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Warning: Brace yourself to read some stark realities on the economic front.My prediction: India will continue to gloriously muddle through economically and we will pay a very high price for growth (through stimulus) as can be seen in India’s economic history.Expert view[1][1][1][1]: “I think India, because I think the kind of growth that India has had, I don’t think it’s sustainable. Partly going back to our earlier discussion about premature deindustrialization. I think they have these plans to significantly strengthen their manufacturing base. I just don’t see it happening. I think India can grow at 4, 5 percent per year on a sustainable basis. I don’t think it’s going to be 8 or 9 percent. When this sinks in, I think there’s going to be a negative overreaction, would be my fear “India’s economic potential, in theory, is quite high. However, in practice, it has always fallen short of expectations. The first step on the long road to redemption is to accept that a higher growth rate for India and its rise to pre-eminence (economic and otherwise) in the twenty-first century are not preordained. The primary causes that impede realisation of the economic potential can be summed up as follows:The country’s domestic structural deficiencies—namely poor human resource capabilities; a narrow and predominantly informal industrial base; and a fragmented, low-productivity primary sector—keep a lid on growth and a floor on inflation.Our premature deindustrialization, the limitations of a services-led growth model, the plateauing of global trade, stagnation in developed economies, and the costs associated with climate change.The government’s capacity deficiencies to implement any meaningful program amplify the effects of these constraints.I now quote various statistical measures to support my claim:GDP growth [2][2][2][2]and its overhang on the economy: Heated growth (whenever we had) invariably led to high NPA and we don’t have the mechanisms to handle that.In the three financial years ending March 1995, March 1996, and March 1997, India recorded real GDP growth rates of 6.6 percent, 7.6 percent, and 7.6 percent, respectively. Since the year ending in 1997, India’s scheduled commercial banks, and particularly the public sector banks, endured a high ratio of nonperforming assets to gross advances. e ratio was in double digits up to 2001–2002.India’s high-growth years of April 2003 to March 2008, during which the compound annual growth rate of the economy in real terms was 8.8 percent, was characterised by several critical inputs that were not sustainable.The problem resurfaced again in the aftermath of the global financial crisis of 2008–2009. Restructured corporate loans helped bank management understate the extent of stressed assets. Now that the RBI now reports the total stressed assets in the banking system all the dirty linen is out there and we are yet to fix them.Inflation and its impact:In the years from 1960- 2014, the average inflation rate, measured by the Consumer Price Index for Industrial Workers (CPI-IW), was 7.6 percent, with little difference in average inflation rates before and after 1991. Between 1991 and 1999, the average annual inflation rate was around 9 percent.The recent decline in the inflation rate was the result of an extraordinary combination of declining energy prices on the international market and declining food prices, and a tepid domestic economic growth environment with subdued pricing power for sellers. The lower inflation rate will be tested when India experiences even a brief period of accelerated economic growth. So, I am quite sanguine about it.The reasons that I see India muddling through is the abject neglect of some factors that lead to growth. Here they are:Education and skilled manpower:High growth requires an almost inexhaustibly large supply of skilled manpower. Let’s look at the reality.51.9% of Class 5 children in rural India cannot read a Class 2 text; only 25% of children in Class 5 and 46.8% in Class 8 could read simple English sentences; just 25.3% of Class 3 children could do a two-digit subtraction, 26.1% of Class 5 children and 44.1% of Class 8 students could do division. India was placed 72 of the 73 countries as evaluated by PISA. Subsequently (partly ashamed of the results), India never participated in the study[3].Only 10 percent of new graduates and 25 percent of graduates of engineering and MBA programs had adequate skills to be employabl[4]eIs it any wonder that our demographic dividend is turning to be a demographic liability?Healthcare[5][5][5][5] and its impact on the economy:Public spending on healthcare, has remained at about 1 % of GDP for decades despite commitments from successive governments at the Centre. India has one of the highest shares of out-of-pocket healthcare expenditures among major developing countries. Nearly 60 percent of healthcare spending in India is paid out of pocket, and catastrophic health expenses are the largest contributor to poverty.The government-affiliated erstwhile Planning Commission estimated that health problems push 39 million people into poverty each year: 47 percent of hospital admissions in rural areas and 31 percent in urban areas are financed by loans and asset sales, while 30 percent of those needing care in rural India and 20 percent of those in urban areas go untreated because of inability to pay for healthcare.Agriculture and its impact on the economy:It is sick baby which continues to stay alive due to tens of thousands of crores of loan waivers each year.The fragmentation of farmland has contributed to India’s low level of agricultural production. Moreover, growth in yield per hectare has slowed considerably since the start of the new millennium: small farm size does not lend itself to the application of yield- increasing technology, improved production methods, or even monetisation.The nation spends thousands of crores each year doing the loan waivers and yet there has been no turnaround.Not MSME, but micro enterprises which doesn’t scale:India has a preponderance of microenterprises and a tiny set of large enterprises. It has neither small nor medium-sized enterprises.At 83.6 percent, the share of informal employment in
