Though weakened, China still formidable
AS 2023 begins, the road ahead has become distinctly steeper for China. After the volte face on its Covid policy, Beijing is now trying to keep a lid on the bad news that is pouring out from all corners of the country. But that is not likely to be of much help, given the tsunami-scale impact of the delayed pandemic.
For the CPC, perhaps, even more significant than its Covid retreat, have been the ‘white paper’ protests where blank sheets of white paper were held up as a slogan and symbol. For a party that prizes social control over everything, this was the shock that led to the quick reversal of the “zero-Covid” regime.
Workers played a significant role in the protests as companies locked them up in a ‘closed loop’ system to isolate them from the virus. There had been protests against this forced isolation, but the biggest uprising took place in November at the massive Zhengzhou facility of Foxconn when the authorities locked their workers in their on-site dormitories that house anywhere up to 2,00,000 of them. As infections spread within this ‘closed loop’, there was panic and hundreds, if not thousands, of workers clashed with the police, seeking to leave. Many fled on foot, and, eventually, the Foxconn authorities relented and arranged transportation.
In part, the zero-Covid policy was itself an admission of weakness on the part of Beijing. The vaccination record of its older population was poor. In contrast with India, where the elderly were the first in the queue, in China, they were at the end, and vaccines never got to many of them. The protests were also aimed at the inadequate medical facilities and insurance cover for the citizens, especially migrants who constitute an important component of the working population in the cities.
But the Covid tsunami is only one part of the challenge before Beijing this year. China’s economy had been slowing down through 2022. There were assumptions that the country would deliver on its target of 5.5 per cent growth of its GDP in 2022. Actually, analysts of the Rhodium Group say that the figure could be 3 per cent, if not lower. For the record, though, in his New Year address last week, President Xi Jinping has claimed that the economy had grown at a respectable 4.4 per cent last year.
With the Covid rampaging across the land, the economic growth for 2023 will be lower than the 2022 figure and there will be factors other than Covid at play as well. One is the continuing problem in the real estate sector investment which used to contribute handsomely to the Chinese GDP figures. Private sector investment is unlikely to be a driver of higher growth since the expected fall in global trade in 2023 will undoubtedly impact China’s export-oriented manufacturing sector.
The Chinese world view was that global power was distributed to the troika comprising the US, the EU and China and they could successfully exploit this. But now, aided by the Russian invasion of Ukraine, the US-EU relationship has strengthened and Europe appears more united than ever before and provides little room for the Chinese to manoeuvre. Further, spooked by the developments, Japan is altering its pacifist foreign and security policies.
The new year will see a significant tightening of the US high-tech embargo that has cut off sales and technology of high-end semiconductors and their technology to China. The resumption of significant funding of its R&D sector by the US will make the road ahead for China rockier. As it is, even now, the productivity of the US workforce and the attraction the country holds for global talent is something that Beijing has not been able to match.
Then, there are other developments in the Indo-Pacific that Beijing will have to confront. Perhaps, the most significant is that of Japan’s decision to double its defence budget and enhance its long-range counter-strike capability.
It will also have to factor in the contours of a new Australian military buildup which will be revealed by the Defence Strategic Review in March. Canberra is committed now to increasing its defence spending beyond the 2 per cent pledged by the previous government. The new year will also see important moves towards operationalising the Australia-UK-US (AUKUS) alliance.
Another significant development in 2023 could see the US and Australia integrating Japan into their ‘force posture initiatives’. There is also talk of the Philippines inviting the Americans back to the Subic Bay base and allowing the US forces to operate from five other bases in the country.
There is no good news for China on its India front either. The Modi government has made it clear that it will not normalise ties with Beijing until it abandoned moves that it undertook in 2020 to change the Line of Actual Control in Ladakh. The recent attempt to repeat the manoeuvre in Yangtse, near Tawang, confirms that China, too, is not in a hurry to normalise the relationship. The India-US military exercise near the LAC in Uttarakhand could be a portent of closer US-India security interaction along the Himalayas.
Just how the developments — the Covid wave, political protests, economic slowdown — will affect Chinese policy is not easy to forecast. A weakened Beijing may adopt more aggressive stances in its periphery. China could, on the other hand, take a lesson from its Covid experience and change course in other areas as well. But either way, Beijing retains considerable economic, military and science and technology capacity, and, for this reason, the world will carefully monitor its conduct.
