What India has done about the RCEP is perfect. It couldn’t be otherwise
The “real” world of trade, commerce and diplomacy fructify on the facts. Thus, the 15-nation Regional Comprehensive Economic Partnership (RCEP), including the 10-nation Asean bloc from Southeast Asia, which came into being in mid-November, can also be evaluated only on the facts, not on any “regret”, “shock” or “surprise”. When a former Indian commerce minister and a former foreign secretary express anguish over New Delhi committing a “historical blunder”, which they feel would negatively impact the nation’s progress and prosperity and lead to “international isolation” diplomatically, one needs a scrutiny of the facts.
Why are we so hallucinating? India is a recurring, chronic laggard with the 15-member RCEP club -- except for Cambodia, Laos, Myanmar and the Philippines, India’s trade balance with the other 11 RCEP states is negative. And while India’s total trade surplus with these four Asean countries is just $1,589.26 billion, the bilateral trade loss from the other 11 RCEP states -- Australia, Brunei, China, Indonesia, Japan, Malaysia, Singapore, South Korea, Thailand, Vietnam and New Zealand -- stands at a staggering $99,870.87 billion. How then, with which magic wand, can India be guided to the path of profit and prosperity in the Chinese-run RCEP? One wonders!
Can’t we see how all these countries, which till recently had an independent identity and freedom of choice and action in the 10-nation Asean bloc, by one stroke of the pen on Sunday, November 15, in Hanoi, virtually lost all their panache, being subsumed by the RCEP – subject to the overlordship of the Communist Party of China, operating from Beijing! All in the name of “free trade”, “ease of doing business”, “free flow of goods”, “tariff-free”, “common prosperity” and “shared (not shredded) goals”?
Contextually, however, the RCEP that was signed into existence in Hanoi on November 15 can’t be seen in isolation as a one-time landmark wishlist for commerce, trade, investment or collective prosperity, etc. Far from it. It is born out of the acute inferiority-cum-insecurity complex of the overlord of Beijing, President-for-life Xi Jinping, who has been left badly shaken by the fate of America’s outgoing President Donald Trump. But the maverick US leader is still in office till noon on January 20, 2021, and the autocrat that he is, President Xi is not quite certain what steps his American counterpart may take against China in his few remaining weeks. That is the fear of the unknown. Therefore, he is searching for security, and the RCEP, he hopes, will fulfil that need.
The Communist Party of China’s $14 trillion economy needs a protective screen of allies urgently, thus the efforts in the past few years towards the Belt and Road Initiative and offshoots like the CPEC. The Chinese-sponsored banks have for long been trying to convince its partners and client states to replace the use of the US dollar with the Chinese yuan (renminbi), which has found few takers. Will it have better luck with the “RCEP Common Market”? If its members agree to use the Chinese currency for its trade, Beijing’s road to numero uno status would get easier. No one would miss the symbolism.
After afflicting the entire world with the Chinese virus and killing millions, while it has mysteriously caused the least damage within the People’s Republic where it had originated, the Chinese Communists know well it is time to build an image of credibility and trustworthiness. Otherwise there is the very real danger of the West mobilising to strike back and maybe inflict damage -- reminiscent of nineteenth and twentieth century Chinese history. It knows well that the existing world order faces its existential threat, as aptly shown in the IMF’s latest annual report.
“Governments and central banks around the world might spend $19.5 trillion just to put ‘a floor under’ the world economy -- which has been reeling under the catastrophic impact of the pandemic”. Governments, as of September 2020, have “announced nearly $12 trillion in stimulus measures and central banks across world have already spent $7.5 trillion” to soften the impact of the Chinese-origin virus on economics. Yet, the fact is that today “the state of the world economy is worse… than the Great Depression of the 1930s”.
What India has done about the RCEP is perfect. It couldn’t be otherwise.
Giving preference to imports rather than exporting indigenous goods, India’s ruling class had made monumental blunders in the two decades since 2000, which led to New Delhi’s capitulation before the CPC, with the Chinese brutally romping deep inside India’s hinterland and taking control of some sensitive and strategic sectors, thus endangering the security of India from within. Just contrast democratic India’s behaviour with the way Beijing deals with non-Chinese entities operating in that country. India’s decision on RCEP was also partly a damage-control exercise.
Our horrendous 2019-20 total trade deficit (despite the downturn due to the Chinese virus) still stands at $1,61,348.24 billion, though down from the 2018-19 figure of minus $1,84,000.33 billion.
India shouldn’t be branded a “loser” for not joining the 15-nation RCEP as long as the supreme national interest of its 1.3 billion people is unaddressed by the RCEP’s shadow of the CPC-created Chinese virus. Just wait and see: the octopus-like dragon will destroy economics, monopolise trade, break banks, create a debt trap, organise political sabotage, destroy indigenous industry, corner and usurp the dollar from all sources and replace it with the Chinese currency.