China’s financial regulatory regime finding its feet

On March 16, 2023, Beijing released an official plan to reform Party and state institutions. This document lays out plans to address deficiencies in the ability of the Chinese government’s own institutions to lead the nation’s development. Part of the 2023 plan is to reform and restructure the financial regulatory framework.

According to the plan, a central commission for finance will be established as the Central Committee’s own decision-making institution — designing, coordinating and overseeing the country’s efforts to achieve financial stability and development. 

It will replace the existing State Council’s Financial Stability and Development Committee. This is Beijing’s way of enhancing its authority over a financial sector that has become a source of turbulence in recent years.

A new national regulatory body, the National Bureau of Financial Regulation, will also be set up. It will oversee consumer rights protection and regulation of the financial industry except for the securities industry. The China Banking and Insurance Regulatory Commission will be abolished and the PBOC will focus on monetary policy and macroprudential regulation.

China’s financial regulatory framework has come a long way from a one-regulator structure to the current one bureau, one commission and one bank structure. Before 1990, China’s financial sector consisted of a few state-owned commercial banks and the PBOC was the only financial regulator.

China’s financial industry started to change in the early 2000s as cross-sectorial financial products, such as bank wealth management products, began to emerge. This has posed challenges to the sectoral regulatory framework as these blended financial operations require supervision from more than one regulator. 

It also creates room for circumvention of regulation in territories where supervisory responsibilities are unclear and rent-seeking in areas where supervisory responsibilities are overlapping.

In an attempt to address supervisory inefficiency, the State Council approved an inter-ministerial joint meeting system for all financial regulators to coordinate cross-sectorial regulations in 2003. This failed to achieve its goal because none of the regulatory bodies had actual executive power to lead the way.

Beijing started a major reform in 2017–18 after seeing turbulence in the stock market, real estate market and internet financing in the past few years. First, the Financial Stability and Development Commission was created under the State Council in 2017. 

This commission is on a higher administrative ranking than the existing regulators, which ensures that it has the executive power to mobilize others to tackle major issues and to lead financial reform. Then the Banking Regulatory Commission and the Insurance Regulatory Commission was replaced by a China Banking and Insurance Regulatory Commission in 2018.

China has implemented waves of financial reforms. Photo: Facebook

The 2017–18 reform shows a gradual transition from sectorial regulation to functional regulation as Beijing responds to the changing financial sector. The 2023 reform is a continuation of this transition, and yet shows Beijing’s pressing concern about financial risks and desire for a stronger grip over the financial system.

The Central Commission for Finance was created in 1998, after the outbreak of the Asian financial crisis, to centralize forces to stabilize the economy and coordinate risk management. Its resurrection today suggests that Beijing’s concern over the financial system has reached the same level as during the crisis.

The 2023 plan also seeks to optimize the central bank’s structure. All the regional branches, which operate across multiple provinces, will be removed. 

Instead, there will be one provincial-level branch in each of the 31 provinces and five separate branches in the cities of Shenzhen, Dalian, Ningbo, Qingdao and Xiamen. It will be a better central–local structure for monetary policy implementation and macroprudential regulation.

Local financial regulatory frameworks will be modified. Central financial regulators will send out local agencies to oversee, coordinate and implement financial supervision and reform, in collaboration with local governments’ own financial regulatory bodies. 

Local governments are no longer responsible for promoting financial development. Rather, they have been given the clear task of reining in financial risks. It is clear that Beijing wishes to control financial supervision at the local level as much as at the national level.

The reform of the local financial regulatory framework arises from a deep concern over the scale of local government debt. In 2022, the Chinese local government’s debt reached 35 trillion RMB (US$4.8 trillion) and the local government financial vehicle (LGFV) debt was close to 60 trillion RMB ($8.3 trillion).

Beijing has recognized the risks embedded in this multi-trillion local government debt and aims to resolve implicit LGFV debt via large-scale debt restructuring and swapping. Reform of the local financial regulatory framework will ensure that Beijing will lead the debt restructuring at the local level while making the local governments accountable for controlling financial risks.

The 2023 round of financial reform comes at an extraordinary time for the Chinese economy. The external environment is uncertain again, due to the pressure of high inflation and tightening monetary policy in advanced economies. Domestically, slow growth, accumulating systemic risk and the shrinking policy room are the biggest challenges.

Given the uncertain economic outlook, it is increasingly critical that the plan for reforming the financial regulatory framework will be implemented seriously. The National Bureau of Financial Regulation is key to this plan. On May 10, 2023, it was officially open for business — we will wait and see whether it can get the job done.

