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Xi Dreading US, Japan Exit From China As Vietnam, Thailand, Indonesia Vie For Opportunities

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China’s pivoting role in the spread of the novel coronavirus pandemic has earned it the fury of countries across the globe. This has many to consider reducing their reliance on China for their manufacturing needs including Japan.  

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The Japanese decision to ‘leave’ China has set alarm bells ringing in Beijing with President Xi Jinping calling for a ‘protracted battle’ while assuming the worse, writes Katsuji Nakazawa for the Nikkei Asian Review.

The Sino-Japanese bonhomie was on track until the global pandemic derailed it earlier this year. President Xi canceled his first-ever state visit to Japan and ever since then, Shinzo Abe has insisted that his country’s need to stop being dependent on China.

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Speaking at Council on Investments for the Future, Abe said he wanted high value-added product manufacturing bases to come home to Japan.” We should try to relocate high added value items to Japan,” the PM said. “And for everything else, we should diversify to countries like those in ASEAN.” This marked the beginning of Abe’s ‘shift away from China’ policy.

In its emergency economic package adopted on April 7, the Japanese government called for the re-establishment of supply chains that have been impacted by the virus. Japan will devote more than $2.2 billion(220bn Yen) of its coronavirus economic stimulus package to incentivize its manufacturers to move their production out to Japan or 23.5bn Yen to diversify production hubs into Southeast Asia.

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Other countries such as the USA and the UK are also planning to reduce their dependence on China. An exodus such as this will hurt the Chinese economy which has anyway been spiraling since the shutdown of the domestic economy earlier this year. The Chinese economy contracted 6.8% in the first quarter of 2020 as compared to 2019.

This was the first contraction in the country’s quarterly (GDP) since it first began reporting the metric in 1992. The novel coronavirus pandemic has created a massive unemployment crisis in the country as well.

According to Liu Chenjie, the chief economist of fund management firm Upright Asset, as many as 205 million people in China may have been put out of a job due to the Covid-19 outbreak. China’s downfall does have a positive, albeit for South-East Asian countries.

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China is currently the world’s production hub, but it may no longer remain that way post the coronavirus pandemic as companies have started to look for other economic avenues to move their production facilities, in order to reduce the dependence on China.

As EurAsian Times reported earlier, after the US-China trade war last year and the coronavirus outbreak in the current year, US technology giants Apple, Google and Microsoft are reportedly looking at shifting their production base outside China and countries like Vietnam, Thailand, Indonesia and Malaysia are set to benefit.

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Another topic that has generated interest amongst the Chinese intellectuals is the year of Geng-Zi, or the metal rat, which comes once every 60 years. It is believed that the year of the metal rat leads to a history-changing occurrence every time. In 1840 is was the Opium War, in 1900 it was the Boxer Rebellion and in 1960 it the great famine under Mao Zedong. What would the metal rat bring in 2020 remains a mystery.

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China Imposes Sanctions On US Defence Giant Behind F-16s, F-22 Raptors

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China has threatened to impose sanctions on US defence giant Lockheed Martin – the makers of Stealth F-22 Raptors, in response to US approving of a possible deal for Taiwan to buy parts to refurbish defensive missiles built by the company.

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Foreign Ministry spokesman Zhao Lijian made announced at a briefing in Beijing on Tuesday, adding that the US should cut defence ties with Taiwan “so that it doesn’t do further harm to bilateral relations and damage peace and stability in the Taiwan Strait.”

“China firmly opposes U.S. arms sales to Taiwan,” Zhao said, adding: “China decides to take measures to protect national interests. We will impose sanctions on the main contractor of this arms sale Lockheed Martin.”

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The US State Department last week approved a possible $620 million foreign military deal for Taiwan to buy parts of Patriot Advanced Capability-3 (PAC-3) missiles so that they can last 30 years.

Beijing’s actions come amid growing tensions between the US and China tensions over various issues including trade war, South China Sea dispute, COVID-19 pandemic, new security law in Hong Kong, 5G network and hostilities against key US allies including India and Australia.

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Despite it being a strategic American ally, the US has no official embassy in Taiwan nor does Australia, Canada, the UK or Germany. China calls Taiwan a ‘renegade province’ and has vowed it to merge it with mainland China, at all costs.

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Asia Pacific

India-China Economic Romance Cannot End With A Mere Border Clash – Chinese Experts

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India and China have been at each other’s throat for more than a month now. Aside from the military confrontation in Ladakh, India has also moved to disengage from China economically.

While the move has got the support from the majority of Indians, Cui Hui’ao of the China Global Television Network (CGTN) writes that disengaging from China might not be a choice for India and that economic de-coupling is driven politically by Narendra Modi.

As reported by Eurasian Times consistently during last month, the feud between India and China has been a rollercoaster ride. From military buildup, deadly clashes to de-escalation and eventual withdrawal, the clash of the two Asiatic giants has seen it all.

