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Answer will be lengthy but worth it.First you need to know about US-CHINA relations.On Dec 5,2018 in Washington DC the United States and the world marks the passing of President Bush Senior.President Bush Snr. was a truly remarkable President. For those of us engaged in the business of the world—the first Gulf War, the end of the Cold War, and the reboot of the U.S.-China relationship in the early 90s after the implosions of 1989—President Bush Snr. was a truly remarkable American, and a truly remarkable American President. And we honor him this day.Over the last twelve months, much of Asia has been turned on its head through the new dynamics we have witnessed in U.S.-China relations and on North Korea. It was only 12 months ago that the U.S. and North Korea appeared to be on the verge of armed conflict as “rocket man” was threatened by President Trump with “fire and fury” over the North’s continued nuclear weapons program. Twelve months later, President Trump and President Kim appear to be the best of friends following their historic summit in Singapore, and despite the fact that there seems to have been negligible substantive progress on denuclearization, the thaw in inter-Korean relations has been unprecedented.Twelve months ago, President Trump had just returned from his state visit plus to Beijing, where it seemed Trump’s anti-Chinese rhetoric of the 2016 campaign had finally been put to bed. But 12 months later, China and the U.S. are now in the middle of a still unresolved trade war, while the Administration has declared America’s 40-year long era of strategic engagement with China is now over and a new period of strategic competition has begun.Twelve months ago, the American, European and Chinese economies and markets were roaring. Whereas 12 months later, they are beginning to slow, albeit for different reasons, causing concerns about the sustainability of long-term growth, employment and income levels.If a week is a long time in politics, in international politics and economics, a year is an eternity. And China remains a dominant driver in all three of these major unfolding changes. During the course of this year, we have all been wrestling with three big questions: how is China changing under Xi Jinping; how is America changing under Donald Trump; and to what extent have the traditional moorings of the U.S.-China relationship of the last 40 years now been severed, in which case what, if anything, can now anchor the relationship into the future?In other words, are we now as Graham Allison warns us, now “destined for war”—either cold, medium or hot? Or is a new strategic equilibrium now possible between the two, based on a new common strategic narrative for the relationship which can be shared and observed in both capitals? The truth is, these are genuinely hard questions. There force us to think clearly about one another through the fog of perception and misperception. They force us to think clearly about our values, our interests and our identity. And they force us to think through carefully what is essential, what is non-essential, where should there be compromise, and what should remain contestable.I do not intend to try to answer all these questions today because they require further thought, although I am deeply conscious of the fact that they must be analyzed and answered soon. That’s because we are now in potentially dangerous terrain - some sort of “no man’s land” between one set of strategic assumptions about each other that have stood for several decades, and a brave new world where everything may be up for grabs.Over the last twelve months, we have, however, made a start in a series of addresses aimed at analyzing core aspects of the collective challenge we are facing. In March I spoke at West Point on the question of what does Xi Jinping want, while in June at the Lee Kuan Yew School in Singapore I began to analyses the Marxist origins of Xi’s emerging worldview. In September I spoke on America’s response to Xi Jinping though a new declaratory doctrine of strategic competition and posed a series of questions for U.S. policymakers as they seek to operationalize that strategy. I’ve also spoken in Silicon Valley on what strategic competition might look like if allied to a high technology war between the two countries. And most recently in Jakarta I’ve sought to analyze what this emerging strategic cleavage between Washington and Beijing means for South East Asia which has become the new “great game” for strategic influence, as ASEAN itself continues to hedge against a rising China and what is perceived to be an indifferent, uncertain and potentially unreliable America. We need also to analyze other regions within a similar frame: including Africa, Eurasia, the Middle East, South Asia, and Latin America. There are commonalities but differences across them all which we need to understand.In my remarks today, part of the same series, I want to look at the state of the relationship at year’s end in the aftermath of the Buenos Aires Summit; the impact of the continuing trade war on China’s unfolding domestic economic policy debate and where that may lead in the future; as well as what are the prospects for the overall U.S.-China relationship for the year ahead. I’m always challenged by Henry Kissinger who enjoins us in strategic analysis to understand first and foremost what we are seeing. And to ask ourselves also what we are not seeing. All before going onto the critical question of policy of what then is to be done.The Buenos Aires SummitWhat Presidents Trump and Xi Jinping did in Buenos Aires was buy time. Three months’ worth in fact. Which is good when measured against the alternative, which was a full-blown trade and broader economic war between the two countries starting next month. Which in turn had the potential to trigger a further collapse in global market sentiment, particularly coming on the back of other negative trends emerging in both the U.S. and Chinese domestic economies. But even from those of us who have been arguing publicly that on balance a deal of some sort between the Chinese and the Americans was more probable than not: one swallow doth not a summer make. Much can still unravel. Both Trump and Xi have indeed bought valuable, though limited, time for themselves and the world. But for a number of different reasons.To begin with, there are five, complex baskets of policy disagreements to work through. First, the current annual $370 billion bilateral trade deficit needs to be reduced. Then there are the possible cuts to tariff rates themselves. The Chinese average tariff rate currently stands at about 9.8% compared with an American average tariff rate at 3.4%. Then there are those industry sectors that are most politically sensitive in each economy, led by agriculture: Republican-voting farmers in the U.S., matched by China’s historical paranoia over national grain self-sufficiency. Then there are the three hardy perennials: intellectual property protection; forced technology transfer (an American term) and the use of the full resources of the Chinese state to support China’s stated national industrial strategy (Made in China 2025) to dominate global advanced technology markets and product standards by 2030. These three are the really ugly ones. Setting a deadline of 1 March 2019 to resolve these five problems is smart. Particularly if it’s driven hard by the prospect of a further working-level summit with Trump and Xi later in March, although I note that a number of trade professionals have argued that 90 days is so ambitious that it’s unrealistic and sets both sides up for failure.This 90-day pause also serves Trump and Xi in other ways. By March, Trump will have a fuller idea of the lay of his domestic economic and political landscape. He will then know the extent of any significant softening in the economy already induced by monetary policy tightening by the Fed, and the extent to which the American economy could then sustain further tariffs should the efforts of Chinese and American officials have come to naught. On the political front, the Mueller investigation should also have reported by March. If the results of the investigation are seriously bad for Trump, then we should be alert to the possibility of Trump having a renewed interest post-Mueller in doubling down against China—if in fact he is found then to have been compromised in his dealings with Russia. That certainly would be an “X factor” that our Chinese friends are worried about.March, however, also presents Xi and his chief economic advisor Liu He with opportunities of their own. On the international front, March might enable Xi to take a bold trade message to Davos in January, should he decide to go. China has sought to mobilize global sentiment in support of its efforts to uphold the global economic and environmental order. A major Chinese announcement on trade liberalization across the board, not just on a bilateral basis with the U.S., could indeed take the world by storm. It would also send a stark signal to the world on the 40th anniversary of the Chinese economy’s “reform and opening up”. And that indeed could represent a serious new challenge to American global leadership.Furthermore, a serious commitment to trade liberalization from Beijing, accompanied by the underlying message of competitive neutrality between foreign firms and domestic firms, as well as between private firms and state-owned enterprises, would reinforce Liu’s valiant efforts in recent months to re-prosecute the full implementation of China’s stalled “phase two” economic reform program first announced in 2013. This is something that China desperately needs for its own economic interestsThis takes us to the core question of the organic relationship between any concessions that China might offer the United States' trade and economic negotiators bilaterally, and those things that Chinese economic reformers understand needs to be done in any case domestically, if indeed the economy is to be able to have strong, sustainable growth into the future.China’s Changing Domestic Economic NarrativeThose who follow the Chinese economy closely understand the significance of the economic reform blueprint first released by Xi Jinping’s administration in November of 2013. This came earlier in his period in office. After a fierce internal debate in its preparation, agreement was finally reached on its central organizing principle that: “the market play the decisive role in resource allocation.” The decision incorporated 60 different reform measures covering ten broad categories of trade, cross-border investment, state-owned enterprise reform, competition policy, financial system reform, fiscal policy, innovation policy, labor, environment, and land reform. This was a conscious effort by China’s economic leadership at the time to transform China’s historical economic growth model over the previous 35 years to what became then universally known as “the new model”.The old model, as we are all familiar, was based on two pillars: labor intensive, low-cost manufacturing for export; reinforced by high levels of public investment in national economic infrastructure. The new model was based on three pillars: high levels of domestic consumption; private sector-driven innovation following the completion of the SOE-driven infrastructure build; and third, a sustainable development revolution.Implementation began in 2014-15 but the party’s confidence in the market was dealt a body-blow by the implosion of Chinese equity markets, and broader financial markets, in August 2015. From that time on, as we at the Asia Society Policy Institute have tracked throughout our China economic dashboard, the pace of implementation of the reform program slowed drastically and in most areas ground to a complete halt. Harsh capital controls were also imposed on China’s capital account, making it much more difficult for private firms to expand their operations abroad. At the same time, because of legitimate fears about the size of China’s debt to GDP ratio, driven in large part by an out-of-control shadow banking sector, as well as ballooning local government debt, the central government began a national deleveraging campaign which over the last several years has also resulted in credit being withdrawn indiscriminately from otherwise profitable private firms. At the same time, Chinese SOEs had been given a new lease of life where the national deleveraging campaign has had less effect on SOEs than their private sector counterparts.Furthermore, there has been the rolling impact of China’s anti-corruption campaign has fundamentally slowed government decision-making processes as officials sought to protect themselves from political exposure, which meant that the private sector-driven development projects also began to slow significantly. To this was added Xi Jinping’s emphasis on the central role of the party and the primacy of ideology, resulting in an enhanced role for party secretaries operating within private firms. And on top of all the above, there has been considerable confusion as to the precise implications of China’s so called “mixed ownership model” – whether it was an invitation for private firms to absorb poorly-performing public trading enterprises; or whether in fact it was creating a fresh opportunity for SOEs to “nationalize” well-performing private firms.All these factors had been unfolding across the Chinese economy over several years prior to the beginning of the U.S.