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      Does Beijing Prefer Biden or Trump?

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      Few major events occur in the world now occur without China having a stake, directly or indirectly, in their outcome. That is because Beijing has become a force to be reckoned with, and its influence has grown to rival or even surpass that of the US in many parts of the world. Just as elections throughout the world have historically implied some sort of impact on Washington, now the world is becoming accustomed to the same being true for Beijing.

      The US presidential election is certainly no exception. At least part of the reason that matters to Washington is because, for the first time since America became a global superpower, it now has a proper peer. The former Soviet Union may have been a military peer, but it was not a peer on any other level. That is not true with China, which now rivals the US in some arenas or is on its way to doing so. In some aspects of science, technology, the global economy, diplomacy and political influence, Beijing is already more consequential to much of the rest of the world than America is.

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      Given its single-minded focus on creating an alternative world order crafted in Beijing’s image, as well as the tremendous resources it is devoting to that task, there is little reason to believe that China’s trajectory will change in the coming decade and beyond. One could argue, in fact, that the outcome of the election matters almost as much to Beijing as it does to America, for it will define the type and scope of headwind Beijing faces for at least the next four years.

      A second Trump term of course implies more of the same: trade war, challenging Beijing at every opportunity, the war of words, and not giving an inch on anything. But it also implies four more years of discord and disarray between America and its many allies. Both America and China have paid a serious price for having Donald Trump in the White House, but Beijing has certainly benefitted while Washington has suffered from the fractious nature of America’s relationship with its allies.

      Under a Biden presidency, that is likely to be greatly reduced, which should concern Beijing a lot, for it has enabled the Communist Party of China (CPP) to act with virtual impunity on the global stage while America and its allies passively look on. That is what has enabled Beijing to expropriate and militarize the Spratly and Paracel Islands, bulldoze its way into more than 70 countries without opposition via the Belt and Road Initiative, and significantly increase its influence in the world’s multilateral organizations, among other things. That damage has already been done and, in truth, there is relatively little Joe Biden or any subsequent US administration may be able to do about it.

      What Biden can do in response is repair those alliances and lead an effort to coordinate and unify the West’s future responses to Beijing’s actions. It is by acting in unison that the West will not only get Beijing’s attention, but begin to reverse the tide. Beijing has few real allies, and some of its “allies” have dual allegiances between Beijing and Washington. When push comes to shove in a time of crisis, Saudi Arabia, for example, is not likely to pivot in Beijing’s direction, despite China’s growing economic ties with the kingdom. The same is true with a variety of other allies that China believes are in its camp but which Washington has cultivated over the decades. Beijing is a new arrival to the party.

      So, what is at stake for Beijing is an unfortunate choice: endure four more years of Trump’s tirades or (at least) four years of a US administration that values America’s alliances and intends to reinvigorate them. Biden is not likely to try to reverse the course Trump has embarked upon with Beijing. That ship has sailed. US Congress is on board with Trump’s contention that Xi Jinping and the CCP are bad actors and that the Chinese government is America’s greatest adversary. Biden’s foreign policy is unlikely to be substantively differently oriented.

      In that regard, while this is undoubtedly the most important election of most Americans’ lifetimes, it is also crucially important for Beijing. The gloves are off on both sides and they are not going to be put back on. The question is, does Beijing prefer Trump or Biden? While the answer is probably neither, knowing that bilateral relations are not going to revert to where they were under Barack Obama, Beijing may actually prefer Trump over Biden in the hope that the damage done to America’s alliances may become permanent. In the meantime, the CCP will continue to use Trump to whip up nationalism at home, which of course suits its ultimate objective of strengthening Xi’s and the CCP’s grip on power.

      *[Daniel Wagner is the author of “The Chinese Vortex: The Belt and Road Initiative and its Impact on the World.”]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      Will Laos Become a Model for China’s Economic Colonialism?

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      The small Southeast Asian nation of Laos stands out as a success story in COVID-19 control. With only 23 confirmed cases, it has gradually lifted lockdown measures. Success on the medical front, however, will not be enough to carry the country through the economic whiplash that pandemic containment had on the informal economy. Laos’ reliance on remittances from abroad is not unique in the region, and while it has thus far averted a coronavirus-induced health crisis, its economy is expected to contract, according to World Bank estimates.

