Are India & China really destined to rivalry?

China and India are the two giants of what are called the emerging powers – they are the ’I’ and ‘C’ in the BRICS  – but despite their membership of that grouping, relations between them have long been uneasy.

They fought a brief war in 1962 high in the Himalayas over their disputed border. It ended with India humiliated and to this day anti-Chinese rhetoric is commonly heard at demonstrations and in the Indian media. For their part, the Chinese resent that India has hosted the exiled Tibetan spiritual leader, the Dalai Lama, and the Tibetan government in exile, since they fled after the failed Tibetan uprising against Chinese rule in 1959.

I wrote last week that China’s maritime borders remain tense and a possible flashpoint. But this week, there is potentially better news from China’s south western border where Beijing has taken a significant step to improving relations with India with a visit to Delhi by the new Chinese Prime Minister, Li Keqiang.

The visit followed a month when tensions had been running high after soldiers from the two sides moved into an area on the disputed border and faced off. This ended when ahead of Mr Li’s scheduled visit, senior officials from both sides picked up the phone and agreed to pull their troops back.

There had been pressure on the Indian government not to back down with anti-Chinese protests in several parts of the country and expressions of outrage in mainstream and social media. In China, there was little public and media reaction as the incident went largely unreported, although past studies of how India is viewed on Chinese social media suggest a none too flattering opinion – more condescending than hostile.

So why did both governments decide compromise was better than confrontation?

You won’t be surprised to hear that part of the answer is economics. As both countries have grown rapidly over the past decade, trade between them has shot up from $2 billion to $75 billion a year and China is now India’s largest trading partner. Although, there are concerns in Delhi about the size of the trade deficit, both sides are keen to see this grow further and during this week’s talks Li Keqiang told his counterpart, Manmohan Singh, that Beijing would address the trade deficit.

China has clearly decided that better relations with India are a priority. The official media made much of the fact this was Mr Li’s first official trip abroad since taking office in March and has talked  up the visit. On arriving in Delhi, Li said the fact it was his first foreign trip showed “the great importance Beijing attaches to its relations with Delhi”.

What he didn’t explicitly say was why. And, in addition to trade, the answer there seems to be the United States.

Washington has made a huge effort to improve its relations with India over the past few years, even going as far as to sign an agreement on civil nuclear cooperation in 2008 despite the fact India never signed the nuclear non-proliferation  treaty and has developed its own nuclear weapons arsenal.

Many in Beijing have interpreted this as part of an American attempt to contain China.  The Obama administration’s “pivot to Asia”, which has seen the US boost its military and diplomatic focus on China’s neighbourhood, has intensified Beijing’s concerns. Some China-watchers have dubbed this the “go west” strategy – facing containment on its eastern seaboard where it is ringed with allies and friends of the US like Japan, Taiwan and the Philippines, Beijing has decided to give itself options to its west.

This may lead to better relations between China and India which makes for a more stable world, but not everyone gets to benefit.

This week, my programme, The World Tonight, heard from some of the people who are losing out in a rare report from Nepal. Traditionally, India has had the greatest influence over Kathmandu, but in recent years China has become more influential. Many Tibetans fleeing Chinese rule of their homeland end up in neighbouring Nepal, but the Nepalese government, allegedly out of deference to China, is restricting their entry and making life difficult for those who get across the border.

A reminder of the human cost of great power politics which remains as much a factor of today’s world as it has throughout history.

Nuclear war called off in Korea – time to relax?

Something quite significant happened this week– though you may have missed it.

It seems the US military doesn’t think there will be nuclear war with North Korea.

A few weeks ago, you could have been forgiven for thinking we were on the brink of something similar to the Cuban Missile crisis of 1962. Pyongyang was threatening a nuclear strike on America and the US – in an unusual move – publicly announced nuclear-capable stealth bombers were taking part in joint military exercises with South Korea.

But then this Monday, unreported by most media, the US Army commander in the Pacific, Lt. Gen. Francis Wiercinski, said he thought ‘the current cycle of provocation (by the North) has come to its end point’.

Things have probably quietened down because the joint exercises are over and the leadership in the North feel they’ve achieved whatever it is they set out to do.

For instance, also this week, the North Korean Defence Minister was replaced . Although we don’t know for sure why he was given the push, there‘s speculation it’s part of efforts by the isolated communist state’s young leader, Kim Jong-Un, to consolidate his hold on power.  Kim is the grandson of the North Korea’s founder, Kim Il-sung; but at only 30 he’d had very little time to build a power base of his own when he inherited the leadership on the sudden death of his father, Kim Jong Il, 18 months ago. Indeed, many North Korea watchers attribute the recent nuclear sabre-rattling to Kim’s attempt to build support inside the corridors of power in Pyongyang by appearing strong and martial.

Whatever the reason, the North has also removed missiles it had deployed on its east coast near the border with the South.

So we can breathe a sigh of relief then? Continue reading

Getting our priorities right

I am hugely reassured to hear that, in this era of global crisis, British diplomats are focusing on the really important issues:

An agreement has been signed to bring two giant pandas to Edinburgh Zoo, the first to live in the UK for 17 years.

The deal was signed at Lancaster House in London by the Royal Zoological Society of Scotland and the Chinese Wildlife Conservation Association.

