New Delhi: As the trade war with the United States disastrously impacts the Chinese economy, China will increasingly retaliate with anger and frustration against US allies and friends in the region in coming weeks and months. One of the prime targets may be India which is covered by the Asia Reassurance Initiative Act which was signed into law by president Donald Trump on the last day of last year.

Worst fears of Donald Trump’s trade war leading to Chinese economic contraction have come true. Chinese factory activity as measured by the Caixin/ Markit Manufacturing Purchasing Managers’ Index has shown an unpredicted decline from 50.2 in November 2018 to 49.7 in December. The contraction is the first to be observed in nineteen months. A level above 50 shows expansion and anything less is automatically defined as contraction which hurts business and economic sentiments.

Rather frankly given the stakes involved, a senior analyst at a Caixin subsidiary said of the latest PMI data: “That showed external demand remained subdued due to the trade frictions between China and the US, while domestic demand weakened more notably... It is looking increasingly likely that the Chinese economy may come under greater downward pressure.”

Before Trump took on China, the United States looked powerless to confront Chinese mercantilism. After the White House took the lead, the rest of the Establishment, bar holdouts in sections of Wall Street and big business, has fallen in line. The US justice department request to Canada to detain the Huawei CFO and heiress has been a calculatedly provocative action for which China has no defence other than to penalize two Canadian citizens present in China on unconnected business. The rest of the West has been quick to recognize the huge cybersecurity dangers posed by Chinese technology giants and these have fed into fears about Chinese expansionism and China’s aggressive claims on and militarization of the South China Sea and the East China Sea.

In its acute and mounting troubles, China faces a crippling vision deficit. China’s miraculous economic growth since the 1980s, which deserves to be heralded like Germany’s post-World War II Wirtschaftswunder, owes to the remarkable Deng Xiaoping who travelled the length and breadth of China to understand and harness the genius of the Chinese people. But he also spoke of moderation, growth by stealth, and to never appear threatening. When the Soviet Union collapsed to reveal the weakness of Marxism-Leninism as national glue, its most direct impact on China was felt in the form of the Tiananmen Square unrest. Bloodily quelled, there was nevertheless a social contractual subtext to it. China would encourage the pursuit of wealth and materialism but political control would solely vest in the Chinese communist party. Since the United States was committed to empower and enrich China, the Dengist programme flowered in a fertile environment: Until Donald Trump arrived to spoil Peking’s party.

If Deng had been around hypothetically speaking, Chinese claims to the South China Sea and the East China Sea would have been more muted. Threats made to Taiwan should have been subtler with a ring of inevitability of absorption which is no longer the case. And had Deng alighted on the Belt and Road Initiative in a misguided moment, he would have set about correcting the impression that China was spearheading neo-imperialism leading poor countries to debt and slavery. Deng Xiaoping certainly would have seen the death of China’s export economy looming a long way before it actually did. Having seen the cruel, mindless, ideological inflexibility of Mao Zedong that took China to near-destruction again and again, Deng had become reflexively pragmatic without compromising on China’s strong central rule. Deng’s China, to put it simply, would not have waited for Donald Trump to start a trade war. It would have moved on a conciliatory path prior.

Although the last of Deng Xiaoping’s chosen leaders, Xi Jinping has none of his benefactor’s flexibility and masterly pragmatism. Deng was the ace puppeteer. Xi, in an action that Deng would find repulsive, has made himself strongman for life. The fate of China and his own personal power are entwined. If China fails against Donald Trump and the permanent US establishment, it is the end of the road for Xi. While his instinct may be to compromise, he cannot know how far to go without having the vultures of the communist party hierarchy flying at his throat. Since he did not design China’s export economy, he can have no idea about alternatives and how to go about implementing them. He is not Deng.

The standard for China in a crisis is to lash out at perceived adversaries and turn up the jingoism. Before proceeding to challenge the United States, China will take on subordinate adversaries like India. Having taken possession of Gwadar, China is actively building Pakistan as a counter to India in the Indian Ocean. Pakistan, never a naval power, is conversing on a sudden about the balance of power in the Indian Ocean. Conventional weapons systems are being transferred to Pakistan at a breathtaking pace, including warships and warplanes. The 2019 general election has distracted the Indian political establishment from China’s growing reach in the Indian Ocean. As China sinks economically, it would perversely seek to ensure that India’s post-1991 growth story remains stillborn.