Courtesy - https://america.cgtn.com/2017/12/21/the-heat-author-tom-miller-discusses-chinese-investment
You feel as if you are roaming in the Chinese Sub-continent, sometimes as a Chinese businessman or sometimes as a local. Tom Miller has done an excellent job in walking the reader of the book through the region’s history, geography, and political condition in detail. Why is China like this, and what is the driving factor behind its adopted strategy discussed in detail?
The book has elaborated on the exact condition of each neighbor and its interaction with China. One has to briefly understand the history between the countries to perceive the basis of interaction between them. The primary objective of the (Chinese) state remains the same. By hook or crook, get control of the area and use it for your business and strategic benefits. Sell Chinese products if it is a market. Explore mines and minerals if it is barren land. Make a strategic location if it is a port. If nothing else, use it as a transit to other lands. In the sales of win-win diplomacy, both the wins are of the (Chinese) state.
The book is fact-filled and walks the reader through all these countries, and the author Tom Miller has understood the pulse of the countries lying on the silk route. This summary will give you a high level understanding of the issues faced and cannot substitute the richness of the facts and sequences stated in the book.
The Chinese leadership has proven that they have worked to get the place China deserved historically over the years. In due course, it is taking revenge and building up an empire that can not be humiliated or manipulated for vested interest or will bow down to anyone by deviating from its objectives. Chinese leaders ensured that the country’s national humiliation in the 18th and 19th centuries did not happen again. It is a lesson that all Chinese must remember and use for national revival. The country has to be internally strong, as well as be a power in the region. The government must have wealth so that it fuels its military power. Fueled nationalism is also a deterrent to internal social weakness.
The leadership till Deng Xiaoping intentionally kept the country out of the limelight and focused on growing internal strengths. However, the Tiananmen Square massacre got the country in the wrong spotlight and exposed the social unrest due to the iron hand in a velvet glove. Hu Jintao started interacting with the world and got the pulse of international relations. Banks like China Development Bank and Export-Import Bank of China began giving loans to traders and countries involved in trade with China. They soon surpassed World Bank and IMF fundings in the Asian countries.
The formation of organizations like AIIB (Asian Infrastructure Investment Bank), SCO (Shanghai Cooperation Organization), and ASEAN plus one is to give a boost to the BRI (Belt and Road Initiative) from China. This initiative will connect most of the Asian and European countries for business, providing a strategic advantage.
With the start of the BRI, China comes out of its cocoon of maintaining a low international profile and focus on domestic development. The leadership starts to assert its position in the world with the BRI’s grand plan. The aim is to create a market based on Chinese products in all the neighboring countries. This objective has to be achieved at all costs. The reach has to be made by building infrastructure to those markets in the name of developing their country using their money. In this process, they generate employment for their people and get a diplomatic grip on the land. This act is also called Debt Trap Diplomacy. Once the country has significant projects funded by China, it will not raise any concern in the UN against China, ally with any nation that is not pro-China or support China in any international forums.
This strategy has worked in many places and has failed miserably in a few of them, but China understands that the risk is worth taking and strategy to meet the objectives. The leadership aims to make the world hear China and inject more rules with China elements in there. President Xi Jinping has been proactive in getting China to the status of China as a major player in international politics.
(Courtesy: https://link.springer.com/chapter/10.1007/978-981-15-5171-0_1)
China has identified six routes on land and few other maritime routes.
1) The China-Mongolia-Russia Corridor goes from the northern part of China to Russia’s the Far East.
2) The Eurasian Land-Bridge between Western China, Western Russia, and Eastern Europe. This land corridor includes a railway that goes through China’s Xinjiang Autonomous Region, Kazakhstan, Russia, Belarus, Poland, and Germany.
3) The China – Pakistan Corridor that will go from China to Pakistan.
4) The China-Central Asia – West Asia Corridor will run from the western part of China to Turkey.
5) The China – Indochina Peninsula Corridor will go from the southern part of China to Singapore.
6) The Bangladesh-China-India-Myanmar (BCIM) Corridor will go from the southern part of China to Myanmar.
I will further elaborate on the routes for their history and the current situation of the ventures. The author has detailed the history and the current status of the same.
While China executes its grand plans to build the silk road, they use every strategy to meet the objectives. The initial focus was to create the maritime silk route through the east and south China sea. But the experts suggest the premier Wen Jiabao look westward and start from there so that while the troubled east is in the process of rectification, China develops its West. There are three components of the “March Westward” objective.
(Courtesy: https://www.sc.com/en/feature/one-masterplan-six-corridors/)
China took administrative control of Xinjiang in 1949 and established it as an autonomous region in 1953. Xinjiang contains China’s 5th of gas and coal reserves and the highest concentration of oil reserves. The province population was primarily Uyghurs, mostly connected with Uzbekistan and Turkmenistan, followed by similar cultural practices and Islam. Local tribes and residents constituted 90 percent of the population.
Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan, now adjoining countries, had little connection till 1991 when they were part of the Soviet Union. After the disintegration of the Soviet Union, Xinjiang found itself in the center of the continent. China made sure it secured its borders and formed a consortium to fuel economic activities. China quickly filled in to fulfill the commercial activity vacuum the region faced. They built up a network of roads, railways, and pipelines to connect the whole country. Xinjiang will now be the transit point to the whole of Central Asia and Europe. Sleep and laid-back towns were now bursting with transit and trading activities.
All these activities do not bring only good news for the locals. China slowly got the Han Chinese to settle in Xinjiang. Slowly the percentage of the local population went down to as low as 40%. Han Chinese were given the opportunity in all spaces, compared to the local Uyghur Muslims. This act fueled unrest and led to riots, acts of terrorism, and demonstrations in Xinjiang and other provinces of China. China took this act seriously and, in the name of security, started re-education camps. They kept the Uyghur Muslims in the camps and educated them to teach Chinese values and de-Islamization. This step from China is justified to quite an extent. When ISIS was rising, most of the recruits from Central Asia were the Uyghur Muslims from Xinjiang. This number did not include the already present Uyghur Muslim fighters in the ISIS camps.
Even with all these complexities, the Chinese government continues to develop Xinjiang to facilitate trading between them and Central Asia. Even though transportation by road is not quite economical, Europe and China exchange time-sensitive goods between places. In this process, there is an intermingling of the cultures and those who are ready to participate in the economic development benefit from it.
“Central Asia is the thickest piece of cake given to the modern Chinese by the heavens.” ~ General Liu Yazhou of China’s People’s Liberation Army (PLA). This statement consolidates the China approach/strategy towards Central Asia. Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan constitute Central Asian countries. No single bullet for all cases is the approach China takes. All these countries are rich in natural resources, but they do not have the infrastructure to exploit them.
China, with deep pockets, stepped ahead to control the major infrastructure projects, oil and gas fields, and mining zones. They would bid low for the infrastructure projects and high for the natural resources to take control of the same. These countries are cash-strapped, so ready to give away infrastructure projects to the lowest bidder. China also created its dependency, where it became the single largest importer of its resources.
The people of these countries also feel threatened that China may gobble them up with debt diplomacy and thinning bloodlines. These countries gave the infrastructure projects to Chinese construction agencies that Chinese banks funded (as the countries did not have the money to pay the construction companies) on the bank’s terms and conditions. These terms and conditions extended to barter or lease of the area or some other exclusive rights.
Chinese banks also keep an eye on an opportunity to take a pie in the company’s share. When the market is down, the banks will pick up the stakes in the companies. Chinese banks have a stake in most of the companies in Central Asia. Chinese businesses would grease the palms of the officials to get the licenses and tenders, and the local officials, in turn, offer them impunity from issues around. This treatment is on all levels, from the city to the country, and officials also know that it is inevitable if they want the government to keep running.
Chinese nationals also interact actively with the locals, settle in the area and run businesses, build relationships with local people with marriages, and act as agents in Chinese companies. Locals see their rising influence in all spheres and feel threatened for their land and the purity of their ethnicity. The way Chinese business dominates the area, the countrymen are scared and do not know where they will land.
“Dance of the mongoose and the cobra” defines the relation between the two countries. Russia keeps aspirations like China, but its current economic condition limits its reach. The Central Asia countries want economic cooperation with China, but they also feel threatened by Russia and China. They look forward to Russia for their defense needs. They also do not want to offend Russia, which may incite conflict and a possible reason for Russia to annex their country again. Six countries form CSTO (Collective Security Treaty Organization), consisting of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan, maintain a balance so as not to be under threat from either country.
Russia also formed the EEU (Eurasian Economic Union) with Armenia, Belarus, Kazakhstan, and Kyrgyzstan for trading activities. This balance also keeps Russia and China in control. If either of the two countries gets aggressive, they will run to the other for cover. China, seeing this, would have to keep itself soft while meeting its business interests.
In this race, Russia and China keep the business and public interest of paramount importance, keeping away from political interference. At the same time, there is a mistrust between them when either of them may take advantage of the delicate situation. China gets the upper hand here when they have more control over their economic activities, and they have a strategic advantage too. China is cooperating in the defense sector with a few of these countries in the area. China and Russia both made sure that they do not irritate the people in any of these countries. Otherwise, they may have to face any political turmoil (like that in Myanmar), also risking the complete Belt and Road Initiative.
(Courtesy: https://www.sc.com/en/feature/one-masterplan-six-corridors/)
This chapter talks of China’s relation with two countries, Laos and Cambodia. These two countries have been darling countries for China in the business objectives.
