Ambitious Chinese 65 Billion CPEC Project Is In Multiple Jeopardy Quagmire

The $ 65 billion China-Pakistan-Economic-Corridor (CPEC), from the restive if oppressed Uighur Muslim majority province of Xinkiang in China, all the way to the Pakistani/Balochi port of Gwadar, is clearly in deep jeopardy now. On top of the obvious debt trap to China, Pakistan finds itself facing a near uncontrollable security dilemma.

Runaway Uighur fighters from Xinkiang, otherwise systematically oppressed by the Han Chinese, are in some degree contributing to the terrorism in Pakistan. This along with the Pakistani Taliban, the Baluchistan Liberation Army, sundry terrorist groups once enthusiastically spawned by Pakistan to deliver a ‘thousand cuts’ to India - plus their variously mutating affiliates.

Baluchis sheltering in Iran are also contributing their mite to the unrest and instability, with Iran reluctant to act harshly against their significant minority population.

This difficult situation is being aggravated daily by the economic weakness of China, plagued by a massive property and real-estate industry collapse, massive non-performing assets (NPAs), a low GDP growth rate, trade and diplomatic differences with the West, as well as a host of its neighbours.

Its currency also cannot be trusted. Its Pakistan ‘all-weather partner’ turned dire liability, is living hand-to-mouth, as it is all but bankrupt. It not only owes billions, under multiple heads and sources, to China, it owes equally huge sums to the multilateral lending agencies such as the IMF and the World Bank plus other Western and Arab lenders. Total Pakistani debt topped $ 126 billion in 2022 and has worsened since.  The currency, the Pakistani rupee, is well on its way to becoming worthless. Foreign currency reserves have gone. Its revenue generation, never robust, as its economy is based on consumption and government spending, is now practically non-existent.

The multilateral lending agencies want Pakistan to renegotiate its loans from China before it gives it more money, but Pakistan is in no position to do so in real terms.

This entire situation is making the Chinese truculent and short with Pakistan, but not really to best effect. Pakistan, as per its long-studied practice, is trying to balance the influence of the super powers, by playing the United States off against China to obtain a measure of leverage with both.

The US Ambassador in Pakistan Donald Blome, no doubt at the urging of the US State Department, visited oil, gas, and mineral rich Baluchistan, the largest province of Pakistan, on 12^th September 2023. The Chinese have been operating in Baluchistan for long. But this visit is probably the beginning of a brand-new US initiative. The US Charge d’affaires had visited in 2021. And this was a long time after the visit of a previous American official, way back in 2006.

Blome met with Pakistani officials in Baluchistan and their Navy’s West Commander. He also visited the port at Gwadar, run by the China Overseas Ports Holding. China hopes to use Gwadar for transhipments, oil cargoes to itself should anything go wrong in the South China Sea, the Malacca Straits, its access to its Pacific ports-and exports to America. How it will drive its cargo through Pakistan to Xinkiang  is another matter.

Pakistan, on its part, sees Gwadar as its only port besides Karachi.

Blome was also to see for himself that there is no Chinese military base in Gwadar as of now, even though the security situation is highly unstable. The Pentagon, in 2022, warned that there could be a People’s Liberation Army (PLA) Navy base in Gwadar before long. More so, if Pakistan capitulates any further to China.

 But, first, before the US can consider fresh investments, there are the growing insurgencies. Almost to illustrate this, the same Pakistan Navy base Blome visited in Gwadar was also recently attacked by Balochistan militants. The Balochis have also attacked and killed Chinese engineers working on a dam at Dasu on the Indus river this month. This is in the sparsely populated Khyber Pakhtunkhwa region.

The Balochi militants routinely attack the provincial capital of Quetta, where the Chinese ambassador recently escaped an attempt on his life. They also do not hesitate to use human bombers in Karachi, again targeting and killing the Chinese, three teachers as it turned out.

All this, despite the best efforts of the Pakistan security forces. The Chinese have so far been disallowed to bring in their own security forces onto Pakistani territory, or indeed into Gwadar Port, other mining sites and Chinese population concentrations in Baluchistan. But the demand is renewed every time there is another terrorist attack on Chinese workers, officials and engineers.

The economic woes plaguing Pakistan have caused then to default on payments on power plants and infrastructure being built by the Chinese. The Pakistanis are also demanding a discount of $3 billion on the cost of a railway known as Main Line -1 from $ 9.9 billion to $6.6 billion. All this is putting pressure on the viability of the CPEC project, and has largely brought it to a stand-still.

