India’s Modi to visit China this week as rapprochement gathers pace

FILE PHOTO: India’s prime Minister Narendra Modi attends a bilateral meeting with Britain’s Prime Minister Theresa May, at 10 Downing Street in London, April 18, 2018. Kirsty Wigglesworth/Pool via Reuters

Ben Blanchard April 22, 2018

BEIJING (Reuters) – Indian Prime Minister Narendra Modi will visit China this week for an informal meeting with President Xi Jinping, as efforts at rapprochement gather pace following a testing year in ties between the two giant neighbors.

The Chinese government’s top diplomat, State Councillor Wang Yi, said the two would meet on Friday and Saturday in the central Chinese city of Wuhan.

“Our common interests far outweigh our differences. The two countries have no choice other than pursuing everlasting friendship, mutually beneficial cooperation and common development,” Wang told reporters after meeting Indian Foreign Minister Sushma Swaraj in Beijing.

“The summit will go a long way towards deepening the mutual trust between the two great neighbors,” he added. “We will make sure that the informal summit will be a complete success and a new milestone in the history of China-India relations.”

Modi has sought to re-set ties after disputes over issues including their disputed border with Tibet and other issues.

The discussion with Wang was to prepare for the informal summit, Swaraj said.

“It will be an important occasion for them (Modi and Xi) to exchange views on bilateral and international matters, from an overarching and long-term perspective with the objective of enhancing mutual communication,” Swaraj said.

The Asian giants were locked in a 73-day military stand-off in a remote, high-altitude stretch of that boundary last year. At one point, soldiers from the two sides threw stones and punches.

The confrontation between the nuclear-armed powers in the Himalayas underscored Indian alarm at China’s expanding security and economic links in South Asia.

China’s ambitious Belt and Road initiative of transport and energy links bypasses India, apart from a corner of the disputed Kashmir region, also claimed by Pakistan, but involves India’s neighbors Sri Lanka, Nepal and the Maldives. Modi’s previously unannounced Wuhan trip is even more unusual in that he will visit China again in June for a summit in Qingdao of the China and Russia-led security grouping, the Shanghai Cooperation Organisation, which India joined last year.

It is almost unheard of for foreign leaders to visit China twice in such close succession. Xi is also extending Modi the rare honor of a meeting outside of Beijing, which almost never happens unless there is a multilateral summit taking place.

Modi’s nationalist government has reversed course on its relationship with Beijing apparently after realizing its hard line on China was not working.

Exiled Tibetan spiritual leader the Dalai Lama, who lives in India and who China considers a dangerous separatist, is also facing the cold shoulder.

In March, India issued an unprecedented ban on Tibetans holding a rally with the Dalai Lama in New Delhi to mark the 60th anniversary of the start of the failed uprising against Chinese rule.

Other areas of disagreement remain however between Beijing and New Delhi.

China has blocked India’s membership of a nuclear cartel and it has also been blocking U.N. sanctions against a Pakistan-based militant leader blamed for attacks on India.

Additional reporting by Elias Glenn and Gao Liangping; Mayank Bhardwaj in NEW DELHI; Editing by William Maclean and Dale Hudson

Source: Reuters “India’s Modi to visit China this week as rapprochement gathers pace”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


To Fight or Not to Fight Trade War, That Is the Question

US President Trump is now challenging China with a trade war to force China to reduce its trade surplus by US$100 billion.

What shall China do? Chinese media and officials have so far responded bellicosely, stating that China will fight to the end.

I had a post on April 4 that predicted that China would win the trade war. However, the victory will be quite costly now as China has not made adequate preparations for it.

Trump’s ban on sales to ZTE alone dealt quite a heavy blow to one of China’s two telecoms equipment giants as ZTE depends heavily on US chips for its operation.

China has already drawn up and been carrying out its Made in China 2025 Program to develop the capabilities of making substitutes for most of its high-tech imports. Now it has decided to make huge additional investment in chip and other electronic high-tech production to be independent from US high-tech supplies, but it takes time.

Moreover, it has been moving its labor-intensive industries to countries with lower labor costs. Time is on China’s side. China can subdue the US in trade war without fighting a decade later. Therefore, I believe it is better for China to delay trade war with the US as long as possible.

Chinese President Xi Jinping recently promised at Boao Forum further opening of Chinese market and liberalization of Chinese economy. It seems precisely aimed at pleasing the US to avoid the trade war.

However, on April 17 China slapped 178.6 percent deposit on imports of U.S. sorghum in retaliation of US tariff increase on Chinese exports. That gave the impression that China is determined to fight back in the trade war.

