‘China Rampant’ and its effect on small nations like Sri Lanka

Rampant is defined as: ‘something that is spreading everywhere, in a way that cannot be controlled’. China is spreading its influence in a planned and structured manner to all parts of the globe. It is using its fast-developing economic power, to expand its influence in both economic and political terms far beyond the Asian region.

A history of perceived abuse and exploitation by the Imperialist Colonial powers, going back to the Opium Wars, fuels this drive. Analysts claim that in 2011 China was the world’s sixth largest international investor.

Sri Lankans are well aware of the strong influence China has over Sri Lanka’s economic development. Through a mixture of grants, soft and commercial loans, China is involved in a large number of infrastructure development projects in all parts of Sri Lanka.

Politically, too China is asserting itself. Recently the Chinese Ambassador in Sri Lanka met with the leaders of the Tamil National Alliance shortly after the TNA team had returned from India after a series of meetings with political leaders and officials.

The TNA team has told the newspapers that the meeting was at the express request of the Chinese Ambassador. The TNA stated that they had covered a lot of ground in discussions with the Ambassador, including the visit of the TNA delegation to India.

However, reports say that a request by the TNA to the Chinese Government to use its good offices to convince the Sri Lanka Government to find an early political settlement to the ethnic issue had been turned down by the Ambassador, because Beijing’s policy was not to interfere in the internal affairs of other countries.

Expanding sphere of influence

China is expanding its sphere of influence in all parts of Asia. There is an ongoing dispute over some rocky outcrops in the South China Sea, the Scarborough Shoals, around the Philippines, Viet-Nam, Japan, and Taiwan. The row between Japan and China over five islets that lie between them resurfaced again recently, when the Japanese Government decided to buy the three islands it does not already own from their private owner.

China reacted with outrage and sent two naval patrol boats to waters near to the islets, which the Japanese call Senkaku and the Chinese call Diaoyu. A Chinese newspaper, the Global Times, recently went as far as to question Japanese sovereignty over the prefecture of Okinawa!

The dispute borders around both countries’ Exclusive Economic Zones, in terms of the Law of the Sea Convention, ratified in 1982. On the Asian mainland, China is extremely conscious of the potential affect of the democratisation of Myanmar, promoted by the ASEAN nations and the Western liberal democratic nations may have on the region.

Internal unrest in Tibet, fuelled by a spate of recent self immolations, and an ongoing dispute with India over the Indian state of Arunachal Pradesh is also live international political issues.

The Indian Army is raising a number of new mountain divisions to station on the border with China and in Ladakh. 2012 being the 50th anniversary of the 1962 invasion of India by the People’s Liberation Army of China, there is a resurgence in India , among the media especially, on the 1962 episode, where the PLA advanced into India, gave the Indian Army a bloody nose and pulled back into China.

It is reported that Deng Hsiao Ping, visiting the United States, had mentioned to President Jimmy Carter that China, which was having a border dispute with Viet-Nam at that time, would teach Viet-Nam also a lesson, in the manner China taught India a lesson in 1962.

True to form the PLA advanced across the China- Viet-Nam border shortly thereafter, although the battled-hardened Vietnamese veterans of the Viet Nam war against the US put up a spirited defence, unlike the ill-prepared, ill-equipped and badly-led India forces in 1962.

To the North, while relations with Russia seem stable, there is a history of border disputes, while with Mongolia, China has ongoing issues over access to Mongolia’s humongous mineral wealth, which Chinese owned, both State and corporate entities, are eyeing.

The freedom of the seas also has become an issue to China, with over 70% of its raw materials and oil and gas coming through the southern seas and the Straits of Malacca. One Chinese leader referred to this as ‘China’s Malacca Dilemma’.

The Chinese also have deployed naval assets to assist the international policing operation against Somali pirates off the coast of East Africa, mainly in self interest, to protect its shipping routes. The first Chinese aircraft carrier is undergoing sea trials.

The Chinese interest in the political unrest in the Maldive Islamic Republic is also said to be based on the fear of the possibility of Islamic fundamentalist pirates locating themselves on an uninhabited Maldivian atoll and preying on shipping carrying raw material to China across the southern seas.

Influence in Africa

In Africa too, China is increasing her influence. Access to raw materials is one reason. In addition Chinese business people are involved in agriculture, animal husbandry and mining. In Zambia recently there was a shooting incident, where it was alleged that Chinese managers of a copper mine had opened fire at demonstrating workers.

A recent crackdown in Ghana over illegal mining in the gold rich nation resulted in the death of a Chinese miner and sparked a protest from China, underscoring the challenges of growing Chinese investment in African mining.

The death of a 16-year-old Chinese boy during a raid by Ghanaian authorities at a mine in October this year prompted Beijing to demand that Ghana undertake a full investigation and ‘uphold the safety and legal rights of Chinese citizens and businesses’.

Ghanaian officials say the growing presence of Chinese miners has become a ‘real national challenge’ as small scale illegal mining by both Chinese and Ghanaians has spread across the country.

