20,000 yuan (US$3,100) per month, then she stayed for a few more months at her own expense, she said.

“The book records my experience of living alone, mostly psychological feelings, travel experiences and literary reviews,” she said. Writing and publishing it had “nothing to do with the foundation”, she said.

Li Haidong, a professor at China Foreign Affairs University, was quoted by nationalistic tabloid Global Times as saying the programme was initiated by the US Department of State to infiltrate China and possibly instigate a “colour revolution”.

COMMENT: I watched one clip from one of Jiang’s interviews with Japanese broadcaster NHK that was doing the rounds on social media and was supposedly “evidence” of her traitorousness. The “damning” part of it was her response to a question on whether the responses to COVID-19 (presumably contrasting China’s quick controlling of the outbreak by last summer and the U.S. response) had delivered a clear verdict on which political system was superior. Jiang responded that it is not possible to reach such a simple conclusion, it’s a very complicated question, and one on which you’d need to take the long view. That was pretty much it. It says quite a lot that such a measured and eminently reasonable opinion, in this current mood gets you branded a traitor.

A useful explainer on China’s new anti-foreign sanctions law from AFP:

The anti-foreign sanctions law was rushed into force on Thursday. It aims to protect Chinese individuals or organisations in the event that a country "uses various pretexts or its laws" to take "discriminatory" action against them.

No country is specifically named. But Beijing has accused Western nations of "suppressing" China's development, especially the United States. It has lashed out at "illegal and unreasonable" sanctions over human rights and flagged an urgent need to fight back.

What could it do?

Countermeasures listed in the law include denying visas, deportation, or seizing assets of those who formulate or comply with sanctions against Chinese businesses or officials.

It rules that authorities are not only able to target individuals and groups but can also take aim at their family members.

The law is broad and "significantly increases the punitive power of China's anti-sanctions measures", said University of Hong Kong associate professor Angela Zhang.

"The broad scope of this framework means that lots of folks, like scholars, pundits, think tanks, could be sanctioned for supporting sanctions on China," warned Julian Ku, an expert on international law at Hofstra University.

How could it impact business?

Senior executives of entities on a countermeasure list could also come under pressure, with potential implications for a large number of people and businesses.

"Affected businesses could lose entire access to the Chinese market, and Chinese citizens and institutions will need to cut ties with affected NGOs and think tanks," Zhang told AFP.

The law could also create severe compliance issues for multinational companies.

Part of the legislation prohibits those in China from going along with designated foreign sanctions. It acts in a similar way to a European blocking statute "which nullified the effect of US Iran sanctions within the EU", said Ku.

This puts foreign businesses in a bind if they cannot legally comply with both US sanctions and Chinese prohibitions.

And finally…

An interesting report on the e-commerce boom in often overlooked western China:

The rural e-commerce industry boomed in China's western regions in 2020, according to an industrial report.

Last year, areas in the west led the growth in the number of new entrepreneurs on e-commerce platform Taobao for the first time in its history, said the report, co-released by Alibaba and an institute under Zhongnan University of Economics and Law.

A total of nine western provincial-level regions ranked among the country's top ten that saw the greatest increase in online shop founders, with their year-on-year growth passing 200 percent.

Northwest China's Ningxia Hui Autonomous Region led the gains with its growth of up to 420 percent, followed by two western provinces of Yunnan and Guizhou, the report said.

The report also showed that the e-commerce industrial cluster is speeding up its expansion to western China. Taobao villages and townships gained strong momentum in these areas.

The number of Taobao villages there soared from 19 to 71 in 2020, up by 274 percent year on year.

While spurring the development of key industries, e-commerce will effectively bridge the gap of western regions with central and eastern parts of the country, said Pan Helin, an expert in economics at Zhongnan University of Economics and Law.

That’s it for this issue. Thank you for reading, and wish you a happy and safe weekend. See you next week.