China has only itself to blame for its own growing isolation

That India has one department store per Quad is now quite evident. Prime Minister Narendra Modi stressed the importance of the quadrilateral grouping, while attending the first in-person summit meeting held in Washington. The meeting gained importance not only for articulating their common beliefs and values, but also for the action plan that India, the United States, Australia and Japan have developed. US President Joe Biden has taken the initiative to roll out the Indo-Pacific Economic Framework for Prosperity (IPEF). India has already welcomed the initiative and said it would be an active partner in this new international effort. Seven of the 10 ASEAN countries, the four Quad countries and New Zealand are members of IPEF. As Biden explained, the IPEF is not a conventional trade organization and therefore it would not even discuss trade tariffs between member countries or set quotas for imports or exports. These countries alone account for 40% of global GDP. This, in itself, is an indicator of the importance of the new grouping. IPEF’s four main areas of concern are, in addition to trade, supply chain resilience, clean energy and decarbonization. As Modi pointed out, trust, transparency and speed are key to the success of the initiative.

It is undeniable that China is not satisfied with the formation of Quad or IPEF. In fact, he shouldn’t hold a grudge in forming either. For example, IPEF is still in its infancy. Member nations must formulate the rules and regulations that will govern their operation. As Biden mentioned and Modi pointed out, he is not targeting any non-members, including China. The reason China is upset is not far to seek. At one time, China was the preferred destination for foreign direct investment. Over the years, it has also gained status as a global manufacturing hub. Name any consumer item like computers, cell phones and cameras – they may have American, European or Japanese names, but they were all assembled or manufactured in China. If China’s economy has grown larger than Japan’s and is likely to emerge as the world’s largest economy in the foreseeable future, it is because of the transfer of capital to China. Many multinationals like Apple have found India to be a better manufacturing hub. It has a very large, skilled workforce and a democratic system that exercises its own checks and balances that rule out violations of labor rules. No wonder more and more companies are moving their factories to India. Certainly, other countries in the region have also attracted foreign direct investment. China has only itself to blame for its growing isolation. It has border disputes with virtually all of its neighboring countries. Instead of resolving the disputes China has with India, it is creating more and more problems on the Indo-China border. Little does he realize that India is no longer the same as it was in 1962 and he is more than willing and able to counter any challenge from across the border. China considers the South China Sea practically as its own territory. To put it another way, Beijing claims almost all of the 1.3 million square miles of sea as its sovereign territory. It has built military bases on artificial islands in the region, also claimed by Brunei, Malaysia, the Philippines, Taiwan and Vietnam. Is it any wonder they resent China’s attempt to control the region as a superpower without even becoming one? For once, the United States made it clear that it would come to the aid of Taiwan if it were threatened by China.

What President Joe Biden has said is not inconsistent with America’s “one China” policy. All of this means that China cannot outright annex Taiwan. In other words, the people of Taiwan will have the right to decide their destiny. It cannot be dictated by China. It is in this context that China resents the formation of Quad and IPEF. One of the concerns of the American administration is the protection of the interests of the American people. Many of them have reservations about China’s policies and they would like US companies to move their manufacturing bases to IPEF countries. If a company had the freedom to invest in China, it should also have the freedom to move to another country. For example, what motivated him to go to China was the cheap labor available there. They also relied on the dictatorial operating style of the Chinese system. However, they could not realize the long-term political and other implications of the investment. Now that they know, you can’t blame them for looking for alternatives. If IPEF offers better investment opportunities, why should China complain?

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Posted: Wednesday May 25th 2022, 08:02 IST

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