An official of Ghana’s Minerals Commission states that “most of these Chinese illegal miners are heavily armed and shoot at anyone that gets near them. In the case where the Chinese boy was killed, the Chinese opened fire when the police tried to arrest them.”

Ghana has seen a large increase in small scale gold mining during the past two years because of high world gold prices. Chinese entrepreneurs are playing a large role in Ghana because they have access to imported Chinese machinery than enables them to extract gold form the river beds more efficiently than the Ghanaians.

Ghanaian authorities have arrested more than 90 illegal Chinese miners in the same raid that resulted in the Chinese boy’s death, including the boy’s father and uncle. In September, Ghana deported 38 Chinese miners who had been detained in an earlier raid.

In an interview with Chinese State media China’s Ambassador to Ghana described the imprisoned Chinese miners as “victims”. He further said: “The Government of Ghana should start from the source of the issue, crack down severely on the middlemen, the traffickers and the illegal miners and curb their illegal activities instead of just arresting victim Chinese citizens.”

Under Ghanaian law, foreign citizens are barred from small scale mining, but local middlemen covertly sub-lease their mining licenses to Chinese groups. A spokesperson for the Ghana Chamber of Mines, said that illegal Chinese mining was a problem all over the country. “There are environmental issues, poor working conditions, and child labour problems because the Chinese use Ghanaian children. They pay them whatever they want, and there are no contracts or safety standards; we are trying to make sure everyone is licensed,” he said.

China has lavished development aid to many countries on the African continent. In Ghana China has built the National Theatre in Accra, the capital city and also wrote off the loans that paid for the construction costs. Recently it constructed as a gift a state-of-the-art conference hall to the Ethiopian capital of Addis Ababa, but there was a small pinprick – channel one on the interpreters’ sound system was Mandarin! Chinese investment in development assistance to Africa exceeds that of the World Bank. Early in 2012, Beijing announced a further US$ 20 billion aid package to Africa.

Economic strength

‘China Rampant’ is a reflection of China’s economic strength. The economy has been growing at double digit rates over the last few years, although just now there is a slowdown due to the collapse in the European and America economies.

Annually, around September, the Hurun Report is published in Shanghai, by a luxury publishing and events group; it is a compilation of China’s wealthiest people. The report reflects important trends in the Chinese economy.

This year’s version of the report reveals that Zong Quinghou, a drinks tycoon who owns the Wahaha Group, regained the top spot he had occupied in 2010. His closest rival was Wang Jianlin of the Dalian Wanda Group, a property developer.

The report discloses that manufacturing has displaced property development as the leading source of wealth for the 1,000 people listed. What is of special interest is that two of those listed – media entrepreneur Yang Lan and Pan Shiyi, a property developer – are the most popular micro bloggers on the list, with more than 10 million followers each, on the internet.

Seven of the listed members have been named as delegates to the 18th Communist Party Congress to be held on 6 November. These are the Red Capitalists whom the Communist Party of China is assiduously cultivating, successful businessmen who also are enrolled into the Communist Party and given positions, to give capitalism a ‘Chinese Communist Face’.

This 18th Communist Party Congress, to be held in the Great Hall of the People in Beijing, on 6 November, is where the Party will unveil the line up of leaders who will rule the country for the next 10 years. Of the 2,270 delegates, around 70% are Party officials. The rest are ordinary members who are considered likely to toe the Party line. They include soldiers, model workers, an Olympic gold medallist and a handful of Red Capitalist businessmen.

The delegates’ job is to rubber stamp decisions made in secret by the Party, including the members of new Central Committee that will in turn name a new Politburo of around 25 members. Most of the discussions at the Congress take place behind the closed doors of the Great Hall of the People next to Tiananmen Square. With its high security and endless motorcades conveying delegates to the Great Hall, normal life in Beijing is brought to a virtual standstill.

Gearing up for Communist Party Congress

Around China the people have been geared up in the build-up to the Congress. Banners hailing the Congress have been put up in streets and commemorative postage stamps have been issued. Preparations include preventing aggrieved citizens from other provinces making their way to Beijing, where they might stage protests on local issues, while the Congress is going on.

Tibet’s boiling monasteries have been ordered to ensure that there are no outbursts of protest during this time. The Communist Party is worried because of the scandal surrounding Red Princeling, and one-time anticipated high flyer, Bo Xilai, has fuelled disputes within Party cadres and cynicism among the public.

Bo, the former leader of the Communist Party in Chongqing, has been expelled from the Party in September, for offences ranging from serial adultery to corruption to unspecified ‘major irresponsibility’ in a murder case involving his wife. Bo Xilai has been handed over to prosecutors. The Congress has expelled Bo from the Congress, removing his immunity from prosecution and opening the way for him to be prosecuted.

Recently a group of around 700 academics and former Communist Party officials, on the left wing of the Chinese Communist Party, to whom Bo’s flamboyant and populist style, including the promotion of old Maoist era Party songs and policies of State-led growth, appealed nostalgically, as against the current trend of Red Capitalism, promoting individual entrepreneurs, have written an open letter asking the Congress not to expel Bo.

