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China-Zimbabwe Relations

In addition to trade, aid, and diplomatic ties, China – Zimbabwe relations are strengthened by a mutual desire for development

By Fraderick MujuruChina-Zimbabwe

Zimbabwe is located in the southern part of the African continent, immediately north of South Africa. The country has a population of 13 million and an area of 151,000 square miles. Zimbabwe gained independence from British colonial rule on April 18, 1980. Zimbabwe’s government is ostensibly a Presidential Republic, with Robert Mugabe being its President since independence. In 2014, Zimbabwe’s economy recorded a GDP of US$ 12.8 billion and an annual growth rate of 3.1%. However, this paints a misleading picture; the economy witnessed negative growth of about 16% during the hyperinflation years (see Figure 1). Though it has recovered since then to post positive growth rates, it must be noted that having a range of over 27% in the growth rate (-16% to 11%) is an indication of macroeconomic instability. There is no better proof of this instability than the episode of hyperinflation where the inflation rate rose to a whopping 231 million percent in July-August 2008.

Figure 1: Showing the real GDP growth of Zimbabwe from 2005-2014. The numbers for 2012-14 are IMF Staff estimates.

Zimbabwe Fig 1

Source: IMF World Economic Outlook Database.

However, Zimbabwe has stabilized since then and there are encouraging signs of growth in the near future. A part of this revival has to do with Zimbabwe’s immense mineral wealth, as it is a source of economic returns. One major factor is the political and economic relationships that Zimbabwe has managed to develop with the fast growing East Asian countries, the biggest of which is the People’s Republic of China.

China has a web of alliances across Africa: there is even a popular mantra to describe the Chinese presence and investments in Africa – “the Chinese are coming”. China’s relationship with Africa has historical roots; in 1971 many African nations supported the claim of the government of the People’s Republic of China to represent China’s seat in the Security Council of the United Nations. This may be because Beijing spent the early part of the 1960s establishing relations with left leaning states such as Ghana, Angola, Zimbabwe, Sudan, etc.

Starting from as early as the 1950s, Africa has seen several large projects spearheaded by the Chinese government that have set the tone of engagement between the two areas. Major projects include the construction of the Tanzam railway joining Tanzania and Zambia. China’s trade with the African continent has increased from US$10 billion to US$120 billion between 2000 and 2014. It has given as much as US$ 5 billion towards at least 800 projects in Africa, an amount higher than the World Bank’s contribution since 2005 (US$3.2 billion).

China-Zimbabwe Political relationship

China and Zimbabwe have cooperated politically in the past. In 2005 the European Union and the USA imposed economic sanctions on Zimbabwe for alleged human rights violations. In response, Zimbabwe crafted its ‘Look East Policy’ which targeted Asian economic giants like Singapore, China, and Malaysia. China responded quite quickly and the communist Chinese government supported Zimbabwe in its ‘Land Reform Program’ which sought to address the predominantly white minority ownership of property.

The pinnacle of China-Zimbabwe political relations was likely China’s use of its veto to axe the 2008 United Nations Security Council resolution that sought to apply additional sanctions on Zimbabwe. The resolution was also vetoed by Russia and they both justified their stance with the argument that the alleged incidents were an internal matter and not a threat to international security.

From Politics to Economics

The economic relationship between the two countries has recently been the source of deepening ties between China and Zimbabwe. In 2010, both countries celebrated 30 years of their relation with over US$ 560 million generated on bilateral trade.

The trade relationship between the two countries is obviously dominated by China; Zimbabwean exports to China are exceeded by Chinese imports in Zimbabwe. Major imports from China include telecommunication equipment, and manufactured goods such as soap, plastics, shoes, etc. Exports by Zimbabwe to China are mainly raw materials such as tobacco, platinum, chrome, steel, and diamonds.

Fig 2: Exports and Imports of Zimbabwe to and from China (US$ thousands)

Zimbabwe Fig 2Courtesy: World Integrated Trade Solution (WITS) 2015

Apart from trade, China has also provided aid to Zimbabwe to help the latter in its developmental efforts. For instance, it provided US$103 million in official development aid to Zimbabwe from 2004-2010, through grants and concessional loans (see Table 1).

Table 1: Summarizing some of the Zimbabwe-China economic deals and aid agreements.