The ambitious multiple roads, with industries, infrastructure projects, power plants, railways, pipelines, are only partially completed after more than a decade. And most don’t make any money making repayment of loans only possible via other loans.

The CPEC  main road snakes through India-disputed Pakistan Occupied Kashmir (PoK) and Gilgit-Baltistan, which could prove to be a choke point should India reclaim its territory, down to the plains of Pakistan.

The largely Shia population of PoK and Gilgit-Baltistan, like that of Baluchistan at the other end, are deeply unhappy with rough and ready Sunni Pakistani administration. The PoK/Gilgit -Baltistan native population that Pakistan is trying to swamp with Sunni Muslims from the plains, would rather be part of Jammu and Kashmir on the Indian side. They have been demonstrating to this effect.

Once on the plains, the CPEC carriageways run for over 3,000 km. to the deep-water port at Gwadar. The Chinese have succeeded in building the deep water port there, but it is still a-begging for cargo and usage, very much like their other white elephant port at Hambantota in Sri Lanka.

At least the Sri Lankans are not attacking the empty, if state-of-the-art port that Sri Lanka had to cede to China on its territory. The same cannot be said for Gwadar in Baluchistan, regularly attacked by terrorists armed with explosives, grenades and small arms.

The Baluchis have made clear that they see no benefit from the Chinese built port for themselves, lacking as they still are, in basics like electricity and water. The fishing in the area has been harmed. The air is polluted with coal-based power plants. The local population is constantly bullied by the Pakistani armed forces.  

The recent elections in Pakistan to the Gwadar constituency in the Balochistan provincial assembly saw Maulana Hidayat ur Rehman, leader of the Gwadar Rights Movement elected. This will now provide an official voice to the Baluchistan activists.

 Prime Minister Shahbaz Sharif is scheduled to visit Beijing shortly, and though he is well-experienced, will come under pressure on various aspects of the CPEC, the progress, payments, and security situation. However, China may well be caught between a rock and a hard place, having already invested billions. It is unable to make fresh investments now to keep up the pace of the project.

The geopolitical situation has also changed considerably for China, to its detriment, particularly since the Covid pandemic, and no easy solutions present themselves.

China is now recalibrating its belt and road initiative that has spanned 150 countries since 2013. It will now concentrate on smaller projects, and has spurned Pakistani proposals for more BRI projects via direct investment on its soil.

(1,263 words)

March 28^th, 2024

For: Firstpost/News18.com

Gautam Mukherjee

 

 

Why Are So Many Young Indian Students In Their Early Twenties Dying in the US?

Why are so many young Indian students in their early twenties dying in the US? The tally is nine so far in the three months of 2024 alone. Is it an outbreak of racism extended to the brown Indian student? Are they quite thoroughly unwelcome in America? If so, why do their Indian parents send them there in droves and at enormous expense? The expatriate Indian student community is the largest in the US and bigger than that of the Chinese.

Normally it is the American, Caribbean, and African black people subjected to murderous racist attacks, if one can call such savagery normal. The Black Lives Matter movement is a testament to the fact that rampant racism involving some institutions and the police departments persists in America.

To prevent violent attacks against Indian students and other Indians, [Gautam Mu1] the current Biden administration is committed to provide adequate security, both on and off campus, and in the community at large.

But do some Indian students put themselves in harm’s way by flouting cautionary advisories on dangerous areas?

Four Indian students have been done to death in a period of two weeks according to a news report date-lined 2^nd February 2024. They were 19 year old Shreyas Reddy Benigher from the Linder School of Business, Ohio, Neil Acharya of Purdue University, Vivek Saini from Panchkula in Haryana. The latest is Sameer Kamath, an Indian-American pursuing his doctorate in mechanical engineering in Purdue University again.

In addition, Akul Dhawan was found dead of hypothermia outside the University of Illinois UIUC in Champaign.

G Dinesh of Telangana and Nikesh of Andhra Pradesh were found gassed to death in their flat in Connecticut.

Kuchipudi and Bharat Natyam dancer Amarnath Ghosh, age 34, was shot to death in St Louis Missouri.

Paruchuri Abhijit of Boston University was found dead in his car, making up the 9^th senseless death so far in 2024.

There is at least one death of an Indian every day across the US says an American Community leader Mohan Nannapaneni, founder of volunteer based non-profit organisation TEAM Aid. These are mostly students and H-1B employees who have recently come to America. 