-China trade dispute in the first half of 2018. The net effect of all of the above has been a growing number of anecdotal reports pointing to the significant slowing of Chinese economic growth during 2018 with private sector firms, concerned about an increasingly adverse policy environment, refraining to invest in further expansion of their enterprises, either at home or abroad. By the time the annual leadership retreat occurred at Beidaihe in August this year, reports had begun to come in from across the country that China was facing a serious domestic crisis of private sector business confidence with potentially profound implications for future growth.From Adversity Springs Opportunity: Competition Policy ReformIt was about at this time that those who have long understood the continuing imperatives of China’s market economic reform agenda saw an opportunity emerging out of adversity – namely to bring about the next wave of competition policy reform within the Chinese economy by opening China to more foreign competition, thereby lifting long term productivity growth. It will be recalled that competition policy reform had long been a key component of the original 2013 national economic blueprint, but had been allowed to slide.The need for a more effective competition policy was particularly felt within China’s poorly performing financial services sector. In any efficient market economy, the effective allocation of capital across competing corporate needs, based on the business case advanced by would-be borrowers, and the associated risk taken on by lenders, is fundamental to sustainable economic growth. By contrast, China’s financial services industry has developed inefficiently, despite the growing number of domestic private players within it, because capital allocation decisions are driven less by market considerations than by political or administrative necessity.China’s economic reformers are fully seized of the dimensions of this problem in the heart of the Chinese financial system. The reformers see the future lying not just in bringing China’s grossly indebted second-tier banks and SOEs back within reasonable borrowing limits from their previous borrowing and lending habits. They equally recognize the structural importance of introducing market disciplines for capital allocation decisions for the future. In other words, it’s not just the matter of cleaning up decisions from the past. It’s also about creating a functioning market framework for the future so that scares financial capital is allocated rationally, and corporate debt burdens do not simply blow out once again.Chinese reformers also see the greater introduction of wholly-owned foreign financial institutions into the Chinese domestic market as being a new way of grafting these market disciplines into the Chinese system. This differs qualitatively from previous Chinese approaches to allow limited foreign financial institutional participation within China – where foreign presence has largely been limited to minority stakes in second tier banks with the limited policy objective of Chinese banking officials “learning” how Westerners do these things, before eventually asking said Westerners to leave. The alternative approach is to fundamentally shake up the Chinese system from the top down, by introducing large-scale foreign competitors across the breadth of the financial services industry in order to force Chinese firms to be more efficient.This year, for example, we have seen a number of foreign investment limitations eased for entry into China’s $45 trillion financial services sector. These have included:Foreign investment limits in securities companies and mutual funds were raised to 51% in April and set on a three-year path to allow full foreign control. Indeed last Friday, UBS became the first foreign securities firm to be approved for majority ownership, with applications from JPMorgan and Nomura in process.Foreign insurance firms are now to be allowed a controlling 51% ownership of domestic insurers as of May this year. And German insurer Allianz was approved to be the first wholly-owned foreign insurance company on November 25. French firm AXA has quickly followed, purchasing the outstanding share of their previous joint venture on November 26.Foreign ownership limits on banks and other debt managers were also removed in August. Previously foreign firms were limited to 20% as a single entity, or 25% as a group. To-date, however, no foreign firms have applied to use the new regulations.Additional Support for the Private SectorFinancial services reform, driven by increased foreign participation is one thing. Wider reforms to promote China’s somewhat beleaguered private sector have also been forthcoming. On 19 November, the State Administration of Taxation issued a policy note outlining 26 concrete measures centered on reducing the tax burden for private firms. According to the State Administration of Taxation, these were not yet fully utilized. Nonetheless, in the most recent quarter, there were over 143 billion RMB (21 billion USD) in tax deductions for Chinese SMEs, a 41% increase from third quarter last year.Beyond these various reform measures, there have also been recent announcements from the central government aimed at improving credit availability to Chinese firms. The party secretary of the PBOC on 7 November outlined the new so-called “1-2-5” policy.This was a directive for at least 1/3 of new corporate loans from large banks to be extended to private firms;At least 2/3 of new loans from small and medium size banks; andOver the next three years, for at least 50% of all new corporate credit across the banking system to be extended to the private sector.First Steps Toward a New Chinese Political Economy?To repeat: the key to the success of this newly emerging political economy in China is the extent to which China’s economic reformers are able to develop a domestic political narrative within the party and the country which explains any “external concessions” to the U.S. Administration as necessary internal reforms to undergird China’s long-term economic growth prospects.This is a tough challenge given that over the last several years at least, Xi Jinping’s political center of gravity has lain elsewhere – namely his predilection for a stronger party, stronger politics, and a more nationalist posture. Nonetheless, it seems that Xi Jinping has now had a large encounter with economic reality - Chinese-style. Namely that the Chinese private sector really matters! Furthermore, if this economic policy correction continues, basically from left to right, then this may turn out to be a seminal period of reform indeed.There are grand precedents in recent Chinese history for such economic policy corrections to occur. Barely three years after Tiananmen, Deng Xiaoping undertook his famous Southern Expedition, where he told China to redouble its efforts in economic reform and opening to the world. And China did. Five years later Jiang Zemin, in the midst of the Asian financial crisis said to China’s emerging entrepreneurial class to “go out into the world”. And they did. Five years after that, Zhu Rongji in 2002 secured China’s admission into the WTO, heralding the next phase of China’s economic reform program, including China’s emergence as the global export superpower it has since become.It may well just be that we are witnessing a policy redirection of a similar order of significance with what is unfolding now. Certainly a careful reading is warranted of Xi Jinping’s speech of September 27 on the economy; Vice Premier Liu He’s of October 19 on the private sector, and perhaps most significantly of all Liu He’s comprehensive statement on China’s future economic direction outlined in his address to the Hamburg economic forum in late November on the eve of the G20 summit.Of course, many things can go wrong with all of this. Policy momentum may stall.Chinese bureaucrats may simply hedge their bets and sit on their hands. Even worse, they may simply resort to the vast array of non-tariff barriers at their disposal to undermine the letter and the spirit of reforms to China’s overall trade and investment policy environment on the ground. And beyond all that, China’s private sector, still facing significant restrictions on the capital account, may not respond positively to what the party and the government are now telling them to do, on the grounds that there is too much policy and regulatory unpredictability for them to have sufficient confidence to invest in the future.That’s why it will be critical to see China’s emerging data on private fixed capital investment to see whether Chinese firms have bought the Chinese leadership’s new policy message, thereby unlocking a further period of reform, opening, and sustainable economic growth.Prospects for 2019Against this general economic background, what then are the prospects for the U.S.-China relationship for 2019? By March, it’s probable that there will be an agreement between China and the United States on the quantum of bilateral trade deficit reduction and the import decisions that China will make to bring that about over time. As for tariff reform by March, that is possible, although the degree of technical difficulty remains significant. If it’s a tariff line by tariff line approach, given the multiplicity of tariffs which currently apply to the overall trading relationship, this may well blow out way beyond March. If however Chinese economic reformers take a more dramatic approach by committing to zero tariffs over time, and challenging the Americans to do likewise, that would be precisely the sort of measure which could be announced relatively rapidly. It would, however, run totally against the grain of half a century of training of Chinese trade bureaucrats to give away nothing if at all possible—let alone be seen to “give away everything” in one fell swoop.The reform of so-called forced technology transfer, within the contractual arrangements between Chinese and American enterprises, should be relatively straight forward. This, however, is different to how contractual arrangements may be interpreted on the ground, even in the absence of any specific technology transfer provisions. Intellectual property protection is deeply problematic. Not only are there traditional forms of commercial espionage. There is now cyber espionage as well. Previous agreements reached under the Obama Administration could be reconstituted. But the critical problem remains jurisdictional enforcement of breaches if and when discovered. One possible mechanism for building confidence is for all relevant contracts between Chinese and foreign firms to be made subject to international commercial arbitration regimes located in either Singapore or Switzerland. These could be designed in a manner to specifically deal with IP protection. The recourse to international commercial arbitration is now relatively common around the world. If China objected, it might also be possible to develop China’s own domestic international commercial arbitration system. But for foreigners to have confidence in this system would require China to appoint qualified foreigners to its panel of arbitrators. Other countries already do this. China could do the same. But in the absence of an independent Chinese legal system, even in the commercial law, this would seem logically to be the only way through this continuing thorn in the side of the relationship.On China’s use of state subsidies in support of its national plan for domestic and international high technology market domination, it is difficult to identify any readily available solution. The uncomfortable reality is that all countries use varying levels of government support for their indigenous technology industries. Even if we were to mandate a maximum proportion of state support for a given firm (either by way of state R&D support or other related tax breaks) the problem would invariably arise as to how all of this is measured. I am not therefore confident of a negotiated outcome in this area. America may simply need to outcompete “China at its own game” in terms of a radical increase in public investment in research and development across the full spectrum of information technology and biotechnology sectors. The major public universities would, I’m sure, welcome this with open arms.As indicated above, we should also not rule out the possibility in 2019 of China pitching any tariff reforms that it is prepared to implement to resolve the U.S.