Dark Dragon Rising

Over the past year, my job has focused heavily on Export Sales. While by itself, that sounds as boring as the next Sooraj Barjatya film, it does give one a greater-than-average exposure to geopolitics and international economics, for which I have been grateful. At times the sheer stupidity inherent to the Indian political discourse can be quite depressing. But the insanity which can pass off as normal in certain other countries, developed or otherwise, is a great source of some dubious relief.

The USA and (not-so-)Great Britain have been the best recent examples of the swift uplifting rush which comes from knowing that you are not the worst-off, in terms of making supremely shitty decisions as a country. In any case, while Britain struggles with the kind of problems you have when you allow propaganda politics to substitute economic sense, and Americans continue to treat their Presidential Elections like the final season of an obnoxious reality show, some radical shit has also been going on in other countries.

Of course, there is the rampant and worrying trend of rising fundamentalism. There is an incredibly complex insurgent war going on in Iraq and Syria, which forces one to watch a five minute YouTube video every time they want to recollect just who wants to kill whom, and the reasons behind it. People fleeing from these wars have caused a shameful refugee crisis which paints a sorry picture for Europe. Not only because it shows us how xenophobic and insecure the ‘liberated’ Europeans are, but also because it seems to have given an unhealthy boost to Conservative and Right-Wing political parties across the Western World, most of whom seem to have a vote-bank approach to politics, centered around what Donald Drumpf loves to call, ‘building a wall’. Cementing their cause are the terror attacks (literally) across the breadth of Europe – Charlie Hebdo, Istanbul Airport, Brussels Airport… the list could go on.

My interactions with the export customers, however, go beyond what routinely populates the Facebook news feeds of most of my peers, and the list is tantalizing. South American countries, for example, are currently in the throes of a terrifying recession, led by Brazil. Prime Minister Dilma Rousseff is facing an impeachment trial due to her alleged involvement in the gigantic Mensalao and Petrobras scandals, which when brought to scale make the CWG Scam seem like a teenager in Kurla doing mandvali with a traffic cop. Apart from the staggering bureaucratic failures of Latin America, I also learned of the vibrant and smoothly functioning black market and money laundering operations running on the ports of Karachi, the fantastically crazy sanction/counter-sanction game which Israel and the Arab countries play amongst each other, and China.

There aren’t many categories in which one can gave China a ‘Dark Horse’ status.

But there is the category of being evil. And in that category, China is more of a Dark Dragon.

China is an extraordinarily evil genius when it comes to Geopolitics. In fact their conniving dark-horse nature is now extending to the way they do business. People make a hue and cry out of the obnoxiously demanding nature of Indian customers, but dealing with a Chinese customer – especially a Chinese business customer is a nightmare even Alan Moore’s Joker would think twice before giggling at. China is oversupplied in nearly everything related to manufacturing, which makes it a really tough deal to send anything inwards, and turns business into a world of pain.

All over the West, petrochemical businesses are consolidating as the industry matures, and prices become increasingly volatile, driven by Crude Oil. Not China, though. Chinese companies are relentlessly adding capacity in markets which are already oversupplied, harvesting a cesspool of underpaid, ill-treated human resource with shocking apathy, and with absolutely no way to differentiate their products, except pricing them cheaper. There are many manufacturers who do not even pretend to maintain industrial safety standards. In trade shows, I have seen smaller manufacturing firms put up promotional videos, where Chinese workers operate machines with absolutely no safety equipment – it is only worse, that no one seems to care. It’s a promotional video for fuck’s sake!

While the West tries to hedge against the sharp fluctuations by entering into contractual agreements with major suppliers, the East, with China in the lead, has turned price fluctuation into a zero-sum game – spot trading (no hedge, completely marked-to-market) is the only format available to a majority of suppliers. This is opportunism in its purest form. When the prices rise, suppliers rally and screw around with buyers; vice-versa when the prices fall. One of my Thai (Chinese origin) partners termed the above situation as a ‘rough sort of market equilibrium’, and wouldn’t agree with me, when I tried to tell her what it actually was – a bloodbath.

The Chinese stock markets have had a bad run recently, and many non-Chinese traders who are settled in China keep dropping hints, which seem to indicate that China’s strength in manufacturing is dwindling. But the Chinese are already emerging from this. They have mastered the art of making big-ticket deals which solidify their balance sheets, but don’t make too much noise. One such deal was China National Chemical buying off their Swiss rival Syngenta for a whopping $43 billion. This came to me as a considerable surprise, because absolutely no news of this deal seemed to reach my phone. To give some context When Bayer offered to buy Monsanto I received a notification from three different news apps, and people posted informative articles on what this means for farmers. The Syngenta purchase happened slowly, surely and quite decisively – a very clear parallel to the way China seems to make claims on territories they cannot really claim.

As an Indian, I would personally evaluate Pakistani policy to be more belligerent and aggressive in nature than Chinese policy, and yet, when it comes to business the situation is completely different. I would jump up, shake hands, or even hug my Pakistani channel partners before Mohan Bhagwat can say ‘Love Jihad’, but you would find me trying to file a restraining order against the Chinese channel partners as a result of all the above. Chinese traders don’t even know it, but they can be extremely obnoxious, and often carry a dangerous lack of respect for professional courtesy, another person’s privacy and the concept of work life balance. It’s not their fault – it’s just the way they do business.

And the way they do business, seems to have disturbing parallels to the way they make foreign policy.