They ask: “What is the reason provided for expelling Bo Xilai? Please investigate the facts and the evidence. Please announce to the people the evidence so that Bo Xilai will be able to defend himself in accordance with the law.”

Though the letter has not been reported in the State media, it has been carried in the left wing Chinese language website ‘Red China’. The letter exposes the deep divisions that exist within the party on the fundamental economic and social strategy – Red Capitalism as against Maoist Statism. The 2012 Congress is expected to chart a future based on Red Capitalism.

Demographic shift

In China, today, non State owned businesses are prospering, while State owned enterprises are in retreat. Over the next few years China will undergo a huge demographic shift. The proportion of people over 60 in the total population will increase from 12.5% in 2010 to 20% in 2020.

A Report by the Chinese Academy of Social Sciences says that China’s ‘demographic dividend’ – the availability of lots of young workers, which helped fuel economic growth, will soon disappear.

Many Chinese are now familiar with the concept of the ‘Lewis turning point,’ named after an economist from St. Lucia, in the Caribbean, Arthur Lewis, who said that industrial wages will start to rise quickly when a country’s rural labour surplus dries up.

Already this has been seen in China: manufacturing industries are moving away from the coastal areas, where they were first promoted, as rural migrants no longer leave their villages and migrate to work in the sweat shops on the coast. Factories are being moved inland, where labour is more plentiful.

However, the new system, by which farmers are allowed to market their surplus produce on their own, has seem a rise in rural small farm incomes, and such agriculturalists are reluctant to work long hours in factories.

The one child policy implemented for many years has resulted in a fast rising population of retired people, whose pensions will have to be paid for by taxes raised from a shrinking pool of current workers.

A big increase in the age of retirement in China is long overdue. The official retirement age of 60 for men and 50 for women was fixed in 1951, when the average life expectancy in China was 46, compared to today’s 73. These are the pressing economic and social issues facing a Rampant China. Zhu Feng, an international affairs expert at Beijing University has said: “We are the 800 pound gorilla in the room. China is learning to be a great power.”

Teufel Dreyer, a Professor at the University of Miami, says of China: “There is a debate at the top. Some leaders assert that China must assert its interests in a more straightforward way, to get its hands on resources it needs to power its economy. Others say the country must continue to give priority to domestic development and solving internal social challenges.”

Political reform

Recently Red Princeling and former Chairman of a State owned company, Qin Xiao, now heading an independent think tank – the Boyuan Foundation – made a speech at one of China’s most prestigious universities, Tsinghua, accusing the Party hierarchy of the enlightened values of democracy, freedom and individual rights, with ‘Chinese’ ones such as stability of the status quo and the interests of the State being paramount.

Qin founded the Boyuan Foundation in 2007, together with investment banker and Red Princeling He Di, saying that “China needs someone to stand up and speak”. Quin in an interview with a news paper published in Guangdong Province, the Southern People’s Weekly, said: “The Arab Spring showed that no matter how well a country’s economy performed, people will not accept dictatorial, corrupt government.”

Also Wang Changjian, a scholar at Communist Party’s training academy for cadres, has pointed out that there seems to be a phobia against political reform. In ‘China Rampant,’ the battle lines are clearly drawn between the universalists, who believe China must eventually converge on democratic norms, and the Exceptionalists, who believe that China must preserve and perfect its authoritarianism.

While Qin and the Boyuan Foundation represent the Universalists, Zhang Weiwei represents the Exceptionalists – Zhang recently wrote China’s evolution should be ‘as if the Roman empire had never collapsed and had survived to this day, turning itself into a modern state with a central government and modern economy, combining all sorts of traditional cultures into one body with everyone speaking Latin.’

This Exceptionalist point of view, which is a confluence of nationalism, rapidly growing military capability and deeply held feelings of victim hood are worrying. However, Chinese officials keep articulating the need for a ‘harmonious world’ and decry the use of military force to resolve disputes.

Consequences

It is interesting to see where China will be in two decades’ time. Will the Exceptionalists carry the day and will China end up being a seething pot of nationalist hate, bent on taking revenge from the world, for the past injustices imposed on China by the imperialist powers? Or will the Universalists win through and, will China end up a rich and affluent, extra large size ‘XL’ Singapore Inc., with warlike intentions only being manifested in corporate board rooms?

Non Chinese planners project that China in 20 years will be a near peer power bumping up against the United States of America in terms of economic and military capability, having aggressive intentions with its neighbours and nation states which do not do China’s bidding, perceived to be within its legitimate sphere of influence like Sri Lanka.

Whatever the outcome, it will have a serious effect on China’s smaller neighbours and emerging client states among developing nations, being nurtured by foreign aid, concessionary and commercial financing, trade and investment. We all should be planning for the consequences of a ‘Rampant China’.

(The writer is a lawyer, who has over 30 years experience as a CEO in both government and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)