Are some Indian students lonely and feeling alienated far from home? Do some of them, unable to fit in socially or cope academically, persist in their studies there due to societal and parental pressures emanating from back in India? Though more often than not, Indian students who go to American universities are exceptionally bright and are there on earned scholarships. But are they mature and experienced enough in the Western cultural mores and milieu to avoid bullying[Gautam Mu2]  and ridicule? Sometimes, there are underlying mental health issues even amongst the gifted students which are activated by the pressures of academics and those of fitting in.

There are also those who die of physical illness and natural causes. Perhaps lack of seeking timely medical attention in an alien medical system is to blame. Again, this is a phenomenon that affects foreign students even here in India, because many tend to neglect themselves in the absence of relatives to keep an eye on them.

In January 2024, a young girl graduate student Jaahnvi Kandula was run over by a speeding policeman Officer Kevin Dave in a police car at a street intersection crosswalk in Seattle. To compound matters, the manslaughter caused by the police car being driven at 119 kmph was laughed off by another Seattle Police Officer Daniel Auderer, who said Kandula’s life had ‘limited value’. He dismissed  the proposition that officer Dave was at fault and that a criminal investigation was necessary.

The MEA in India has said a total of 403 Indian students have died abroad from various causes since 2018. The largest number of deaths occurred in Canada followed by Britain.

Several voices in India are being raised against the necessity of sending Indian students to study abroad. Perhaps the answer lies in sending them to better regulated and safer places such as Singapore where the spectre of racism is largely absent.

It seems that most of the White world, including Australia and New Zealand has a racist problem, that their governments are struggling to quell.

The lure of obtaining lucrative jobs in Europe and America by studying and graduating from their universities is under pressure now because of economic recession. The fact that many American corporations already have Indians in prominent positions or at the top is probably resented by the natives.

Unlike White immigrants, the Indian, by dint of his or her colour does not blend in. The Indian also tends to not assimilate into the great American or European melting pot. Tensions are bound to result.  

The answer may lie, at least in the medium term by setting up US  and European university campuses in India and West Asia. Till then, these are very real risks that Indian students and their families must face.

As for the H1 B visa employees, they too must weigh their pros against their cons. Of course, statistically, these tragic demises are not very large compared to the masses of students and employees who go to America.

The Indian diaspora in the West is now in millions after all, and many have found jobs in local, state and federal government as well as the judiciary and medicine.

Those who are already European and American citizens must organise to maintain their security. More so in America, a land where the first amendment allows everyone to own and use firearms. Nothing works better than a strong response and the perception that Indians are not timid pushovers.

(930 words)

March 22^nd 2024

For Firstpost/News18.com

Gautam Mukherjee

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 [Gautam Mu1]e

 [Gautam Mu2]

 

India Is Rebooting Into A Middle Income Economy

The country was startled in a good way by the announcement of 8.4% GDP growth for the third quarter of fiscal 2024. This was till December 2023, instead of the earlier estimated 6.5% for the same quarter. This, of course, is in the so-called ‘real economy’ that is benefiting from multiple structural changes over the last decade and the lack of any big ticket corruption.

 The Indian stock market, that has recently overtaken that of Hong Kong with a little over $ 4 trillion in market-cap, reacted by reaching fresh all-time highs on the Sensex and Nifty. But now, this cannot be labelled as mere exuberance, irrational or otherwise, froth, or a bubble, as in the past.

The number of Indian stocks that have tripled in value terms over the last decade and are worth $1 billion or more are 183 in number, making it No.1 for this feat. The next two positions have the US with 157 such companies and China with just 79. The US, of course has a $ 62 trillion worth of stock market and its biggest companies have a market-cap bigger than the entire Indian economy.

But in its place, the Indian debt and bond market is seeing significant foreign investor inflows, ever since it was included in the Morgan Stanley debt fund global indices in New York. Morgan Stanley has issued bullish statements on the Indian stock market and is overweight India. Likewise, Jefferies and a number of other international investment houses. A number of international allocation indices have halved percentage weightages for China, based on its economic decline and geopolitical tensions it has engendered, and doubled those for India. This should see sizeable investment coming in from abroad, despite so-called high valuations in the smallcap and midcap space.

In addition, the domestic institutional investors (DII) and the mutual fund industry has been pouring resources into the Indian stock market, keeping the market buoyant by buying on dips. The systematic investment programmes (SIP) into mutual funds have seen the influx of lakhs of retail investors and sizeable collective funds.

The foreign institutional investors (FII) who controlled 60% of the Indian stock market activity in 2016, now account for 40% of the larger market-cap, and cannot take the market up or down at will anymore.

India is rapidly turning into an ‘asset class’ on its own in the opinion of investment gurus, fuelled by growth figures of 15% per annum or more in a large number of private sector and now public sector companies too.