the country’s overall nonagricultural employment total is the highest in the world. It is not something to be proud of.Jobs eh: Where will it come from:India must address its missing agricultural and industrial middle if it is to avoid sudden stops and economic crises and to make headway in manufacturing and farming. Without these sectors, there will not be jobs for the millions of young people seeking entry into the workplace each year.Investment by public and private sectorsCapital expenditure by corporations has also been on a continuously declining trajectory since 2011 both by public and private sectors. Where shall the young go for jobs?Finally, the poor efficiency by the government:The inability to implement government programs is pervasive and dominates the public’s perception of weak governance.India’s government-run schools are noteworthy for neglect and apathy. Teacher absenteeism is rampant; learning levels are abysmal; toilets, where available, are mostly non-functional; and so on.In healthcare, doctor and nurse absenteeism is very high, and the quality of primary care services is unacceptable.Even when resources and personnel are made available, most large government-run hospitals remain badly managed. In both sectors, well-designed national programs with adequate implementation flexibility have fallen far short of expectations when subjected to the field test of implementation.Conclusion:As aptly summarised and put eloquently Dr. Raghuram Rajan said in his C. D. Deshmukh lecture, delivered in January 2016: “It is possible to grow too fast with substantial stimulus, as we did in 2010 and 2011, only to pay the price in higher inflation, higher deficits, and lower growth in 2013 and 2014”[6][6][6][6]Giving up is not really an option. It is important to recognise that post-independence, India has survived and made progress on several fronts. Challenges remain because the problems have kept getting bigger and more complex with the relentless rise in population.It is where India is today and despite Modi making claims, we are unlikely to see significant progress even in next 10 years because we are shy to make the big changes that needs to be done.Footnotes[1] https://medium.com/conversations-with-tyler/a-conversation-with-dani- rodrik-e02cf8784b9d. [1] https://medium.com/conversations-with-tyler/a-conversation-with-dani- rodrik-e02cf8784b9d. [1] https://medium.com/conversations-with-tyler/a-conversation-with-dani- rodrik-e02cf8784b9d. [1] https://medium.com/conversations-with-tyler/a-conversation-with-dani- rodrik-e02cf8784b9d. [2] http:// http://data.worldbank.org/country/india[2] http:// http://data.worldbank.org/country/india[2] http:// http://data.worldbank.org/country/india[2] http:// http://data.worldbank.org/country/india[3] http://img. asercentre.org/docs/Publications/ASER%20Reports/ASER%202014/National%20PPTs/aser- 2014indiaenglish.pdf.[4] http://www.dnaindia.com/academy/report-only- 10-fresh-graduates-and-25-mba-passouts-are-employable-says-tiss-study-1455242.[5] http://planningcommission.nic.in/reports/ genrep/rep_uhc0812.pdf.[5] http://planningcommission.nic.in/reports/ genrep/rep_uhc0812.pdf.[5] http://planningcommission.nic.in/reports/ genrep/rep_uhc0812.pdf.[5] http://planningcommission.nic.in/reports/ genrep/rep_uhc0812.pdf.[6] http://Dr. Raghuran jan 2016[6] http://Dr. Raghuran jan 2016[6] http://Dr. Raghuran jan 2016[6] http://Dr. Raghuran jan 2016

Indian Navy (IN) chief Admiral Sunil Lanba, who is on a four-day visit to Britain in March 2019 said China's growing presence in the northern part of the Indian Ocean is a challenge for India but New Delhi is keeping a close eye on the deployment of Chinese ships and submarines in the region. He however did not say by ‘keeping close eye’ on Chinese vessels, what Indian Navy will achieve and what more IN can do in Indian Ocean region (IOR) to keep China at bay. No nation has invested as much as China in shipbuilding and its presence and deployments... it is here to stay, he said. We all know that China maintains 7-8 vessels in IOR region at any time but if they deploy nuclear submarines and aircraft carrier, the situation will turn ugly. Let's look at some improvement areas of IN.An agreement inked in January 2004 between India and Russia had earmarked only $974 million for aircraft carrier Vkramaditya but final price was $2.33 billion and few years delay in delivery. During trial run one of its engine failed out of eight, leading to rework and delay. Despite high cost, it came without any protective missiles against incoming missiles and Barak-8 will be deployed for its own protection in