-China trade war to the wider international community as well. We should not rule out the possibility, for example, that if China was to undertake something dramatic—like a commitment to zero tariffs over time—that such a commitment would not just be made on the basis of reciprocal actions by the United States, but by all WTO member states. Indeed, this would represent and almost irresistible geopolitical opportunity for China to champion global free trade and to arrest the global trend towards protectionism that currently threatens the wider global economy. Furthermore, we should not rule out the possibility that China approaches TPP 11 member states to negotiate possible accession to the TPP. This would comprehensively outflank the United States within the Asia Pacific region. It would also turn out to be supremely ironic that a TPP originally designed by the Obama Administration as part of its Pivot to Asia, ended up including China but not the U.S. itself. China, when it sees a political and market opening, can be remarkably fleet-of-foot. The technical negotiations would, of course, be formidable. But there is already evidence of a softening in traditional Japanese reservations towards possible Chinese accession as evidenced during Prime Minister Abe’s recent visit to Beijing.On the wider foreign policy and security policy front, 2019 is likely to see China increasingly pull its head in. There is already evidence of a normalization in relations with Tokyo. The Japanese Coastguard has published data already indicating a radical reduction in the frequency of Chinese incursions into the Senkaku/Diaoyudao area in the East China Sea. China is also seeking to de-escalate tensions with the ASEANs over the South China Sea through an intensification of its negotiation of a “code of conduct”. Although maritime incidents with the United States have continued to be sharp. And may well get sharper if the United States implements a more vigorous campaign of Freedom of Navigation Operations in the coming year. China has also sought to de-escalate tensions with India following the bilateral summit with Prime Minister Modi in Wuhan in April 2018. That is likely to continue through the Indian national elections due in 2019. China may also begin to moderate its posture towards Taiwan during 2019 given the remarkably poor results of the DPP in the most recent Taiwanese local government elections.This, of course, would change radically if the United States proceeds, as is likely, with a further significant arms sale to Taiwan.Across Eurasia, the Belt and Road Initiative continues to be implemented. But for those observing China closely, the BRI now attracts considerably less political fanfare within China, at least over the last several months. It’s still too early to tell. But already there is a debate underway in Beijing about revising certain BRI modalities. The Sri Lankan case looms large in the mind of the Chinese official class. So too does the long-term affordability of this multi-trillion dollar project. We may therefore be seeing less Chinese triumphalism over the BRI on 2019 than we’ve seen the last couple of years.Common to all these adjustments in the year ahead is a general tactical approach that until such time as China is able to finally bed down the fundamentals of its trade, investment, and economic relationship with the United States, it is wise for China to reduce tensions between Beijing and other countries and regions of the world.As for China’s engagement in the wider international system during the course of 2019, China is likely to continue to be the new-found champion of the WTO. It is also likely to sustain its posture on global climate change action which it agreed to under the Paris Accord. In other words, China is likely to use the period ahead to consolidate and expand its role within the existing institutions of international governance, rather than the continued construction of new institutions of international governance that lie outside the UN and the Bretton Woods system.Of course, the BRI and the AIIB will continue. But there may well be a parallel reduction in the global profile attached with China’s more recent institutional innovations. Among some of the more sober minds in the Chinese foreign policy establishment, it’s better to focus instead on the existing machinery of the global rules-based system, particularly when the United States is demonstrating systematic contempt for those very same institutions.Taken together, these are nonetheless likely to represent tactical rather than strategic shifts in China’s overall posture towards both the United States, third countries, and the wider international system. China is likely to use 2019-20 to form a deep judgment about what happens to the future of U.S. politics. Will Trump be derailed by Mueller? What will China policy be like if Trump is weakened by Mueller? Would Pence be even more hard-line than Trump on China? And would a Democratic Party candidate, if successful in 2020, adopt an equally hard-line strategy towards Beijing, and if so, how would it differ from the Republicans?On these big strategic questions, the Chinese system moves deliberately slowly. It seeks to analyze carefully the operating environment in which Chinese strategy and tactics are deployed. And while China’s leadership has already concluded that there is indeed a deep shift in American attitudes to China, they are still uncertain as to what precise shape and form this will take in the future. Tactically, therefore, China is likely to seek to buy time to reach these conclusions. And in the meantime, to de-escalate tensions wherever possible, both with Washington and other capitals, while China seeks to reach a more fundamental judgment about America’s future strategic direction and political resolve.This is consistent with China’s predilection for the long term, rather than the short. At present, China sees Trump as being a problem for the next two years for China, possibly not longer, before being replaced by another political leader with different priorities. Whereas China equally assumes that Xi Jinping will be leading China not just for another two years, but probably another ten. Or even more.ConclusionAs I said at the outset, we are dealing with profoundly complex questions. Indeed it is historically unprecedented to be in the midst of a debate about whether the world’s largest economy and oldest continuing democracy, can happily co-exist with the world’s second-largest economy and oldest continuing civilization, given that the latter has never exhibited in its history any attraction to liberal democratic norms. But grapple with the debate we must. And resolve it we must as well. One way or the other.This is despite the fact that we must do so in the midst of an increasingly polarized debate in both countries about the other. Americans believe China is stealing their future. They are angry. They have finally woken up and are fighting back. The Chinese, whether they are on the right or the left of their own debate, believe that the Americans are now deliberately containing China because Americans cannot cope with the idea of ever being number two. Particularly if number one happens to be Asian.The debate is, therefore, a highly charged one. Which is why we need to be careful about the manner in which it is conducted in both our countries. In America, as in other countries, I am concerned about the rise of “neo-McCarthyism” in a debate which conflates concerns about the actions of the Chinese party and state on the one hand, with the actions and attitudes of Chinese Americans on the other.The recent report on foreign interference in the United States and a number of other countries is a case in point. Foreign interference, from whichever country, is an entirely legitimate subject for debate. After all, that’s why democracies have laws, courts, law enforcement agencies, the intelligence services and other institutions preserving the careful set of checks and balances guarding our civil liberties as well as protecting us against internal and external threats to our security. That’s why the best solution to questions of foreign interference lies in a policy of full transparency on the part of any institutions receiving foreign funding. It’s when things are done in secret that we should be particularly concerned.But that’s also why it’s critical to constrain the terms of the debate so that the patriotism of Chinese Americans is not brought into question. I’m concerned that in the current febrile political environment this could occur. I presume that’s why the recent report on foreign interference in this country has attracted dissenting submissions from among its authors, namely Susan Shirk.Having read Susan’s dissent, I support her reflection. I have also noted Bill Bishop’s observation about the title of the report and its conflation of the Chinese Communist Party with the simple word “Chinese”, capable as Bill says of sparking anti-Chinese sentiment in general.So as we advance this hard debate on this country’s future with China, let us learn from the events of the last Cold War, Joe McCarthy and his committee on un-American activities. This debate requires full candor. Not a show trial. We are all better than that."India and China Will Catch Up with the United States."With his prognoses on international politics he has become one of the most influential authors in the United States. The British historian, Paul Kennedy, from Yale, is considered to have been one of the brains behind the Clinton era. Thoughts on India and China as future super powers, the likelihood of military conflicts, the poker-player Vladimir Putin and the unrecognised strengths of the Europeans.Kosmos: Professor Kennedy, in your bestsellers "The Rise and Fall of The Great Powers" (1988) and "Preparing for the Twenty-First Century" (1993) you voiced concern about imperial overstretch of the United States as well as about global environmental issues. Given global warming, no one would argue with you about the latter. However, your forecast about America's dark future as a superpower has not come true. What makes you think that the current US government should still be concerned about its decline?Kennedy: First of all, we are not talking about immediate collapse of the US but about a long-term process of relative decline. A great power needs a long time to decline. The Ottoman empire took 300 years. But there are signs.Kosmos: What signs?Kennedy: International opinion has swung against the US. The attractiveness of the US Dollar has gone. The competitiveness of certain key industries like automobiles has gone. Daimler selling off Chrysler is not just economic news, it's also symbolic. The US allowed a massive build-up of very large budget, borrowing and trade deficits leading to an increasing dependency upon Asian nations to bail America out each month through purchase of treasury bonds. It's hard to think that will go on forever. This means dependency, and that's the first sign of overstretch. If the two giant countries of China and India continue to grow at eight or ten percent a year for the next few decades, they will catch up with the United States which is growing at two or three percent. That will mean shift s in the power balance. India and China will be able to pay for greater influence in world affairs and also, crudely, in military establishments.Kosmos: Will industrial growth alone do the trick for China?Kennedy: The fact that so many foreign businessmen and CEOs and heads of state feel that they have to go to Delhi or especially now to Beijing is only one indicator. Another indicator for Chinese awakening is its foreign policy. China discovers Africa. Just before last Christmas, the Chinese President Hu Jintao made three long visits to African states and signed trade agreements about oil and timber. Just before that, the Chinese government invited leaders of 43 African states to an African conference in Beijing while the US were too busy in Iraq to even notice what was happening.Kosmos: What risks are there for India and China on their way up?Kennedy: I am a bit sceptical of visitors to China and India who just visit Mumbai, Shanghai or Hong Kong and then say: Wow, that's the future! In India, in particular, the levels of rural poverty and the gap between rich and poor are widening. There is a rise of ethnic and religious intolerance and murders across India which have shot up in the past five years. And the Chinese government is clearly frightened about massive unemployment in the inner provinces and also very real environmental dangers. They have colossal domestic problems. It's not just inevitable that they grow at eight or ten percent every year and everybody gets richer. When gaps open up in society and internal tensions increase it's quite tempting for the leadership to divert attention to the foreign