Xi Jinping in Myanmar, US-China trade deal, Putin's new amendments in Russia, Taiwan Elections and the US efforts to fund 5G alternatives

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CWA # 203

The World this Week

Xi Jinping in Myanmar, US-China trade deal, Putin's new amendments in Russia, Taiwan Elections and the US efforts to fund 5G alternatives

GP Team
18 January 2020

The World this Week (TWTW), 18 January 2020, Vol.2, No.3

Aparupa Bhattacherjee, Sukanya Bali, Sourina Bej, Yashaskar Shubham Mishra and Sneha Tadkal

Myanmar welcomes Xi Jinping
What happened?
Xi Jinping, the Chinese President, is currently on two days (17-18 November) visit to Myanmar. The streets of Naypyidaw have been decorated to welcome him for the first time. He is the first Chinese President visiting Myanmar in 19 years. Hence it is historic.

Xi will meet state counsellor Aung San Suu Kyi and army chief Min Aung Hlaing, along with leaders of different political parties. He is expected to sign infrastructure deals to strengthen the Sino-Myanmar relationship.

What is the background?
The bilateral relationship has been often described as 'fraternal' due to ethnic and geographic linkages. It became stronger under the Junta, with China as the only country to support when the rest of the world had shunned the regime. The steady flow of investments and infrastructural projects in Myanmar are testimony to the equation.
In 2011, the stalling of the Myitsone dam project due to public protest was a setback to the above relationship. Since then, there was also a rise of anti-Chinese sentiments within Myanmar, dampening the relationship. However, this did not hamper the Chinese investments.

In 2015, before the national elections, Aung San Suu Kyi was invited to China. This assured Beijing's support for the NLD government. Further, Beijing refused to condemn Myanmar, when the rest of the international community criticised the latter for their treatment to the Rohingyas.

The Chinese support is also important for Suu Kyi, who has been condemned and eschewed for her inaction and support for the army. Since coming to power, Suu Kyi's Beijing inclination has been evident. Since her visit to China in 2017, her pragmatic approaches towards the stalled Chinese projects and also China's active role as a mediator in the national reconciliation process helped the two countries to come closer.

China, on the other hand, is marred in the trade war with the US. Its flagship BRI project is being questioned and scrutinised by several Southeast Asian partners like Malaysia, Indonesia, and others. Several South and Southeast Asian countries who have received Chinese investment with open arms in early 2000 have later realised the carrot and stick approach of China in the name of investment. Hence there is a growing apprehension to the China economic 'neo-colonial' policies in the region.
In this background, Xi's visit to Myanmar becomes essential.

What does it mean?
First, Chinese interest in Myanmar is evident. The strategic location of Myanmar plays a crucial role in China's Belt and Road Initiative.

Second, perhaps China wants to pressurise the government to restart the Mytisone dam project and other infrastructural projects stuck but which will play a pivotal role in the BRI. It is understood that these issues will be the core of the discussion and are crucial enough for Xi himself to visit this small country.

Third, Myanmar will have its general election by the end of 2020. Given the failure of the ethnic reconciliation processes, it is evident that Suu Kyi will not be enjoying the support of the ethnic minorities, unlike the previous election. Xi's visit will further hamper this as most of the stalled projects are based in the ethnic majority peripheries. In case these projects are restarted, it will worsen the conflicts in these regions and deteriorate their relationships with the centre. This would also end up increasing the anti-Chinese sentiment within Myanmar.

Lastly, this visit will also impact Myanmar's relationship with India and its other investors like Japan and South Korea. Given the ongoing trade war between the US and China, Xi's visit to Southeast Asia will speak a volume of its impact on the region.

A new phase in the US-China trade, as both ink the first cut
What happened?
On 15 January 2019, China and the US signed the first phase of the trade deal. Donald Trump called the deal, "the biggest deal anybody has ever seen" whereas Chinese leaders called it a "Win-Win" deal.

The deal was signed by China Vice Premier, Liu He, and the US President Donald Trump.

