New Delhi: Even if Donald Trump approves a trade deal with China, it will still mean a slow death for China’s export economy, and fears of the internal contradictions this will aggravate may well lead to Chinese aggressions in South and East Asia. Taiwan and India need to prepare for the worst.

Chinese trade data for February should be very disturbing for the Xi Jinping regime. Since he has declared himself strongman for life, the blame may focus almost entirely on him. According to the wire services, dollar denominated exports fell 20.7 per cent against expectations of 4.8 per cent, imports dropped 5.2 per cent compared to predictions of 1.4 per cent, and worst of all, China’s February trade surplus amounted to $4.12 billion against forecasts of $26.38 billion.

China’s economic contraction over several quarters peaking in February is directly related to the US-China trade war triggered by the massive Chinese trade surplus with the United States which Donald Trump is electorally committed to erase. Ironically, according to a US commerce department report made public earlier this week, the US-China trade gap rose to $419.2 billion in 2018 from $375.5 billion in 2017. The US-China trade war is now beyond the capacity of the White House to calibrate and control because it has, after initial scepticism and resistance, been embraced in large part by the US establishment. This is in line with US geopolitical history. Richard Nixon’s opening to China faced nearly as much Establishment resistance (owing to legacy ties with the Kuomintang) as Donald Trump’s moves to penalize China for trade inequities. Once the resistance was overcome, the Establishment doubled down on the path opened by the president.

If only to prove that he makes the decisions as president Trump has held out hopes of a trade deal with China. But since he has mounted the tiger of reversing the trade imbalance with China, he cannot deliver less if he desires re-election. And even should Trump not win a second term, the victor cannot relax the trade norms with China which is a competing Major Power with Great Power ambitions. The containment principle of the Cold War with the Soviet Union which did not change in its core elements from president to president will apply in whole to the US-China strategic economic competition as well. And since China’s export economy cannot survive balanced US-China trade in a meaningful way, it could lead to internal meltdowns, of which broad hints were provided at the ongoing National People’s Congress (NPC). The NPC has pegged the 2019 growth target at 6-6.5 per cent which is lower than last year’s enlargement at 6.6 per cent which is already a twenty-nine-year low.

One of the least publicized outcomes of the bloody repression of the Tiananmen Square movement was the understanding that was reached between the surviving leaders of the movement and the Chinese leadership represented by Deng Xiaoping that individual wealth creation would be encouraged in exchange for democratic freedoms. Deng was reflecting at least some of the understanding of the interwar years that came later that the economic depression of the 1920s and 1930s played a major role in the rise of fascism in Italy, Japan and Germany which led to disasters in the three countries. Economic unrest, Deng knew, would threaten the pre-eminence of the Communist Party of China (CPC), and once the CPC crumbled, the 1949 revolution would come to an end. Deng’s genius capitalized on the Chinese knack to copy and manufacture in bulk aided by the non-application of true market costs to inputs. He also advised stealthy growth and concealment of geopolitical strength. Deng, however, did not prepare China for market capitalism or rather, more to the point, for balanced trade. Facing an onslaught on its export economy, China has tried to internalize growth with, inter alia, stimulus packages, but they have not met the end of reviving the Chinese economy.

Meanwhile, internal contradictions, not the least helped by the absence of a market economy, have grown. The Chinese bias towards state enterprises has dampened entrepreneurial enthusiasm with entrepreneurs fleeing the country when possible. Party hacks are routinely foisted on business. Innovation is poor and there is an international backlash against compelling Western companies operating in China to part with intellectual properties. In addition, the richness and splendour of coastal provinces have provoked anger and jealousies in backward hinterland regions. In sum, the economic rise of China has not raised a majority of boats.

Time has also turned against China. The West was eager to embrace China at the height of the Cold War with the Soviet Union and Deng’s genius with an export economy worked. But now with a trade war breaking out on all fronts, Chinese companies like Huawei and ZTE facing the brunt of criminal prosecutions in the United States, and China’s last hope of the Belt and Road Initiative coming up against opposition in China’s peripheries from Central Asia to South-East Asia and South Asia, China has been cornered. And China has no one of Deng’s calibre to plan a future based on balanced trade and market economics.

Like a cornered beast, China will hit out at adversaries or those perceived with negative values like India and Taiwan. In the face of economic troubles, totalitarian states have routinely opted for foreign misadventures hoping to buy time with hyper-nationalism. While it makes little geopolitical sense presently to stir direct trouble with India, China will employ Pakistan as a cat’s paw. If China cannot reverse the economic decline as seems likely, India should be on full alert. China’s economic decline suits India in the long term even if it could bring pain in the immediate future or the middle term. If China is shut out of the Indian economy, it will contribute to China’s economic decline. It is in that direction that Indian energies should be concentrated.

Editor’s Note: 1. Courtesy Arvind Kejriwal, the phrase “unauthorised colony” has acquired a connotation of being somewhat legal. Only second to Narendra Modi in splurging tax receipts on full-page newspaper advertisements, the Delhi chief minister considers it a crowning achievement to legalize illegalities. Not to be left behind, Delhiites have brought another phrase into the lexicon, this being “wrongside driving”. Wrongside driving has become brazen and the Delhi Traffic Police seems powerless to end the menace. Who knows: Perhaps Kejriwal will legalize wrongside driving as well.

2. The Mahipalpur Bypass flyover-and-underpass project in South Delhi has revealed a major flaw. While it streamlines traffic to the airport, it leaves the much larger vehicular movement to Gurgaon in a worse mess than before. Without an opening to NH-8, Gurgaon traffic builds up on the slip road leading to the choked Mahipalpur signals, causing large jams in rush hours. Whoever planned the project slipped on the basics.