Jiao Wang is Research Fellow at the Melbourne Institute: Applied Economic & Social Research, University of Melbourne.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Facebook in Cambodian politics

Many Cambodian people started to familiarize themselves with Facebook probably in the late 2000s. Back then, people used it simply to connect with friends.

Cambodia started to see Facebook being used in the political domain mainly from the 2013 general election.

It is not far-fetched to say that Facebook was a major communication tool in pushing the opposition in Cambodia to win an unprecedented 55 seats in 2013. The opposition also used Facebook to mobilize people to the unprecedented mass protest in December 2013. The protest took a violent turn in January 2014 with destructive demonstrators who were later cracked down on by the government.

For the opposition, the chain of events had brought them an inch close to toppling the Hun Sen regime and gaining power. For the ruling Cambodian People’s Party (CPP), the events were putting the country an inch close to civil war.

The CPP was finally awakened to the danger of a color revolution, which was not yet a known concept in Cambodia at that time.

Similar political events can be seen around the world during that period, for instance the Arab Spring that occurred between 2011 and 2012 in countries such as Tunisia (Jasmine Revolution), Egypt, Libya, Syria and Yemen. Documentaries were made to suggest a major role of Facebook in launching these color revolutions.

The results of the Arab Spring were nothing but tragedy and endless crisis. What started off as peaceful pro-democracy protests turned into civil wars in Libya, Syria and Yemen, displacing or killing millions of people. Tunisia lost stability. Tunisia has had 12 governments in the last 10 years. Some questioned why after 10 years since the Arab Spring, countries that fought for dignity and democracy are still far from it.

The violence in 2013-2014 gave CPP a big lesson in terms of communication strategy.

The CPP believed that it had left Facebook to be monopolized by the opposition and had ignored this space for far too long. The CPP was a latecomer in terms of utilization of Facebook in politics. It was not until September 20, 2015, that Prime Minister Hun Sen officially launched his Facebook page.

The battle on Facebook increased in the run-up up to 2018 election, with more CPP supporters becoming more active to increase their political space on Facebook. The opposition thus lost its monopoly on Facebook.

In general, those who can read Khmer can understand that the political battles on Facebook are fierce.

As the mainstream media tend to perceive that the Cambodian government is authoritarian, there has been less scrutiny of the ways the opposition have been communicating their political messages, which were violent and racist. Their messages are often written in Khmer to hide them from the eyes of English-language media.

The opposition has taken this kind of political culture since the first election in 1993 by undermining the trust toward the government in whatever means possible, including promoting division of classes, encouraging civil disobedience and military mutiny, and inciting anti-Vietnamese and later anti-Chinese sentiment among voters.

It took 24 years for the Special Rapporteur on the situation of human rights in Cambodia to acknowledge on September 27, 2017, that the opposition were using hate speech. In a very indirect and soft tone, the then-Special Rapporteur Rhona Smith wrote in her statement that “the same is true of earlier rhetoric from other parties inciting hatred.”

Direct stakeholder

In 2023, as Cambodia is approaching another election, Facebook has undergone a major turning point in Cambodian politics by changing its role from being a mere political platform to adopting a role akin to a regulator.

This is nothing but becoming a direct stakeholder of Cambodian politics.

In late June, Facebook’s oversight board recommended that the platform suspend the Cambodian prime minister’s account for violent language. In response, Hun Sen deleted his Facebook account with more than 14 million followers, and the government expelled Facebook representatives and stopped all activities it had with Facebook.

It said in a statement that the government had found irregularities in Facebook’s services for users in Cambodia, such as the creation of fake accounts, risk of private data, use and collection of private data, dissemination of fake news, lack of accountability and transparency, and interference in the country’s political affairs.

The members of the oversight board were later declared persona non grata.

When a dozen of unelected private individuals, completely unknown to the Cambodian public, attempt to censor the prime minister’s speech within Cambodian political discourse, this is direct interference by a private foreign company in the domestic affairs of a sovereign state.

So a red line has been crossed by Facebook, and Cambodian leaders have lost their trust in the platform.

From Facebook’s perspective, probably there is nothing it can do about its inability to control the vast pool of messages with ill intentions, especially when the platform allows fake identities to exist.

When “likes” and “shares” are the motivational drives for Facebook users, it can create a breeding ground for extremism and populism.

