Post COVID 19 Global Strategic Relations

            The Government of India has recently announced new order amending the country’s Foreign Direct Investment policy to protect Indian companies from opportunistic takeover exploiting COVID19 pandemic induced economic downturn. Although the order relates to investments from countries having land borders with India the target of the new move is anybody’s guess given the fact that investments from Bangladesh and Pakistan already require scrutiny on national security ground. The US and some European countries are already concerned over China’s aggressive overseas foreign investment strategy. These countries are actively considering to deflecting investment from China to other destinations. Japan government has already announced earmarking of $2.2billion to help its manufacturers shift production line out of China. Meanwhile, South Korean companies have evinced interest to move some of their factories from China to India. These developments accompanied by growing anti-China sentiments emanating from China’s suspicious role in devastating worldwide spread of coronavirus suggest emerging of a conglomeration of anti-China forces to downgrade China. China’s increasing use of its clout in world organizations is also a matter of concern. In this backdrop, prediction of perceptible change in global strategic relations in the aftermath of COVID19 crisis holds merit. In order to get an insight of likely geopolitical and economic scenario after the ongoing world war like battle against Covid19 revisiting history of post Second World War has relevance.

Post World War II developments

Post World War II witnessed rise of two superpowers – the Soviet Union (USSR) and the United States of America (USA), engaged in cold war competing to expanding areas of influence. West European countries were rebuilt with the US aid under Marshall Plan. Japan and many other countries were also provided aid by the US. Soviet Union, which had taken control of Central and East Europe formed a group of communist nations and were outside the US aid program. Implementation of Marshall Plan is seen as the beginning of Cold War. Many developing countries including India distanced themselves from the cold war by the formation of a forum named Non Aligned Movement (NAM) in 1961. Birth of People’s Republic of China in 1949 following the victory of Chinese Communist Party in civil war under the leadership of Mao Tse Tung marked watershed in the history of post-World War II. China’s economy started impressive growth following introduction of economic reforms in December 1978 under the leadership of Deng Xiao Ping. Meanwhile, the disintegration of Soviet Union in December 1991 pushed Russia towards economic hardship and loosened its grip on East European countries. The end of cold war in 1991 was followed by splintering of bipolar world. Meanwhile, China’s emergence as economic and military power helped spreading Chinese influence in different parts of the world. China’s humongous OBOR (One Belt One Road) project which had attracted a large number of both developed and developing countries is virtually Chinese ploy to strengthen its clout in large number of countries and thereby emerge as a superpower supplanting the US.

Recent World- wide increasing anti-China sentiments

      

China’s alleged contribution (either inadvertent or deliberate) towards spreading coronavirus causing devastating losses of human lives and pushing the global economy towards rock bottom; supply of defective or low quality medical equipment including PPE, testing kits, etc. have caused anti-China sentiment throughout the world. USA, UK, France, Germany and many other countries have raised their voice against China. While the entire world is struggling against COVID19, China’s bid to acquire strategic industries in many countries taking advantage of pandemic inflicted economic slowdown added fuels to the fire. There may be global unrest against China in the event of China’s involvement in pandemic is established but China disowns responsibility and refuse to pay compensation. China has recently refused to accede to the US request to allowing visit of US experts to probe in China the origin of Covid19 virus. US attacks on China on this issue will continue at least till the country’s presidential election if not beyond. A new cold war may start against China and all the developed countries may expedite formulating strategic policy of reducing dependence on China.

Outlook

China’s dream of becoming economic super power is likely to be jolted by the adverse impact of the pandemic on the economy as well as the apparent hostile attitudes of the developed countries. China’s status as economic power in the post pandemic world order would largely depend on the intensity of coronavirus inflicted damages to Chinese economy and its capability to resist developed countries’ economic onslaught. Whether China could be marginalized in the aftermath of COVID19 pandemic will be subject to various factors such as: resilience of world’s major economies, USA in particular, to bear the brunt of economic fallout from crisis in China; the time taken by the developed countries’ pandemic stricken economies to bounce back, their capability to provide substantial economic assistance to pandemic affected developing countries; intensity of any adverse impact of EU’s any further splintering and China taking advantage of that; China’s capability to withstand stringent economic sanctions if imposed jointly by all the developed countries as earlier China had withstood economic sanctions imposed in 1989 following Tiananmen massacre; extent of success in reducing dependence on China’s supply chain by all the countries; getting Russia’s cooperation in taking actions against China in the backdrop of Sino-Russian relations serving mutual interests akin to marriage of convenience. China and Russia have come closer despite China making inroads into Russia’s backyard through increased scale of cooperation with South Caucasus – Armenia, Azerbaijan and Georgia. China became an important partner of Russia following sanction on Russia by the US in 2014 over Russia’s takeover of Ukraine’s Crimea region.

Taking different aspects into consideration the developed countries’ long term strategy could be to contain China. All the countries may emphasize not only on reducing dependence on China but also on self-reliance to the best of ability. Economic nationalism with protectionist measures may in general take precedence over economic globalization. India has an opportunity to emerge as an economic power provided the country makes spectacular victory in the battle against COVID19. India has an edge over other countries on generic medicines and low cost medical treatment. Medical equipment like PPE, testing kits etc. made in India by eminent institutions like DRDO and others are cheaper despite having quality of international standard. India, which itself is a big market, together with Bangladesh, Sri Lanka and others provide a very big potential market for IT and telecommunication as well as digital technology sectors in view of expected spike in demand in the aftermath of Covid19. Although ASEAN countries particularly Vietnam and Thailand with their cheap labour cost are favourable destinations for manufacturing sector, the bottlenecks in India are not insurmountable. Foreign investment-friendly reforms measures may be undertaken to attract FDIs in various sectors in India. So far, India’s handling of Covid19 crisis with its limited resources is impressive while comparing with most of the developed countries. India’s prompt positive responses to the requests from many countries for providing the drug hydroxychloroquine and its proactive role in taking other countries together in fight against the pandemic has already been appreciated worldwide while Chinese activities have been condemned either openly or in subdued tone. However, surpassing China by India as an economic power seems unlikely in the near future unless the former confronts any internal large scale uprising leading to fragmentation of the country or radical change in China’s political system.  There seems to be an undercurrent of resentment in China. In order to deflect attention China may resort to muscle flexing. Efforts may also be made by China to undermine India’s so far impressive handling of corona crisis by injecting and propagating communal colour and clandestinely work on destabilizing law and order situations in different parts of India to ensure India’s defeat in the fight against Covid19 and thereby cause disinterest among prospective foreign investors in India. An important aspect of post pandemic strategic relations could be to addressing need for global cooperation in order to closely monitor any effort by the terrorists to add coronavirus as low cost highly effective weapon in the arsenal. Need for global platform to have stringent control over research institutes could be highlighted for a viable mechanism.   The functioning of world bodies like UN, WHO etc. could come under scrutiny and the possibility of their restructuring cannot be ruled out.