China missile sanctions taking toll on both Koreas
LEADERS OF BRICS NATIONS EXPECTED TO ATTEND, A CHANCE FOR PRESIDENT XI AND PRIME MINISTER MODI TO TALK
With geopolitical tensions rising in North Asia, China has tightened the economic screws on both Koreas — on the North for firing missiles, and on the South for deploying a shield to stop them.
In dollar terms, South Korea looks worse off, taking a $4.7 billion (Dh17.2 billion) hit from the drop in tourism alone. Adding in falling sales of South Korean cars, cosmetics and other goods in China, the dispute will cut 0.3 percentage point from growth this year, according to the central bank in Seoul.
North Korea has taken a massive blow, with China now refusing to buy coal, iron ore and lead, which accounted for more than 50 per cent of the nation’s exports. While the amount of money involved is far less in the case of North Korea, the relative impact is huge on its much smaller economy.
One way Beijing expressed its unhappiness with the Thaad missile shield was by imposing a ban in March of package tours of Chinese visitors to South Korea. That’s translated into 2.3 million fewer Chinese tourists in the five months through July, versus the same period last year.
Based on the 2016 average spending of $2,060 per visitor from China, that’s cost South Korea $4.7 billion. Sales of Korean vehicles in China have slumped this year as consumer sentiment mirrored that of the government over the missile shield.
Due to complicated pricing structures and different prices for various models, it’s difficult to estimate the revenue impact on the two companies, but it’s clearly large.
Lotte Shopping Co has been one of the worst affected South Korean companies. The company owned a golf course where the military has installed the missile shield and has been subject to retaliation China because it transferred the land to South Korea’s government. hina and India may have ended a tense border standoff for now, but their longstanding rivalry raises questions about the possibility of meaningful cooperation at an upcoming summit of major emerging economies.
The annual summit of the Brics grouping encompassing Brazil, Russia, India, China and South Africa gets under way this weekend in the southeastern Chinese city of Xiamen, hoping to advance its vision of an alternative to the Western dominance of global affairs.
The leaders of all five nations are expected to attend, offering the best opportunity for Chinese President Xi Jinping and Indian Prime Minister Narendra Modi to talk since the border tensions flared in June.
While both their countries view Brics as a significant forum for progress, their rivalry for global influence and fears of containment by the other threaten to overshadow those aspirations.
The two countries’ militaries are “prowling the same spaces” along their land borders, in the Indian Ocean and western Pacific Ocean, said Sreeram Chaulia, dean of Jindal School of International Affairs in the Indian city of Sonipat.
Even beyond the region, they are vying in Africa and Latin America “for the leadership of the developing world,” Chaulia said.
“There is a contest, whether it is acknowledged or not, and it is because of the ambitions of both nations to be superpowers and to be inheriting the Asian century,” Chaulia said.
Attempting to start the Brics summit off on a positive note, Beijing and Delhi on Monday announced a resolution of their most protracted and potentially explosive border standoff in years.
The sabre-rattling had raised fears of renewed conflict between the nuclear-armed Asian giants, who fought a bloody border war in 1962 and remain locked in disputes over extensive chunks of territory along their border.
Yet, while India’s Ministry of External Affairs said that troops were leaving the face-off site, China’s official response avoided any mention of Chinese concessions or the fact that troops from both sides will continue patrolling in the area.
Aggressor
“The attempt is to paint India as the aggressor,” said Sriparna Pathak, an assistant professor in international relations at Assam Don Bosco University in the northeastern Indian state of Assam. “Clearly, China wants to somehow portray itself as the winner in a conflict which India had started and has now ... been forced to withdraw by China.”
Given the recent hostility between China and India, “the air between the two even at the upcoming Brics summit will not be a calm one,” although they will likely seek to maintain appearances so as not to be portrayed as the spoil sport, Pathak said.
Still, the Brics grouping holds considerable allure for both countries, underscoring their support for regular meetings over the past decade to discuss economic concerns and issues such as climate change.
Some observers see a multilateral arena like Brics as being one of the few places where the world’s two most populous countries can work together despite tensions.
“There is competition and mistrust but also some maturity where they are able to convert these face-offs into face-saving solutions,” said Chaulia. He said it was “quite feasible” to put aside “bilateral bad blood” and have worthwhile cooperation at Brics.
“Both countries cannot hold the other three, as in South Africa, Russia and Brazil, hostage to our narrow nationalistic rivalries,” he said.
The recent border standoff has shown that Brics now needs to establish a method for sorting out “problems and contradictions” between China and India when they arise, said Zhang Yansheng, chief research fellow at the Beijing think tank China Centre for International Economic Exchanges.
Communication
The summit is “a great opportunity to communicate face-to-face and exchange views on the two countries’ problems and contradictions and the solutions to them,” Zhang said.
Both China and India see Brics as “a very significant platform, particularly this time when the West is disengaging Indian fears of Chinese encroachment in the Indian Ocean. China announced Friday it had carried out military drills in the western Indian Ocean, advertising its growing presence there. China is also cooperating with Pakistan, Sri Lanka and other coastal nations on port access, including for its navy. Indian wariness about the motives behind Beijing’s flagship “One Belt, One Road” infrastructure initiative, which includes a key component in Pakistan — India’s archrival but one of China’s staunchest allies. That adds to Indian frustration over lopsided trade that saw China record a trade surplus of about $40 billion (Dh147 billion) with India last year. China has thwarted attempts by India to gain permanent membership on the UN Security Council and join the Nuclear Suppliers Group, or to label Pakistani militant Masoud Azhar a terrorist. Beijing resents India’s providing a base for the Dalai Lama, and complained bitterly when the exiled Tibetan spiritual leader was permitted to visit an Indian region claimed by China earlier this year. Beijing fears what it sees as a US-led encirclement of China by Washington’s allies and neighbours, including India and Japan. Modi has sought to balance relations between China and the US, along with others such as Russia and Japan, but Beijing continues to view New Delhi as an upstart rival. from globalisation as it had operated until now,” Acharya said.
Yet, she added, “unless China and India cooperate, this is not going to produce very good results. So this is something I think is realised at the highest levels.”