From the government’s perspective, it is extremely problematic when the authorities cannot enforce the law against those who insult His Majesty the King, make slanderous comments against the dignity of public individuals, or disseminate fake border maps to accuse the government of ceding territory to a neighboring country.

In fact, Cambodia’s is not the only case in which states have difficulty striking a balance between the promotion of the freedom of expression through the flourishing social media and the maintenance of the rule of law and public order.

In France, Facebook was considered a supportive tool for violence by the gilet jaunes in 2018. Facebook’s latest algorithm change favors wildly popular organic posts, rather than those from media organizations and the gilet jaunes’ protests have benefited from the new code. In the recent violent protests, President Emmanuel Macron also blamed social media for fueling violence.

Nonetheless, maybe it is hard to blame Facebook and other social media because basically they are not accountable for state’s security and public order.

When Facebook cannot assist the government in enforcing the rule of law, governments have no choice but to find their own ways and means, because the government is the elected representative of the people, and it has to be accountable toward the people in terms of protecting peace, rule of law, security and public order.

After all, what is the purpose of authority if the rule of law cannot be enforced? This question touches to the core raison d’etre of the state itself.

As the trend continues, it is not hard to see that the Cambodian government has started to reconsider its view about Facebook in terms of political communication tool, and to seek better ways to handle social media while trying to maintain the rule of law, national security and public order.

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Robots that deliver medication, voice-activated devices: Hospitals tap technology to improve patient care

Another robot guides people to different areas of the emergency department, relieving nurses of the task of escorting patients in person, which typically takes one-and-a-half hours a day in total.

The consultation room is “quite a distance” away from the triaging area, said Ms Cheong. It speaks four languages – English, Mandarin, Malay and Tamil.

A third robot can perform dedicated tasks, such as providing patients in the waiting area with items they need like a blanket. The robot alone has reduced the workload of retrieving items by nearly half.

This means service staff can focus on other tasks like helping patients with payment or discharge queries.

The robotic trial is expected to end in August. CGH is looking to deploy the robots for more tasks or mobilise the machines elsewhere in the hospital.

SMART WARD AT TTSH

At Tan Tock Seng Hospital’s (TTSH) Smart Ward, several devices have been introduced to make healthcare more efficient.

One device allows nurses and doctors to update one another quickly hands-free, without the use of the phone. 

With the completely voice-activated device, nurses can say the name of the doctor they are looking for, and the device will connect them. 

“Traditionally, we have to pick up a phone, find the contact number of the doctors and then dial and connect with the doctors and wait for the doctors to arrive on site to the ward,” said Smart Ward lead and senior nurse manager Lim Mei Ling.

They can also use the device’s camera to scan items like medication or bandages for doctors to assess the situation and make a call on what to do next for a patient, saving time, Ms Lim added.

The device is one of 20 innovations that have been tested at the TTSH Smart Ward since 2022. Another new technology at the ward is a bed that turns bed-bound patients with the push of a button, reducing the need for labour-intensive work.

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China cranking up production of game-changing frigate

China’s massive naval shipbuilding program is gaining steam with the rapid construction of next-generation combatants, a building spree that promises to free up older warships for coast guard patrols in disputed maritime areas in the East and South China Seas.

This month, Naval News reported that production of China’s new Type 054B frigates is now underway at Hudong in Shanghai and Huangpu Wenchong in Guangzhou, the same shipyards responsible for producing the Type 054A frigate, of which the People’s Liberation Army-Navy (PLA-N) operates 40 units.

Naval News mentions that the Hudong and Huangpu shipyards also produce a modified Type 054A adapted for the China Coast Guard (CCG), designated Type 818, and continue work on a newer redesigned variant.

Naval News reports that the Type 054B is a new warship that is wider and longer than its Type 054A predecessor, with an estimated length of 147 meters, a beam of 18 meters, a bulkier superstructure and a higher bridge with a 6,000-ton displacement.

The report notes that while the Type 054B’s armaments and other subsystems are still unknown, they will most likely include a 32-cell vertical launch system (VLS), a new type of active electronically scanned array radar (AESA), and a possible H/PJ-11 11-barrel 30 mm autocannon on the bridge like the Type 052D destroyer and Type 055 cruiser.

It is also expected to house two Z-20 utility and anti-submarine helicopters, replacing the lighter and less-capable Z-9 used on the Type 054A.

Naval News mentions that the Type 054B frigate under construction at Huangpu has already been painted, and launch appears likely in the next couple of months. The hull at Hudong was floated out in early June to make way for a civilian vessel but was then returned for further work.

