Indian Defence Review

Post elections, the United States (US) seems to have lost illusions about its biggest trading partner and the new administration has adopted the hardline policy of the Trump administration. The hardline stance of the newly appointed Secretary of State Anthony Blinken and the special attention by President Biden, makes the role of China the third-most important issue in his recent address; that he allotted more than 15 percent of his time to that, speaks volumes about the intentions. From a game theory point of view, the US does not have a useful move other than countering the Chinese advances and will have to assume that every action with regards to Beijing, will bring some level of negative consequences – be it economic or diplomatic. So, pursuing the Wall Street dream of constant growth might become difficult or even impossible. But these societies have to accept the new reality – the biggest threat to the US, India and every party opposing China, including even silent Russia, is to implement tactical policies benefiting their current administrations for the duration of power rather than strategic moves, which might bear heavy short and mid-term weight.

The presidential elections in the United States (US) in 2020 were one of the main events with the greatest potential geo-political impact on the world. The Trump administration’s foreign policy, implemented by hardliner Mike Pompeo, was viewed by many as too harsh and economically hindering primarily because of the tough stance towards its main trading partner China and a few allies such as Turkey, which had given out highly controversial signals. In order to increase its chances of election, the Biden camp relied on opposing views. So, after their win, the world watched with bated breath how the new foreign policy might be shaped. There was one little problem – the strategists of the new administration knew they could not afford a soft stance on China because they had already been put into a corner and China had already revealed its plans for the next 30 years. The future looked rather dark for America.

This article argues that the US has no useful move but to confront China in the economic, diplomatic and military spheres, united with allies such as India, Japan and the major part of the Western civilisation, as their interests are aligned in the long run. Not only that – if they fail to counter the Chinese actions, their long term losses will be incomparably higher than the short term shocks that they would have to endure.

Understanding the World in 2021

Despite the presence of enormous amounts of data about influence through economic, diplomatic and military channels, many of the observers still live in the past where the world was divided by the US – USSR axis and and they fail to grasp the new reality of far more complex dynamics. The pre-1989 narrative would be for a largely binary system, where interests would gravitate towards one of the two sides – the West led by the US and the Eastern block for practically any country with socialist or communist ideology putting Russia and China in the lead.

30 years later, such perception could not be further from reality. The US has kept the lead position; Russia has had its economy tarnished, but its military has remained strong; China’s economy has grown to match the size of the US and its military has even surpassed that of the US in numbers for the largest ground force and largest navy. India’s economic growth has allowed for a far stronger military turning it into the hottest arms market in the last few years. Essentially, there are now four major camps with distinctively different interests and a growing international body of states with greater gravitational pull which are able to exert greater-than-ever influence on the some of the big camps.

Understanding China’s Strategy

Outlining China’s strategy is essential as this allows us to understand its future economic and military strategies. Summarised, the Chinese Communist Party (CCP) seeks to achieve “the great rejuvenation of the Chinese nation” by 2049. This includes expanding its national power, improving its governance systems and revising the international order. It is clear even here that accepting the status quo or being passive, is not a sought after course of action. As if to leave no doubts about it, President Xi Jinping declared on October 1, 2019, on a speech marking the 70^th anniversary of the foundation of the People’s Republic of China (PRC) that they would be pursuing the two major centenary goals accompanied by a very exact statement – “Today, a socialist China is standing in the East of the world and there is no force that can shake the foundation of this great nation.” He used practically the same sentence in a very similar speech the night before referring to the unification of China with Hong Kong, Macao and Taiwan.

Interestingly enough, the timeline of the Ministry of Foreign Affairs of PRC website has the speech from the night before together with a picture of Xi Jinping on the speech the next day, but missing the important speech on Tiananmen Square on the National Day. The newsfeed of the State Council of PRC also uses far more mellow expressions in describing the event and does not even mention Taiwan. This is indicative of an effort of the Chinese authorities to portray the future plans as less aggressive and expansionary.