According to the deal, the US will cut some tariffs in exchange for promises from China, to buy more US goods and take steps to protect intellectual property. China has agreed to purchase over $200 billion of US goods and services over the next two years. The US will cut the tariff rate to 7.5 per cent on $120 billion of Chinese goods. The deal contains assurances that foreign companies will not be forced to transfer technology in return for access to the Chinese market.

What is the background?
The US-China trade war began in 2018 had slowed the global economy.

Tensions between the countries escalated when the US and China began imposing tariffs on goods worth hundreds of billion-dollars. President Trump had accused China over the 'unfair' trade practices and intellectual property theft. In 2016 during the election campaign, Trump had promised to go tough on China as unfavourable trade with China affected American jobs and industries.

Multiple rounds of discussions have taken place between the two countries; there were numerous occasions during which both countries came together, but fell apart.

What does it mean?
First, China agreed on the purchase of $50 billion in energy supply, $50 billion in agriculture products, and $75billion in manufacturing products. It seems hard for China to keep its commitment to its new trading partners. The investment by China in new developing countries will again be on the verge of debt trapping and lessen import from those countries.

Second, this trade deal is considered as a 'win-win' strategic move by Trump for the upcoming 2020 Presidential election. Trump claimed that he had kept his 2016 election promise. With the impeachment debate in the Senate, will the trade deal influence the former?

Third, the trade-war was perceived as an attempt by the US to prevent or slow down China's global rise. Developing countries faced the impact of the trade war between the two countries. Now the big question is whether the signing of the first phased of the deal between the two countries has ended the uncertainty for the developing economies.

Fourth, the deal appears to be a big issue for the US; but on China's side, it has not received that limelight. Whereas Trump stated, this as the "biggest deal anybody has ever seen" the Chinese media and Xi, just see the deal as both the countries making progress.

Russia: Putin's New Democratic experiment
What happened?
In a surprise rejig of the Russian leadership, Prime Minister Dmitry Medvedev resigned from his post after President Vladimir Putin announced a series of proposed constitutional amendments that curtails the power of the President and makes way for more power to the Parliament over the President.

On 14 January, President Putin in his speech at the Duma proposed to restrict the tenure of the President to two consecutive terms. Other amendments include the appointment of the Prime Minister and all ministers by the State Duma (Parliament) instead of the President, who would have no right to reject those appointments, expansion of the role of the State Council (an advisory body) and the power to form the government will rest with the legislature and not with the President.

Medvedev resigned on 15 January enabling Putin to reinstate these amendments and continued to remain as Putin's long-time ally as the newly created post of deputy head of the Presidential Security Council. Following the Prime Minister's resignation, Putin appointed a bureaucrat (tax officer), Mikhail Mishustin, as the new Prime Minister.

What is the background?
The resignation of the ruling cabinet after the President's speech comes at a time when Putin is in his last tenure as a President which ends in 2024. Hence the voluntary curtailment of the President's power and the subsequent resignation of the Prime Minister look as an engineered ploy by Putin and Medvedev to capture a more permanent seat of power.

Since Stalin, Putin has been in power longer than any other Russian or Soviet leader. Josef Stalin led from 1924 until his death in 1953. In this context, it is essential to note that this Presidency is the last route for the 67-year-old Putin to create a permanent coterie and legacy in power. The resignation of the cabinet might come as a surprise but Putin's intentions to remain in power are not unknown.

Medvedev served as a placeholder President for one term (2008 to 2012) and appointed his mentor as the Prime Minister. In this capacity, Putin wielded maximum power to the extent that Medvedev amended the constitution to lengthen the President's term from four years to six. This served well for Putin and every attempt by him since has been to keep the Russian Presidency constitutionally stronger.

Thus when Putin tailors down the role of President overturning the progress of the Russian Constitution, it signals clearly who the constitutional amendments would serve in the future: Putin.

What does it mean?
The constitutional changes will alter the roles of both the Prime Minister and the President in Russia.