Year Amount (millions) Types Description
2000 $5.8 Concessional loans Used to invest in Cement production plant
2004 $240 Sale 12 jet fighters and 100 military vehicles’
2006 $25 Preferential loans  –                –                 –                   –
2007 $200 Export credit Farming Inputs
2007 $200 Sale SINOSTEEL purchased ZINASCO
2010 $700 Loan Rejuvenating Agriculture sector
2012 $180 Loan Airport Upgrade, neonatal equipment, economic and technological cooperation

 

Extraction: Ministry of Finance and Economic Development of Zimbabwe (2014)

China also funds many infrastructure projects in Zimbabwe. It recently invested US$ 98 million in a military complex entitled the Robert Mugabe School of Intelligence. The trade relationship is not limited to the Chinese government; Chinese companies have invested in Air Zimbabwe, the Zimbabwe Broadcasting Corporation (ZBC) and Zimbabwe Electricity Supply Authority.

Though the China-Zimbabwe relationship may have been more political in its early years, the two countries are currently bound more by economics and diplomatic ties. China has offered loans, grants, concessions, and preferential loans to Zimbabwe. To increase their engagement, Zimbabwe allowed Beijing investors to have a share and invest freely in Zimbabwe. The relation between China-Zimbabwe has been branded ‘all weather friendship’.

China still lags behind other countries in terms of humanitarian and economic engagement with Zimbabwe. The USA remains Zimbabwe’s biggest provider of aid – its contribution (above US$ 2 billion since 1980) is substantially more than other countries; China does not make it to the top ten list of donors. However, China has emerged as Zimbabwe’s fourth biggest trade partner and there is still potential to further strengthen what are already robust economic ties between the two countries.

Fraderick Mujuru is an intern at Takshashila Institution and is presently doing his Masters in International Relations at Christ University, Bangalore

 

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Snapshot of India’s Export Industries

This is written as a small addendum to Pavan’s insightful article on India-US trade. I shall aim to give a small snapshot of these commodities and their significance in the world trade.

IndiaExports

IndiaImports

The charts and tables above give a closer look at the top commodities traded with the US between 2009 and 2013 and their trends. The numbers above each bar represent the change in percentage terms over that period.

With a market share of about US$ 41 billion in 2013, the Gems and Jewelry industry in India is becoming one of India’s top foreign exchange earners. India imported US$ 3.9 billion worth of gem diamonds from the United States in 2013 and exported US$ 7.4 billion. Globally, India imported 163.11 million carats of rough diamonds worth US$ 16.34 billion and exported 36.46 million carats of polished diamonds valued at US$ 20.23 billion in 2013. The difference can be roughly seen as the value added by India. The country exported gems and jewelry worth about US$36 billion in 2013, significantly contributing to India’s foreign exchange earnings.

Exports of pharmaceutical products are also on the rise (132% over 5 years). Globally, the Indian pharmaceutical industry is ranked third largest in terms of volume and 10th largest in terms of value.  During 2013-14, pharmaceutical exports stood at Rs 90,000 crore (US$ 14.55 billion) globally.

The Indian chemical industry is also performing well. Basic chemicals and their related products (petrochemicals, fertilisers, paints, varnishes, glass, perfumes, toiletries, pharmaceuticals, etc.) form a very significant part of the Indian economy and account for about 3 per cent of India’s GDP. The Indian chemical industry is the second largest in the world. In 2012-13, India exported dyes and related products worth US$ 1.32 billion, organic chemicals worth US$ 619 million, and agro chemicals worth US$ 967 million.

Petroleum products mainly refer to India’s plastic industry. In 2012–13, exports of Indian plastics stood at over US$ 7.2 billion and have increased at about 20% each year.

The Indian textile and apparel industry is one of the largest in the world with an enormous raw material and manufacturing base. The present domestic textile industry is estimated at about US$ 33billion and unstitched garments comprise US$ 8.3 billion. The industry is a significant contributor to the economy, both in terms of its domestic share and exports; it accounts for a phenomenal 14 per cent of total industrial production, contributes nearly 30 per cent of the total exports and employs around 45 million people.