What does China really want? To fight or no to fight the trade war, that is the question.

To fight, it will win and put an end to US economic hegemony, but that will be quite a costly victory. According to China’s gifted strategist Sun Tzu, subduing the enemy without fighting is better.

There are also advantages not to make concessions. The US is now attacking nearly all countries in the world with its protectionism. If China surrenders to the US, other countries under US attack will have difficulties to resist a triumph United States. As a result, US protectionism may prevail while globalization advocated by China and most others may suffer.

For example, Trump is also attacking US close ally Japan for reduction of US trade deficit with Japan. The Star says in its report “Trump, Abe fail to agree on U.S. steel tariff exemption for Japan” that Trump will not exempt the high tariffs he imposed on China as well as Japan. China’s surrender will make it hard for Abe to resist Trump’s attack.

I still believe that there will not be a real trade war but some skirmishes between China and the US as Trump does not want a real trade war. The high tariffs he will impose on Chinese goods will make American consumers especially the poor suffer. He will thus lose quite many votes in the next presidential election.

What Trump wants is to get substantial concessions from China so that he will be popular and obtain much more votes in the election.

For China the trade war may cause some hardship near term but in the long run, it will gain quite a lot especially if it can bring an end to US economic hegemony, which is the basis of US military hegemony. Moreover, its victory will also be the victory of globalization that facilitates its economic expansion in the world.

However, China’s priority is to realize its dream of the great rejuvenation of the Chinese nation. A trade war will certainly cause difficulties in realizing the dream; therefore, China had better avoid it.

To fight or not to fight, that is the question. If the trade war is really fought, the whole world will be affected.

Comment by Chan Kai Yee on The Star’s report, full text of which can be viewed at

Great Chinese Emperor’s Way to Conquer Turkic Khanate

When the US challenged China with a trade war, Chinese President Xi Jinping made concessions to the US while Chinese media and other officials expressed their firm determination to fight. The following story about Emperor Taizong’s way to deal with enemy’s challenge will perhaps help readers understand Xi’s way.

When Emperor Taizong of Tang succeeded to the throne in 622, Tujue (the Turkic Khanate) was very strong. For decades China’s northern states when China was divided into a few states and China’s central government when China had been reunified into one empire had to enter into peace treaties with Tujue on humiliating terms of sending a princess to marry Tujue’s king and giving him lots of gold and silk. Emperor Taizong of Tang, one of the greatest emperors in Chinese history, drew up and carried out a plan to finally conquer Tujue. The following is my translation of the description of Taizong’s wise way to deal with Tujue invasion of China in 622 in Volume 191 of the Comprehensive Mirror to Aid in Government, a history book specially compiled for emperors to refer to in governing their empires:

Sili (Tujue King Jieli’s envoy) said with exaggeration, “Kings Jieli and Tuli have brought one million troops here.”

The emperor scolded him, saying, “We have concluded a peace treaty with your king, sent our princess to marry your king and given you countless amount of gold and silk once and again. Is your king not ashamed in unilaterally breaching the treaty and bringing your troops deep into our territories! You are barbarians but you still shall have human conscience. How can you entirely forget our great favor and boast your strength! I now will kill you first.” The envoy was scared and begged for mercy. Xiao Yu and Feng Deyi asked the emperor to be courteous to the envoy and release him. The emperor said, “If I release him now, the enemy would think that I am afraid of them and would rely on their strength to act more wantonly.” He then detained the envoy at the Edict Examination Bureau.

Then Emperor Taizong and five of his officials rode out of his palace on horseback directly to the bank of the Weishui River. He talked with Jieli (King of Tujue) across the river. He condemned Jieli for breach of the peace treaty between Tang and Tujue. The troops of Tujue were panic-stricken and all got down their horses and fell on their knees to salute the emperor. Soon various Tang troops came and the field was covered by flags, helmets and armors. Jieli looked scared when he found that his envoy did not come back but the emperor came with few entourages and that the Tang troops looked well organized. Emperor Taizong told the messengers from various troops to go back to deploy the troops while he alone stayed to talk with Jieli.

Xiao Yu thought that the emperor took the enemy lightly. He stopped the emperor’s horse and insisted on remonstrating with the emperor. The emperor said, “I have drawn up a plan through careful consideration that you are ignorant of. The reason why Tujue dared to come all out directly to the suburbs of our capital was because there was trouble in our country. They thought that as I had just succeeded to the throne, I was not able to resist them. If I had shown them that we were weak and closed our city gates to resist them, then they would have told their troops to loot at will and we would not have been able to stop them. That is why I come alone to show them that I take them lightly. On the other hand, I give a show of the strength of our troops to tell them we would certainly fight against them. This has surprised them and they are at a loss what to do. As the enemy has come deep in our territories, there is certainly fear in their hearts; therefore, we will surely win if we fight against them and the peace will be a stable one if we enter into a peace treaty with them. We depend on what I do now to subdue Tujue. You just wait and see.”