It is little wonder that John Thomas Chambers, the former CEO of Cisco Systems, one of the greatest successes of the internet era, thinks that India will have the largest economy in the world by 2047.

Chambers expects an accelerated partnership between the US and India to make this happen, along with taking artificial intelligence (AI) into the mainstream. Chambers also thinks Prime Minister Narendra Modi is the greatest leader in the world.

 The year FY 24 is now estimated to end with 7.5% GDP growth. This augurs well for the period after the general elections 2024, which the NDA is expected to win with a majority, because more bold economic reforms can be effected soon thereafter.

This continuity and expected stability of governance is another highly favourable factor for the increased thrust towards manufacturing including  those of the high value electronic chips. Three ventures are in the works, and several more are likely.

The rapid development of infrastructure has already reduced bottlenecks and a proportion of the logistical costs from a high of 14% towards a low of 8%. The China plus one initiative has gained ground with renowned manufacturers like Apple.  

India’s thrust on Make in India in defence manufacturing is bearing tangible fruit in a number of areas such as fighter jets, light tanks, armoured carriers, bailey bridges, radar, missiles, helicopters, military transport aircraft, bullet proof vests, howitzers, rifles, ammunition and so on.

Agriculture is in need of substantial reform but still has created a food surplus along with substantial exports of rice and other commodities to West Asia and beyond.

Exports in general, from manufactured and value added goods to services have vastly increased and are on a sharp upward trajectory.

Arvind Panagariya, the University of Columbia professor from New York, who was Vice Chairman of the Niti Aayog earlier, and has recently taken on the mantle of Chairman of the Finance Commission (that decides which state gets how much out of central collections and resources), and Vice Chancellor of the rebuilt Nalanda University, is ahead of the curve. While most analysts expect about 7% growth in GDP for several years going forward, Panagariya sees a potential to achieve 10% GDP growth per annum year-on-year. This is the coveted double-digit growth that took China to No.2 in the world, albeit over a much longer period based, not on a roaring domestic economy, despite a formidable manufacturing capacity, but exports to the West.

Eminent economists Surjit Bhalla and Arvind Virmani are calling India a middle-income economy now.

India, at just about $ 4 trillon in GDP, is already poised to become the 3^rd largest by 2030, just six years away. This, particularly with Germany, Japan, as well as several other European economies, slipping into recession.

India’s indirect tax, the Goods and Services Tax (GST) collections, a barometer of a growing legitimate economy, also rose 12.5%  year-on-year to 1.68 lakh crores in February 2024 for transactions conducted in January. The average monthly gross collection for FY 24 is steady at Rs. 1.67 lakh crores. As of February 2024 the total gross GST collection stood at Rs. 18.40 lakh crores, 11.7% higher than the corresponding period in 2023.

Going forward, GST collections of 1.7 lakh crores per month is likely to become the minimum if it doesn’t go higher.  This increase in taxes is likely to cushion, if not obviate any impact on the fiscal deficit from higher nominal growth rates as they come. Direct taxes similarly are seeing a noticeable increase too.

As of January 2024 the government has clocked up only 63.6% of its fiscal deficit target or 11.02 lakh crores in absolute terms. This leaves enough elbow room for the remaining two months of the fiscal year 2024. GDP at current prices in FY 24 is estimated to reach Rs. 293.90 lakh crores, up from Rs. 269.50 Lakh crores in FY 23. It is therefore clear, that the slow-down in the economy occasioned by Covid is now over.

As for those, like the Communists and sections of the opposition, who like to think that the rich are getting richer and the poor are getting poorer, there was other news. The percentage of people in absolute poverty amongst India’s 1.4 billion plus people declined to just 5% of the population. We are now within striking distance of abolishing absolute poverty. And the growth is becoming more and more inclusive of all sections of the population. At the prevailing growth rates let alone the double digit ones, the per capita income will also rise into multiples of what it is today and become more evenly spread.

Another news item stated that rural consumption figures have nearly caught up to urban ones. People there were now spending much more on non-essentials, lifestyle and so on. This is not surprising because of rising aspirations. The impact of not only greater disposable income, but the reach of satellite TV, social media on the internet, and the fact that over half of the billion plus  smart phones are owned by citizens from the rural areas and the tier two/ three, tier four towns now.

Barring impactful Black Swan events in a volatile geopolitical scenario, India is poised to make its Amrit Kaal period to its centenary in 2047, a truly transformative one.  

(1,300 words)

March 3^rd 2024

For: Firstpost/News18.com

Gautam Mukherjee