Coming over to imports, it is noteworthy that Indian imports of non-monetary gold have reduced since 2012. Non-monetary gold refers to an individual’s purchase of gold as against the gold held in the Reserve Bank’s vaults as a reserve asset. Gold imports peaked in 2012, which severely dented the current account balance and weakened the rupee. In late 2013, the RBI stepped in and took corrective measures like raising the import duties on gold. Generally, when inflation is very high (India’s CPI was about 9-10%), people rush to invest in alternative channels. When bank deposits gave you negative real returns, gold seemed like a good option for investment. The astronomical increase (115200%) in the imports of military aircrafts can be ignored as the data is zero for 2009 and about 1.2 billion in 2013.

Note: Industry specific data has been taken from http://www.ibef.org/exports

 

 

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Can USA and China avoid the Thucydides trap?

In a recent interview with The World Post, Chinese President Xi Jinping set out his outline for the future of China and the world and why peaceful world environment is necessary to develop China in the long term. One particular significance of this interview was his usage of the term “The Thucydides Trap”.

“The Thucydides Trap” was coined by the Belfer Center Director Graham Allison whereby an established power becomes wary of an emerging power and ultimately leads to war and confrontation among them. The Greek Historian Thucydides blamed the war between Athens and Sparta on Sparta’s fear of Athens growth and its own diminishing influence and hence went to War with Athens to thwart its rise.

Even though The United States and China are the world’s largest economies, their relationship is very complex and based on mutual fear and suspicion.  China’s rapid defence modernisation coupled with increasing assertiveness with its neighbours over various territorial disputes has caused US policy makers off guard in Asia. What worries the policy makers the most is what will be the US response in case of conflict between say China/Japan or China/Philippines and to what extent will the United States go to protect its allies in the region?  Even though China advocates a multi-polar world, its actions speak differently about the role it is going to take in future. China is playing a game of cat and mouse in the region and is checking USA’s capacity to deliver in case of a conflict.

United States has clearly outlined its intention after long wars in Afghanistan and Iraq that it will be concentrating on Asia with its Asia Pivot policy.  The wars in Afghanistan and Iraq proved too big a financial burden on the American economy and allowed China to leapfrog it and become the world’s largest trading nation. As the US troops withdraw from the region post 2014, the US plans to concentrate on Asia-Pacific region to check the growth and influence of China in the region. Post World War II, United States has been a dominant power in the region and most of its trade goes through this route and any effort by China to subvert its influence will be met by strong US response.

Current President Xi and Former President Hu Jintao, both laid out a vision for China’s global role in international politics wherein both Countries will form a “new type of great power relationship”. To what extent the United States is going to share power with China and what will be its impact on International geopolitics remains to be seen. Skeptics argue that confrontation between the two countries is more of a reality in the coming decades then in the past.

American foreign policy which was clearly focused on terrorism and Middle East post September 11 attacks have once again started concentrating on China after the economic recession of 2008. America’s Asia pivot is aimed clearly at China and focuses on containing it in the region without harming its interests or its allies. Japan is increasingly trying to change its pacifist Constitution in order to prep up its military in case of a conflict with China. Japan is concerned that US will not come to its rescue in case of conflict even though the US-Japan Treaty 1971 provides so and hence is becoming increasingly insecure about China’s intentions in the region. In his book On China, Henry Kissinger states that China wants a complete revamp of the current world order wherein it has greater say in the happenings around the world and is not discriminated against whereas the United States stands for the existing rule based order, freedom of navigation of seas and skies. The opaque system of Chinese decision making makes it much more difficult for America to solve disputes or tone down the tensions in case of a miscalculated Conflict.

US policy makers believe India can be a trump card against China in the Asian power dynamics. Based on the principle of democracy and rule based order, United States believes that in the long run India can become a possible alternative to China in Asia and on one on which it could depend on. India is being increasingly courted by Japan, Australia and the US to seek a dominant role in Asia Pacific to subvert Chinese influence.  However they forget that India has its own sets of problems with China and will not join any US led camp against China. India’s current focus right now is economic growth and liberalisation and lifting millions out of poverty before it can match China tooth for tooth militarily in Asia and the world.

In the last 500 years, whenever an established power has been faced with an emerging power, the result was war in 11 out of 15 cases. The US has slowly and steadily built up its largely dominant role now since 1890, when it surpassed United Kingdom as the world’s largest economy and has enforced itself as the sole World Super Power through the two World Wars and its rivalry with Soviet Union during the Cold War years. What will be the US approach to China’s rise and whether it is going to make any concessions to China remains to be seen? China on the other hand will try to gain its status as the Middle Kingdom in the Confucian concept of “All under Heaven” and regain its previous glory as the world’s largest economy prior to 1750’s.