Chinese Geopolitics is either insanely strategic to the point where there is a secret plan to annex the world lying in Xi Jinping’s office, or it derives inspiration from the tagline of Pokémon – ‘Gotta catch ‘em all’.

To understand just how brilliant the Chinese strategy is we need to understand their core motivations. They keep it simple:

  1. Insulate from War
  2. Monopolize Maritime Trade

Whoa, wait a minute. Because this needs some explanation:

China is a ginormous country – 3rd by geographical area and 1st by population. But the population density of the state undergoes wide variations across its breadth. In fact, here is a map:

Image_2_20160104_TWIG

The red line in the map, unimaginatively titled the 15-inch Isohyet is like a weird population bridge. As you can see, almost 100% of the world’s largest population is concentrated along the comparatively tiny geographical area near the Southern and Eastern coastlines. Why this unfair amount of people on one side of the line? One answer is of course, the climate. The regions farther away from the mountains are more inhabited as a thumb rule. But there is another interesting map of China which throws things into sharper perspective:

Image_1_20160104_TWIG

The Han Chinese (the brown colored portion on the maps), are the original ethnic population of China. This make another thing clear – The isohyet is not just a demarcation of population density, it is also a demarcation of ethnicity. Nearly the entire indigenous population lives below the line. Why is this distinct trend visible? How exactly do the borders of this country extend so insanely far beyond where the indigenous population is concentrated? Well, that’s because of foreign policy.

China is like The Eyerie from A Song of Ice and Fire – covered from approach by mountains on three sides and protected by a sea on the fourth. And China takes this topographical advantage very seriously. It is currently fighting a boundary dispute with nearly every single country it shares a hilly border with.

With India, their tiff is well known – they have not ceded an inch of the territory they took away from us without a sane explanation in 1962. They disputed the territory determined by a fully legal treaty signed between British India and Tibet (as per a line called the McMahon Line), and consider many parts of Bhutan, Nepal and Arunachal Pradesh to be their own. The reason why they think the land belongs to them is hilarious. China doesn’t acknowledge the McMahon Line, because it was enforced by a treaty signed by Tibet. And no one in China seems to give a flying fuck about the land of Tibet or the Tibetans. They are obstinate about it to a legendary extent, given that they have declared Tibet was not a sovereign country even during those historical periods when Tibet very much was one (for example, the time when Tibet signed the treaty with India). And by extension, any land related understanding anyone ever made with Tibet is void. It is also an illegal occupation of Chinese territory. Sigh.

China doesn’t stop there – it goes on and on. It claims Tajikistan because of a historical presence of the Qing Dynasty and says that many parts of Kyrgyzstan (least vowels in a country name, EVER), were illegally taken away from them by Russia.

Why does China care so much about these vague borderlands which are mostly uninhabited and provide nothing whatsoever to the Chinese GDP? Because it is a strategic buffer for China. The Han Chinese are enveloped, just like the Eyerie, by impenetrable topography across Tibet in the south (with a secessionist movement of its own), Xinjiang in the North West (with a secessionist movement of its own), Inner Mongolia in the North (Mongolia is a different country, for Christ’s sake!), and Manchuria in the North East. China has never given a fuck about the rightful claimants of the territory, and there is no indication that they ever will.

Meanwhile, more interesting things are happening on the marine side.

Towards the sea, China is fighting Japan on the Senkaku Islands, and a mind boggling four other countries – Brunei, Malaysia, Vietnam and the Philippines over a few tiny islands in the South China Sea. The islands are smaller than Sharad Pawar’s land holdings, and definitely carry no importance except the strategic one. In 1947, China released maps carrying the now famous ‘Nine-dash-line’, which laid claim to this huge patch on the sea, with a highly convincing, one-line logical basis, “Fuck you, I am China”.

images

The reasons behind this are a crippling geographical limitation – Americans control sea passages between many of the islands in the neighboring waters of China, directly or indirectly through archipelagos claimed by Singapore, Japan, and others. This does not sit well with China – in much  the same sense that a 98 percentile in CAT  does not sit well with the guy who only wants IIM-A. China has made many strategic alliances just to subvert the effects of this problem. About a couple of years back, for example, they started tying up in port operations with Sri Lanka. They also continue to maintain an embarrassing number of Anti-Ship missiles as a Plan-C. Plan-B, of course, is to draw maps with imaginary lines. These desperate attempts to control maritime trade in its neighboring waters while maintaining tactical superiority over the USA climaxed yesterday.

An International UN Appointed Court decided after the due judicial process, that China was indeed overstepping its bounds by claiming the area covered by the nine-dash-line. No prizes for guessing the Chinese reaction to this. Since it would be too mainstream to not acknowledge a court’s verdict, China preempted their flip-kick in the face of global sensibility by deciding to not even participate in the proceedings. It is sort of a letdown that no other member of the Security Council is trying to slap China out of this self-induced hallucination.

This is worrying for everyone, as well as India. We don’t really share the best of relationships with China. It begins with serious political disagreements over sensitive issues like state borders and India’s membership in the NSG, all the way down to the heinous culinary crime of calling Gobi Manchurian a Chinese dish. It doesn’t help that at times it seems as if Pakistan (the only country with which China shares a border and has no insurgency or territory disputes) is on the payroll of the Chinese. It doesn’t help that the Chinese advances from a geopolitical standpoint are as shrouded and unreported as their business deals. There is a strong case to be made for the UN Security Council to view China’s infractions and stubbornness without the diplomatic sugarcoating usually reserved for another UNSC member. But whether events of the recent past have actually rattled the right stakeholders, remains to be seen.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s