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Can India supplant China as the voice of the Global South?

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New Delhi seeks to expand its influence over Asian, African and Latin American countries looking for ways out of Beijing’s debt burden

India is pulling out all the stops to emerge as the self-appointed leading voice of the Global South by dislodging its ‘hostile’ neighbor China.

The developing economies in Asia, Africa and Latin America, collectively dubbed the Global South, will come under New Delhi’s soft power lens at the first G20 finance ministers and central bank governors meeting under India’s G20 presidency, which will be held in Bengaluru on February 24 and 25. India’s Finance Minister Nirmala Sitharaman and Reserve Bank governor Dr Shaktikanta Das will jointly chair the meeting.

To be sure, in its bid to become the voice of the Global South, India is going up against the financial muscle of China, which is giving away billions of dollars in soft loans and grants to these developing economies. One example of this is Chinese President Xi Jinping’s ambitious Belt and Road Initiative (BRI), extended to around 150 countries and at an estimated cost of $8 trillion, of which Beijing has spent upwards of $1 trillion.

New Delhi is taking a contrarian stance to China’s and is trying to impress upon the cash-strapped nations across these three continents the importance of debt relief. Otherwise, they may end up with what happened in Sri Lanka last year, where an unprecedented economic crisis triggered in part by external debt led to massive anti-government protests. Pakistan, too, is heading for a similar economic crisis.

India’s imports from Russia soar 400% – media

India is keen to chart its own course as New Delhi is ‘cocking a snook’ at the US and Western sanctions over Russia’s military operation in Ukraine, which enters its second year on Friday – the day the meeting in Bengaluru starts.

The US courts India

India is willing to play ball with Russia over energy security, while Washington simply can’t afford to isolate New Delhi because of its growing geostrategic and economic heft.

In absolute numbers, China’s economy is far stronger than India’s. For instance, while data shows that the gross domestic product (nominal) of both Asian countries was almost equal in 1990, China has since forged ahead at a tremendous pace. As of 2021, China’s GDP was 7.7 times greater than India’s, while on purchasing power parity (PPP), China outpaced India by 2.7 times.

However, there appears to be a discernible shift in the power structure. India, under Prime Minister Narendra Modi, is working on making itself more attractive for foreign investments, which were pegged at about $85 billion last year, compared to China’s $189 billion. The paradigm shift is in the works because American policymakers are acutely mindful of the fact that Indian economic growth holds the key to Washington’s lofty strategic ambitions in the Indo-Pacific.

Successive US administrations – irrespective of their political hues – are in favor of made-in-India products having access to American markets, as China loses its manufacturing sheen to other Asian nations such as Vietnam, Malaysia, Bangladesh, India and Taiwan.

In the shifting geostrategic power structure, as exemplified by the running feud between the US and both Russia and China, more emphasis is being laid on the Quad grouping: the US, India, Japan, and Australia.

New Delhi’s priorities

India’s priorities during the year-round G20 activities include pushing for a raft of reforms in global institutions, creating awareness of the dire need for economic aid for low- and middle-income countries, who are facing mounting debts and cannot service them. Climate initiatives and sustainability challenges also figure high on the agenda, according to India’s Chief Economic Adviser V Anantha Nageswaran.

Western sanctions bring Russia and India closer – diplomat

India’s G20 sherpa Amitabh Kant, too, has been turning up the heat on China to come clean on its loans to the developing countries.

“China needs to come out openly and say what their debt is and how to settle it,” said Kant, according to a Bloomberg news report. “It can’t be that the International Monetary Fund [IMF] takes a haircut and goes to settle Chinese debt. How is that possible? Everybody has to take a haircut,” the sherpa was quoted as saying.

A World Bank report, which was published amid the Covid-19 pandemic, stated that 94 countries across the globe are indebted to China. Countries heavily in debt to China are largely located in Africa, but there are several nations in Central Asia, Southeast Asia and the Pacific as well. Of the $35 billion that these low-income nations, such as Angola, Ethiopia, Djibouti, Pakistan, Sri Lanka and the Maldives, owed in debt service payments last year, about 37% or $13.1 billion was to state-run Chinese entities.

Challenges before the Global South

The Global South is facing critical issues like an unabated rise in the prices of crude oil, food, and fertilizers, in addition to the mounting debt and rapidly deteriorating economic growth. Last November, during his talks with Russia’s Foreign Minister Sergey Lavrov in Moscow, Jaishankar said, “The Global South feels the pain [of rising prices].”

He spelled out India’s need to buy oil from Russia. “India is the third-largest consumer of oil and gas, where incomes are not very high. We need to look for affordable sources, so the India-Russia relationship works to our advantage. We will keep it going.”

