Professor Suresh Chander
It’s taken Covid-19 for many countries to wake up to notice China’s reach all over and the dangers it poses to the world order —and how far its decisions can shape the world post Covid-19. The world has woken up, with a rude shock, from deep sleep to the inevitable thanks to Covid-19. It appears that China, on the other hand, believes the events that unfolded this year are an inevitable evolution toward a new world order. China might have silently achieved her objective but for the wake up call by Covid-19. Now the world has to fight both Covid-19 and to check China’s growing influence.
We have yet to figure out the origin of Covid-19. Looking back, China’s foreign exchange reserves rose from T$ 0.17 in 2000 to T$ 3.3999 at present. In the same period US Federal debt increased from T$ 5.943 to T$ 25.75. China has Foreign Exchange Reserve Policy. In 2007, Cheng Siwei, Vice-Chairman of the Standing Committee of the National People’s Congress caused financial markets to tremble when he said that China would invest outside the dollar. However, any sharp movement will cause the US dollar to fall even faster and further, hurting the dollar holders even more than the United States.
There is widespread belief that it is some kind of Chinese magic that made her foreign exchange reserves increase twenty fold in almost 20 years. It was not Chinese magic but the greed of multinationals that allowed it to happen. US and other advanced countries have anti-monopoly commissions to curb growth of monopolies in their countries but turned a blind eye to slow and steady growth of a monopoly of another kind. A nation that became a supplier of practically everything – a one stop shop for anything one can name. The think tanks, policy makers, economists, future watchers did not see it coming or at least the warning signals were too weak to react. It is not perhaps their fault either as it is not a classical case mentioned in any book. But that is no excuse either – thinkers are supposed to think of impossibilities. It did not happen overnight but systematically over a period of several decades.
They seem to have forgotten Keynes by whose name the economists swear. As Keynes (1919) argued, the great events of history are often due to secular changes in the growth of population and other fundamental economic variables. Yet these factors can escape attention from contemporary observers owing to their gradual character. The causes of warfare too easily attributed to ‘the follies of statesmen or the fanaticism of atheists’ (Keynes 1919: 15). Economics offers one perspective on war—an important one in analysing and understanding conflict. Its explanatory approach puts less emphasis on accidents of history or the actions of prominent actors—instead it stresses the role of markets, the importance of resources, the conditions which predispose nations and peoples to war. While economic factors are important, they require human agency—economic factors do not declare war on their own (Offer 1989).
Multinationals, perhaps unknowingly, are responsible for creating the economic factors in present case.
This was a classic case of using cheaper resources to maximize profits. The MNC customers were too happy to get goods and services at cheaper rates. But, there was a catch – the source of this was not an individual or a company that too was happy to have a customer placing bulk orders never before heard of. This was no ordinary supplier like many in Vietnam, Bangladesh or India – it was the State of China that systematically lured MNCs to shift their factories to China and icing on the cake were marketplace aggregators like Amazon and Ali Baba sourcing consumer goods, FMCGs etc. from China. The die was cast. Everything fell in place until Covid-19 made the rest of the world to take notice of China’s tentacles all over.
In Indian mythology, something similar happened when Kuber ruled Lanka as representative of the ‘gods’. Before that Sumali was the king of Lanka. The ‘gods’ dethroned Ravana’s maternal grandfather Sumali and banished him and his people to Patal Lok, the netherworld. Kuber brought them back as cheap labour. They were the kith and kin of Sumali. On Sumali’s directions, Ravana organised these people and staged a coup d’état without shooting a single arrow. Kuber went to ‘gods’ for their help to regain control of Lanka. Kuber was admonished for his follies and greed to have imported cheap labour purely from economic considerations without its administrative and political ramifications. However, Kuber was rehabilitated at Alkapuri, a mythical city, by the ‘gods’. It is the home of Kuber, the king of Yakshas and the lord of wealth, and his attendants, called Yakshas. The Mahabharata mentions this city as the capital of the Yaksha Kingdom. This city rivals the capital of Indra the king of the Devas in its architecture, opulence, and overall splendor. It is quoted in the famous lyrical poem Meghaduta by Kalidasa
Having accomplished economic dominance – now was the time for territorial ambitions. It chose India’s Eastern Ladakh, to send the message to ASEAN countries and Australia about the coming of age of China. USA, Russia were superpowers of yesteryears who were only interested in their spheres of influence. This new player has different thinking. It wanted subservient clients and not colonies of the yesteryears that required complex logistics and huge machinery to keep them in check. The system being evolved was autonomous with no freedom movements, no Gandhis or Mandelas. There would have been no way to come out of China’s debt-trap diplomacy.
The world including USA and Russia would have become so weak to unshackle the economic stranglehold of China.
Economics is fundamentally about human behaviour—it is about choices in a world of resource constraints. It is about rationality and maximising welfare, and the gains of trade and cooperation. This would seem to put it at odds with war—a zero-sum game—which is about the worst aspects of human interaction and the costs of violent competition. War is difficult to square with rationality, but nations have passions as well as interests (Offer 1989). Of course we assume that war is counter-productive and futile from an economic point of view—it is even irrational. But when Azar Gat (2006) set out to unravel the ‘riddle of war’, he found that on the contrary—war is not an irrational act of passion or about the emotional acts of the battlefield. Rather, war is often fundamentally about economics, welfare maximisation and resulting aggression from a competition for resources.
In forensic science, Locard’s principle holds that the perpetrator of a crime will bring something into the crime scene and leave with something. The tyrants too commit some follies which become their undoing. China’s economic noose was tightening around the neck of India from which it could have found it difficult to unshackle itself. But someone out there was in a hurry to accelerate the process. That may turn out to be China’s biggest mistake. Let us hope it will not become a Thucydides* Trap – In the book Destined for War, Allison uses the phrase the Thucydides Trap which, according to him, refers to the theory that “when one great power threatens to displace another, war is almost always the result”.
*(One of the greatest ancient historians, Thucydides (c. 460 B.C.–c. 400 B.C.) chronicled nearly 30 years of war and tension between Athens and Sparta. His “History of the Peloponnesian War” set a standard for scope, concision and accuracy that makes it a defining text of the historical genre.)
(The author is former Head of Computer Engineering Department in G B Pant University of Agriculture & Technology)
Professor Suresh Chander