Conscious de-coupling and implications for Nepal
The year was 1972 and what a year it was!
It was history in the making.
The global champion of capitalism, the
United States, crossed the Himalayan barrier to shake hands with a communist
China leaving behind past irritants like the Korean War and the Vietnam War and
establishing a bilateral relationship that would emerge as the most important
international relationship over the years.
This new chapter in the diplomatic relationship
between the two amazingly different countries, which marked the end of over
two-decade-long halt in the ties, was a Richard Nixon-Henry Kissinger master stroke targeted at weakening China's ties with the then Soviet Union in the interest of the United States.
This relationship proved quite resilient even during trying times like the Tiananmen Square massacre (1989), the handover handover of Hong Kong (July 1, 1997) to mainland China,
constant friction over Taiwan, the collapse of communism in East Europe and the
fragmentation of Soviet Union in the 1990's, with China opening up to the world
from the late 70's and joining the World Trade Organisation in 2001. At the
climax of the winds of change, the Berlin Wall collapsed but the ties between
the US and China remained intact.
By and large, this bond between a democracy and a communist
country proved beneficial for the world as the latter opened up to the world
and became a global factory for gadgets, clothing and vehicles, among others, thanks
to easy availability of a cost-effective and hardworking workforce and cutting-edge
American technologies.
Over the years, academic and scientific collaboration between
Chinese and American universities would strengthen, boosting research on
diverse fields.
Sadly, this era of engagement seems to be coming to a close and an
era of disengagement seems to have begun amid speculations that China will become
the largest economy by relegating the US to the not-so-coveted second place
sooner than later.
Indications of a possible disengagement (partial disengagement
in the best case scenario), are everywhere: In high seas, land, in the air and
the space. The disputed South China Sea is one of the potential flashpoints,
where the US is siding against China with other claimants in favour of what it
calls the freedom of navigation. China's Belt and Road Initiative will surely cross
path with the Asia Pivot Strategy, making the whole of Asia, including South
Asia, a huge flashpoint for potential conflicts.
In a clear sign of fraying ties, American companies have started
shifting from China to Vietnam, Malaysia and Indonesia, among other countries.
One would be naïve to think that this disengagement would pass
off peacefully. It would be equally foolish to think that the superpower and
the hyperpower would engage in a full-fledged confrontation. But there's little
doubt that the two countries will seek to harm each other's interests on their
own and by taking like-minded countries on board, setting off a prolonged Cold
War 2.0.
Needless to say, this kind of conflagration will be disastrous
for global peace, stability and prosperity.
Already, the world is witness to the ongoing trade war between
the two global giants, a major factor in the economic slowdown that is taking
global proportions after spreading in parts of Asia, including India, and
Europe. As China and the US have footprints everywhere, no part of the globe
will be left untouched.
The irony of history is that the United States, once the
champion of globalisation and liberalisation, is taking protectionist measures
to protect its economic interests by imposing heavy tariff on Chinese goods and
putting pressure on China to buy more of its products, including soybean that
is largely produced in the US Midwest, including Iowa, to reduce the trade
deficit, which, in 2017, stood at a whopping $336 billion. China also is imposing heavy tariff on US steel, pork, crude oil and vehicles.
In the short run, at least, heavy tariff seems to be benefiting
the world's largest economy. But there are speculations that benefits from
protectionist measures will be short-lived and a liberal trade regime will be good
for all in the long run.
Amid this trade war, a war of words is going on between the two
sides. The US is accusing China of giving concessions to Chinese companies,
thereby denying a level playing field for its companies, something which the US
has also started doing to protect its core interests. The US is also accusing China
of stealing technologies and vice-versa.
The US is accusing Beijing of currency manipulation in view of
Chinese ambition to promote its national currency (RMB) as an international
currency.
How this trade war will end up is quite uncertain.
One thing is clear, though: Trade war is something that no party
seems to be seen as losing. President Donald Trump and his Chinese counterpart
Xi Jinping both have their political fortunes at stake in this war. President
Trump wants a second term, so he does not want to be seen as the one, who blinked
first. On the other hand, President Xi Jinping also wants to remain on the high
pedestal like Chairman Mao, so 'blinking' is out of the question.
Amid this war, Nepal offers an interesting spectacle.
Stricter border controls are out of the question, given that the onus is on our small-time politicos to make Nepal bear the historical burden of unequal relations institutionalised by questionable bilateral legal instruments
Here, there's no dearth of hopeless optimists, high-stake
gamblers and their lofty plans to make the country prosperous by keeping the
border open to allow huge influx of peoples and goods from the immediate
neighbourhood and beyond, and keeping the two economies like conjoined twins.
While farm and other products from the dear neighbour can enter
Nepal without much hassles, most of our products find it pretty hard to make it
through the border down south. Stricter border controls are out of the
question, given that the onus is on our small-time politicos to make Nepal and
the Nepalis bear the historical burden of unequal relations institutionalised
by questionable and controversial bilateral legal instruments like the 1950's Peace and
Friendship Treaty.
Is this bunch of optimists and high-end gamblers seeing any opportunity to benefit from the animosity of the two giants?
Is this bunch of optimists and high-end gamblers, by the way, seeing
any opportunity to benefit from the animosity of the two giants, formulating
plans similar to the ones it has made to profit from the 'prosperity' of the
two giant neighbours regardless of the fact that their ongoing and future
projects are mainly aimed at promoting their own national interests, whether it's
the Belt and Road Initiative, the Arun III, the cross-border pipeline projects
or cross-border power transmission lines?
Is this bunch seriously assessing this trade war and possibility of a serious global recession that may force Nepali migrant workers to return home, cause market prices to escalate and push a huge population to abject poverty? Is it formulating plans to tide over this crisis?
Or is it seriously assessing
this trade war and the possibility of a serious global recession that may force
Nepali migrant workers to return home, cause market prices to escalate and push
a huge population to abject poverty again, giving rise to a humanitarian crisis?
Is it formulating some plans to tide over this worst-case scenario?
Devendra Gautam
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