devils.Kosmos: Could the fall of the old empire and the rise of new ones lead to military conflicts?Kennedy: I am afraid that military conflicts are more likely than unlikely. The fi rst indicator is the pretty terrible relationship the USA has got itself into vis-à-vis the Muslim world, or at least the radical parts of the Muslim world, radical parts which not only want to hurt America and Europe but want, of course, to overthrow the governments of Saudi Arabia and Egypt to attack Israel. Secondly, we have an increasing vulnerability of the West for energy supplies, now made worse by the increasing vulnerability of China and India for energy supplies, too. A struggle for energy is already beginning. It would be surprising if there were not actual physical conflicts over control of petroleum supplies. Thirdly, Europe seems to think that naval power is not important to national policy. Why is it that the Chinese, the Japanese, the Indian and even the South Korean naval budgets are going up and up? In Asia a naval race is going on. Under these circumstances, it is pretty hard to stop some clash at sea turning into deeper trouble.Kosmos: What will be the role of Europe in this scenario? As a military power it is rather toothless.Kennedy: Admittedly, Europe has no unified foreign policy and it has no unified defence forces. The best it can do are some Franco-German joint brigades or British-Netherlands naval operations. It doesn't have much influence on the military sphere. But in the economic sphere Europe has enormous influence. It negotiates through the World Trade Organisation as a single trading block. And Europe has increased its share in the field of soft power attractiveness. Th e Europeans do a lot more in terms of aid to Africa. And they are way ahead of the US in issues of global warming. Europe has terrific strengths.Kosmos: But it has difficulties in playing them out. Recently we saw a Russian President who did not seem to be impressed by the Europeans at all. Is this a sign of new Russian strength?Kennedy: For many years all that the Russian State could do was to reduce the army and the navy. You still see dozens of rusting old Soviet warships. With the rise of oil prices and with the advantage going to Mr. Putin's poker game, he is now saying that they will be putting additional money into modernising the Russian armed forces, including the rocket forces. It now looks as if Russia's strong foundation is the high price of natural gas and petroleum. If that was to come down, which is possibly unlikely, he'd be weakened. Whereas Europe has a variety of strengths - from high technology to cultural influence to strong trade balances. Russia has a single natural resource as its strength. It is also dependent upon energy even though it is an energy exporter. The future, therefore, hangs very much on the sustainability of stable government - not necessarily democratic liberal government - on the one hand and the continuation of the flow of additional moneys to the central treasury on the other - which has allowed Russia, for instance, to start modernising its railway system and its subways. You can do an awful lot when the price of oil has gone up two or three times.Kosmos: As an historian, you tend to think rather long-term. However, would you dare to make a prognosis about the state of US foreign policy and its war against terror in four years time?Kennedy: It would completely surprise me if in four years time there was still a US army troop of 165,000 soldiers on the ground in Iraq. Public opinion is against it, the junior officers in the army are resigning as fast as they can and even George W. Bush's Republican buddies are trying to get out of it. And I think that the US could actually strengthen itself by getting out of Iraq. A critic of General de Gaulle said it would be dreadful for France to withdraw from Algeria. In fact, it freed de Gaulle to play a much more prominent role in the world and in Europe. Nixon was freed by getting out of Vietnam. He could do the diplomacy which divided China and Russia. The British were freed when they got out of India and Palestine. They could make much more of a commitment to NATO. Possibly the best argument to off er those who say we have to stay in, is that by staying in, you give advantages not just to the Iranians and the Muslim enemies; but you give Mr. Putin a big advantage and you give the Chinese government a big advantage. They want you to stay in Baghdad. And that's a strong argument to get out.Kosmos: Your books and you yourself are said to have influenced the Clinton administration. How did this reputation as one of the important minds behind Clinton grow?Kennedy: That is much exaggerated. I think it was one of my publishers who got it all pretty well wrong. I met Clinton in spring of 1988 when "The Rise and Fall of Th e Great Powers" was a very controversially discussed bestseller. I was asked to address the meeting of the Council of American State Governors which Clinton attended. At that time, he was the Governor of Arkansas. Sometime in the middle of that conference I was stopped by a lot of young and shiny American students. They were all on Clinton's staff and would later go with him in the Presidential campaign. They had copies of my book and said, "Oh, Mr. Clinton has told us all to read it and that it's terribly important, so can you sign it for us." From that incident, I think, grew a sort of legend that I was a kind of eminence grise for the Democrats. It might be good if you could cut that myth.

Number: 310Question: Is the rise of China good for Asia?Answer: It depends on the view of each people, but in general, I think that the rise of China is good for Asia. However, from the Vietnamese view, the Chinese rise shall impact on Vietnam more complicated and brings both sides including the good and the bad for Vietnam. In this answer, I shall guide you in reading this article.The Politics of “Struggling Co-evolution“: Trade, Power, and Vision in Vietnam’s Relations with China(Foreign ministers of both countries)China’s increasing presence, economically and militarily, has the potential to lead to a Chinese sphere of influence in which Southeast Asia is regarded as China’s “backyard.” For realist scholars, China’s regional leadership constitutes an irresistible outcome of its technology, military forces, economic scale, and population. Among them, military and economic indicators are the two crucial factors determining the degree of its influence. Specialists favoring a historical-cultural approach emphasize, additionally, that Southeast Asia includes countries that belonged to the “Chinese tribute system” in the past. John King Fairbank's well-known concept of the “Chinese world order” provides a model to understand international relations in Asia, which depicts China’s centrality and superiority in this system. With the long history of hierarchical order in Asia, the prospect that the Middle Kingdom would return to the central position as the most dominant power on the regional ladder should not be surprising. Of all the countries in Southeast Asia, Vietnam has the most complicated and multifaceted relationship with China. Sino-Vietnamese interactions are far more complex than historical, cultural, or ideological issues alone. In the post-Cold War era, four factors characterized China’s main interests in Vietnam:1) to gain an advantage in territorial disputes with Hanoi;2) to keep Hanoi from veering toward the United States;3) to encourage Hanoi to pursue pro-China policies on the Taiwan issue and other international affairs,4) to encourage Hanoi to give preferential treatment to Chinese products and businesses.Since the early-1990s’ normalization of Vietnam-China ties, Hanoi has assiduously pursued a strategy of hedging its bets toward China: On the one hand, it has undertaken measures to increase economic engagement as well as deepen party-to-party relations; on the other, Vietnam has sought to diversify its external strategic relations by reaching out to other powers (i.e., Russia, India, and the United States) in order to check Chinese territorial adventurism.While Beijing and Hanoi cooperate where they can, there has also been a deepening struggle in this relationship. The context has shifted to what is aptly called “struggling co-evolution,” as the two countries are continuously searching for a “glue” to keep their relations together for both their international and domestic affairs. Meanwhile, Beijing wants to control Hanoi within its sphere of influence as much as possible, and Vietnam tries to manage the asymmetries to maintain its autonomy. The “struggling co-evolution” between both countries is more and more comprehensive: commercial, political, diplomatic, and technological, even in the “ideal” world where China tries to provide “objective and common” knowledge that supports regional planning and cooperation and create the image of a regional order led by it.Asymmetric Trade Dependence and Inclusion-Exclusion LogicEconomic interdependence rarely means economic equality; one side benefits more in such a relationship and, as a result, has powerful leverage over the other. Sino-Vietnamese economic relations exemplify this reality. While China is Vietnam’s top trading partner, Vietnam is not China’s top partner. Vietnam is strongly dependent on cheap exports from China and investment from Chinese businesses, whereas the same could not be said for China. If China closed its southern border with Vietnam, both countries would be hurt economically, but because Vietnam’s economy is smaller and more dependent on China than vice versa, it would be less able to sustain the economic consequences. China holds an important economic advantage, and its rise will pose an increasing threat to Vietnam as its power continues to grow relative to that of Vietnam. In 1991, bilateral trade was only USD 32 million. China is now Vietnam’s largest partner, with trade totaling USD 50.21 billion in 2013 and expected to reach USD 60 billion this year, while bilateral trade with the United States in 2013 was USD 30 billion. China is also the country with which Vietnam has the biggest trade gap, an imbalance that has grown wider over the years. Unprocessed goods, such as crude oil and coal, account for a significant proportion of Vietnam’s export basket to China. The problems deepen for Vietnam’s production industry, as enterprises, even export-centric ones, are becoming more reliant on Chinese inputs for value-chain production. Imported goods from China encompass various essential materials for export-specified production, including raw materials, machinery and equipment, steel, chemicals, oil, and fabrics. Vietnam is now importing nearly 50 percent of yarns and fabrics needed for its textile industry from China. If China disrupted the yarn supply, it would greatly damage Vietnam’s labor-intensive garment industry, culminating in mass unemployment.Vietnamese have concerns about being under the shadow of the dragon and being dominated in the long term by China’s increasing economic and political power, but closer economic relations may make Hanoi reluctant to adopt a policy against China in their territorial dispute. For instance, conservative Vietnamese leaders might learn the ongoing lesson from Europe as the Ukraine economy is heavily hit by Russian economic pressure and sanctions. A Vietnamese report says the impact of China’s unilateral deployment of an offshore drilling rig into Vietnam’s exclusive economic zone in 2014 might cost Vietnam’s economy USD 1.0-1.5 billion. The figure could have been bigger if China had not one-sidedly withdrawn the rig sooner than scheduled.Vietnam’s trade deficit with China and the asymmetrical north-south divide between their economies are important reasons why the Trans-Pacific Partnership (TPP) is significant in Vietnamese eyes. The benefit of opening another market needs to be understood in this context: Vietnam would pay a higher cost of missed opportunities, especially after other new trade initiatives led by China are emerging. On January 1, 2010, the ASEAN-China Free Trade Agreement (ACFTA) was formally established with zero-tariffs implemented between China and the six founding member states of ASEAN on over 90 percent of products. For the less developed ASEAN members, such as Cambodia, Laos, Myanmar, and Vietnam, the zero-tariff policy for 90 percent of Chinese products will be implemented in 2015 (and 2016).Since early 2014, however, some doubts have begun to emerge among Vietnamese policymakers. Economists question the ability to quantify tradeoffs for the economy and determine domestic losers under TPP. Other experts question the model itself, arguing for instance, that Chinese trade competition in the long term has proven very difficult for Vietnam to manage. This should mean that TPP’s “China exclusion” effect will become valuable, particularly in the textile, garment, and footwear industries, in which Vietnam’s competitiveness