Voice of the Global South Summit

Earlier, Jaishankar had defined the thrust of New Delhi’s G20 presidency, and referred to India as “the voice of the Global South.” Modi appeared to have taken a cue from Jaishankar and convened a virtual summit of developing countries on January 12–13, which he christened the “Voice of the Global South Summit.”

India will buy oil ‘from wherever is beneficial’ – energy minister

Eight ministerial-level thematic sessions were held, which involved the ministers of finance, trade, environment, energy, health, and education. Two sessions were for the foreign ministers, where the focus was on the priorities of the Global South, and their suggestions for India as the G20 president.

Valuable input was provided by foreign participants. For example, Mozambique’s President Filipe Nyusi emphasized the need for concerted international efforts to focus global attention on promoting the interests of the developing world. Nigeria’s President Muhammadu Buhari drew attention to the huge debt burden that had derailed many countries’ development plans.

“Developing countries should put forward ‘a common agenda’ to present our collective demands to the Global North,” he said.

Bangladesh’s PM Sheikh Hasina Wajed presented a bouquet of six proposals: maintaining world peace and stability; creating a new paradigm to tackle inequality holistically in accord with sustainable development goals; special financing for the most vulnerable nations; bridging digital divides; ensuring that all human beings, including Myanmar’s Rohingya refugees sheltered in her country, have an equal right to lead a decent life; and fostering tripartite cooperation to ensure global human development.

Modi emphasized that the Global South wanted “a globalization that brings prosperity and well-being to humanity as a whole.” He added that “a human-centric globalization” was the need of the hour and solemnly assured his guests that “India’s G-20 Presidency will attempt to voice the views of the Global South on these important issues.”

New Delhi touted it as the biggest digital conference of the leaders and ministers of the developing world. “As far as India is concerned, your voice is India’s voice. Your priorities are India’s priorities,” Modi said.

India ditches dollar to bypass sanctions on Russian oil – Reuters

Altogether, 125 nations took part in the digital conference. The geographical breakdown was 29 countries from Latin America and the Caribbean, 47 countries from Africa, seven countries from Europe, 31 countries from Asia, and 11 countries from Oceania. Of them, 11 countries participated at the leaders’ level at the inaugural session and seven countries took part in deliberations at the concluding session, both chaired by Modi.

Terming the summit “a unique beginning,” India’s Foreign Secretary Vinay Mohan Kwatra stressed that its key feature was “the need for articulating the voice of the Global South in international institutions and for reforming them for a balanced representation of the developing countries.” He promised “the strongest endeavors” by the government to channel their ideas, priorities and concerns into the G20 process, piloted by India.

In its quest to become a leader among developing economies, India is facing great challenges, but is firmly set on exploiting every opening and take its place among the key figures of the emerging multipolar world. And it has the edge necessary to do so, thanks to its equidistant ties to the US and Russia and robust trade links to China, which have endured despite the two nations’ cross-border disputes.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of TSFT.

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China is raising its retirement age, now among the youngest in the world’s major economies

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Starting next year, China will raise its retirement age for workers, which is now among the youngest in the world’s major economies, in an effort to address its shrinking population and aging work force.

The Standing Committee of the National People’s Congress, the country’s legislature, passed the new policy Friday after a sudden announcement earlier in the week that it was reviewing the measure, state broadcaster CCTV announced.

The policy change will be carried out over 15 years, with the retirement age for men raised to 63 years, and for women to 55 or 58 years depending on their jobs. The current retirement age is 60 for men and 50 for women in blue-collar jobs and 55 for women doing white-collar work.

“We have more people coming into the retirement age, and so the pension fund is (facing) high pressure. That’s why I think it’s now time to act seriously,” said Xiujian Peng, a senior research fellow at Victoria University in Australia who studies China’s population and its ties to the economy.

The previous retirement ages were set in the 1950’s, when life expectancy was only around 40 years, Peng said.

The policy will be implemented starting in January, according to the announcement from China’s legislature. The change will take effect progressively based on people’s birthdates.

For example, a man born in January 1971 could retire at the age of 61 years and 7 months in August 2032, according to a chart released along with the policy. A man born in May 1971 could retire at the age of 61 years and 8 months in January 2033.

Demographic pressures made the move long overdue, experts say. By the end of 2023, China counted nearly 300 million people over the age of 60. By 2035, that figure is projected to be 400 million, larger than the population of the U.S. The Chinese Academy of Social Sciences had previously projected that the public pension fund will run out of money by that year.

Pressure on social benefits such as pensions and social security is hardly a China-specific problem. The U.S. also faces the issue as analysis shows that currently, the Social Security fund won’t be able to pay out full benefits to people by 2033.

“This is happening everywhere,” said Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations. “But in China with its large elderly population, the challenge is much larger.”