      Incomes from tourism, remittances and the informal gig economy are expected to be hit hardest by the pandemic. Director general of the Laotian Department of Labor Skill Development at the Ministry of Labor and Social Welfare, Anousone Khamsingsavath, has voiced concerns about exacerbated poverty under COVID-19. Migrant workers have been returning from abroad due to evaporated opportunities, and the sudden influx of job seekers, coupled with a precarious economy, makes countries like Laos particularly susceptible to economic — and thus political — influence from outside.

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      Against the backdrop of the pandemic, countries whose economies are large enough to weather the storm have a unique opportunity to extend their influence vis-à-vis their smaller neighbors. A case in point: China and Laos. Earlier this year, Beijing began to build diplomatic goodwill in Vientiane by sending supplies, health advisers and medical staff, as well as offering loans and development opportunities to help Laos recover from the crisis. Existing power imbalances between the two states will likely be exacerbated, and China is well positioned to further consolidate support for its ally.

      Golden City

      China was the first country to be hit by the pandemic, and its economy, the second largest in the world, is now showing signs of recovery. Beijing has already unveiled a 3.6-trillion yuan ($506-billion) stimulus package, suggesting that China intends to continue work on its existing projects, with the Belt and Road Initiative being the crown jewel among them. As part of this initiative unveiled in 2013, China has been working to extend its land and maritime transportation networks through infrastructure built with the agreement of partner countries.

      One of the initiative’s branches that has thus far received little attention is the China-Laos railway, which stretches from Mohan, in China’s Yunnan province, to the Laotian border town of Boten, before reaching the capital, Vientiane. Once adjoining railways are complete, the segment is projected to be part of a pan-Asian network that joins Yunnan’s capital Kunming with Bangkok, Kuala Lumpur and Singapore. The project has been underway since 2016. Laos is the only landlocked country in Southeast Asia, and due to the lack of ports that can offer counterbalancing sources of income and connectivity, it is particularly dependent on Chinese investment in towns like Boten. The town was designated a special economic zone (SEZ), its casinos drawing in massive numbers of tourists from mainland China, where gambling is illegal.

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      Touted by both governments as a partnership of mutual prosperity, local Laotians complained of the disrespect and one-sided decision-making from the new arrivals. This was the case when casinos in Boten were shut down in 2010 by the Chinese Ministry of Foreign Affairs over accusations of crime and prostitution. The town, whose economy centered around gambling, went into decline even as construction of the railroad continued. Two years later, however, Laotian officials decided to give the original sponsor of Boten’s failed project a second chance. The sponsor partnered with another industrial group and signed a new agreement to shift the town’s focus from gambling to commerce, rechristening “Golden Boten City” as “Beautiful Boten Specific Economic Zone.”

      It is unclear whether this new venture is a result of or is intended as an extension of the railway being constructed. What is clear is that China does not intend for the BRI to be an isolated transportation framework in Boten’s case. Railway construction naturally brings an influx of Chinese laborers who prefer Chinese goods and Chinese services, but an injection of Chinese cash into the local economy could also add to the local government’s incentive to cooperate with construction. The businesses and the railway can then form an economic feedback loop that justifies each other’s existence.

      Business Model

      This business model would not be so worrying if the local Laotian government retained significant regulatory power over the venture. However, the Chinese-funded Boten Economic Zone Development and Construction Group has been given the responsibility of charging taxes and building both utility and telecommunications infrastructure. This calls into question the sovereignty of the host nation’s government, and one of the group’s buyers stationed in Boten went so far as to say the company basically controlled the entire growing city.

      SEZs like Boten may become the next model of economic colonialism in Southeast Asia, where Chinese investors lease large tracts of land for a substantial period, import Chinese workers to build infrastructure around railway stations, and create economies that cater specifically to Chinese patrons and Chinese interests. This form of colonialism doesn’t have to be directly affiliated with the Communist Party, as China has more than enough corporations with deep pockets that can withstand the risk of investment and provide the much-needed capital to rural areas whose native government do not have the means for development.