is expected to reap relative advantage over China’s. Still, Vietnam’s economic benefits are far from certain. The “yarn forward” rules of origin being pressed by the United States in negotiations put some of these apparent benefits in question. Vietnam’s supply chain is heavily dependent on Chinese textiles and other inputs, which are disqualified by the “yarn forward” rule that requires TPP signatories to use TPP member-produced yarn in textiles. For Vietnamese garment makers to get access to zero tariffs under TPP, they have to seek alternative suppliers inside the treaty zone.While Vietnam is striving to reduce its dependence on the Chinese economy, recent economic diplomacy under the Xi Jinping administration has put Hanoi’s leaders in a difficult situation again. China’s “One Belt and One Road” (OBOR) initiative, fully unveiled at the 2014 APEC summit in Beijing, aims at nothing less than establishing a web of traffic, transport, and communications networks between China and neighboring regions, including Central Asia, the Russian Far East, Southeast Asia, and ultimately Europe. The necessary financial backbone will be provided by several new China-led funding institutions, most notably the USD 40 billion Silk Road Fund and the USD 100 billion Asian Infrastructure Investment Bank (AIIB). The task of both agencies is to use their financial instruments for creating “connectivity partnerships.” Beijing’s outlook is extraordinarily far-reaching, especially compared with its rather limited goals over the last three decades. The Silk Road initiatives in particular and Beijing’s foreign policy ambitions in general, increasingly embody Xi’s dream “for the great renewal of the Chinese nation. Rational calculations about the expected costs, direct and indirect, of (non-) followership lie behind Hanoi’s decisions. Exclusion from a free-trade agreement may make a small economy lose its competitiveness to other countries. China’s charm offensive from many large-scale projects and cooperative initiatives, however, have, at times, been mired in controversy over economic sovereignty and political priorities. This is clearly a dilemma since economic interests are closely intertwined with security. Not only will China be much more powerful than it is today, but viewed in Hanoi, it will also remain deeply committed to making Vietnam part of its sphere of influence. For Vietnam, joining TPP could be the second step of “Doi Moi,” or renovation, launched by the Communist Party in 1986 by opening the door to more competent, transparent governance and to pressure to overhaul domestic corporations to be more competitive. Is joining OBOR or AIIB the same? It has not been clear to Vietnam until now.Triangular DynamicsThe South China Sea (SCS), China’s front yard, is of particular importance in the context of China-Vietnam relations. Not only does it hold great economic value (e.g., due to its huge significance for global Sea Lines of Communication (SLOC) as well as its often noted yet still hard to quantify riches of energy and seafood), but it is also significant to China’s regional strategy and future regional role. Indeed, it is fair to say that the SCS is the most important waterway of our time in SLOC that connects Singapore with Northeast Asia. Years ago, the economic value and volume of goods in this SLOC surpassed that of the SLOC between Rotterdam and New York. Around two-thirds of the Asian route runs through the SCS, making it the maritime economic runway of the Asia-Pacific essential for the region’s future economic development.By attempting to incorporate the SCS into the People’s Republic as undisputed Chinese territory, Beijing is able to put strategic pressure on the SLOCs important for three regional US allies (Japan, South Korea, and Taiwan) to gain a potentially very energy-rich area right at its doorstep, and, thus, to further reduce Chinese dependency on ship-based energy transports from the Middle East and Africa (which are strategically vulnerable to other nations’ naval assets) as well as to demonstrate to neighboring states its ability to shape its “near abroad.” Chinese maritime thinkers such as Admiral Liu Huaqing have emphasized that nation-states are engaged in intense competition over resource-rich areas and that China’s navy has an important role to play in protecting Chinese maritime interests and in developing China into a maritime great power. China, the strongest party in the disputes, gave the appearance of a hegemonic stabilizer by leveraging the Code of Conduct (COC) negotiations with ASEAN since 1998 as a force for building a rule-based order. The resulting order based on law and norms has yet to be achieved, but a temporary outcome resulted from the establishment of a Declaration of Conduct (DOC), which has served as the conflict management mechanism in the SCS. The agreement was significant because China engaged in a “peace enhancing process” to form long-term relations with its neighbors. As the balance of power has been shifting in China’s favor since the economic crisis in 2008, China’s attitude towards the DOC/COC in the SCS has changed significantly. Contrary to its earlier relatively peaceful approach, recent actions by China have alarmed other claimants as it competed for sovereignty, jurisdiction, and control of the SCS. China is becoming too powerful and has not agreed to limit its power by institutional frameworks.This change has resulted from the regional power shift since 2008 with China’s clear-cut military superiority in the SCS over the combined forces of ASEAN countries. Although both the Philippines and Vietnam are currently engaged in territorial struggles with China over islands in the SCS, Vietnam faces two distinct disadvantages compared to the Philippines. First, it is in conflict with China in both the Paracel and Spratly Islands. While the Spratly Islands involve other SEA nations and directly affect regional maritime freedom, disputes on the Paracels remain a bilateral issue. Second, more importantly, Vietnam’s long-time “three no’s” non-alliance policy—no military alliances, no allowance for any country to set up military bases on Vietnamese territory, and no reliance on any countries for help in combating other countries—sets the country apart, although it has become more controversial.After the events linked to the HD-981 oilrig, Vietnamese strategists realized that it is difficult to make the case that territorial conflicts are tests of maritime freedom, an obvious US concern. Therefore, with neither an alliance nor military support, Vietnam will be badly hurt in physically confronting China in the Paracel Islands. A slow but steady move to military cooperation with the United States is hardly inevitable. In April 2014, two US Navy ships participated in the fifth annual six-days of joint non-combat exercises with the Vietnamese navy, symbolizing closer defense cooperation between the two former adversaries. They forge the basis for building mutual trust and understanding between the United States and Vietnam, hopefully catering to each other’s priorities. During his trip to Vietnam last December, Secretary of State John Kerry announced that the Vietnamese Coast Guard would receive USD 18 million in aid with five fast patrol-boats to enhance its maritime police capacity. Vietnam is not going to establish a formal alliance with the United States in the foreseeable future, mainly because policymakers do not want to see a strengthened US relationship disproportional to frayed Sino-Vietnamese relations in a zero-sum game. Hanoi will not risk ruining its relationship with China in order to make an alliance with the United States. Vietnam and China have already established an institutionalized mechanism to undergird their bilateral relationship with annual high-ranking official visits and frequent discussions on border issues, maritime security, defense cooperation, territorial waters, and joint fishing activities. Even though China is increasingly aggressive in the SCS disputes, Vietnam keeps reiterating the critical importance of a friendly relationship with China.A fundamental problem for Vietnam’s political elite is the absence of convergence in “threat perceptions” toward China.. At the Tenth Plenum of the 11th Party Congress earlier this year, the Vietnamese Communist Party’s (VCP) chief, Nguyen Phu Trong, faced with the age-old question of whether “China is friend or foe,” emphasized that the answer could be found in the party documents and resolutions of the Central Committee. Resolution No. 28 on contemporary strategies for national defense states that the Standing Committee of the Central Committee continues to focus on identifying “partners and targets” (doi tac va doi tuong). What constitutes a strategic “partner?” The document asserts: “Those who respect the sovereignty of Vietnam, who seek to establish and expand their friendship and equal, win-win cooperation with Vietnam, are considered as our partners; however, those who plan at subverting our nation’s objectives, as well as our project of building and protecting the Fatherland are considered as our adversaries. The forces that support Vietnam’s policies and development are considered (strategic) partners. In contrast, those who disrupt and harm Vietnam are considered adversaries—necessitating appropriate counter-maneuvers. Following the above description, it is hard to put China in a specific category; China could be considered both a partner, primarily in economic terms, and a threat, especially in light of the deepening territorial disputes in the SCS. In this light, Vietnam will have to adopt a dualistic strategy, which, on one hand, preserves stable economic relations with China as a strategic partner, while simultaneously exploring means to keep Chinese maritime ambitions within Vietnamese-claimed waters in check. This is where the United States is of paramount importance.Given the US-Vietnam-China triangular relationship, the high-profile state visit of Vietnam’s paramount leader to Washington in July was expected to stir controversy, raising critical questions over the evolving dynamics of a long-standing hedging strategy toward the great powers. After considerable preparation and strategic contemplation, VCP General Secretary Trong made important visits both to China and to the United States over the summer. Some analysts have interpreted this as a sign that Hanoi continues to place greater emphasis on maintaining stable, if not cordial, ties with its giant neighbor, despite their intensified jostling in the SCS, which can undermine the VCP’s internal legitimacy. Some pundits interpreted those trips as indicative of subordination and one-sided leaning of the VCP towards Beijing. Such arguments are deeply affected by Cold War thinking and tell only one side of the story. Strategists in Hanoi’s inner circle consider “such obedience” a diplomatic means to coax China into reorienting her focus towards Hanoi’s priorities. Indeed, upon closer inspection, it becomes clear that the trip to Beijing was largely designed as a “shock absorber”—to offset the strategic fallout from Trong’s visit to Washington. Vietnam’s foreign policy is to enhance defense and economic times with the United States while maintaining a good relationship with the northern juggernaut. What Hanoi wants is not to defeat the Chinese military, but instead to make Beijing pay a huge price in case of a preventive strike in the SCS. They believe that with conventional deterrence, walking a delicate balancing act between these two superpowers can still work.Vietnam has good strategic motivation to be comfortable with multilateral arrangements in dealing with powerful China. ASEAN can indeed bring to Vietnam’s table two important things: the first is its normative clout. Norms are an important facet of SCS disputes. Contending parties frame their respective claims in distinct normative contexts. The main illustration is that, whereas China resorts to a concept of “historical waters” and historical legitimacy to back its expansive claims, another claimant like Vietnam, the Philippines or Indonesia opposes it with the Convention on the Law of the Sea (UNCLOS). Interpretations of states’ rights and obligations under UNCLOS and its applicability to the SCS context also diverge from one actor to the other. From Vietnam’s stance, given the power discrepancy with China, having ASEAN defend the validity of existing rules and procedures, and their usefulness in dispute management in the SCS is a major asset. All claimants seek the moral high ground.The second is enhancing bargaining power. A multilateral framework like ASEAN tends to favor weaker actors by giving them more “voice” opportunities toward the powerful (in comparison with bilateral arrangements, where China could maximize its political leverage towards then weaker actors), just as multilateral institutions allow the weaker to raise their voice collectively to influence the decision-making