It is very important to note that the plans for the national rejuvenation by 2049 cannot be completed peacefully. The party leadership views the unification with Taiwan on Beijing’s terms (essentially taking over) and completing the integration of Hong Kong and Macau as fundamental conditions. In this regard, there are two steps for renewed China – first to “fight and win” and secondly – to “resolutely safeguard” the country’s sovereignty, security and development interests. It is clear that the last word describes external territories, which could be deduced to be Taiwan, all areas of ambition in the Himalayas in India, Nepal and Bhutan, as well as all places for international military bases, where Beijing is currently expressing developmental interests – Pakistan, Sri Lanka, Kenya, Seychelles, Tanzania, Angola, Tajikistan, Indonesia, Singapore, Thailand, Myanmar and the UAE. The whole Indo-China Peninsula is of prime importance to China because its tip controls the vital Malacca Strait and the possible Thai Canal.

Additionally, if taking over foreign territories requires strength that is far greater than the existing one on the specific place, then safeguarding those territories requires even greater strength as the retaliation from the remaining local resistance and the international community, which is likely to be united, is going to be stronger as well. It is because of this second condition that China seeks to achieve “world class military”. For that, however, the economy is needed.

CCP Strategy Milestones

The development plan was revealed two years prior. The highlight of the 19^th National Congress of the CCP on October 18, 2017, was Xi Jinping’s 3-hour 24-minute – speech in which he laid out a broad plan to achieve national rejuvenation with a timeline linked to two important centenary milestones – 2021 (CCP’s centenary) and 2049 (the PRC’s centenary). In order to bridge the gap, a mid date was used – 2035, separating the 28-year period in two steps of 14 years.

The first stage, in party terms, is for China to meet its goals to become a “great modern socialist country”, where economic development would be the central goal. Unlike previous years, targets would not include economic growth, but rather a prolonged period without major economic shocks. It is very likely that this is in response to the aftermath of the 2007-2008 financial crisis which had seriously affected China as well. This line could be seen in the newly accepted 14^th Five Year Plan (2021–2025), where the first target is to keep the major economic indicators within an appropriate range. A specific GDP growth target was not set for the first time in the country’s history of making five-year plans.

The quest to avoid shocks is understandable as a crisis has the potential to wipe out the gains for decades. If the end goal, requiring steadily producing economy to finance it, is time sensitive, then predictability in planning is paramount. Additionally, since stability is sought, rather than growth, it literally means that China is at the level of production where the goal is 100 percent certain to be achieved, definitely factoring in wide margins for error.

The second stage from 2035 to 2049 is for China to attain national rejuvenation. In it, China will achieve international status which Xi Jinping describes as being a “global leader in terms of composite national strength and international influence”. This is the stage where they will attain a world class military and assume a leading position within the international order, establishing a “community with a shared future for mankind”. One does not have to read between the lines to understand that the effort here will be solely on the military front, quite possibly conducting military operations of various scales from small conflicts to regional wars, maintaining the gains and choreographing the community of allies.

Peace Was Never Sought

Even if official announcements declare China as a peace champion, Xi Jinping himself has pointed out the opposite numerous times, especially at events where his speeches are extremely carefully constructed. These events in front of the CCP Central Committee are similar to the State of the Union messages delivered regularly by the US presidents. These are exceptionally well formulated by whole teams considering every word for its weight and possible influence on the billions of people it would affect directly and indirectly, everything aligned to the vision of the leadership for the nation. Improvisation or careless mistakes are impossible.

In a speech in 2013 in front of the CCP Central Committee, he pointed out the disadvantage that China had in the economic, technological and military domains compared to the developed Western nations and warned that China had to prepare for a long period of cooperation and then conflict between these two social systems in each of the domains. The announcement for a conflict from such a tribune points out to its inevitability and determination for it.

Even though the gains for China from the peaceful collaboration with the world have been extraordinary over the last decades, CCP views core aspects of the current international system as incompatible with its strategy. Because of the fact that the US is the main international competitor, the PRC leadership considers all US security alliances and partnerships, especially those in the Indo-Pacific region, as destabilising and irreconcilable with their sovereignty, security and developmental interests. Considering India’s growth in power in the last decade and the fact that they share a physical border, the same is true for all of India’s alliances and partnerships. It is only logical to assume that significant effort will be put to counter and destabilise such relationships rather than participate in them as a contributing member.

Military Development

As mentioned earlier, economic development without shocks will be the sought-after course of action in the first phase till 2035 to guarantee the production goals and mid-term sustainability of the Chinese economy and society. The already extensive military complex will be gradually improved even further in the next 14 years until it has reached whatever milestones they have set. If we take into account the planning and construction times, now will be the time when the work on some of the projects will be starting.