      As COVID-19 ripples through Southeast Asia, countries in the region can be expected increasingly to look abroad for any kind of financial buffer that will help them survive the economic shockwaves. Even countries like Laos that have avoided a health crisis cannot avoid suffering indirectly from the economic contractions of their less proactive neighbors. Regional governments will be tempted to grant more concessions in the hopes of bringing more jobs to locals out of work, and capital from China will be alluring, even as it inevitably comes with economic dependence and the local influence of powerful Chinese corporations.

      Developments in little-known outposts with potential, such as Boten, rarely make the headlines. But make no mistake: China was already making its way steadily through Southeast Asia, and the ongoing pandemic is only likely to increase its pace.

      *[Fair Observer is a media partner of the Young Professionals in Foreign Policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      China-India Clash Wakes Up Tibet’s Ghost of Independence

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      Wildfires have been burning in California, Brazil and Siberia. Brexit is causing unending headaches in both Europe and the UK. The American election campaign has kicked off in high gear. Deaths from COVID-19 have crossed one million. US President Donald Trump’s taxes were the talk of the town, before he landed in hospital with COVID-19 himself. In such a milieu, it is easy to overlook a tempest in Asia. On October 5, China threatened to make India’s latest strategic tunnel unserviceable even as Indian engineers race against time and tough conditions to bolster their country’s border infrastructure.

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      For the last few months, India and China have been clashing over icy heights on the roof of the world. Their undefined border and contesting claims are causing increasing unease in the world’s largest and most populous continent. They are also leading to new moves on the geopolitical chessboard that might have historic consequences.

      Tibetan Troops, Article 370 and Ladakh

      Tenzin Nyima, a company leader in India’s shadowy Special Frontier Force (SFF) and a stateless Tibetan refugee, died on the contested Line of Actual Control that separates territories controlled by India and China. Hundreds of thousands of Tibetan refugees have lived in India since the Dalai Lama’s flight to the country in 1959. A select few serve in the SFF, an extremely tough outfit that excels in high-altitude operations.

      The Tibetan Kashag was the de facto independent government of Tibet before the invasion by China’s People’s Liberation Army (PLA) in 1950, which was condemned by the United Nations General Assembly. The SFF fights under the snow lion flag of the Tibetan Kashag. The Central Tibetan Administration, known as the Tibetan Government in Exile, also uses the same flag. Understandably, the PLA, the Communist Party of China (CCP) and Chinese nationalists are not too fond of this symbol.

      Nyima’s funeral in Ladakh occurred with much honor. Importantly, Ram Madhav, then the general secretary of India’s ruling Bharatiya Janata Party (BJP), was present at the funeral. His admirers refer to him as the “Kissinger of India.” More pertinently, Madhav is one of the most influential political figures in India and a key ideologue on strategic matters. He was a key architect of the BJP’s Kashmir policy and was instrumental in removing Article 370 last year, which ended Jammu and Kashmir’s autonomy. By honoring Nyima, Madhav is making a symbolic but profound point: He is signaling support for the Tibetan cause.

      As most Indians and India hands know, the BJP had been vowing to remove Article 370 for decades. Once Prime Minister Narendra Modi won historic reelection last year, the BJP made a bold bet and removed this article from the constitution. It carved out Ladakh from the state of Jammu and Kashmir as a separate union territory. The people of this land practice Tibetan Buddhism, share ethnic kinship with Tibetans and follow the Dalai Lama. By removing Article 370 and giving Ladakhis their own territory, India has upset not only Pakistan but also China.

      Salami Tactics

      Historically, India’s stand on Tibet has been ineffectual. Despite domestic opposition, Jawaharlal Nehru acquiesced to the Chinese conquest of Tibet. Even after the disastrous defeat of 1962, India’s first prime minister did not come down on the side of the Tibetans. The Dalai Lama has lived in India for decades, but Delhi has never openly supported Tibetan independence or autonomy. In contrast, China has allied with Pakistan and opposed India’s interests in Jammu, Kashmir and Ladakh.