The Naval News report notes that both hulls may be launched before yearend, with the sighting of more modules at Hudong suggesting that China is building more frigates.

Asia Times noted in February 2023 that the Type 054B was first designed in 2016 and is the final form of the Type 054A design. It is intended to be a low-end, anti-submarine ship working alongside the high-end Type 055 cruisers and Type 052 destroyers, which are too expensive to build in greater numbers.

Chinese Type 055 cruiser firing YJ-18 supersonic anti-ship missile. Photo: Sina News

The Type 054B is expected to operate within the First and Second Island Chains. It may also be tasked to secure China’s sea lines of communication (SLOC) connecting major seaports across its Maritime Silk Road, with its larger size enabling it to carry more fuel and onboard stores to increase its endurance and self-sustainability on the high seas.

It may also operate alongside China’s carrier battlegroups, with its improved propulsion systems solving the Type 054A’s significant handicap of being too slow to keep up with the Type 052 destroyers and Type 055 cruisers in an escort role.

South China Morning Post (SCMP) noted this month that the Type 054B is actually a “mini Type 055”, meaning it may feature technologies aboard the latter ship such as high-power microwaves or shipborne drones.

SCMP also says China plans to have four carrier strike groups by 2030, with the Type 054B, Type 052D and Type 055 serving as the critical escort vessels for its aircraft carriers.

Accelerating the Type 054B’s construction may also enable China to beef up its coast guard vis-à-vis its East and Southeast Asian neighbors in areas of dispute. China has a track record of converting older warships into maritime law enforcement vessels.

Combining a warship’s design endurance and resilience with the legal status of a civilian ship allows China to flexibly implement its “gray zone” tactics, including sometimes risky maneuvers that pull up short of lethal force to confound its adversaries’ response options.

The US Department of Defense (DOD) 2022 China Military Power Report mentions that, in 2021, China transferred as many as 22 early units of its Type 056 corvettes from the PLA-N to the CCG due to its lack of towed array sonar, limited range and small storage capacity. Also, as more blue water capable ships enter PLA-N service, the need for coastal defense warships such as the Type 056 has decreased.

SCMP noted in February 2022 that a Type 056 corvette with hull number 511 had been modified by the Hudong shipyard for CCG service, removing the ship’s torpedo tubes and missile launchers but keeping the 30mm autocannons and 76mm main gun in place.

SCMP also says LED panels were added to the ship’s sides, allowing it to display warnings and messages. The source also says the Type 056 can better handle collisions with civilian vessels, which frequently occur in maritime disputes, and conduct electronic jamming.

China has also converted its old frigates into maritime law enforcement ships, adding range, endurance and capabilities not found in repurposed Type 056 corvettes.

In a July 2015 article for The Diplomat, Franz-Stefan Gady noted that the Hudong shipyard converted two Type 53H2G frigates into CCG cutters, with their YJ-83 anti-ship missile launchers, HQ-61 surface-to-air missile launchers, 100mm main gun and 37mm gun mounts all removed while retaining two twin forward 37mm gun mounts.

Further, Gady mentions in a separate June 2015 article for The Diplomat that China may have already modified a Type 054A frigate for CCG service, saying that images in Chinese social media show what appears to be a ship of that class already painted with CCG colors, with its VLS and 76mm main gun removed, but most likely maintaining its secondary armaments.

A Chinese Navy Type 054A frigate enters the port of Havana on November 10, 2015. Work on Pakistan's first Chinese frigate has now started. Photo: AFP/Yamil Lage
A Chinese Navy Type 054A frigate enters the port of Havana on November 10, 2015. Photo: Asia Times Files / AFP / Yamil Lage

Gady notes that inducting ex-PLA-N ships into CCG service is a quick and easy way to bolster the latter’s numerical strength as China’s preferred agency for enforcing its territorial claims in the East and South China Seas. He also notes that inducting ex-frigates into CCG service will boost its power projection capabilities in disputed waters.

Indeed, Japan Times reported in May 2023 that the CCG already has 157 large vessels, quadruple the number it had a decade ago, making it the world’s largest maritime law enforcement agency.

The report notes that over the years CCG ships have become larger and increasingly heavily armed. Additional Type 054A frigates may be repurposed for CCG service as Type 054B production increases.

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Coroner's court grapples with mystery of dead man, whose identity on paper belongs to someone else

SINGAPORE: After their father died suddenly of natural causes, a family was shocked to realise that the name they had always known him by was not his real name.