For example, if we consider that aircraft carriers take 10 to 12 years to be planned and constructed, this leaves a margin to ensure completion. Since aircraft carriers are not sole vessels roaming around, but rather a whole fleet of support vessels (cruisers, destroyers, submarines, logistics and supply ships) in a carrier strike group, the planning and construction of each one of these would need to commence soon as well in case it has not started already. Currently, China has two operational carriers, the Liaoning and Shandong, the third is on the way and the fourth will be nuclear powered, possibly to be completed by the end of the current decade. It is believed that the fifth and sixth will be completed by the end of this first period.

The increase in China’s military budget through the years speaks volumes. In 2019, the increase was 6.2 percent, while in 2021, it was 6.8 percent indicating a steeper and more aggressive expenditure curve. Additionally, the PRC’s military budget does not include several major categories of expenditures, which indicates that its actual spending is higher and the official budget figures are grossly underestimated.

Diplomatic Pressure and Propaganda

The work of the diplomatic apparatus together with the covert propaganda to destabilise democratic societies will be of immense importance. Time and again, Chinese diplomats show the same trait common for all communist countries – boasting declarations of peaceful principles or vague statements indicating very idealistic goals, while conducting policies diametrically contradicting those statements. One such example was the response of Ciu Tiankai, the Chinese Ambassador to the US, to the comments by the US President Joe Biden on the relationship with China. Ciu stated, “Our (Chinese) goal is to meet the growing inspiration of the Chinese people for a better life. Our goal is not to compete with, or replace any other country… this has never been our national strategy”. This contradicts the idea to change the world order as per their understanding. Additionally, he mentioned “We’ll have no problem with open and fair competition – actually we very much stand for that.” In turn, this is the opposite of the reality of exorbitantly high import tariffs (30 percent), extreme capital and ownership regulations and so on.

The propaganda effort is part of PRC’s Influence Operations. Since democracies, such as the US and India are considered more susceptible to influence operations through cultivating counter groups via the freedom of speech tenet, it is expected that more funding through proxies will be allocated in the next decades to what is known as the “progressive liberals”. We have seen such pressure in the farmers’ protests in India.

Economic Expansion

The “One Belt One Road” initiative serves as the backbone for the majority of the effort in this regard. Practically all of the projects along that are heavily financed by EXIM Bank of China to the magnitude of 85 percent (85 percent Chinese loan, 15 percent local government). Such levels of debt to equity ratio are extremely rare, especially when funding infrastructure projects by governments in financial distress. What follows at later stages could be seen by the developments in Sri Lanka, where delayed debt payments were agreed to be transferred to equity ownership in the underlying projects, essentially giving EXIM Bank, i.e. CCP, control over them. It is expected that this modus operandi will be followed in Pakistan to guarantee factual control over the whole China Pakistan Economic Corridor (CPEC) and its adjacent projects, practically allowing for control of the entire country.

Such a scenario is not limited to Asian countries. On March 21, 2021, the Montenegro government asked the European Union (EU) for help with the one billion-euro loan from EXIM Bank in 2024 to build a highway, citing increased Chinese pressure and influence. It is only expected that such time bombs will occur more often in the following years, which will serve as pretext for pressure from Beijing.

Post elections, the US seems to have lost illusions about its biggest trading partner and the new administration has adopted the hardline policy of the Trump administration. The hardline stance of the newly appointed Secretary of State Anthony Blinken and the special attention by President Biden makes the role of China the third-most important issue in his recent address; that he allotted more than 15 percent of his time to that, speaks volumes about the intentions. From a game theory point of view, the US does not have a useful move other than countering the Chinese advances and will have to assume that every action with regards to Beijing will bring some level of negative consequences – be it economic or diplomatic. So, pursuing the Wall Street dream of constant growth might become difficult or even impossible. But these societies have to accept the new reality – the biggest threat to the US, India and every party opposing China, including even silent Russia, is to implement tactical policies benefiting their current administrations for the duration of power rather than strategic moves, which might bear heavy short and mid-term weight. Such actions can only strengthen Beijing and decrease the margin of error on the road to fulfilling the dream for national rejuvenation while putting to rest their control.