      Since Modi came to power in 2014, he has met Chinese President Xi Jinping 18 times. He has been conciliatory and accommodating to Xi. Even before Modi, India opened its markets to Chinese products. This economic engagement was for a strategic reason: India wanted peace with its larger neighbor and aimed to wean it away from Pakistan. Instead, China has consistently followed salami tactics, and, this year, it cut off a larger slice of Indian territory.

      Chinese actions led to Modi losing face earlier this year. The Indian National Congress (INC) party tried to paint him as the new Nehru. For the Nehru dynasty that still leads the INC, a debacle for Modi would wash off Nehru’s sins and damage the BJP. In the brutal battle for national dominance, an embarrassment for Modi would boost the INC. Hence, it is no surprise that Modi and Madhav are pushing back so strongly against China.

      In recent years, India has been preparing for a two-front war. In 2018, India’s Air Force conducted its largest exercise to counter a joint China-Pakistan invasion. The junior minister in charge of border roads is General V.K. Singh, the former army chief. More than most, he understands the key need for border infrastructure and has been pushing hard for it. This has caused the Chinese grief because Indian infrastructure upgradation of its Central Asian tracts chips away at the PLA’s strategic advantage.

      Public Sympathy

      In recent weeks, Modi has gained public sympathy. The Indian public blames Xi for backstabbing him and the Indian intelligentsia for being too naive, if not deluded, about China. This public support has allowed Modi to take a stronger stance against Beijing. The PLA and Xi have been caught off guard. At high altitudes, Chinese troops have been weighed, measured and found wanting. Indian troops have not rolled over as in 1962. In fact, they have given the PLA a bloody nose. This is deeply embarrassing for a country with superpower pretensions. China is setting itself up as a counterpart to the US. Anything short of a conclusive victory against a country China deems to be its inferior would be nothing short of a national disaster.

      Embed from Getty Images

      As two of the authors explained in a historical analysis of the India-China conflict, Beijing has become more aggressive since Xi came to power. The PLA has consistently and constantly claimed territory India considers its own. As a result, confrontations have been on the rise. There is a real risk that Xi might be overplaying his hand.

      What Xi fails to appreciate is that 2020 is not 1962. Over the last few months, China has lost the element of surprise. Indian troops are mobilized all along the border and have more experience of high altitudes. Furthermore, Tibetans and other mountain troops fighting for India are local lads with old scores to settle with the PLA. They come from communities who practice Tibetan Buddhism. Hence, they resent Beijing for cultural genocide in Tibet and do not want to live under its yoke. These troops are fighting for their freedom and are in a do-or-die mood. The next clash could easily spill over into an all-out war.

      Xi forgets that India has less to lose in case of war. A decisive defeat would merely confirm its underdog status and win international sympathy. Even if India loses but its troops acquit themselves well, China would be humbled. However, if China loses, Xi himself and his CCP might find themselves in trouble. On a simple cost-benefit calculus, a Xi-led China has no rational reason to go to war against a Modi-led India.

      There is another key reason for China to wind down tensions. After decades of licking their wounds, Tibetans have now openly entered the fray under their fabled snow lion flag and with the blessing of India’s political leadership. It is no longer two militaries clashing for icy crags but two ideas colliding head-on. A military clash might be about to turn into a political, religious and cultural conflict. The Tibetan snow lion of independence threatens Beijing’s holy cow of Greater China.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      Will China’s Digital Currency Revolutionize Global Payments?

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      China is well on its way to becoming a cashless society. More than 600 million Chinese already use Alibaba’s Alipay and Tencent’s WeChat Pay to pay for much of what they purchase. Between them, the two companies control approximately 90% of China’s mobile payments market, which totaled some $17 trillion in 2019. A wide variety of sectors throughout China have since adopted Blockchain to pay bills, settle disputes in court and track shipments. The Chinese government understands that, via Blockchain, the issuance of its own cryptocurrency is an excellent way to track and record the movement of payments, goods and people.