Piyush Singh is a law student with an interest in India-China relations and nuclear law and energy. He completed his internship at the Takshashila Institution.

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India’s options for reducing risk from China-Pak alliance

R.Srikanth

While the internal debate has predictably settled down on questioning the morality of executions in a democratic republic, few questions have been asked about whether Kasab’s execution has increased or decreased India’s options with respect to its long-term adversaries in the region, China and Pakistan.

Hafiz Saeed, leader of terrorist group Lashkar-e-Toiba is being legitimised in the public space in Pakistan, as he makes a foray into Pakistani politics. Given Pakistan’s penchant for denying its hand in anti-India terrorism, it seems like poor strategy to execute Kasab at this time, as he is the only living being that was proof of 26/11. Can Indians afford to be sanguine about the mainstreaming of terrorist groups in Pakistani politics?

The central place of religion in politics is not surprising given that Pakistani Constitution and Republic and even the Army define themselves in terms of religious doctrine. The side effect of religious propaganda in the Pakistani school curriculum over the decades has resulted in religious fundamentalist groups garnering immense public support for right wing political groups. In this environment, terrorist masterminds like Hafiz Saeed are able to seek legitimacy by entering politics and making pretensions of abstaining from terrorism.  Hafiz’s actions of offering prayers for a 26/11 terrorist, but not its victims, says enough about his pretensions of seeking a life of peace.

It does not seem to be in India’s interest to let Pakistan get away with providing validity to groups like Hafiz Saeed’s Lashkar-e-Toiba as a legitimate political party via an election. This will result in the permanent mainstreaming of terrorist groups into Pakistani politics. However, in Pakistan, it is a truism that no matter which political party wins, the Army actually is in control. So, in that sense, not much has changed in Pakistani politics, except for the death of secular and liberal political parties. Frequent headlines in the international print media that portray the Army submitting to the civilian government of the day have always turned out to be false.

Even mainstream political parties such as the PTI and Jamaat-e-Islami are very vocal about their aggressive intent towards India, should they come to power. All these political parties have openly stated their antipathy for friendly relations with India, with constant background refrain of promising more terrorism in India unless India relinquishes Indian territory in Jammy &Kashmir to Pakistan.

Buckling down to Pakistan’s blackmailing tactics to exchange land for peace, whether in Siachen or elsewhere, are unlikely to yield results for India. This is mainly due to the Pakistani Military-Jihad Complex’s (MJC) antipathy to normalising relations with India, combined with their domineering role in Pakistani politics. Since the inception of Pakistan as a state in 1947, the Pakistani Army has always dictated terms to the civilian government in power.

In the early 80s and 90s, Pakistan was financially, politically, and diplomatically supported by the USA, China, Japan, and Saudi Arabia. Such support has waned in the recent years due to frictions between Pakistan and its donors. USA continues to finance Pakistan under strict controls and has downgraded military relations with Pakistan. Saudi Arabia still wields a lot of influence in Pakistan, though it has stopped subsidising Pakistan like it did in the past.

The only country that has made proclamations of everlasting, mutual, enduring relations with Pakistan is China.  This was evident from the fact only a journalist from Pakistan was given the privilege of being allowed to record the proceedings of the CPC. Ignoring the dubious value of the Pakistani presence in such a meeting- the showcasing of China-Pakistan relations- is a reminder that the chance of these two Indian adversaries colluding against India in the long term is a certainty. As long as the MJC wields power in Pakistan and the Communist Party wields power in Beijing, India needs to consider the likelihood of such collusion, a certainty.

Although China’s investments in Pakistan have decreased in scope and involvement over the last couple of decades, not least to the inability of the Pakistani government to secure the lives of Chinese engineers and workers implementing development projects in Pakistan. However, China has followed a strategy of proliferating weapons of mass destruction to states like North Korea and Pakistan, and there is no indication that the CCP has relinquished the use of WMD proliferation as a tool in the toolkit of Chinese foreign policy.