That is on top of fewer births, as younger people opt out of having children, citing high costs. In 2022, China’s National Bureau of Statistics reported that for the first time the country had 850,000 fewer people at the end of the year than the previous year , a turning point from population growth to decline. In 2023, the population shrank further, by 2 million people.

What that means is that the burden of funding elderly people’s pensions will be divided among a smaller group of younger workers, as pension payments are largely funded by deductions from people who are currently working.

Researchers measure that pressure by looking at a number called the dependency ratio, which counts the number of people over the age of 65 compared to the number of workers under 65. That number was 21.8% in 2022, according to government statistics, meaning that roughly five workers would support one retiree. The percentage is expected to rise, meaning fewer workers will be shouldering the burden of one retiree.

The necessary course correction will cause short-term pain, experts say, coming at a time of already high youth unemployment and a soft economy.

A 52-year-old Beijing resident, who gave his family name as Lu and will now retire at age 61 instead of 60, was positive about the change. “I view this as a good thing, because our society’s getting older, and in developed countries, the retirement age is higher,” he said.

Li Bin, 35, who works in the event planning industry, said she was a bit sad.

“It’s three years less of play time. I had originally planned to travel around after retirement,” she said. But she said it was better than expected because the retirement age was only raised three years for women in white-collar jobs.

Some of the comments on social media when the policy review was announced earlier in the week reflected anxiety.

But of the 13,000 comments on the Xinhua news post announcing the news, only a few dozen were visible, suggesting that many others had been censored.

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Russia warns NATO of ‘direct war’ over Ukraine

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Moscow’s envoy to the UN has reiterated where the Kremlin’s red line is

Granting Kiev permission to use Western-supplied long-range weapons would constitute direct involvement in the Ukraine conflict by NATO, Russia’s envoy to the UN, Vassily Nebenzia, has said.

Moscow will treat any such attack as coming from the US and its allies directly, Russian President Vladimir Putin said on Thursday, explaining that long-range weapons rely on Western intelligence and targeting solutions, neither of which Ukraine is capable of.

NATO countries would “start an open war” with Russia if they allow Ukraine to use long-range weapons, Nebenzia told the UN Security Council on Friday.

“If such a decision is made, that means NATO countries are starting an open war against Russia,” Moscow’s envoy said. “In that case, we will obviously be forced to make certain decisions, with all the attendant consequences for Western aggressors.”

Putin issues new warning to NATO

“Our Western colleagues will not be able to dodge responsibility and blame Kiev for everything,” Nebenzia added. “Only NATO troops can program the flight solutions for those missile systems. Ukraine doesn’t have that capability. This is not about allowing Kiev to strike Russia with long-range weapons, but about the West making the targeting decisions.”

Russia considers it irrelevant that Ukrainian nationalists would technically be the ones pulling the trigger, Nebenzia explained. “NATO would become directly involved in military action against a nuclear power. I don’t think I have to explain what consequences that would have,” he said.

The US and its allies placed some restrictions on the use of their weapons, so they could claim not to be directly involved in the conflict with Russia, while arming Ukraine to the tune of $200 billion.

Multiple Western outlets have reported that the limitations might be lifted this week, as US Secretary of State Antony Blinken and British Foreign Secretary David Lammy visited Kiev. Russia has repeatedly warned the West against such a course of action.

 

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China makes its move in Africa. Should the West be worried?

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Beijing maintains a conservative economic agenda in its relations with the continent, while finding it increasingly difficult to avoid a political confrontation with the West

The ninth forum on China-Africa Cooperation (FOCAC) and the FOCAC summit held in Beijing on September 4-6 marked a significant phase in Africa’s relations with its global partners in the post-Covid era. China is the last major partner to hold a summit with African nations following the end of the pandemic; Africa summits were held by the EU and the US in 2022, and by Russia in 2023. The pandemic, coupled with rising global tensions, macroeconomic shifts, and a series of crises, underlined Africa’s growing role in the global economy and politics – something that China, which has undergone major changes (both internal and external) as a result of the pandemic, is well aware of.

It is clear that the relationship between China and Africa is entering a new phase. China is no longer just a preferential economic partner for Africa, as it had been in the first two decades of the 21st century. It has become a key political and military ally for many African countries. This is evident from China’s increasing role in training African civil servants and sharing expertise with them, as well as from several initiatives announced at the summit, including military-technical cooperation: officer training programs, mine clearing efforts, and over $100 million which China will provide to support the armed forces of African nations.

In the political arena, however, Beijing is proceeding very cautiously and the above-mentioned initiatives should be seen as the first tentative attempts rather than a systematic strategy.