future. Despite many initial teething problems, Vikramaditya is a giant leap in terms of aircraft carrier technology in terms of previous Indian carrier Vikrant-1 and Viraat ( both decommissioned) . Vikramaditya is larger carrier and has Mig-29K jets on its deck which much lethal than older smaller Sea Harrier jets used earlier. But there are many problem with Russian Mig-29K jets. CAG report says since induction in February 2010, 40 engines (62 percent) of twin-engined MiG-29K have been withdrawn from service/rejected due to design-related defects and the serviceability of the warplanes was low, ranging from 21.30 percent to 47.14 percent. Hence most Vikramaditya photo available on internet / public domain shows the ship without any jet planes on its deck. What is the point of buying and sailing this big carrier which can’t defend itself and has no attack jets on its deck? Compare USA super carriers which always have huge numbers of jets on its deck.Russia brought its only Aircraft Carrier Admiral Kuznetsov in Syrian conflict in 2016 but it failed miserably. On Nov. 14 2016, one of the carrier's Cold War-era Mikoyan MiG-29KR naval multirole fighters crashed into the Mediterranean Sea shortly after take-off in the aging carrier's first bombing mission against anti-Assad rebels. The accident was as a result of an equipment fault during an approach for deck landing using arrester cables. The failure of Kuznetsov's arresting gear system has forced the Russian Navy to remove all its fighters from the carrier and station them at the Humaymim Air Base in Latakia province, Russia's largest air base in Syria a few days later. The Admiral Kuznetsov caught fire during a previous deployment to the Mediterranean in 2009, an incident that killed one sailor. Her condition was so pitiful then, Russian tugboats had to escort her in case her engines broke down.China carrier Lioning started SCS patrolling to defy ICJ ruling and speeding up new carrier development.China plans to build six aircraft carriers with two deployment in Indian Occean. Second carrier will start operations from mid 2019.Compare US nuclear Aircraft Carriers (clockwise from top left - USS Nimitz, USS Carl Vinson, USS John C Stennis & USS Ronald Reagaon) loaded with warplanes and Indian Aircraft Carrier Vikramaditya (which is mostly floating empty).This incident should be a wake up call for INS Vikramaditya. Indian Navy has many problem which also includes aircraft carrier. In comparison to China, India had huge advantages on using aircraft carriers since 1960s but alas, that advantage is fast depleting now. China started using aircraft carriers only in 2014 and building two home made carriers and one on them is under sea trial despite starting its construction as alate as 2014. Chinese carriers will became active despite their late start as compared to Indian indigenous carrier Vikrant-II. Other problem of Indian Navy is frequent accidents which now makes frequent international headlines. INS Betwa on 5th December 2016 tipped over while undocking at the Mumbai dockyard. The Betwa is an indigenous 3,850 ton ship that is now lying on its side. It is armed with anti-ship missiles, surface-to-air missiles, This is a mega disaster which rarely happens any any Navy. No Navy officer resigned nor any major inquiry initiated on this lapse.On 14 August 2013, the submarine INS Sindhurakshak sank after explosions caused by a fire on board when the submarine was berthed at Mumbai. The fire, followed by a series of ordnance blasts on the armed submarine, occurred shortly after midnight. The fire was put out within two hours. It is unclear exactly what caused the fire. Due to damage from the explosions, the submarine sank and was partially submerged in 15 metres deep water. The disaster was thought to be the Indian navy's worst since the sinking of the frigate INS Khukri by a Pakistani submarine during the 1971 war. On 26 February 2014, INS Sindhuratna, another Kilo-class submarine, had a fire detected on board when trials were being conducted which resulted in smoke leading to suffocation and death of two officers. According to the naval board of inquiry, the fire was caused due to problems in the cables of the vessel. This particular incident led to the resignation of Naval Chief Admiral D K Joshi.It happens only in India: Navy battle ship turning turtleThere is no improvement in accidents after resignation of Navy chief. INS Chakra, the nuclear submarine leased form Russia is out of order. The controversy stared when Russians complained that American personnel boarded the nuclear submarine against the protocol. India rejected the claim saying officials were British and not Americans. Subsequently it was reported that INS Chakra hull was damaged during a training mission near Vizag port. Russia subsequently demanded Rs 125 crore to repair the sub! And if India refuses to pay this, the sub will remain grounded and its 10 year lease will expire without much action. Unlike the earlier 10 year lease of Russian nuclear submarine, this second lease has gone terribly wrong.One of the biggest naval accident is related to indigenous nuclear sub Arihant propulsion compartment was damaged after water rushed in when a hatch on the rear side was left open by mistake. Since the accident, the submarine has been undergoing repairs and clean-up. Besides other repair work, many pipes had to be cut open and replaced. "Cleaning-up" of a nuclear submarine