Cui writes that apart from the military confrontation, India has retaliated in the economic sphere, referring to the decision by the Indian government to ban 59 Chinese application including TikTok, WeChat and ShareIt and the call to boycott Chinese products.

The journalist at CGTN writes that decoupling from China may be easier said than done for India. He says that India is not a manufacturing powerhouse, so in terms of bilateral trade, it actually buys much more from China than the other way around.

Cui analyses trade data to support the fact that New Delhi will find it difficult to reduce its dependence on Chinese imports. Between April 2019 and March 2020, India imported over 65 billion U.S. dollars’ worth of goods from China.

Cui is of the opinion that the coronavirus pandemic has hit the Indian economy hard and in fact, the disengagement is driven by politics rather than economics. He finds it difficult to accept that India’s disengagement from China would take place at a time when the Indian economy is projected to contract by 4.5% according to the International Monetary Fund (IMF).

Economic Disengagement Driven Politically 

Speaking to Cui, Cheng Xizhong, a visiting professor from Southwest University of Political Science and Law, says that the decision to de-couple from China economically is because of the domestic pressure on Prime Minister (PM) Narendra Modi.

‘’Since his second term began yet Indian economy is a mess. He has to find a way to shift the public attention elsewhere,” he said.

The author agrees with the point made by Cheng Xizhong and writes that pressure on the Indian PM Modi comes from multiple fronts, including his own supporters, businesses, and farmers union. But this time, the nationalistic voice is even louder.

Other experts interviewed by Chui agree that New Delhi would benefit more if it partnered with Beijing. Professor Cheng, a former Chinese military diplomat in South Asia, said that since India started its opening-up in the 1990s, its economic growth has been crippled by lack of high-quality infrastructure and it would wiser if India and China work together.

Similar views are shared by Indian economist Biswajit Dhar, who says that India’s decision to start producing domestically has to be strategic and it cannot take the decision to produce everything.”

While India and China disengage at the battlefront in Ladakh, the Indian government is looking for solutions to reduce its dependency on Chinese imports. PM Modi has encouraged all Indians to become self-reliant (Aatmanirbhar) by producing and purchasing indigenous goods and boost the Indian economy.

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Americas

US-China ties to worsen as Trump set to block all Chinese claims in South China Sea

Ties between US and China could dramatically worsen over the South China Sea after Secretary of State Mike Pompeo said Washington now regards virtually all Chinese maritime claims outside its internationally recognised waters to be illegitimate. 

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Ties between the US and China are set to further deteriorate over the South China Sea as the Trump administration is set to outrightly reject almost all of Chinese maritime claims in the contentious waterbody.

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The Trump government presented the decision as an endeavour to restrain China’s increasing belligerence in the region with a commitment to recognising international law. This move in the South China Sea will further enrage the Chinese, who are already countering against various US sanctions and other penalties.

Previously, US policy had been to insist that maritime spats between China and its smaller neighbours be settled peacefully through UN-backed arbitration.

But in a statement released on Monday, Secretary of State Mike Pompeo said Washington now regards virtually all Chinese maritime claims outside its internationally recognised waters to be illegitimate.

“The world will not allow Beijing to treat the South China Sea as its maritime empire,” Pompeo said. “America stands with our Southeast Asian allies and partners in protecting their sovereign rights to offshore resources, consistent with their rights and obligations under international law. We stand with the international community in defence of freedom of the seas and respect for sovereignty and reject any push to impose ‘might makes right’ in the South China Sea or the wider region.”

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Although the US will continue to remain impartial in territorial conflicts, the announcement means Washington is now directly supporting Brunei, Indonesia, Malaysia, the Philippines and Vietnam, all of which oppose Chinese declarations of sovereignty over maritime areas surrounding disputed islands, reefs and shoals.

“There are clear cases where [China] is claiming sovereignty over areas that no country can lawfully claim,” the State Department said in a fact sheet that accompanied the statement.

The announcement was released a day after the fourth anniversary of a binding decision by an arbitration panel in favour of the Philippines that discarded Chinese maritime claims around the Spratly Islands and neighbouring reefs and shoals.

China has declined to recognise that ruling, rejected it as a “sham” and withdrew from the arbitration proceedings. It has continued to oppose the decision with aggressive actions that have brought it into territorial disputes with Vietnam, the Philippines and Malaysia in recent years.

However, as a result, the administration said China has no valid maritime claims to the fish- and potentially energy-rich Scarborough Reef, Mischief Reef or Second Thomas Shoal. The US has repeatedly said areas regarded to be part of the Philippines are covered by a US-Philippines mutual defence treaty in the event of an attack on them.

In addition to reemphasising support for that decision, Pompeo said China cannot legitimately claim the James Shoal near Malaysia, waters surrounding the Vanguard Bank off Vietnam, the Luconia Shoals near Brunei and Natuna Besar off Indonesia. As such, Washington said it would regard any Chinese intimidation of fishing vessels or oil exploration in those areas as unlawful.

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