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Unfair criticism

Mar 02 2016 | 12:02 pm

By Madhukar SJB Rana

There seems to be a growing concern and fear in the West that things are not going their way– geo politically or geo economically or, for that matter, geo psychologically too– like it used to be after 1989 when the Soviet Union collapsed.

technology justiceThis can be felt from the tempo of the US elections for the Presidency in 2017. And also the structural strains hammering the European Union with possibilities of a British exit in June 2016 from the EU followed by the Greeks from the euro standard. Neither NAFTA nor EU nor NATO has released the power that was expected to command and control global geo strategy in its favour.

The war in Syria and the entry of Russia into the fray, and possible entry of China too, to combat international terrorism has stymied Western designs to dominate West Asia. And thus a new Eurasian entente cordial is emerging involving Russia and China–and possibly Iran too; at a time when the world economy is once again weak with the renewed threat of global recession in the wake of falling fuel and commodity prices globally.

Anti-China sentiment is being seen in the attack on its economic performance, which stands at an impressive six percent plus GDP growth per annum–second only to India at seven percent. Western commentators are doubting the official Chinese statistics arguing that it’s not possible to have such a growth rate when exports and imports have fallen, so have investment and production with no sign of a pick up in national consumption. They further allude to the turmoil in the stock market as proof where trillions of dollars were wiped out suggesting trouble in the real economy.

In short, anti-Chinese economists in the West don’t believe that the fundamentals of the Chinese economy are sound. They base their argument by asking why China needs to expand commercial credit and deficit financing when growth, as claimed, is a robust six percent plus? And further, they ask how come with such expansionary fiscal and credit policies inflation has not grown? It is less than 1.5 percent in 2015.

The Chinese model of economic management is based on state capitalism with 100 percent control of banks directed by a single party, the Communist Party of China (CPN). This model has triumphed with the Chinese economic miracle from the late 1970s to this day when it is being tested for the first time.
It took pride over the fact that it proved more successful than the American or European or Japanese or the so called Tiger economies’ models of development to usher prosperity and eradicate poverty like no time before in human history.

The challenge for President Xi is to recalibrate the economy towards a more internal consumption- led rather than an FDI- led, export-dependent economy. His ‘ Look Westwards’ policy seeks precisely this. Combined with his grand vision for One Belt One Road (OBOR); New Maritime Silk Route (NMSR), and Trans Himalayan Economic Corridors (THECs) to generate growth and development in the hinterland economies of the Asian land mass. Spearheaded by investments in high speed railway technology to create sub regional integration with each or clusters of China’s immediate neighbours.

Western critics of China’s economic policies and performance fail to understand that although Keynesian policies are being applied, even in a regime with a high growth rate, it is not for pump priming but to not let growth fall any lower since this would weaken the hold of the CPN in the body politic.

China thinks and acts strategically. And the financial tremor in the stock market is more reflective of the anti-corruption drive nationally hitting at very highly placed, very powerful personalities and, most probably, also because of the massive flight of capital to the US, Europe and Australia.

Given all these challenges facing China, and the leadership of President Xi so committed to his “ China Dream”, one would expect Nepal to be in the eye of the geo strategic storm with all manner of unwanted entrants into our national politics: To eye and watch China with a view to its social and political destabilisation so as to weaken it from within. The Tibetan plateau is, after all, a very soft underbelly of China. Dangerous times lie ahead for our country if we do not act wisely in our supreme national interest to remain united, and politically stable with strong, corruption free security and administrative organs of state.

It is in this context Nepal needs to go for national reconciliation and a trilateral understanding between Nepal, China and India over security matters so that it does not become a playground for extra regional powers.

The reintroduction of the concept of Nepal as a Zone of Peace, committed firmly to the UN Charter as a non aligned and neutral nation would be a good beginning in the interest of the Asian Renaissance. So would the rewriting of the Constitution in tune with our history and due space provided for our traditional institutions to make it a strong buffer state playing a dynamic role in SAARC as a founding father with Kathmandu as the SAARC capital. Instability in Nepal will have unintended regional consequences for both India and China.

(The writer is Former Finance Minister of Nepal)

Panipokhari

Kathmandu, Nepal

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