This country infamously is diplomatically the least aggressive country on Earth. They also carry the title of being “the most heavily bombed country on earth”—even more than Europe in World War 2. People’s per capita income was less than one-third of China’s poorest province, i.e., Yunnan, adjacent to Laos. China did everything to exploit the situation. Chinese businessmen took agricultural land on meager rent and took licenses for mining abundant gold, copper, bauxite, lead, iron, zinc, and potash, and quickly got tenders of construction projects. Set up the nightlife in the work areas, along with other pleasures. For that also they were entirely Chinese with Chinese food, language, and people. The businessman even got Chinese workers and them, stating that the locals were not efficient in working. China also saw Laos as the transit area for connecting with Cambodia and, subsequently, the ports.
The influence is so much that the country even accepts Chinese currency in main trading areas. Mobile phones continue to run on Chinese SIM cards, as Chinese telecom companies give facilities in Laos too. Even though gambling is illegal in Laos, many casinos have popped up in business areas, accepting currencies from China Yuan, Thailand Baht, Laos Kip, or US Dollars.
The Laos government has no other alternative of tilting economically to China for its development. It lacks population and money and runs the risk of drying out of resources when Chinese businesses exploit them.
Cambodia does not share borders with China, but all the investments, projects, and ventures in the country have China involved. It is also seen as the puppet of the Chinese government as it opposes the countries who dispute China’s territorial claim in the South China Sea and adjoining areas. Chinese do not feel like foreigners as the Chinese population has swelled up here and see all Chinese signboards & languages all around. Chinese New Year, though it is not an official holiday in Laos, the capital Phnom Penh effectively shutdowns altogether that day.
Cambodia also holds the credential of being one of the most corrupt countries in the world. Few companies with Cambodian names are Chinese-owned. Cambodia needs friends and friends with money. While the West wanted to invest with many terms & conditions and high-interest rates, China came with easy T&C and much lower interest rates. Cambodia also supports China as it wants to keep the US in check who is in Vietnam. Cambodians, in general, do not like Vietnamese, as have shown their protest on the street against them. Still, Cambodia is open for the US to come in with a lot of money.
China also helps Cambodia enhance its military capability with Chinese arms and ammunition. Cambodian military officers get trained in the Chinese Military Academy.
Cambodia (in the opposition party feels that it) has become a Chinese colony. Few snippets of dissatisfaction come up when small provincial projects get blocked when the government changes there. These events show the discontent of the Cambodians on growing Chinese influence in their country.
Still, China treads very cautiously with Cambodia as it does not want to enter the situation like it is in Myanmar and Sri Lanka.
Myanmar’s story cannot proceed without involving China. Myanmar was once a buzzing country with a lot of trading activities. In the early 19th century, Rangoon was the world’s top immigration destination, even above New York or Shanghai. Further, it was the melting pot of many cultures, with Chinese and Indians coming to the area to do business.
When it became a republic in 1949, China looked at Myanmar as the Gateway to the Bay of Bengal. There was the influence of China at all levels. Along with the Burmese Military, China took on all the business they wanted and rendered atrocities on Burmese people. Along with the military, they even evicted the more than half a million landowners of their land.
These acts fueled major unrest and hatred for the Chinese people in Myanmar. There were frequent riots and armed attacks on Chinese people living there. The military rule still favored the Chinese business and kept getting key infrastructure contracts and licenses to set up local businesses in mining and other areas.
Local people continued to hate Chinese people, which came out in a more prominent form when the democratic government came to power. A huge Chinese project of Myitsone Dam stalled as soon as the government came to power. Even after many discussions, the project did not take off. This decision was more the anger of the public showing up.
Many cities in Myanmar, like Mandalay, have been completely taken over by Chinese businessmen. There is no distinction between Chinese and Burmese there. It is extravagantly rich compared to the rest of Myanmar.
China wanted Burma to be its proxy of California and the transit to the BCIM silk route, but aggressive policy and corrupt practice laid this China dream to rest.
(Courtesy: https://www.sc.com/en/feature/one-masterplan-six-corridors/)
India and China have a long history of mistrust and border disputes which keeps both countries from discussing mutually beneficial business prospects. With the intent of increasing its trade and having a strategic advantage, China moved ahead with increasing its options in the Indian Ocean. Starting from Hambantota Port in Srilanka, Gwadar port in Pakistan, to Chabahar port in Iran. These moves may not be a direct alarm for India, but this increases options for China in case of any conflict. Though China wants to increase its trade, the projections it made to the countries for selling the port construction business. China built the Hambantota port project with the projection of 36 thousand ships docking the port every year, while just 175 ships anchored in 2018.