His identity – Abdul Rahman Majid – belonged to a man they did not know, and who had been living in a welfare home since 1994.

Investigative efforts revealed few clues and met with several dead ends, as a coroner’s court heard on Tuesday (Jul 18) on the opening of the inquiry into the unknown man’s death.

MAN’S DEATH PROMPTS UNANSWERED QUESTIONS

The dead man had a wife and five sons – his eldest had been given away at birth. He lived with his youngest son in a rental flat in Geylang Bahru.

On Aug 5 last year, the man was found lying in a supine position and not breathing in the living room. His youngest son, who suffers from schizophrenia like his mother, called the police.

When the police arrived, they first identified the man as Mr Abdul Rahman Majid, according to the name provided under the “father” column in his youngest son’s birth certificate.

The man was pronounced dead that same day. He had no injuries on him and there were no signs of a struggle in the flat. The initial cause of death was found to be natural, from coronary artery disease.

However, police investigations uncovered oddities – there was no passport or NRIC belonging to the dead man in the flat.

Only an old construction site pass and a UOB Plaza pass indicated the man’s photo and the name “Abdul Rahman Majid”.

However, fingerprints lifted from the dead man did not match any in the national database, nor any in the databases of Malaysia or Indonesia.

Blood samples showed that four of the dead man’s sons – excluding the eldest who had been given away at birth – were the dead man’s biological sons.

THE REAL ABDUL RAHMAN MAJID

The investigating officer tracked down the real Mr Abdul Rahman. He was a long-term resident living at a home since 1994, because of his chronic schizophrenia. He is now 69.

Inspector Ng Yun Ning had a brief interview with Mr Abdul Rahman, who could respond only by shaking or nodding his head.

She showed him a photo of the dead man, and he shook his head, indicating that he did not know him.

INSP Ng requested reports from all major hospitals and clinics on the dead man’s medical history, but only two returned answers – the Institute of Mental Health (IMH) and Tan Tock Seng Hospital.

The real Mr Abdul Rahman’s sister confirmed that it was her brother who had received treatment at IMH and Tan Tock Seng Hospital, so there were no clear medical reports tagged to the deceased.

The sister of the real Mr Abdul Rahman was also surprised to hear that someone was using her brother’s identity, and said it was her first time hearing this.

“I interviewed the sons, who received this information as a shock, because they always knew their father as Abdul Rahman Majid, bearing the IC number found in the birth certificate,” said INSP Ng.

OTHER CLUES

She also spoke to a cleaner who was in charge of the block the deceased lived in for more than 20 years. The cleaner said he previously had a brief conversation with the dead man, who told him to call him “Kassim”.

According to one of the sons, the family used to live in another rental flat in Hougang. When they lived there, there was a man saying he was from Malaysia, who visited and addressed their father as “Kassim”.

State Coroner Adam Nakhoda explained to the man’s fourth son and his wife, who attended the hearing on Tuesday, that an inquiry had to be held because the identity of the deceased is unknown.

On questioning by the coroner, INSP Ng said she had shown a photo of the deceased to the real Mr Abdul Rahman, but not to his sister.

Instead, she had given the woman the names of the deceased’s sons, and the woman said she did not know them.

In court, a photo of the real Mr Abdul Rahman was shown to the deceased’s son and his wife, and they said they did not know him.

None of the sons were aware of any paternal relatives or grandparents, INSP Ng said.

The officer said she had tried speaking to the deceased’s wife, but the woman suffers from schizophrenia and could only respond by nodding or shaking her head.

According to one of the sons, the deceased’s wife has some relatives on her side who also suffer from schizophrenia.

MORE INVESTIGATIONS

The coroner directed the investigating officer to conduct additional investigations.

She was asked to contact the relatives of the deceased’s wife to find out if they had any information about the deceased. 

The police should also check with the Housing and Development Board over the rental flats in Hougang and Geylang Bahru that the family lived in, to see if there was any other name tagged as a registered tenant other than the deceased’s wife.

The coroner also asked the officer to check with the Registry of Muslim Marriages or the Registry of Marriages as to whether there is any record of the deceased’s marriage.

He asked the officer to canvass coffee shops the deceased frequented to see if anyone there could recall him. She should also show the photo of the real Mr Abdul Rahman to the man’s remaining son who had not seen it.

The son who attended the hearing had no concerns about his father’s death, but said he wanted to know his father’s real name.