process. ASEAN and its various initiatives have not only become an important consideration for stabilizing Sino–ASEAN political and economic relations but also can serve as a mechanism protecting weaker Southeast Asian states from the advantages of the hegemonic power. In the case of SCS disputes, the same argument for peaceful settlement and institutionalizing for greater political autonomy can be found in the more general attitudes of weaker states towards dispute settlement.The main challenge for ASEAN to become a harmonized group successfully employing institutionalization is its internal division. Member states can be generally divided into three groups regarding their behavior in the SCS dispute: those on the front lines of the sovereignty issue (Vietnam and the Philippines); those with significant interest in the ultimate outcomes of the conflict (Indonesia, Malaysia, Singapore, and Brunei); and those tilted towards accommodating China (Cambodia, Laos, Myanmar, and Thailand). This division signifies a major problem facing ASEAN as a single bloc in reacting unanimously vis-à-vis China in SCS territorial disputes. Singapore’s Law Minister K. Shanmugam brilliantly summed up the prevailing state of mind of the majority of ASEAN nations when he bluntly stated: “If you start looking at ASEAN-China relations through the prism of the South China Sea, you are getting it wrong completely…The facts on the ground are the very substantial economic, security, political relationship between China and every country in ASEAN and ASEAN as a whole. The SCS forms part of it, and we will not be doing our duty for our country and our people if we forget that”. In short, the SCS disputes do not and should not define the overall texture of China-ASEAN relations. It is not worth alienating a key trading partner, so the argument goes, over disputes that are essentially bilateral in nature.One World, Different ViewsReinforcing China’s regional dominance is its scientific and engineering expertise. Drawing on its enormous experience in dam building and having a massive construction industry that operates worldwide, Chinese actors assume a dominant position when it comes to knowledge about planning, constructing, and operating large infrastructure. Hydropower development in the Great Mekong Sub-region (GMS) is an example. Other actors along the Mekong depend on the data, engineering skills, and scientific assessments delivered by their northern neighbors. This is particularly relevant for undertaking environmental (and social) impact assessments for the dozens of planned dam projects. China’s previous non-cooperative stance in information sharing between upstream and downstream-states renders trust-based common understanding as well as objective knowledge about the large-scale trans-boundary impact of dams very difficult. Nonetheless, the overall role of China could be seen as a “giver of last resort” of information, regarding the management of hydropower planning for the Mekong River.The exploitation of the river affects the interests of countries in the region. The impact on species and people living in and along the river depends on the balance among economic development, social security, and environmental issues. Besides contested images of how “sovereignty” and technologies ought to be reconciled, the vision of a “prosperous and peaceful Mekong region” presents a central controversial point. China has utilized its projects in hydropower development as a tool for pursuing its long-standing vision of “common prosperity” for the whole region. However, in building hydropower plants on the Mekong River and assessing environmental impact, one can observe a normative divergence between China and the GMS countries, especially Vietnam. This infrastructure is linked to different collective visions of the public good. While some GMS countries have accepted China as their partner supporting them to construct dams (Lao PDR and Cambodia) and others are big importers of electricity from China (Thailand and Vietnam), the three downstream states of Thailand, Cambodia, and Vietnam have pursued diverse benefits in the development of the GMS. Resolving environmental issues and aiming at a more sustainable future may require sacrificing short-term economic benefits by controlling the hydropower boom, which goes against the assumptions ingrained in the Chinese government’s outlook, i.e., the priority of electricity generation and economic development in general.At the core, authoritative knowledge is complex and certainly not apolitical. Thus, the question “who” provides objective knowledge that supports planning and decision-making is important. In fact, to counterbalance the overwhelming knowledge gap relative to China, the other states have undertaken major efforts. US-led cooperative initiatives such as the Low Mekong Initiative (LMI) attempt to rebalance the regional knowledge hegemony. Instead of focusing on state-sponsored mega-projects, LMI offers “projects involving the innovative technologies of Intel, the educational excellence of the Harvard Kennedy School, and advice on impact assessments and standards from the US Mississippi River Commission and US Geological Survey. As a key part of the massively expanded program LMI 2015, an action-oriented group was created in Myanmar, focusing mainly on “environment and water.” Its goal is to help increase the knowledge and research capacities of the less developed ASEAN countries Cambodia, Laos, and Vietnam. The establishment of the DRAGON Institute in southern Vietnam is one of the best examples. DRAGON is a cooperative product of the governments of the United States and Vietnam, aiming to develop into a prominent research center on ecosystems and the sustainability of major river deltas in a changing climate. While riparian states accept China’s dominance with respect to construction and markets, DRAGON and further knowledge-oriented initiatives indicate that they are less inclined to accept a Chinese quasi hegemony over scientific knowledge production. More and diverse perspectives with respect to water management and hydropower development in the region decrease epistemological dependence on China.Social imagination plays an important role in forming “a common GMS” since it creates shared understanding, expectations, and knowledge, and, thus, orients behavior. China’s main competitors in fostering a regional order are the United States and Japan. The competition to become a “spiritual leader” is evident. It is manifested, for instance, in the struggle between an “inclusive development” idea, considering many aspects of human needs (including management of trans-boundary water resources, infectious diseases, and vulnerability to climate change) and “extractive growth,“ focusing on fostering economic dynamism with the involvement of the GMS countries in order to create a regional economy with hydropower at its center. In other words, the contest over images of hydropower is linked to the support of different outside actors.The underlying process is not one-way. It is much more complicated than the portrait of regional states that buy “into the hegemon’s vision of international order and accept it as their own. The process of finding principles and agreeing on certain value judgments for the use of the Mekong’s waters remains open-ended. These diverging visions crosscut societies, political actors, elites, populations, and interest groups between China and Vietnam. More importantly, they are part of larger images about hydropower technology in the region. To China’s detriment, the struggle about the future of hydropower development prominently entails the question of which “external” actors should be included in its governance and which forms of governance should be adopted. The persistence of differing standpoints and coalitions on both issues means that no regional order is stabilized yet.ConclusionThe strong growth of the Chinese economy is a fundamental foundation for its advanced sciences, its powerful military, and an increase in its political influence on surrounding countries. The consequences of this rise, basically, are confirmed by the growing concern of the region and the world on how China will use its power and influence. Beijing’s pursuit of either substantive policies harmonious with the common interests of other countries in the region or policies rejecting existing general rules will lead to a different impact on regional security. How other countries view China is also an important question.Chinese elites should realize that pursuing a policy of hard power could draw the attention of the United States and result in confrontation. Since 2009, China has faced the dilemma of choosing between using its growing power or complying with international law and institutions. China’s internal debates (between elites and think tanks) have discussed different approaches and viewpoints. While one side believes that the current context provides an opportunity for China to take the initiative in resolving sovereignty disputes, the other calls for more caution. The existing power gap between the United States and China means that any direct, or indirect, confrontation in the South China Sea would wreak tremendous havoc on the Chinese economy.Vietnam’s main concern is whether China’s rise will enhance or undermine its national security. Actually, this worry was aroused even before Chinese power emerged rapidly, stemming from a long history of dominance by China in the region and its policy of aggression threatening neighboring countries, notably the Vietnam–China border conflict in 1979 or current territorial disputes in the SCS. Vietnam does not own a wide range of alternatives to falling under the shadow of the dragon, which would be a “nightmare” to it. Therefore, it is crucial to create a “social contract” with powers from inside and outside the region, which includes a commitment about use of power, methods to solve common issues, and rules to be utilized as common norms of the community. For Vietnam, this is the appropriate time to foster this process, before the power scale inclines completely to one side.Link: http://www.theasanforum.org/the-politics-of-struggling-co-evolution-trade-power-and-vision-in-vietnams-relations-with-china/Lusia Millar

1. INTRODUCTIONMango (Mangifera indica L.) belonging to Family Anacardiaceae is the most important commercially grown fruit crop of the country. It is called the king of fruits. India has the richest collection of mango cultivars.2. OBJECTIVE   The main objective of the study is to promote commercial cultivation of the crop by small and middle scale farmers by projecting a one acre bankable model project.    3. BACKGROUND   3.1 Origin Cultivation of mango is believed to have originated in S.E. Asia. Mango is being cultivated in southern Asia for nearly six thousand years.3.2 Area & ProductionIndia ranks first among world’s mango producing countries accounting for about 50% of the world’s mango production. Other major mango producing countries include China, Thailand, Mexico, Pakistan, Philippines, Indonesia, Brazil, Nigeria and Egypt. India’s share is around 52% of world production i.e. 12 million tonnes as against world’s production of 23 million tonnes (2002-03).An increasing trend has been observed in world mango production averaging 22 million metric tonnes per year. Worldwide production is mostly concentrated in Asia, accounting for 75% followed by South and Northern America with about 10% share.Area under cultivation and production trends of mangoes in India during 1997-98 to 2001-02 are depicted in graphs 1 & 2. Major producing States are Andhra Pradesh, Bihar, Gujarat, Karnataka, Maharashtra, Orissa, Tamil Nadu, Uttar Pradesh and West Bengal. Other States where mangoes are grown include Madhya Pradesh, Kerala, Haryana, Punjab etc. (Ref. Table-1)The state-wise area and production of mangoes are given in Table 1 below:Table 1 : State-wise Area, Production & Productivityof Mangoes during 2001-02StateArea(‘000 Ha.)Production(‘000 MT)Andhra Pradesh341.22445.8Uttar Pradesh253.01950.0Maharashtra164.4559.0Bihar139.31253.5Karnataka115.41130.6Tamil Nadu110.8438.7Orissa107.3402.4West Bengal65.4585.0Gujarat65.3457.6Others213.7797.6TOTAL1575.810020.2Source : Database of National Horticulture Board, Ministry of Agriculture , Govt. of India.The crop accounts for 39% of area under fruit corps in India and 23% of production of these crops.3.3 Economic Importance The fruit is very popular with the masses due to its wide range of adaptability, high nutritive value, richness in variety, delicious taste and excellent flavour. It is a rich source of vitamin A and C. The fruit is consumed raw or ripe. Good mango varieties contain 20% of total soluble sugars. The acid content of ripe desert fruit varies from 0.2 to 0.5 % and protein content is about 1 %.Raw fruits of local varieties of mango trees are used for preparing various traditional products like raw slices in