The World’s bully is under pressure and it does not like it.
President Xi Jinping has been anointed one of the three “core” leaders of China along with strongmen Mao and Deng giving him sweeping powers over the vast Chinese Army and the politburo. President Trump has started to vacate the seat at the centre of the head table of World politics as he focuses on America leaving China to assume that they are the natural successors to this seat and therefore the leader of the World.
The Chinese spokespersons or their state run mediums threaten every world leader who has the “audacity” to meet Dalai Lama. They do not like anyone who tries to do business with Taiwan. President Xi’s recent threat on the 20th anniversary of Hong Kong of “not crossing the red line” was alarming but Hong Kong residents, knowing the consequences, silently accepted it. China has exhibited its military power in the South China Seas and has claimed islands that do not belong to it. They genuinely believe they have the right to protest against anything they do not like but they are not willing to accept any protests against their actions.
China has done it all with absolutely no concern for what others may feel. But these threats are now beginning to sound hollow. The sabre rattling is sounding scratchy and tired.
“Either you are with us or against us” is the policy followed by China and for the past two decades most countries, eager to do business with this large market or keen to get their investments, have complied in stoic silence.
But all is not right with China. The Chinese economy, the reason for the arrogance of its leaders and its spokespersons, is slowing down noticeably and dramatically. Labour unrests are growing everywhere either because of unpaid wages, layoffs in record numbers or because sufficient new jobs are not being created. The population is ageing and, it has often been said, that China will grow old before it gets rich.
The debt of the country at US$ 25.6 trillion (one trillion equals 1000 billion) has ballooned to 250% of gross domestic product leading most economists to voice their concerns of an impending bubble bursting and tsunami waves of debt will be felt all over the world. Unemployment, pegged at 4% by Government statistics is believed to be at least three times this figure by Fathom Consulting. Forex reserves has dropped from US$ 4 trillion in early 2014 to just over US$ 3 trillion in 2017. No one asks where this US$ 1 trillion has been spent in three years.
China needs a minimum growth rate of 7.4% to ensure that the Chinese citizens continue to be gainfully employed. In a translucent society, where financial numbers are suspect and statistics are “managed”, no one knows what the correct position is in China leaving everyone to speculate. Huge infrastructure projects are lying idle and ghost cities can be seen everywhere.
Chinese investments all over the world are facing serious challenges. The port in Sri Lanka is a financial disaster for Sri Lanka and China is taking 80% equity and therefore opening up an opportunity to set up a naval base. Bridges are collapsing in Kenya and infrastructure projects in Africa are either sub standard or running behind schedule. The Pakistanis are questioning the China Pakistan Economic Corridor as they are beginning to realise that the Chinese have taken away promised jobs and the power plants promised are actually second hand thermal power plants from China. Pakistanis now fear that they will become another province of China but have to hang on to the only “all weather friend” they think they have.
On the political front, the love affair of China with USA is over. President Trump has sold arms to Taiwan, violating China’s self-stated “one China policy” and has refused to listen to the empty threats of China. If he goes ahead and imposes tariffs on Chinese products, the famous sweatshops of China will go into a tailspin. The South East Asian countries, overawed by the financial power of China have started to understand the bully that China is and are hoping to find another market before they can push back on the so-called largesse of China.
Contrast this to what is happening in India, a nation with more than two thirds of its population under the age of 35. Indians now have a strong democratically elected leader whose popularity continues to rise.
Prime Minister Modi won a majority in Parliament and has, barring a couple of state elections, consistently won with sweeping numbers. He has not hesitated in taking tough decisions much to the chagrin of some of India’s hawkish neighbours. His tough stand against Pakistan and India’s surgical strikes has been acknowledged with respect.
The Chinese have gotten used to a hesitant Indian leadership who have generally tried to take the middle path against Chinese push backs. The recent Chinese incursion into Doklam on the Bhutan border and Modi’s unwillingness to back down despite the Chinese rhetoric has won him even more admirers both in India and outside. The Chinese, used to getting their way everywhere, are unsure and making meaningless threats.
Foreign Direct Investment in India is at an all-time high. Demonetisation and the introduction of GST has made the ruling party stronger. The stock market is at an all-time high. The Indian economy is now the fastest growing in the world and will continue this momentum for the at least next decade. And, Prime Minister Modi is just getting started. He should easily lead his party to a thumping majority in the parliamentary elections in 2019.
Mr Modi’s whirlwind diplomacy in the last three years has won him many friends and admirers. Unlike his Chinese counterpart, Modi knows how to connect with the wealthy Indian diaspora. His ability to balance opposing groups around the world has opened up economic opportunities for Indian businesses outside India and for foreign businesses in India. Strong bonds with USA and Israel will help India not only in getting more investments but also shore up our already strong defence capability.
The three decades starting in the early eighties belonged to China. The next three decades, starting from 2014, definitely belong to India, now beginning to be accepted as a super power in the world.
China does not like being on the back foot but then does the World really care?
The author is the founder Chairman of Guardian Pharmacies and the author of 5 best-selling books, Reboot. Reinvent. Rewire: Managing Retirement in the 21st Century; The Corner Office; An Eye for an Eye; The Buck Stops Here – Learnings of a #Startup Entrepreneur and The Buck Stops Here – My Journey from a Manager to an Entrepreneur.
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