The coroner told him that he could understand this, but said that this might not be able to be established at the end of the day, as “quite a lot” of the investigations did not yield any clues on his identity.

Findings will be given at a later date.

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From PAP up-and-comer to Speaker: Tan Chuan-Jin's career before resigning over affair

“DEMOTION” TO SPEAKER

In 2017, Mr Tan was nominated by Prime Minister Lee Hsien Loong to be the 10th Speaker of Parliament. Then-Speaker Halimah Yacob had resigned to contest the presidential election.

Political analysts expressed surprise at the move, given that he was tipped to be a core member of the PAP’s fourth-generation, or 4G, leadership.

One observer said that it was unusual for a Cabinet minister in his prime to be made Speaker, while many online called it a “demotion”.

Mr Lee wrote on Facebook at the time that it was a “very difficult decision” to nominate Mr Tan as Speaker, as it “meant losing an effective activist” at the Ministry of Social and Family Development.

After accepting the nomination, Mr Tan wrote on Facebook: “May God continue to grant me wisdom, courage and love in all that I do. However inadequate as I may be, I hope that I can fight the good fight, finish the race and keep the faith.”

He was re-nominated as Speaker in 2020.

Last year, he appeared on news podcast Plan B where he was asked why he was not in the running to be Singapore’s next Prime Minister.

At the time, three Cabinet ministers were tipped as potential candidates – Mr Chan Chun Sing, Mr Lawrence Wong and Mr Ong Ye Kung. Shortly after, Mr Wong was endorsed as leader of the 4G team, then promoted to Deputy Prime Minister.

Mr Tan told the podcast host that he was not in the Cabinet, given that he was Speaker. This effectively ruled him out of the prime ministerial race.

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CelcomDigi partners Huawei, ZTE for nationwide network integration and modernisation

Largest telco network deployment since merger of Celcom & Digi in 2022
Involves upgrades, consolidation of 25,000 existing Celcom & Digi sites 

CelcomDigi Bhd announced that the company is partnering Huawei Technologies (Malaysia) and ZTE (Malaysia) Corporation for the purchase of network services, solutions and equipment for its nationwide network integration and modernisation project. 
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Washington myopia undercuts Indo-Pacific partners

Over the last few weeks, Washington has been abuzz with everything India. On June 22, President Joe Biden, cabinet secretaries and the US Congress gave a rousing reception to visiting Indian Prime Minister Narendra Modi.

For his part, the prime minister cheered Republican and Democratic congressmen with his quip that he could “help them reach bipartisan consensus,” referring to the across-the-aisle support India enjoys in Washington.

It was certainly an apt decision to honor the Indian leader, given that the US-India partnership has significantly expanded under Biden. Both the White House and several members of the Biden administration, from National Security Advisor Jake Sullivan to Indo-Pacific Coordinator Kurt Campbell, have characterized it as the “most important bilateral relationship of the 21st century.”

However, over the last few months, some of the Biden administration’s regional policies in the Indo-Pacific have done more harm than good to its partners, particularly hurting India and its geopolitical leverage in the Indo-Pacific region. 

The Biden administration’s foreign policy cut a significant departure from its predecessors until last month, when it returned to Washington’s old ways: myopic democratic interventions, benevolent outreach to adversarial nations and partisan bickering.

Over the last few weeks, Washington’s primary Indo-Pacific partners, India and Japan, have borne the brunt of these missteps.

Biden, in a last-minute change of plans, canceled his scheduled trip to Papua New Guinea and Australia to address the debt ceiling crisis in Washington, with Republicans stalling the Democrats from raising the debt ceiling levels.

While Secretary of State Antony Blinken went ahead with his own trip to Papua New Guinea and signed a crucial defense agreement with the Pacific Island nation, Biden’s cancelation of that leg of the tour was not the best messaging to a region increasingly falling under China’s orbit.

Prior to Biden’s cancellation, the Indian government had decided to accommodate his visit and cut short Indian official visits as a courtesy to the incoming American presidential delegation. Modi went ahead with his travel itinerary as scheduled – and turned it into an opportunity to showcase India’s position on the global stage.

Prime Minister Narendra Modi arrived in Papua New Guinea on May 21 and a rare moment was seen at the Port Moresby airport when PNG Prime Minister James Marape, in a traditional welcoming gesture, touched Modi’s feet and sought his blessings. Photo: NDTV

New Guinea Prime Minister James Marape hailed Modi as the leader of the Global South. Taking an implicit jab at the United States and China, the island nation leader told Modi, “We are victims of global power play, and you are the leader of Global South. We will rally behind your leadership at global forums.”

