“The deal reflects China’s intention to play an enhanced role across the region that has been a strategic preoccupation of the United States for decades.”
“It is widely believed that the deal between Iran and China carries more geo-strategic importance than having geo-economic implications.” Many predict the 25 year deal between Tehran and Beijing to enable both sides to advance their policies across the region through mutual cooperation.
The China-Iran agreement will enable Iran to focus on economic revival as it deals with the impact of crippling U.S. sanctions. The deal could deepen China’s influence in the Middle East (West Asia) and undercut the U.S. efforts to keep Iran isolated.
Talat Shabbir, the Director of China Pakistan Study Centre at the Institute of Strategic Studies in Islamabad shares his views.
Q: How do China’s neighbours see Beijing’s economic rise? How could China succeed to reach such a level of development?
Talat Shabbir: China is the world’s largest manufacturing economy and the world’s largest trading nation. China is also investing overwhelmingly in overseas infrastructure and development projects across the world as part of its Belt and Road Initiative. According to a survey conducted by the Pew Research Center, a large majority of people particularly, in emerging markets, have a positive attitude toward China’s economic stature.
Generally, People see China’s economic rise as a positive sign for their country and believe China is having a positive influence on their country’s economic affairs. According to the same survey, even China’s neighbours and its peer competitors in the region look at China’s economic rise as a good thing for regional economic stability and prosperity.
Since the introduction and implementation of market reforms in 1979 and the integration of its economy with international markets, the Chinese economy continued to grow with an average GDP growth rate of 9.5 percent over the decades. In an effort to wake up a dormant economic giant, it encouraged the emergence of rural enterprises and private businesses, free trade and investment, capitalising on the industrial sector and the education of its workforce.
Moreover, China has set a future vision to further embolden its economic growth in the future. The Chinese government has placed innovation at the top in its economic vision, such as “Made in China 2025,” a plan announced in 2015 to upgrade and modernise China’s manufacturing in key sectors through extensive government assistance.
Q: What Opportunities can China provide for Asian Countries?
Talat Shabbir: In the past four decades, the Chinese economy has been more focused on industrialisation and manufacturing, as once it was predominantly focused on agricultural one and is now increasingly service-oriented. China’s rapid growth has surely served as an important instrument in connecting economies across the region and supporting the rise of a greater Asia.
China’s rapid growth, its trade expansion, and increased inflows of FDI have influenced the Asian economy massively. China’s ambitious Road and Belt Initiative (BRI) would further embolden regional production and transportation chains across Asia.
As the BRI reduces the obstacles in the way of movement of goods and services, factors of production are dropped further. Thus, Asia would integrate more with each other as well as with the global economy.
Q: How do you evaluate US – China trade row? Is the U.S. capable to contain China?
Talat Shabbir: China’s economic and political power rise has made it the main U.S. rival. China’s economic rise has first led to a trade war between both countries as the trade deficit widened. This has impacted the supply chain, threatening new and ongoing foreign direct investment.
The U.S. faces a $436 billion trade deficit with China. Therefore, under the pretext of reducing this gap, the U.S. imposed additional tariffs on imports coming from China. As a result, China adopted a tit-for-tat policy and retaliated against the U.S. with the same and equal strength. The Trump administration commenced and intensified this trade war with China.
Now, the Biden administration is pursuing more aggressive policies against China. Washington continues to retain the world’s largest and most capable military force. But the present doctrine, which assumes that America will continue to dominate every region across the world, is no longer realistic.
At present, China is still developing its advanced military capabilities to compete with the U.S. military might, but the U.S. and economic interdependence with its allies, (be it with Germany, UK, France, South Korea, or Japan) lags behind the Chinese economic potential, which gives China the upper hand vis-à-vis the U.S. The group of seven (G-7) split on Biden’s anti-China push also implies the U.S. failure to build consensus among European powers against China because if the democratic world pushes against China, it would be a loss-loss for all.
Q: Do you think China can lead the global economy in near future? Don’t you expect emerging Asian powers, like India and Turkey, to form a coalition with China?
Talat Shabbir: Chinese history was marked by foreign occupation and a prolonged civil war in the 20th century. This experience has fuelled its strong desire for attaining ‘Great Power’ status. China is now a major economic powerhouse that has built up impressive foreign currency reserves and is slated to be the world’s largest economy by 2028.
China recognised the fact that economic reform is the only way to gain the status it wishes on its own terms. China’s economic growth and its expanding FDI across the world is an unprecedented phenomenon. It infers that greater economic transformation has led Beijing towards the status of an economic leader of the world.
Recent developments in Sino-India relations portray two pathways for the future bilateral relationship. First, China and India relations are experienced profound challenges as both are expanding in South Asia and the Indian Ocean region.
It is imperative for India to manage its competition with China to find space for strategic growth. With Turkey, the current changing regional environment can lead to more convergences with China. Both are opposing aggressive U.S. policies in the Middle East (West Asia).
Q: How do you assess the 25-year Iran-China partnership? Can it curb the U.S. sanctions?
Talat Shabbir: China and Iran, signed a 25-year cooperation agreement to strengthen their long-standing economic and political relations. It comes on a special occasion, the 50th anniversary of the establishment of diplomatic relations between China and Iran. The deal articulated a plan for bilateral cooperation between the two countries.
The deal reflects China’s intention to play an enhanced role across the region that has been a strategic preoccupation of the United States for decades. It is widely believed that the deal between Iran and China carries more geo-strategic importance than having geo-economic implications.
The deal enables both China and Iran to advance their respective interests across the region through mutual cooperation. The China-Iran agreement will enable Iran to focus on economic revival as it deals with the impact of crippling U.S. sanctions.
The deal could deepen China’s influence in the Middle East (West Asia) and undercut the U.S. efforts to keep Iran isolated. But, at this stage, it is unclear how much of the deal can be implemented as the Iran nuclear issue remains a contentious matter.