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      The unsexily named Digital Currency/Electronic Payments (DCEP) is intended to be used by anyone around the world to purchase anything. It has the potential to revolutionize the global payments system. Assuming it succeeds, many other countries will want to emulate it. Some other governments have already launched similar initiatives, but not on the scope or scale of the DCEP, which promises to be the first global digital currency.

      Digital Wallets

      What appears to have spurred the Chinese government to actively pursue the DCEP in 2019 was the birth of an organization that also has the potential to revolutionize the global payments system, the Libra Association. Libra is a grouping of more than two dozen organizations creating the world’s first Blockchain-derived global payment system, specifically founded on best practices in regulation and governance. Its stated objective is to transparently bring access to financial services to billions of people who either have limited or no access to the existing global banking system.

      Embed from Getty Images

      Given that it is an American-led initiative that will use the US dollar to determine its benchmark value, Beijing viewed Libra as an attempt to establish US dominance over the global cryptocurrency marketplace. It previously viewed other cryptocurrencies as a threat to its own hegemony over capital controls in China.

      Although its motivations to counter the US are clear enough, much remains unknown about the DCEP. One has to wonder just how much focus it will have on transparency, governance or best practices. It will not be available on cryptocurrency exchanges, nor will it be available for speculative purposes. Embracing Blockchain and creating a DCEP ecosystem will give the Chinese Central Bank unprecedented power over capital movements — certainly in China, but also around the world.

      Like Alipay and WeChat, the DCEP will require a digital wallet, but it will not require a bank account. Commercial banks will issue the digital wallets, but no internet connection will be required to conduct transactions via the DCEP. All that will be required is that a phone has battery power. While a certain degree of anonymity will be present with the DCEP, the Chinese Central Bank will still be able to track who spent or received funds, when, where and from whom. The Chinese government calls the concept “controllable anonymity” and will rely on Big Data to identify behavioral characteristics of the individuals and businesses using DCEP. Doing so will help the government identify money laundering, tax evasion and terrorist financing. It will, of course, also permit a higher degree and quality of state surveillance of Chinese citizens and citizens of any other country that may use it.

      Since the Chinese government will be the first to launch a global digital currency, it will gain a considerable lead over the world’s nations and provide it with the ability to perfect its surveillance capabilities in China and around the world for any country that chooses to adopt the DCEP. It will also help to internationalize the yuan and simultaneously create less dependence on the US dollar. So, the Chinese government intends to stay a step ahead of the competition, enhance its ability to monitor its citizens, broaden its soft power and increase China’s appeal to other countries while countering the supremacy of the US dollar in the process.

      Alternative System

      By issuing the DCEP, the Chinese government hopes that demand for yuan reserves will follow, facilitating a digital version of the yuan as a global alternative to dollar reserves, especially in Belt and Road Initiative (BRI) member nations seeking to modernize their financial sectors. It could also help internationalize China’s e-payment systems, which are not used outside of China. In the absence of an American cryptocurrency, which seems to be a long way off, doing so could in theory make the DCEP the cryptocurrency of choice among BRI (and other) countries.

      Such an alternative system may be particularly appealing for countries under US sanctions, which may wish to avoid using the US dollar entirely, or for countries or businesses engaged in trading, investment or lending with Chinese companies. But the yuan remains not fully convertible, with just 1% of international payments using it. That could have a significant impact on the government’s implementation strategy. In addition, the Chinese government is attempting to centralize what is a decentralized technology by requiring that all “nodes” using the Blockchain register with the government and provide information about their users.

      While the Chinese people are accustomed to having their government pry into, and try to control, their private lives, most of the world’s population wants nothing of the sort. It remains to be seen just how broadly the DCEP will be adopted, or whether it will turn out to be a net positive for the nations that choose to use it, but having the first-mover advantage will surely serve Beijing well. Despite its apparent flaws, if it also helps to bring some of the world’s poorest nations with the least access to basic and global financial services on par with the world’s developed nations in that regard, Beijing will have done much of the world’s population a great service in the process.

      *[Daniel Wagner is the author of “The Chinese Vortex: The Belt and Road Initiative and its Impact on the World.”]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More