While this was a minor setback for a coordinated approach toward Chinese expansionism in the Pacific, the Indian Ocean challenge is a more geopolitically complex Gordian knot.

In mid-May, Blinken threatened Bangladesh with sanctions if the Indian Ocean state did not host free and fair elections in the 2024 poll. Suppose the United States were to follow through with its threat.

In that case, India and Japan would be in a quandary as they have consistently positioned Bangladesh as a gateway connecting the Indian subcontinent to Southeast Asia for supply chain and infrastructure connectivity initiatives.

Geographically, Bangladesh is nestled between India’s state of Bengal to the west and India’s northeastern provinces to the east, bordering a thin strip of land the connects the rest of India to the northeast (also known as the “chicken’s neck”).

Thus the densely populated country’s interaction with the rest of the world is directed through India or the Bay of Bengal and the Indian Ocean.

Both New Delhi and Tokyo have invested in infrastructure in the region and have long-term plans to invest in Dhaka’s growth. Recently, Japan and India agreed to jointly develop the Matabari deep-sea port in Bangladesh to serve as a “strategic anchor” in the Indian Ocean.

Though often underreported, Japanese investment plays a vital role in South Asian development. Japan is also undeniably India’s Northeast region’s major infrastructure and development partner.

Development assistance projects supported by Japan in India’s Northeast amount to more than 231 billion yen ($1.7 billion). Graphic: Japanese government

Through the Bay of Bengal-Northeast India Industrial Value Chain, the Japanese government envisions increased connectivity between India’s landlocked northeast and Southeast Asia, creating a single economic zone and an alternative trade connectivity project to China’s Belt and Road Initiative.

Japanese prime minister Fumio Kishida, articulating his government’s Free and Open Indo-Pacific strategy in New Delhi in early March this year, called for increased integration of India’s Northeast with Bangladesh to transform the region into a single economic zone.

Moreover, Japan is attempting to capture the businesses moving out of the pricier markets of Southeast Asia, using the Bay of Bengal region. Japan’s regional strategy has neatly complemented the Modi government’s policies.

Modi transformed the older “Look East” policy into an “Act East” policy of increasing strategic and economic engagement with Southeast Asia as a countervailing force to China’s involvement in the region. 

Tokyo has slowly and steadily supported this transformation. A case in point is Tokyo and New Delhi’s hosting of the India-Japan Act East forum to discuss cooperation on a range of projects that will increase connectivity in India’s Northeast to Southeast Asia.

India’s Northeast has a history of civil unrest and strife, making it a challenging region for development. Furthermore, its landlocked topography and poor infrastructure limited its connectivity to both its neighboring countries and the rest of India. Only a party interested in the long game or having a vision for the region could invest in that part of the world, and in this case it is Japan.

Interestingly, as an extension, both Japan and India are engaging the immediate eastern neighbor to Bangladesh and India, Myanmar. Sanctioned by the United States, Myanmar has limited partners on the world stage. Nonetheless, Japan and India have continued engagement with the military junta to prevent the nation from falling entirely under China’s influence.

There, once again, Indo-Japanese interests are affected by America’s sanctions. In May, India-Myanmar inaugurated the Sittwe port in the Rakhine state of Myanmar. India supported this port to enhance sea lane connectivity between India’s eastern states and Myanmar.

However, since the sanctions, Indian companies have either had to depart Myanmar altogether or face global scrutiny for working with the military junta-led government.

India-financed Sittwe Port in Myanmar. Photo: PTI

As satellite images released earlier this year indicated, increased activity on the Great Coco Islands of Myanmar had the markings of Chinese military involvement. With the Great Cocos less than thirty miles north of India’s Andaman and Nicobar Islands, any potential militarization of the Coco Islands by the Chinese could pose a significant threat to India’s security in the Indian Ocean.

In this geopolitical equation, India cannot afford to disengage from Myanmar. And yet, America’s economic statecraft is undercutting India’s vital regional partnerships.

Henry Kissinger, who celebrated his 100th birthday in May, summed up this dynamic well: “It may be dangerous to be America’s enemy, but to be America’s friend is fatal.” It is undoubtedly proving so for Japan and India, but more so for New Delhi in the Indian Ocean. 

Against the backdrop of these measures come the Biden administration’s attempts at thawing relations with China. While Biden departs from his predecessors as the only recent president not to ask for Kissinger’s advice, he is beginning to walk in the footsteps of the grand strategist by making attempts to mend ties with China.