When Srilanka could not generate the money from operations to pay Chinese debt, China converted the port into a 99 years lease. This act sparked public fury and a lot of unrest. In the next elections, people elected an anti-China government. Now the agreements are under scrutiny and stall the rest of the other projects.
Pakistan is an all-weather friend for China, but local hostilities against the Chinese threaten the Chinese ventures. All the political parties know that Pakistan cannot progress if Chinese money does not pour in, but the local population is entirely against Chinese projects for a few of the reasons. Chinese projects get Chinese labor to execute the jobs. They do not generate local employment. Chinese projects charge a high-interest rate, which leaves very little room for the administration to earn. China keeps an opinion that it is worth throwing money in Pakistan to get a strategic advantage.
China thought that Gwadar port is one option for multiple reasons. The port can act as a maintenance base for Chinese submarines in the Arabian Sea and the Indian Ocean. China can also get the goods (including petroleum products) from this route to China in case of any embargo in the South China Sea (Strait of Malacca). China forcefully acquired a lot of land around Gwadar port, offending the local population. This move deteriorated the security conditions for the Chinese engineers in the area. These moves from China also fuel India’s fear of getting a string of pearls around it. China cannot control the whole South China Sea; controlling the Indian Ocean is a remote possibility. But India’s building strategy with that assumption will make China move towards this strategy and make it a reality.
China used the hot and sour relations with India to gather feet in Sri Lanka. While there was always a tussle between India and Srilanka over the Tamils, China gained grounds to discuss commercial projects with Sri Lanka. China looked at business opportunities in the war too. They supplied arms and ammunition to Sri Lanka in time of war with LTTE. China also made sure that it gives loans to Sri Lanka and not investments. These moves put Srilanka in a problematic situation as repayment of loans became a difficult task again for Sri Lanka to achieve. There were few Governments (Especially Mahinda Rajpaksha) in between who involved China in most of the projects without caring for long-term repercussions. After the change in the ruling party, the projects had a grinding halt.
China understands the issues in working with the democratic political systems but is ready to take the risk, as they get their foot in the door once something starts. China’s Asian Dream needs a careful retrospection in handling such issues with care.
China’s great lake is what China considers the South China Sea. China does not recognize the UNCLOS and states that all islands, including Taiwan in the South China Sea, are Sovereign China’s territories. Earlier, China focused on internal and business growth with other countries, and keeping the claim of ownership of the South China Sea took a back seat. But from 2014, it openly started making claims on the area. It went on to build artificial islands in the sea and deploy military equipment on the same. Though it denies militarizing the islands, deploying the equipment clearly shows its intentions.
China also claims to have historical ownership of the South China Sea. At the same time, history clearly shows that the Chinese were too scared to venture out in the sea and only traveled along the coastline for the unknown supernatural fears.
China wants to drive out all the other countries’ influence out of the South China Sea as the US did in the Caribbean. China knows that it cannot stress this territorial claim too much as that will ruin its economy, but it will maintain the stand to maintain the anxiety in the nations around. It takes the slicing salami strategy to gain more control in the area. They do not want to incite a war as that will again be detrimental to them as well as gain the hold of the area slowly. When they keep stressing that point, the countries will have to accept the stand in the long run.
China also runs into the fear of getting isolated in the process. None of its borders are peaceful due to its territorial claims and due to all the countries having distrust of it.
The 1979 Sino-Vietnamese War and 2014 China-Vietnam oil rig crisis were just two instances where two countries developed mistrust. China and Vietnam have a long history of hostilities. They have been fighting for ages. After the Vietnam war, the US made Vietnam its protectorate, thus keeping the US alive in the South China sea and keeping China in check. China claims ownership of Spratly Island and stops Vietnam from Oil and Gas exploration in the area, warning of armed conflict if Vietnam does not adhere to the advice.
Even though there is mistrust, both countries continue their trades. Vietnamese population still does not like the Chinese even after various attempts to heal the ties and continuing China’s aggressive posture in the South China Sea. Vietnam allowed China to work on the portion of the Hanoi Metro project. They did not allow them to advertise the CRG (China Rail Group), keeping the sentiments of people in control.
Vietnam continues to court with the US for its safety and protection from the bullying nature of China. Vietnam is clear that China cannot buy its loyalty with money and threaten its sovereignty.
China continues to assert its position in the world and the dream of prosperity to all those who comply. The US has to understand that China will not stop and will do anything to gain that position. It will have to congenitally accept or else bring the world to the brink of war.
China will have to tread forward; else carefully, it will make its situation what it is in Myanmar, Sri Lanka, and Malaysia. It cannot afford to isolate itself from the world, but to assert its position without a war, it will have to maintain its stand, which is a long-term game to fulfill China’s Asian Dream.
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