That very day, Jieli came to ask for peace. The emperor gave the order to accept his request. The emperor then returned to his palace. Two days later, he went to the west of the city, killed a white horse and entered into a peace treaty with Jieli on a temporary bridge. Tujue then withdrew its troops.

Xiao Yu asked the emperor, “Before entering a peace treaty with Tujue, the various generals vied with one another in asking for a battle against it, but your Majesty did not allow them to fight. We the officials also wondered what your Majesty would do. Soon the enemy retreated. What was your strategy in achieving that?”

The emperor replied, “I observed and found that Tujue troops were not well organized though they were large in number. What their king and officials wanted was only gifts of gold. When their king asked for peace, only he alone stayed at the west bank of the Weishui River while all his high officials came to have an audience with me. If I had made them drunk and arrested them and then attacked their troops, I could have defeated them like smashing rotten woods. I could have ordered Changsun Wuji and Li Jing to ambush the enemy in Youzhou (the border area with Tujue). When the enemy ran away, there would have been the troops in ambush before them and our major troops in their back. It would have been very easy to defeat them. I did not fight because I just succeeded to the throne, the situation in our county was not stable, our people had not become rich and we should let our people rest and foster them.  If we had fought against the enemy, we would have suffered quite a few losses and incurred deep hatred of the enemy. Then they would be afraid of us and be on their guard so that it would be difficult for us to achieve our goal to conquer them later. Therefore, we did not fight but gave them gold and silk. They naturally would retreat since they got what they wanted. They will become conceited and be unprepared. When we have build up our strength and found an opportune timing, we will annihilate them at one stroke. ‘To take it from someone, surely one must first give it to him’ (a quotation from Chapter 36 of Laozi’s Daodejing). (This blogger’s underline) That was my strategy. Do you understand now?”

Xiao Yu saluted the emperor again and said, “That is beyond my wisdom.”

Three years later Emperor Taizong conquered Tujue.

China is now moving its labor-intensive industries to Silk Road economic belt to avoid US tariff increase on Chinese products of those industries, making efforts to produce import substitutes to reduce its imports from the US. It will win its trade war with the US without tariff increases. That is what China is doing to subdue the enemy without fighting according to China’s gifted strategist Sun Tzu’s teaching.

Article by Chan Kai Yee

China to set up free trade zone in southern island province of Hainan

Reuters Staff April 13, 2018

BEIJING (Reuters) – China will set up an international free trade zone and port on the island of Hainan, state radio said on Friday, citing President Xi Jinping, granting foreign firms greater economic freedom in the southernmost province

The announcement came on Hainan’s 30th anniversary as a province. Originally administered as part of nearby Guangdong on the mainland, the South China Sea island was given province status in 1988 and was declared the country’s fifth special economic zone as part of former leader Deng Xiaoping’s opening up of China.

In recent weeks, shares of listed Chinese firms such as Hainan Expressway Co (000886.SZ) and Hainan Strait Shipping Co (002320.SZ) had soared. Investors were betting that Xi would unveil new plans to further open up the island province’s economy when he attended the Boao Forum – Asia’s equivalent of Davos – in Hainan this week.

There has also been speculation that China intends to establish Hainan as a rival to free-wheeling Hong Kong, a former British colony that returned to Chinese rule in 1997.

Xi also said China supported Hainan in setting up international energy and shipping-related commodity exchanges, state radio reported.

At the Boao Forum, Xi pledged to further open China’s economy and cut import tariffs this year.

Hainan is rich with natural resources both onshore and offshore. Sinopec (0386.HK) operates an oil refinery there while Cnooc (0883.HK) drills for gas in some offshore fields.

Hainan also accounts for about half of China’s rubber output.

Known for its sandy beaches and resort-lined coast, Hainan has also been a frequent host of the Miss World pageant since the early 2000s.

Reporting by Stella Qiu and Ryan Woo; Editing by Nick Macfie

Source: Reuters “China to set up free trade zone in southern island province of Hainan”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

Belt and Road Initiative is not a Chinese plot, Xi says

Reuters Staff April 11, 2018

BEIJING (Reuters) – President Xi Jinping’s signature foreign policy plan to build a new “Silk Road” of infrastructure and trade links between China and Eurasia is not a “Chinese plot”, Xi said on Wednesday, according to state media.