This is where China and Pakistan gain from their illegal occupation of Indian territory in J&K. Pakistani occupation of PoK and China’s occupation of CoK, has resulted in a physical border and land route connecting China and Pakistan. As long as this land route connects China and Pakistan, China’s capability to proliferate weapons of mass destruction to Pakistan via such a route remains in place. Proliferating such weapons by Air or Sea is a lot harder as the global commons is monitored. Thus, it is in India’s long-term interests to ensure that Chinese capability for such proliferation is neutered. Once a capability is neutered, China’s intentions towards India in that region do not matter if India regains control over all of J&K. Intentions of any geopolitical entitiy can change on a whim with no effort, but geopolitical capability needs to be gained and maintained.

Why is the completion of the accession of J&K to India necessary? Why does Indian government spend an enormous amount of revenue generated from other Indian states to sustain J&K? For one, there is a parliamentary resolution in effect today that declares India’s sovereignty over all of Jammu & Kashmir.  India retaining control would mean that India would have a border with Afghanishtan, establishing direct Indian transit into Central Asia. India has been denied land transit rights into Afghanistan and will continue to be denied such rights for the foreseeable future. Also, as explained earlier, such reclamation of control over J&K would ensure breaking a land route between two of India’s most bloody-minded and hostile adversaries, China and Pakistan. Seems prudent for India to proactively gain leverage over them in order to control events in the future that may be orchestrated by the collusion of these two hostile nations.  It should be noted that a political union of the two sides of the LoC in J&K is a logical first step towards Indian control over all of J&K.

What are India’s options with respect to Pakistan, especially given China’s significant capabilties today, to change the nature of India-Pakistan relations via WMD proliferation? India taking the initiative on foisting aggression on Pakistan is not an option, as this is exactly what the Pakistani MJC has been trying to do for a long time. Recall the 26/11 was orchestrated when the Pakistani Army was trying to prove to its American allies that maintaining a large army presence in the Indo-Pak border is essential, in order to avoid going after the Taliban in North West Pakistan.  The Army’s gambit would have worked had the Indian government reacted to 26/11 by escalating hostile intentions, thereby providing the Pakistani Army with a solid excuse to not cooperate in Waziristan.

If India escalates the situation on the ground, Pakistani army’s best option is to respond by claiming that various red lines have been crossed. Once this is done, what will follow is a drumbeat of “India-Pak nuclear flashpoint” from motivated third parties, mostly arms-control wonks. Such a falling out of events has never worked in India’s favor in the past. A more important reason to avoid a war with Pakistan is the effect it will have on the gap between India and China in terms of economic and military power. The already wide gap is likely to increase further, which is unwise given that there is no guarantee India can recover from such a setback post war with Pakistan. However, even if overt war is ruled out with Pakistan, the sub-conventional proxy war options that Pakistan avails is also available to India- it is a different matter that Indian political leadership seems to have failed to avail itself of such options.

Let us take a look at Pakistan today. Pakistan government’s choice to radicalise their population with religious dogma, hatred and violence in school textbooks has created multiple generations of Pakistanis that would fit the label of religious radicals or fundamentalists- people who are not averse to using violent means as a tool to further their religious-political goals. The end result seems to be that Pakistanis are increasingly vulnerable to terrorist bombings in their own country, and State of Pakistan is increasingly unable to exert control over its own territories.  This should seemingly increase India’s options, but it has not done so yet.

The Pakistani government effectively controls 3 out of 4 states in the country. The army dare not challenge militant tribes in the Northwest Frontier province that challenge the Pakistani army on the ground. Any election in Pakistan is likely to usher in a religious-minded political party in power- these parties have openly stated their concurrence with the goals of Al Qaeda in Pakistan. If such a religious party comes to power as a result of elections in Pakistan, it will legitimise anti-India terrorist groups in Pakistan, which means an increase in anti-India violence emanating from Pakistan, as it has happened in the past. When dealing with Pakistani MJC/Government it is prudent to watch what they are doing rather than what they are saying, as explained by Mr Vikram Sood.

If suggestions that Saltoro/Siachen be transformed into a “Peace Park” are taken seriously by the Indian government, then it would imply that the Indian Government has learnt no lessons from the Kargil War or has forgotten those lessons already.

R. Srikanth is a Senior Researcher at the Cyber-Strategy Studies Team at the Takshashila Institution and a GCPP alumnus.
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