First, the primary reason for restricting the power of the President and the resignation of the Prime Minister could be a symbolic yet strong message to the people that the government has acknowledged the dissatisfaction with its performance. What was evident from Putin's speech is that both the governance of Russia and the current government have been deficient. The government has been unable to check the economic decline and the number of widespread protests. Putin has reasoned the disjointed governance to the lack of a direct constitutional line between the President and the Ministers, and this would be resolved by making the Prime Minister the critical person in the policy sphere rather than the President. What is also important to note is the power politics. By reducing the position of the President, Putin is crafting out a new position of power for himself which could be of a more permanent. For example, the reshaping of the State Council could provide a slot into which a post-presidential Putin could move and give him the needed power continuity to decide on crucial policy issues.

Second, the resignation of Medvedev should be looked in the context of his long partnership with Putin. His resignation served a dual purpose: not only was he an extremely unpopular leader with the people, but he also secured an independent role of himself in the Presidential Security Council when the President himself will have a limited role to play. It is essential to reflect that both Putin and Medvedev had engineered similar cabinet rejigged in 2008 and 2011 when Putin became the Prime Minister preceding his Presidency only to buy him the time to come back in power later. Hence it is not a surprise that Medvedev will not once again side with Putin as his Presidency ends soon.

Third, the role of the technocrat in a democracy is increasingly becoming a necessary tool for regime legitimisation and stability. By replacing Medvedev with a little known yet a loyal and efficient bureaucrat was critical. Faced with repetitive protests over inflation and negative growth both Putin and Medvedev was becoming unpopular, in this context a skilled and highly educated economist with 10 years of service in the Federal Tax will go a long way in him working with the system as well as have a fair image in the public gaze. Mishustin was known to have worked to revamp the corrupt tax collection system.

Taiwan: DPP returns to power with a large mandate
What happened?
Tsai Ing-Wen of the Democratic Progressive Party (DPP) won her second term for the presidential election in Taiwan. The election counting which took place on last Saturday saw the DPP and Tsai win the Presidential election with the largest margin by far in the history of Taiwan.

Tsai's main rivals in the election included Han Kuo-Yu of the Nationalist Party (KMT) and James Soong of the People First Party. Tsai registered over 57 per cent of the vote in the election against her main competitions Han Kuo-Yu who registered 38 percentage and James Soong who got only four per cent.

What is the background?
China has been a significant source of division for Taiwan and the debate over independence versus unification has always been a hot topic and the deciding factor for the elections. Taiwan also has long been cast in the shadows of China and the Washington-Beijing relationship. The two major parties KMT and DPP, are at the opposite spectrums of this debate. The KMT is more of a conservative, pro-unification and pro-China party while the DPP leans more towards left, pro-US and pro-independence.

Tsai Ing-Wen was not a strong contender in the beginning. Even a year before the present election, the chances of her return seemed unlikely. The DPP performed disastrously in the November 2018 mid-term elections which cost Tsai the party leadership as the DPP lost its control over major cities and districts.

In the present election as well chances seemed very slim. However, things started to take a turn for Tsai after the break out of the Hong-Kong protest against the implementation of the new extradition bill passed by the Chinese government. The Hong Kong protest resulted in the rise of anti-Chinese sentiments in a Taiwanese population concerning security and independence of the people over the Chinese plan of bringing Taiwan into the same 'one country, two systems' model which is implemented in Hong Kong.

On the wave of the anti-Chinese sentiment, Tsai registered her landmark victory against the KMT which has a more sympathetic side towards China and support its claim over Taiwan.

What does it mean?
First, Tsai's victory over the populist ideals of Han Kuo-Yu and KMT reinforces the fact that the Taiwanese population cherish their freedom and democracy. The DPP will likely emphasise on maintaining the de facto democracy in Taiwan, and it is highly unlikely that the region will accept the 'one country, two systems' model approach that is pushed by the Chinese in the next four years.