is a laborious task that requires a lot of effort, money and time. Arihant may remain out of service for a year. Why nobody was punished for this silly blunder? Why the sub Arihant was launched secretly unlike INS Kalvari? Most of the Navy boats are Russian origin. Series of accidents suggests internal sabotage or lack of co-operation from Russia.The Navy desperately requires 147 multi-role helicopters (MRHs) with anti-submarine warfare capabilities, without which its warships are virtually defenceless against enemy submarines, and 110 twin-engine naval light utility helicopters (NUHs) to replace obsolete single-engine Chetaks. The initial procurement of 16 MRHs, with an option for eight more, has not materialized despite being granted the acceptance of necessity way back in 2005. The global tender for this project issued in 2008 is now on the verge of being scrapped, with cost negotiations with helicopter-manufacturer Sikorsky (acquired by US armament giant Lockheed Martin) remaining deadlocked. India may sign part of the chopper deal by October 2019.With the armed forces overall requiring around 1,200 helicopters of different types over the next 10-15 years to replace aging fleets at an estimated cost of over Rs 1.5 lakh crore, sources say the tri-Service Integrated Defence Staff has also formulated a consolidated helicopter acquisition strategy under the Defence Procurement Procedure-2016.Senior Indian Navy officers were quoted by Indian media as saying the navy's 15-year modernization plan will need $123 billion. The aim of this modernization plan is to make the Indian Navy the uncontested dominant naval power in the Indian Ocean, which will become an "Indian Lake" when the Indian Navy becomes strong enough to enfeeble both the Pakistan Navy and the People's Liberation Army Navy (PLAN). A lack of money stands in the way of this aim, however.Navy sources said the navy will need to receive $8.5 billion a year to attain this aim. The navy, however, is currently receiving only $3 billion annually, and 95 percent of this amount is already committed. That means only $153 million can be spent on new defense programs, including force modernization. The navy's long-term plan calls for 198 warships by 2027, of which 120 should be "capital warships," which will include large, offensive combat platforms like aircraft carriers, destroyers, frigates, corvettes, and submarines.Against this requirement, the Indian Navy has just 140 warships today, of which barely half are capital warships. India's naval might is directed against China, and analysts believe China must assert control of the Indian Ocean for it to become the pre-eminent global superpower supplanting the United States. China do not want to directly engage with Indian Navy as they are more focused on US navy. China strengthening Pakistan Navy to take on India.Defence minister Jaitley: We have this much for Indian Navy budget. Indian Navy Kolkata and Delhi class destroyers have only 32 VLS while Chinese 052 and 055 destroyers have 64 and 96 VLS.In 2015, China said India can no longer consider the Indian Ocean its own backyard, a statement equivalent to flinging down the gauntlet. India responded with the modernization of the Indian Navy. China declared that they plan to make six aircraft carriers as part of force projection and two carriers will be deployed in Indian ocean. India’s domestically built aircraft carrier Vikrant II was laid in year 2009 and launched to water in August 2013 by the defence minister AK Antony. Seeing this event, China planned to build its own home made aircraft carrier which was launched in April 2017. It seems China will be able to commission its third home made carrier (construction started) much before Indian carrier despite starting much late. This shows the difference in speed and capability of Indian shipbuilding. India need to buy defence ships and submarines from country like Japan, South Korea etc. who has advance shipbuilding.The Indian Navy needs to expand its footprint to be a stabilising force in the Indian Ocean Region, Chief of the Naval Staff Admiral Sunil Lanba said during a four-day-long Naval Commanders Conference in May 2017. The conference was attended by Foreign Secretary S. Jaishankar besides Army and IAF chief. The Commanders also reviewed the security measures and mechanisms for coastal defence, infrastructure, force development and logistics support management and the Indian Navy's readiness to deploy over the entire range of missions in the maritime domain. This is what top military commanders do, attend conferences, give lectures, sulk seeing advirsory has become five times bigger when big money is not available for military asset buildup. PLAN currently (2016) operates 490 ships and 700 aircraft. Its sea going surface warships that can battle with India include a aircraft carrier, 32 destroyers, 51 frigates and 32 corvettes. PLAN operates huge 68 submarines, both conventional and nuclear. They also have smaller 109 boats like missile boats, gunboats, minesweepers (China has 100 minesweepers but India has only 4 which will retire by 2020 with no replacement planned yet), landing ship, replenishment ships, tank landing ships, amphibious transport doc etc.Navy’s latest attack weapon Brahmos and defence weapon Barak-8PLA Navy’s latest destroyer 055 and second aircraft carrier. China builds 8 ships if India makes 1.

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