Katherine Tai. Photo: Wikipedia

From the dialogue in Vienna to Blinken rescheduling his trip to Beijing for last month to the official abandonment of economic “decoupling” for the less confrontational “de-risking,” Washington’s approach to China shows signs of softening.

While members of the Indo-Pacific Economic Framework for Prosperity (IPEF) agreed on moving ahead with a supply chain agreement in Detroit, US Trade Representative Katherine Tai met with her Chinese counterpart to discuss trade and economic ties in the same week on the sidelines of the APEC meeting.

Washington’s blow-hot, blow-cold approach does not reassure allies and partners – particularly partners that it courts for strategic competition with China – of the consistency of its priorities and policies.

Furthermore, Washington’s skewed sanction policies, opposing democratic backsliding in a few states at the same time it calls for engagement with authoritarian China, raise questions about the motives behind such policies.

While the United States has sanctioned Chinese officials allegedly involved in human rights abuses in Xinjiang, it continues to do massive business with Beijing. This selective condemnation only further isolates partners and strengthens Chinese engagement with the sanctioned nations.

This misbegotten strategy, according to Rob York, director for regional affairs at Honolulu’s Pacific Forum, is “a holdover from America’s unipolar moment that we need to outgrow. America’s moral authority, and the benefits of aligning with Washington, are no longer assumed but must be competed for, and sanctions must be employed far more judiciously than they have been.”

This type of awakening to multipolar realities of the world order should inform Washington of the pitfalls and shortsightedness of its foreign policies. America’s sanctions and other tools of economic statecraft should not be used for democratic interventions but to deter its enemies. If not, the United States will have few allies in its strategic competition with China.

Akhil Ramesh ([email protected]) is a senior fellow at the Pacific Forum and author of the US-India chapter for Comparative Connections: A Triannual E-Journal of Bilateral Relations in the Indo-Pacific.

The article in this version was first published by Pacific Forum. An earlier version appeared in The National Interest. Asia Times is republishing with kind permission.

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Evergrande: Crisis-hit Chinese property giant reveals $81bn loss

A woman rides a scooter past the construction site of an Evergrande housing complex in China's Henan province in September 2021.Getty Images

Crisis-hit Chinese property giant Evergrande has revealed that in 2021 and 2022 it lost a combined 581.9bn yuan ($81.1bn; £62bn).

The firm, which defaulted on its debts in late-2021, reported its long overdue earnings to investors in Hong Kong.

Evergrande has been struggling with an estimated $300bn (£229bn) of debts.

The huge losses highlight how much the developer was rocked in recent years by the property market crisis in the world’s second largest economy.

In filings to the Hong Kong Stock Exchange late on Monday, the company said it lost 476bn yuan in 2021 and 105.9bn yuan last year.

That came as revenue more than halved over the two-year period.

Evergrande said the losses were due to a number of reasons, including the falling value of properties and other assets as well as higher borrowing costs.

Shares in the firm, which was once China’s top-selling property developer, have been suspended from trading since March last year.

China’s real estate industry was rocked when new rules to control the amount big real estate firms could borrow were introduced in 2020.

The following year, Evergrande missed a crucial deadline and failed to repay interest on around $1.2bn of international loans.

Its financial problems have rippled through the country’s property industry, with a series of other developers defaulting on their debts and leaving unfinished building projects across the country.

Earlier this year, Evergrande laid out plans to restructure around $20bn in overseas debt.

The company racked up debts of more than $300bn as it expanded aggressively to become one of China’s biggest companies.

Over the last decade and a half the company’s expansion encompassed a wide range of industries including sports, entertainment and electric car making.

In 2010, Evergrande took control of Guangzhou FC and changed its name to Guangzhou Evergrande Taobao FC.

With an infusion of new money, the squad was strengthened and it immediately won promotion to the top tier of Chinese football. From 2011 it won the Chinese Super League title eight times, including seven seasons in a row.

Last year, the club was relegated from the Super League, while Evergrande’s plans for a $1.8bn stadium were shelved. The club has also reverted to its previous name – Guangzhou FC.

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Thailand’s Constitutional Court could also take up a case on Wednesday on whether Pita, 42, should be disqualified from parliament entirely for owning shares in a media company, prohibited for MPs under the Thai constitution. Pita, who made his fortune in a family-run agrifood business, has said the shares wereContinue Reading