brine, amchur, pickle, murabba, chutney, panhe (sharabat) etc. Presently, the raw fruit of local varieties of mango are used for preparing pickle and raw slices in brine on commercial scale while fruits of Alphonso variety are used for squash in coastal western zone.The wood is used as timber, and dried twigs are used for religious purposes. The mango kernel also contains about 8-10% good quality fat which can be used for saponification. Its starch is used in confectionery industry.Mango also has medicinal uses. The ripe fruit has fattening, diuretic and laxative properties. It helps to increase digestive capacity.4. MARKET ANALYSIS AND STRATEGY   4.1 Demand and Supply patterns 4.1.1 World TradeAmong internationally traded tropical fruits, mango ranks only second to pineapple in quantity and value. Major markets for fresh and dried mangoes in 1998 were: Malaysia, Japan, Singapore, Hong Kong and the Netherlands, while for canned mango were: Netherlands, Australia, United Kingdom, Germany, France and USA.Southeast Asian buyers consume mangoes all year round. Their supplies come mainly from India, Pakistan, Indonesia, Thailand, Malaysia, Philippines, Australia and most recently South Africa.Each exporting country has its own varieties, which differ in shape, colour and flavour. Prices are very low for Indonesian and Thailand fruit and are on the higher side for Indian fruit. In the United States of America, the prices vary with the season, higher prices found during February and March, when mango availability is lowest.Most international trade in fresh mangoes takes place within short distances. Mexico, Haiti and Brazil account for the majority of North America’s imports. India and Pakistan are the predominant suppliers to the West Asian market. Southeast Asian countries get most of their supplies from the Philippines and Thailand. European Union buyers source mangoes from South America and Asia. Although Asia accounts for 75 percent of world production, its dominance does not translate into international trade.4.1.2 International Markets for Indian MangoAsian producers find it easier to expand sales to the European Union. Europe’s acceptance of different varieties is greater, because of a large demand from Asian immigrant groups. Phytosanitary restrictions are less stringent. Transportation costs are not as big a factor in exporting mangoes to the European Union as in exporting to the United States market: for example, India and Pakistan are able to compete with non-Asian suppliers to the European Union, whereas proximity gives Mexico and Haiti a clear advantage in supplying to the United States market.Fifty-four percent of European Union imports enter during the periods May to July and November to December, with peak imports in June. French imports reach peak in April and May, whereas United Kingdom imports are concentrated during the May to July. German imports are spread more evenly throughout the year. Of the top suppliers, Brazil provided chiefly during the period November to December, the United States during June to October, South Africa during January to April and Venezuela during April to July. Pakistan supplies the majority of its exports to the European Union during June and July; Indian exports take place mainly during the month of May.Although a lion’s share of Indian mango goes to the Gulf countries, efforts are being made to exploit European, American and Asian markets. About 13,000 MT of Alphonso variety is exported to Middle East, UK and Netherlands every year.The different products of mango which are exported include mango chutney, pickles, jam, squash, pulp, juice, nectar and slices. These are being exported to U.K., U.S.A., Kuwait and Russia. Besides these, the fresh mangoes are being exported to Bangladesh, Bahrain, France, Kuwait, Malaysia, Nepal, Singapore and U.K.The varieties in demand at the international market include Kent, Tomy Atkin, Alphonso and Kesar. Varieties such as Alphonso, Dashehari, Kesar, Banganapalli and several other varieties that are currently in demand in the international markets are produced and exported from India.    ‘Mahamango’, a co-operative society was established in 1991 with the support of Maharashtra State Agricultural & Marketing Board (Pune). This was mainly formed to boost the export of Alphonso mangoes as well as for domestic marketing. Facilities like pre-cooling, cold storages, pack house, grading packing line etc. have been made available at the facility centre of Mahamango for which the financial assistance was given by APEDA, New Delhi and Maharashtra State Agricultural & Marketing Board (Pune).    A similar type of association named ‘MANGROW’ has been formed for the export of Kesar mangoes from Aurangabad district of Maharashtra. 4.2 Import/Export trendsIndia's mango exports were estimated at 45 thousand tonnes worth Rs 100 crore (Rs 1 billion) in 2002-03. Fresh mangoes are exported to Bangladesh, U.A.E., Saudi Arabia and U.K. and mango pulp to U.A.E., Saudi Arabia, Kuwait, Netherlands, U.S.A and U.K. Processed mango products viz. pickle and chutney are exported to U.K., U.A.E., Saudi Arabia, Germany, Netherlands, U.S.A and U.K.The trend in export of mangoes during the period 1999-2000 to 2002-03 is given in Graph 3 and destination wise exports during 2001-02 are shown in Table-2.Table-2 : Country-wise export of mangoes from India during 2001-02. CountryQuantity(‘000 Tonnes)Value(Rs. in crores)Bangladesh21.0324.10U.A.E12.8128.19Saudi Arabia2.946.62U.K.1.374.54Kuwait0.983.10Oman0.881.88U.S.A.0.731.63Bahrain0.602.01Others3.098.92Total44.4380.99 Source : APEDA, New DelhiThe biggest importer of mango is the United States importing an average of 1,85,000 metric tonnes annually (about 45% of the total world import volume). Europe’s top importers of mango include Netherlands, France, UK, Germany and Belgium with an aggregate average volume of 95,000 metric tonnes imported annually.Of late Asian market has been expanding. China's market has been increasing and ranks second among the top importers in the world. Other Asian markets such as Malaysia, UAE, Saudi Arabia and Singapore have been among the top ten importers exhibiting an export growth average of 20% annually.4.3 Analysis and Future StrategyMango has an established export market and poses bright opportunities for export in the international market whether in fresh or processed forms. Similarly, the mango industry has provided livelihood opportunities to its growers and those involved in its marketing channel. Creation of essential infra-structure for preservation, cold storage, refrigerated transportation, rapid transit, grading, processing, packaging and quality control are the important aspects which needs more attention.There is need for developing processing industries in the southern region of the country where post harvest losses in handling and marketing are higher.There is scope to establish mango preservation factories in cooperative sector. Mango growers cooperatives on the lines of Mahamango need to encouraged to come up in major mango producing States. This will add to their income through processing and create additional employment opportunities for the rural people.Considerable amount of waste material, e.g, mango stones, peels remain unutilized which can be used properly by the processors to earn more profit. This will also help to improve sanitary conditions around factory premises.5. PRODUCTION TECHNOLOGY5.1 Agro-climatic requirementsMango is well adapted to tropical and sub-tropical climates. It thrives well in almost all the regions of the country but cannot be grown commercially in areas above 600 m. It cannot stand severe frost, especially when the tree is young. High temperature by itself is not so injurious to mango, but in combination with low humidity and high winds, it affects the tree adversely.Mango varieties usually thrive well in places with rainfall in the range of 75-375 cm. /annum and dry season. The distribution of rainfall is more important than its amount. Dry weather before blossoming is conducive to profuse flowering. Rain during flowering is detrimental to the crop as it interferes with pollination. However, rain during fruit development is good but heavy rains cause damage to ripening fruits. Strong winds and cyclones during fruiting season can play havoc as they cause excessive fruit drop.Loamy, alluvial, well drained, aerated and deep soils rich in organic matter with a pH range of 5.5 to 7.5 are ideal for mango cultivation.5.2 Growing and Potential Belts Mango is cultivated in almost all the states of India. The state-wise growing belts are given in the following :StateGrowing beltsAndhra PradeshKrishna, East and West Godavari, Vishakhapatnam, Srikakulam, Chittoor, Adilabad, Khamman, VijaynagarChhattisgarhJabalpur, Raipur, BastarGujaratBhavnagar, Surat, Valsad, Junagarh, Mehsana, KheraHaryanaKarnal, KurushetraJammu & KashmirJammu, Kathwa, UdhampurJharkhandRanchi, Sindega, Gumla, Hazaribagh, Dumka, Sahibganj, Godda.KarnatakaKolar, Bangalore, Tumkur, KaguKeralaKannur, Palakkad, Trissur, MalappuramMadhya PradeshRewa, Satna, Durg, Bilaspur, Bastar, Ramnandgaon, Rajgari, Jabalpur, Katni, BalaghaMaharashtraRatnagiri, Sindhudurg, RaigarhOrissaSonepur, Bolangir, Gajapati, Koraput, Rayagada, Gunpur, Malkanpuri, Dhenkanal, Ganjam, PuriPunjabGurdaspur, Hoshiarpur, RoparTamil NaduDharmapuri, Vellore, Tiruvallur, Theni, MaduraiUttaranchalAlmora, Nainital, Dehradun, Bageshwar, UdhamSingh Nagar, HaridwarUttar PradeshSaharanpur, Bulandshahar, Lucknow, Faizabad, VaranasiWest BengalMalda, Murshidabad, Nadia5.3 Varieties CultivatedIn India, about 1,500 varieties of mango are grown including 1,000 commercial varieties. Each of the main varieties of mango has an unique taste and flavour.Based on time of ripening , varieties may be classified as under :Early-Bombai, Bombay Green , Himsagar, Kesar, SuvernarekhaMid-season-Alphonso, Mankurad, Bangalora, Vanraj, Banganapalli, Dashehari, Langra, Kishen Bhog, Zardalu, MankuradLate-Fazli, Fernandin, Mulgoa, Neelum, ChausaHybrids:Amrapalli (Dashehari x Neelum), Mallika (Neelum x Dashehari), Arka Aruna (Banganapalli x Alphonso), Arka Puneet (Alphonso x Janardhan Pasand), Arka Neelkiran (Alpohonso x Neelum), Ratna (Neelum x Alphonso), Sindhu (Ratna x Alphonso), Au Rumani (Rumani x Mulgoa), Manjeera (Rumani x Neelum), PKM 1 (Chinnasuvernarekha x Neelum), Alfazli, Sunder Langra, Sabri, Jawahar, Neelphonso, Neeleshan, Neeleshwari, PKM 2 (very few of these hybrid varieties are grown commercially in the country).The important mango varieties cultivated in different states of India are given below :StateVarieties grownAndhra Pradesh-Allumpur Baneshan, Banganapalli, Bangalora, Cherukurasam, Himayuddin, Suvernarekha, Neelum, TotapuriBihar-Bathua, Bombai, Himsagar, Kishen Bhog, Sukul, Gulab Khas, Zardalu, Langra, Chausa, Dashehari, FazliGoa-Fernandin, MankuradGujarat-Alphonso, Kesar, Rajapuri, Vanraj, Jamadar, Totapuri, Neelum, Dashehari, LangraHaryana-Dashehari, Langra, Sarauli, Chausa, FazliHimachal Pradesh-Chausa, Dashehari, LangraJharkhand-Jardalu, Amrapalli, Mallika, Bombai, Langra, Himsagar, Chausa, GulabkhasKarnataka-Alphonso, Bangalora, Mulgoa, Neelum, Pairi, Baganapalli, TotapuriKerala-Mundappa, Olour, PairiMadhya Pradesh-Alphonso, Bombay Green, Langra, Sunderja, Dashehari, Fazli, Neelum, Amrapalli, MallikaMaharashtra-Alphonso, Mankurad, Mulgoa, Pairi, Rajapuri, Kesar, Gulabi, VanrajOrissa-Baneshan, Langra, Neelum, Suvarnarekha, Amrapalli, MallikaPunjab-Dashehari, Langra, Chausa, MaldaRajasthan-Bombay Green, Chausa, Dashehari, LangraTamil Nadu-Banganapalli, Bangalora, Neelum, Rumani, Mulgoa, Alphonso, TotapuriUttar Pradesh-Bombay Green, Dashehari, Langra, Safeda Lucknow, Chausa, FazliWest Bengal-Bombai, Himsagar, Kishen Bhog, Langra, Fazli, Gulabkhas, Amrapalli, Mallika5.4 Planting5.4.1 Planting MaterialMango can be propagated from seed or propagated vegetatively. Plants are generally propagated vegetatively by using several techniques like veneer grafting, inarching and epicotyl grafting etc.5.4.2 Planting SeasonPlanting is usually done in the month of July-August in rainfed areas and during February-March in irrigated areas. In case of heavy rainfall zones, planting is taken up at the end of rainy season.5.4.3 SpacingThe planting distance is 10m. x 10m. and 12m. x 12m. in dry and moist zones respectively. In the model scheme, a spacing of 8m. x 8m. with a population of 63 plants per acre has been considered which was observed to be common in areas covered during a field study.5.5 Training of PlantsTraining of plants in the initial stages of growth is very important to give them a proper shape specially in cases where the graft has branched too low.5.6 NutritionFertilizers may be applied in two split doses , one half immediately after the harvesting of fruits in June/July and the other half in October, in both young and old orchards followed by irrigation if there are no rains. Foliar application of 3 % urea in sandy soils is recommended before flowering.The