Xi’s Belt and Road Initiative, unveiled in 2013, aims to bolster a sprawling network of land and sea links with Southeast Asia, Central Asia, the Middle East, Europe and Africa.

At a summit last May, Xi pledged $126 billion for the plan, but has failed to overcome suspicion in Western capitals, where officials suspect the professed desire to spread prosperity in the region is foremost an attempt to assert Chinese influence.

“The Belt and Road Initiative is not a Chinese plot, as some people internationally have said,” Xi told a gathering at the annual meeting of the Chinese Boao Forum for Asia in the southern province of Hainan.

“It is neither the post-World War Two Marshall Plan, nor is it a Chinese conspiracy. If you had to (call it something), it’s an ‘overt plot’,” he added, the official news agency, Xinhua, said.

China has said projects along the routes of the Belt and Road will be open to investment from all, including third party nations, but some Western governments have voiced concern the deals will overwhelmingly favor Chinese companies.

Visiting China in January, French President Emmanuel Macron said Belt and Road could not be “one way”.

In his opening speech to the forum on Tuesday, Xi said Belt and Road pacts had been made over the last five years with more than 80 countries and international bodies.

“China will not engage in geopolitical games for selfish ends, nor will it create an exclusive club, nor will it force trade deals on others from above,” he said.

Reporting by Christian Shepherd; Editing by Clarence Fernandez

Source: Reuters “Belt and Road Initiative is not a Chinese plot, Xi says”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

Some love and some meh for Xi’s speech on trade and tariffs

Jeremy Goldkorn April 10, 2018

Love and meh for Xi’s speech on trade and tariffs

Speaking at the Boao Forum for Asia on Hainan Island, Xi Jinping vowed “to open the country’s economy further and lower import tariffs on products including cars, in a speech seen as an attempt to defuse an escalating trade dispute with the United States,” according to Reuters.
•The markets loved Xi’s speech: “Stocks are rising sharply on Wall Street Tuesday after Chinese President Xi Jinping offered possible concessions in a trade dispute with the U.S.,” says the Washington Post.
•Elon Musk, whose Tesla cars will benefit if import tariffs fall, loved Xi’s speech and tweeted: “This is a very important action by China. Avoiding a trade war will benefit all countries.”
•Some cold water for investors, if not for Musk, in a tweet thread from Bloomberg correspondent Michael McKee: “Lots of talk about Xi Jinping calming markets. Reality: investors are hearing what they want to hear. We’re months away from the possible imposition of tariffs. We’re years away from implementation of Xi’s promised reforms.”
•Ford, GM, and Fiat Chrysler Automobiles already have plants in China, so tariff reductions will not affect them. McKee notes: “Lower tariffs primarily would benefit Mercedes, BMW, which export U.S.-built large and luxury cars to China, and Tesla.”
•“Neither side is ready to stand down” was the conclusion drawn from Xi’s speech and tweeted by Shawn Donnan, world trade editor at the Financial Times.
•Trump heard a different message and tweeted: “Very thankful for President Xi of China’s kind words on tarrifs [sic] and automobile barriers…also, his enlightenment on intellectual property and technology transfers. We will make great progress together!”
•Xi’s whole speech in Chinese is available on Xinhua.

Source: SubChina “Some love and some meh for Xi’s speech on trade and tariffs”

Note: This is SubChina’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

China’s Xi promises to lower tariffs this year, open economy further

Kevin Yao April 10, 2018

BOAO, China (Reuters) – Chinese President Xi Jinping on Tuesday promised to open the country’s economy further and lower import tariffs on products including cars, in a speech that comes amid rising trade tensions between China and the United States.

Xi also said China would raise the foreign ownership limit in the automobile sector “as soon as possible” and push previously announced measures to open the financial sector.

“This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products,” Xi said at the Chinese Boao Forum for Asia in Hainan province.

The comments sent U.S. stock futures, the dollar and Asian shares higher.

They come amid rising trade tensions between China and the United States following a week of escalating tariff threats sparked by U.S. frustration with China’s trade and intellectual property policies.

Xi said that China will take measures to sharply widen market access for foreign investors.

China will also speed up opening of its insurance sector to foreign investors, Xi said.

Reporting by Kevin Yao; additional reporting by Michael Martina; writing by Elias Glenn; Editing by Robert Birsel and Sam Holmes

Source: Reuters “China’s Xi promises to lower tariffs this year, open economy further”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.