An old Chinese story titled “The
Wolf of Zhongshan,” talks about a wolf which had been shot by a hunter. As it
was running away injured, it met a kind-hearted person who saved the wolf from
the hunter. After the hunter left, the wolf said to the kind-hearted person,
"You have saved me. Now I am hungry. Since you have come this far helping
me, let me eat you."
Why has China, the second largest economy of the World, suddenly
starting flex its muscles? Why are they opening so many flanks with so many
countries simultaneously? There is an economic, political or territorial issue
that has been raised with several countries, almost simultaneously. What does
China hope to accomplish when its own economy has been ravaged by the Wuhan
Virus?
From time immemorial, world leaders, under pressure because of a weak
economy or a weak political position, have waved the flag of National Security
and done sabre rattling to divert attention from their internal challenges. Are
we seeing the same in China today?
Let us look at the challenges China is facing:
1. Credibility Challenge: China has a serious credibility issue with the rest of the World,
reeling with the impact of the Corona pandemic. Political leaders around the
World have started blaming China for not being transparent about the origin of
this virus. What should worry China is that the average individual in each
country is angry with China and the first reaction will come against “Made in
China” goods. This is an emotional and a sentimental reaction and once
deep-rooted, will be difficult to change in a short time. Calls to stop buying
Chinese products and even to uninstall Chinese apps should be a cause for
serious concern in China.
2. Diplomatic Challenge: When there is when
there is pressure diplomacy normally comes to the rescue.
a. Chinese officials have been reacting with threats as can
be seen in their stopping imports from Australia.
b. They have been threatening
Taiwan and there is cause for worry in Taiwan in case China decides to
unilaterally take military action.
c. The recent amendment of
the National Security law to govern Hong Kong is another case in point.
d. Racist comments against African people in parts of China
has resulted in a reaction from Africa.
e. Finally, the Chinese government officials are aware that US elections are round the corner and
therefore understandably rhetoric will be high and loud. This is the time when
they need to keep quiet and wait for the elections to be over. Instead Chinese
officials are you issuing threats of retaliation to America when they
comment or support Hong Kong or Taiwan.
3. Geographical and Territorial Challenge: China has always wanted to expand its boundaries by
attempting to take over lands of other countries that it claims.
a. Gathering a number of military personnel on the border of India and raising
territorial and boundary issues at this point of time is one more flank that China could have
avoided opening. After encroaching into Indian territory, the Chinese found that
unlike in the past, Indian political resolve was strong, and the Indian army
pushed back. This resulted in some fisticuffs though no damage was done other than to the Chinese ego. Soon thereafter, the Chinese leadership
started to wave the peace flag.
b. The Spratly Islands is a contentious issue in the South
China Sea.
c. The China Pakistan Economic Corridor that goes through
Indian territory will be the first casualty.
d. The One Band One Road (OBOR) project has also become a
question mark in most countries. Citizens of these countries were expecting
large investments into their country, but they can see they will get nothing.
China is sending its own equipment, its own people and its own material for
these roads. Even the food their workers eat comes from China!
4. Economic Challenge: China has powered its way into every nation given its financial might
and during this pandemic its companies, supported by State Institutions, are
looking for cheap acquisition of lucrative companies around the World. This has
been picked up my most countries and restrictions are being imposed to ensure
that good companies are not sold because of the pandemic.
a. The financial cost of the virus to the World economy
varies between US$ 5 trillion to US$ 9 trillion. Some countries are threatening
to recover this from China. While it is unlikely that any compensation will
ever be paid, the sentiment behind these claims is more important.
b. Most international companies in China are starting to evaluate how they will re-engineer their supply chains so
that they are less dependent on manufacture of their products In China. This
will have serious impact on China
which relies on mass production.
c. China has
launched a trial of digital yuan in Shenzhen, Suzhou and Chengdu, and the
Xiong’an New Area. It will be interesting to see the reaction of the US
Government as it will see this move as a threat to the US Dollar, the only
global currency. The only other person who had challenged the US Dollar when he
started trading oil in Euros was Saddam Hussain.
No one likes a bully, and no one likes to be threatened. Trade and commerce
are always a two-way street. There could be trade imbalances between countries
and these can be corrected. No country can stop buying from another and assume
that there will not be a reaction from the other country.
China is powerful because the World started to buy its products putting
money in the hands of the Chinese citizens thus powering their own economy. If
the factory of the World stops selling its goods, the impact on the country is
clear and obvious.
President Xi Jinping has asked his country “to make mental and material
preparations for changes in the external environment that will last a
relatively long period of time.” This could mean that China will be more
aggressive and confront their challenges with retaliation rather than conciliation
and cooperation.
Has China got caught up with its own hype of having a large economy
(which is slowing down), of having a large well-fed and satisfied army (which
could be reluctant to get into a fight) and an invincible leader (who could be
facing serious challenges from within)?
Only time will tell.
*******************
The author is a CEO Coach, a
Storyteller and an Angel Investor. He hosts the highly successful podcast
titled The Brand Called You. A keen political observer and commentator, he is
also the founder Chairman of Guardian Pharmacies. He is the author of 6
best-selling books and writes for several online newspapers.
Twitter: @gargashutosh
Instagram: ashutoshgarg56
Blog: ashutoshgargin.wordpress.com |
ashutoshgarg56.blogspot.com