following table gives the details of fertilizer applied (depending upon the age of the plants) :Age of the plant(in years)Fertilizer applied1*100g. N, 50g. P2O5, 100g. K2O101kg. N, 500g. P2O5, 1kg. K2O11-do-*The doses applied in the subsequent years should be increased every year upto10 years in the multiple of the first year’s dose.Well decomposed farm-yard manure may be applied every year. For trench application of fertilizers, 400g. each of N and K2O and 200g. of P2O5 per plant should be provided. Micro-nutrients may be applied as per the requirement in the form of foliar sprays.5.7 IrrigationThe frequency and amount of irrigation to be provided depends on the type of soil, prevailing climatic conditions, rainfall and its distribution and lastly the age of the trees. No irrigation is required during the monsoon months unless there are long spells of drought.Age of the plant (in years)/Growth stageIrrigation schedule1· Irrigated at an interval of 2-3 days during dry season.2-5· Irrigation interval- 4-5 days .5-8/ fruit set to maturity· Irrigated after every 10-15 daysFull bearing stage· 2-3 irrigations after fruit set.Frequent irrigation during 2-3 months prior to the flowering season is not advisable as it is likely to promote vegetative growth at the expense of flowering. Irrigation should be given at 50% field capacity. Generally inter-crops are grown during the early years of plantation and hence frequency and method of irrigation has to be adjusted accordingly. The method usually followed for irrigating mango plants is basin irrigation. However, use of Drip Irrigation will not only reduce the water requirements but will also help in fertigation in root zones of the plants.5.8 Intercultural OperationsThe frequency and the time of inter-culture operations vary with age of the orchards and existence of inter-crops. The weed problem may not exist immediately after planting the mango crop but it is advisable to break the crust with hand hoe each time after 10-15 irrigations are applied. In case of mono-cropping, the area between the basins should be ploughed at least three times in a year i.e. during the pre-monsoon, post-monsoon period and in the last week of November.5.9 Inter-croppingIntercropping can be taken up till the mango trees attain suitable height and develop canopy (at 5-6 years of age).Leguminous crops like green gram, black gram, gram etc., cereals like wheat, oilseeds like mustard, sesame and groundnut, vegetable crops such as cabbage, cauliflower, tomato, potato, brinjal, cucumber, pumpkin, bitter gourd, tinda, lady’s finger etc. and spices like chillies can be grown as intercrops. The partial shade loving crops like pineapple, ginger, turmeric etc. can be cultivated in fully grown orchards. In addition to field crops, some short duration , less exhaustive and dwarf type inter- fillers like papaya, guava, peach, plum etc. can be grown till these do not interfere with the main mango crop .It is advisable to take vegetable crops as inter crops for better returns.The average cost of inter cropping would be Rs.10,000 / Acre and it would yield on an average of 6 tonnes / Acres.5.10 Crop Management5.10.1 Regulation of BearingProper cultural practices like addition of fertilizers and control of diseases and insect pests may be adopted to regulate growth and bearing. Regular bearing varieties viz. Dashehari and Amrapalli may be grown. Deblossoming of the panicles with NAA @ 200 ppm. (20 g./100 l. water) during ‘on’ year may help to regulate the bearing.5.10.2 Regulation of Fruit DropEmbryo abortion, climatic factors , disturbed water relation, lack of nutrition, attack of disease and pest, hormonal imbalances are the major factors that lead to fruit drop. A spray of Alar (B-Nine) @ 100 ppm. or 20 ppm. 2,4-D (2g. in 100 l. water) in the last week of April or in the last week of May will control to some extent the summer fruit drop in Langra & Dashehari.5.11 Plant Protection Measures   5.11.1 Insect Pests   Insect pests mostly observed are mealy bug, hopper, inflorescence midge, fruit fly and scale insects. For controlling these insects, spraying with carbaryl, monocrotophos, phosphamidon & methyl parathion are recommended.   5.11.2 Diseases and Disorders The crop is suspect to diseases like powdery mildew, anthracnose, die back, blight, red rust, sooty mould, etc. In order to control these diseases spraying of appropriate chemicals/fungicides have to be undertaken preferably on preventive basis.Disorders can also affect the crop if proper case and control measures are not taken. The major among these are malformation, biennial bearing, fruit drop, black tip, clustering etc. The grower needs to seek advice and professional assistance to prevent/control diseases and disorders in the crop.5.12 Harvesting and YieldThe orchard starts bearing from sixth year onwards and the economic life of a mango tree exceeds 35 years.Yield of fruits varies considerably according to the variety, climatic conditions, plant population etc. On an average, the yield ranges from 5 to 9 t/acre. Grafted plants start bearing early.6. POST HARVEST MANAGEMENT 6.1 GradingGrading is mainly based on the size, colour and maturity of the fruits. While grading, smaller fruits are separated from the larger ones in order to achieve uniform ripening. Immature, overripe, damaged and diseased fruits are discarded in the process of grading.The fruits are generally harvested early in the season at a pre-mature stage to capture early market. Such fruits are ripened by uniformly dipping in 750 ppm. ethrel (1.8ml./l.) in hot water at 52±20 C for 5 minutes. within 4-8 days under ambient conditions. Mature fruits are ripened with lower doses of ethrel for uniform colour development.6.2 StorageThe mature green fruits can be stored at room temperature for about 4-10 days depending upon the variety. The harvested fruits are pre-cooled to 10-120 C and then stored at an appropriate temperature. The fruits of Dashehari, Mallika and Amrapalli should be stored at 120 C, Langra at 140 C and Chausa at 80 C with 85-90 % relative humidity.6.3 PackingWooden or cardboard boxes, rectangular in shape and bamboo baskets having capacity to accommodate 5 to 8kg. of fruit is used for packaging and transportation of mango fruits. The most commonly used containers are ventilated card board boxes of corrugated fibre board (CFB) cartons. Size of the box varies to accommodate 5 to 10 kg. of fruit.6.4 TransportationRoad transport by trucks is the most popular mode of transport due to easy approach from orchards to the market.6.5 MarketingMarketing of the produce is mainly controlled by intermediaries like wholesalers and commission agents.7. TECHNOLOGY SOURCESThe major sources for technology, as well as quality planting material are:(i) Central Institute for Sub-tropical Horticulture, P.O. Kakori, Lucknow-226002, Uttar Pradesh, Tel (0522)-2841022/1023.(ii) Indian Institute of Horticultural Research, Hessarghatta, Bangalore-560089, Karnataka, Tel (080)-28466471/6353.(iii) Indian Agricultural Research Institute, New Delhi-110012.(iv) Narendra Deva University of Agriculture & Technology, Kumarganj, Faizabad-224229, Uttar Pradesh, Tel (05270)-2262097/2161.(v) Acharya NG Ranga Agricultural University, Rajendra Nagar, Hyderabad-500030, Andhra Pradesh, Tel (040)-24015078.(vi) University of Agricultural Sciences, Dharwad-580005, Karnataka, Tel (0836)-2447783.(vii) Mahatma Phule Krishi Vidyapeeth, Rahuri-413722, Maharashtra, Tel (02426) 2243208.(viii) Dr. Balasaheb Sawant Konkan Krishi Vidyapeeth, Dapoli District, Ratnagiri-415712, Maharashtra, Tel (02358)-2282064.(ix) Directorate of Horticulture, Shivajinagar, Pune, Maharashtra-560003(x) Directorate of Horticulture, Lalbagh, Bangalore, Karnataka.(xi) Directorate of Horticulture, Hyderabad, Andhra Pradesh.(xii) Directorate of Horticulture, Lucknow, Uttar Pradesh8. ECONOMICS OF A ONE ACRE MODEL8.1 High quality commercial cultivation of crop by using improved planting material and drip irrigation leads to multiple benefits viz.· Synchronized growth, flowering and harvesting;· Reduction in variation of off-type and non-fruit plants;· Improved fruit quality;· Early maturity;· Increase in average productivity;· High efficiency in water application and water use efficiency;· High fertilizer use efficiency;· Minimum incidence of pests and diseases.Costs & Returns:8.2 A one acre plantation of the crop is a highly viable proposition. The cost components of such a model along with the basis for costing are exhibited in Annexures I & II. A summary is given in the figure below. The project cost works out to around Rs.1.50 lakhs per acre.COST OF PROJECT(Amount in Rs.)Sl. No.ComponentProposed Expenditure1.Cultivation Expenses(i)Cost of planting material2,000(ii)Manures & fertilizers5,000(iii)Insecticides & pesticides2,000(iv)Cost of Labour8,400(v)Others, if any, (Power)3,600Subtotal21,0002.Irrigation(i)Tube-well/submersible pump45,000(ii)Cost of Pipeline-(iii)Others, if any, please specify-Subtotal45,0003.Cost of Drip/Sprinkler25,0004.Infrastructure(i)Store & pump house15,000(ii)Labour room5,000(iii)Agriculture Equipments5,4000Subtotal25,4005.Land Development(i)Soil Leveling4,000(ii)Fencing29,600Subtotal33,6006.Land, if newly purchased (Please indicate the year)*Grand Total1,50,000*Cost of newly purchased land will be limited to one-tenth of the total project cost8.3 The major components of the model are:· Land Development: (Rs.4.0 thousand): This is the labour cost of shaping and dressing the land site and developing a layout.· Fencing (Rs.29.60 thousand): It is necessary to guard the orchard by barbed wire fencing to safeguard the valuable produce from poaching.· Irrigation Infra-structure (Rs.45 thousand): For effective working with drip irrigation system, it is necessary to install a bore well with diesel/electric pumpset and motor. This is part cost of tube-well.· Drip Irrigation & Fertigation System (Rs.25.0 thousand): This is average cost of one acre drip system for mango inclusive of the cost of fertigation equipment. The actual cost will vary depending on location, plant population and plot geometry.· Equipment/Implements (Rs.5.4 thousand): For investment on improved manually operated essential implements a provision of another Rs.10 thousand is included.· Building and Storage (Rs.20.0 thousand): A one acre orchard would require minimally a labour shed and a store-cum pump house.· Cultivation (Rs.21.0 thousand): This is to cover costs of land preparation and planting operations, planting material, inputs and power.8.4 Labour cost has been put at an average of Rs.70 per man-day. The actual cost will vary from location to location depending upon minimum wage levels or prevailing wage levels for skilled and unskilled labour.8.5 Recurring Production Cost: Recurring production costs in the pre & post-operative period are exhibited in Annexures III & III A respectively. The main components are planting material, land preparation, inputs .application ( FYM, fertilizers, liming material, plant growth regulators, plant protection chemicals etc.), labour cost on application of inputs, power, inter-cultural and other farm operations, interest on term loan, harvesting, packing and transportation.8.6 Returns from the Project: In the development stage returns from inter-cropping are estimated at Rs.25,000 annually. The yield from the plantation is estimated at 5 tonnes in the first year of bearing rising to 7 tonnes. The produce has been valued at Rs. 10,000 per tonne in this exercise.Project Financing:8.7 Balance Sheet: The projected balance sheet of the model is given at Annexure IV. There would be three sources of financing the project as below:Source Rs. ThousandFarmer’s share 75.00Capital subsidy 30.00Term loan 45.00Total 150.008.8 Profit & Loss Account: The cash flow statement may be seen in Annexure V. Annexure VI projects the profit and loss account of the model. Gross profit increases from Rs.25.5 thousand per annum to Rs.43.3 thousand per annum in the first three years of bearing and thereafter more or less stabilise.8.9 Repayment of Term Loan: The term loan will be repaid in 11 equated 6 monthly installments with a moratorium of 72 months. The rate of interest would have to be negotiated with the financing bank. It has been put at 12% in the model (vide Annexure VII). The repayment schedule has been presented at Annexure-VII A.8.10 Depreciation calculations are given in Annexure VIII.Project Viability:8.11 IRR/BCR: The viability of the project is assessed in Annexure IX over a period of 15 years. The IRR works out to 32.59 and the BCR to 1.9.8.12 The Debt Service coverage ratio calculations are presented in Annexure X. The average DSCR works out to 3.83.8.13 Payback Period: On the basis of costs and returns of the model, the pay back period is estimated at 4.63 years (vide Annexure XI).8.14 Break-even Point: The break even point will be reached in the 3rd year. At this point fixed cost would work out to 55.3% of gross sales - vide Annexure XII.