Second, it will be interesting to see how China responds to this victory. The Chinese have previously stated that Taiwan is an integral part of China, and they will take back control of the island by force if required. However, it seems unlikely that China will opt for the use of force shortly. There are high possibilities of diplomatic sanctions by Beijing to put pressure on the government as a method of teaching Tsai a lesson.

Third, there are vast geostrategic implications of Taiwan elections in the Indo Pacific region, and Taiwan has long been seen as a battle for dominance in the region between the US and China. Thus the win for DPP makes it clear that it will not be the end of US dominance against the Chinese in the Indo Pacific region for the next four years at least.

Alternatives to Huawei: The US introduces legislation to fund 5G
What happened?
On 14 January, the US Senate introduced legislation that would provide over US$1 billion to fund the alternatives to Huawei in the West. The proposed Utilising Strategic Allied Telecommunications Act would aim to spend at least US$750 million in funding companies carrying out research and development work in developing fifth-generation (5G) wireless technology.

Also, a fund of US$500 million is set aside to speed up the adoption of "trusted and secure equipment" worldwide. The funds are to be drawn from the revenue generated on auctioning new spectrum licenses by the Federal Communications Commission (FCC).

What is the background?
Huawei Technologies has been at the forefront of emerging 5G technology. The contentious Chinese firm is at the heart of current US-China trade tensions as well. The Trump administration has added Huawei to its "entity list," with the signing of National Défense Authorization Act (NDAA). The law bars US companies from doing business with Huawei. The FCC has also unanimously voted to designate Huawei as a national security threat. In response, Huawei has rejected allegations that it poses a threat and FCC's decision is based on selective information, mistaken assumptions, and there is no valid evidence to it.

The US Senate has introduced legislation in bolstering the US innovation in the race for 5G. The bill was introduced after months of discussions on abandoning the use of Huawei equipment by the US federal government. There were concerns among the members of Congress and other officials around a Chinese law that requires all Chinese-based companies to assist with intelligence work. The bill states the representation and leadership of the United States as necessary to stop China from gaining influence at international telecommunication organisations.

The Huawei's full-stack of 5G crunch extends across the world. There is a rift between parties in Germany on allowing Huawei equipment. German Chancellor Angela Merkel opines on not being dependent on one equipment supplier but at the same time not to shut out the most viable option available. The UK is also likely to restrict Huawei equipment to its commercial networks and not allow in their core infrastructure. The US has been lobbying efforts in the wake of governments preparing themselves to make decisions on 5G network. It has warned that any use of Huawei would lead to a review of intelligence sharing.

What does it mean?
First, this will keep the hope of US efforts to combat china's dominance in the telecommunication sector afloat. Though the US has ceded mainly to European and Asian companies, the bill subsidises tech firms and would help smaller domestic companies to gain a foothold in the market. The representation of the US and its support to tech companies of smaller countries will become less vulnerable to Chinese assertiveness. China's haul of getting access to military and intelligence agencies, Government classifieds will largely remain unsuccessful.

Second, while the introduction of the bill with bipartisan support is easy, it remains far more challenging to get it passed in the purview of the current political scenario. Like always the executive and legislative branches could differ in their opinion while the Senate is prepared to consider the impeachment trial of US President Donald Trump. Moreover, the political lines are growing rigid in advance of the presidential election in November.

Third, major telecom operators are all customers of Huawei and are appealing to the US and other Western governments to embrace 5G more rapidly or risk falling behind China at the loss of years of delays and billions of dollars in costs launching 5G networks. Germany and the UK would want to reassess their decisions on leaving out Huawei.

Finally, China would continue to sell Huawei equipment and heed no interest in unsubstantiated allegations against Huawei. It would see this introduction of the bill as unfortunate in using US taxpayer's money to duplicate efforts when Huawei is offering the best to ensure the security of a network.

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The World this Week

Xi Jinping in Myanmar, US-China trade deal, Putin's new amendments in Russia, Taiwan Elections and the US efforts to fund 5G alternatives

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