While China strives to avoid political confrontation with the West in Africa and even closely cooperates with it on certain issues, it is becoming increasingly difficult to do so. Washington is determined to pursue a policy of confrontation with Beijing in Africa – this is evident both from US rhetoric and its strategic documents.

Dirty tactics: How the US tries to break China’s soft power in Africa

A “divorce” between China and the West is almost inevitable. This means that Chinese companies may lose contracts with Western corporations and won’t have access to transportation and logistics infrastructure. Consequently, China will need to develop its own comprehensive approach to Africa, either independently or in collaboration with other global power centers.

An important sign of the growing confrontation between the US and China in Africa was the signing of a trilateral memorandum of understanding between China, Tanzania, and Zambia regarding the reconstruction of the Tanzania-Zambia Railway (TAZARA), which was originally built by China in the 1970s. If it is expanded, electrified, and modernized, TAZARA has the potential to become a viable alternative to one of the key US investment projects in the region: the Lobito Corridor, which aims to enhance logistics infrastructure for exporting minerals (copper and cobalt) from the Democratic Republic of the Congo and Zambia by modernizing the railway from the DR Congo to the Angolan port of Lobito.

In inland regions such as Eastern Congo, transportation infrastructure plays a crucial role in the process of mineral extraction. Considering the region’s shortage of rail and road networks, even a single non-electrified railway line leading to a port in the Atlantic or Indian Ocean can significantly boost the operation of the mining sector and permanently tie the extraction and processing regions to specific markets.

It appears that China’s initiative holds greater promise compared to the US one, particularly because Chinese companies control major mines both in the Democratic Republic of the Congo and Zambia. This gives them a clear advantage in working with Chinese operators and equipment, facilitating the export of minerals through East African ports. Overall, this indicates that East Africa will maintain its role as the economic leader on the continent and one of the most integrated and rapidly developing regions for imports.

A former colonial European power returns to Africa. What is it after now?

The highlight of the summit was China’s pledge to provide $50 billion to African countries over the next three years (by 2027). This figure echoes the $55 billion commitment to China made by the US (for 3 years) at the 2022 US-Africa Summit and the $170 billion that the EU promised to provide over seven years back in 2021. Consequently, leading global players allocate approximately $15-20 billion annually to Africa.

In recent years, there has been noticeable growth in such promises. Nearly every nation is eager to promise Africa something – for example, Italy has pledged $1 billion annually. However, these large packages of so-called “financial aid” often have little in common with actual assistance, since they are typically commercial loans or corporate investments. Moreover, a significant portion of these funds is spent in the donor countries (e.g. on the procurement and production of goods), which means that they contribute to the economic growth of African nations in a minimal way.

As for China, it will provide about $11 billion in genuine aid. This is a substantial amount which will be used for developing healthcare and agriculture in Africa. Another $30 billion will come in the form of loans (roughly $10 billion per year) and a further $10 billion as investments.

The overall financial framework allows us to make certain conclusions, though it’s important to note that the methodology for calculating these figures is unclear, and the line between loans, humanitarian aid, and investments remains blurred. In terms of investments (averaging around $3 billion per year), Beijing plans to maintain its previous levels of activity – in recent years, China’s foreign direct investments (FDI) have ranged from $2 billion to $5 billion annually. Financial and humanitarian aid could nearly double (from the current $1.5 billion-$2 billion per year) while lending is expected to return to pre-pandemic levels (which would still be below the peak years of 2012-2018).

Can Africa seize control of its own energy?

China’s economic plan for Africa seems to be quite conservative. It’s no surprise that debt issues took center stage during the summit. During the Covid-19 pandemic, macroeconomic stability in African countries deteriorated, which led to challenges in debt repayments and forced Africa to initiate debt restructuring processes assisted by the IMF and the G20. Starting in 2020, a combination of internal and external factors led China to significantly cut its lending to African countries – from about $10-15 billion down to $2-3 billion. This reduction in funding has triggered economic reforms in several African countries (e.g. Ghana, Kenya, and Nigeria), which have shifted toward stricter tax and monetary policies. While promises to increase lending may seem like good news for African nations, it’s likely that much of this funding will go toward interest payments on existing obligations and debt restructuring, since China wants to ensure that its loans are repaid.

Despite China’s cautious approach to Africa, its interaction with the continent will develop as a result of external and internal changes affecting both Africa and China. Africa will gradually become more industrialized and will reduce imports while the demand for investments and local production will increase. China will face demographic challenges, and its workforce will decrease. This may encourage bilateral cooperation as some production facilities may move from China to Africa. This will most likely concern East African countries such as Ethiopia and Tanzania, considering China’s current investments in their energy and transportation infrastructure. Additionally, with Africa’s population on the rise and China’s population declining, Beijing is expected to attract more African migrant workers to help address labor shortages.

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