It was witnessed by Deputy Prime Minister Nick Clegg and Vice Premier of China Li Keqiang.

Tian Tian and Yangguang, a breeding pair born in 2003, will be under the custodianship of the zoo society.

The project represents the culmination of five years of political and diplomatic negotiation at the highest level and it is anticipated the giant pandas will arrive in their new home as soon as a date is agreed.

The Chinese government is said to charge around $2m a year to rent a pair of pandas. Apparently though, “the Giant Panda Project will be funded through sponsorship, offering unparalleled opportunities in terms of international corporate, commercial and diplomatic relationships between China and the UK.”

Happy days.

From BRICs to PIGS: what’s in a name?

First there was BRICs. Then came CIVETS. Then we were presented with BASIC, CRIM, BRICK, CEMENT, BEM, N11 and the 7% Club. Now barely a week goes by before someone tries to float another ‘useful’ investment acronym.

Behind the dense forest of exotic acronyms is a simple fact: the catch-all classification ‘emerging markets’ has lost much of its usefulness. It was invented in the 1980s, by World Bank economist Antoine van Agtmael, to replace the now-defunct acronym LEDCs (or ‘less economically developed countries’) by which the West had until then blithely referred to the rest of the world. The term ‘emerging markets’ served as a useful way to refer to fast-growing although crisis-prone markets like Russia, China and Mexico.

Within the term ‘emerging markets’ was quite a 1980s-assumption: these markets would follow the development route laid down by ‘developed’ economies, until they arrived in the neo-liberal end point reached by the US, the UK and other western countries. And the phrase also came to have strong associations with the currency and debt crises of the 1980s and 1990s.

But things have changed. The bigger emerging market countries have now overtaken the weaker developed markets, not just in total GDP, but also in the pricing they pay on their sovereign debt. Emerging market countries like China and Russia have accumulated trillions of dollars in foreign exchange reserves, and are now the main creditors of western sovereigns. In the 1980s, emerging markets depended on the west for capital inflows. Now the situation is reversed, and the US and EU depend on China to buy their sovereign debt.

It was partly to recognize this shift in economic power to emerging markets that Goldman Sachs economist Jim O’Neill introduced the now-famous acronym BRICs (Brazil, Russia, India and China) in 2001. It was a runaway success. A decade on, and MSCI has launched a BRIC index, there are several BRIC-focused funds, BRIC-focused blogs, BRIC conferences, and the leaders of the BRIC countries even held their own BRIC summit in 2009. 

However, the success of the acronym, and the increase in capital flows to BRIC markets that followed, quickly led to questions and criticisms of the BRIC tag. In 2008, for example, when Russia’s economy slid into recession following the war with Georgia and the Credit Crunch, some analysts suggested Russia should be dropped from the grouping. This suggestion was sufficiently alarming to Russia that it organized not one but two BRIC summits in Russia in 2009. . Continue reading

Russian bear hugs the West tighter?

Two years ago, Georgian forces shelled the capital of the breakaway region of South Ossetia hitting the base of Russian peacekeepers as well as civilian housing. Russia responded immediately with a massive ground and air assault and in five days inflicted a heavy defeat on its tiny neighbour, occupying a band of Georgian territory into the bargain.

The conflict had several immediate results.

Already fraught relations between Moscow and Tbilisi plunged to new depths and diplomatic relations were severed.

Russia and three other countries recognised the independence of the breakaway Georgian regions of South Ossetia and Abkhazia.

And relations between Russia and the West – the US and the EU – deteriorated to their worst level since the collapse of the USSR – there was even talk of a new Cold War from western politicians.

The Cold War analogies led some commentators to argue Russian foreign policy had taken a decisive anti-western turn and things could and/or should never be the same again

Two years later, the one thing that seems unlikely to ever be the same again is the shape and size of Georgia. If recognition from Russia was not enough, the recent International Court of Justice opinion that Kosovo’s unilateral declaration of independence was not against international law, makes it even less probable Tibilsi could regain control of its lost regions. Continue reading

On the web: China at home and abroad, Cameron’s foreign policy, and sustainable development…

– Over at The Diplomat, Thomas Wright explores how China’s self-confidence in initial relations with the Obama administration may prove the “catalyst for a more competitive – and geopolitically savvy – US multilateralism.” Der Spiegel, meanwhile, highlights the extent of Chinese soft power, while Charles Grant sees a chance to enhance the EU’s relations with the emerging superpower.

– Focusing on Chinese domestic society, the Economist highlights the growing activism and changing dynamics of the country’s vast labour force, with its associated implications for the global economy. Analysis over at VoxEU, meanwhile, assesses evidence of a potential Chinese property bubble.

– Elsewhere, with David Cameron back from his visit to India, Adrian Hamilton and Geoffrey Wheatcroft offer their views on his approach to international affairs. Kim Sengupta meanwhile remarks that the new Prime Minister “has started his foreign policy journey with a series of very deliberate steps”.

– Finally, Sir John Sulston talks to the New Scientist about the implications of global population change for sustainable development – the subject of a new initiative that he’s leading for The Royal Society.  Prospect Magazine‘s blog, meanwhile, highlights favourable demographic trends in the developing world, while figures this week confirm that the EU’s population has now passed the 500 million mark.