Tom Arms’ World Review – China, the space race, India’s fading democracy and the Biden stimulus

In this weekend’s world review, Tam Arms opines that Joe Biden’s economic stimulus package will boost the world economy. A new space race is underway much of it led by Russia and China, and of course Elon Musk. Tom also talks about the Covid-19 vaccine controversies, overstretched health services across the world and the countries that are luring us with holidays. A thinktank has downgraded India – once trumpeted as the world’s biggest democracy – to an “electoral autocracy”. Back to China again with Tom’s review of the annual National People’s Congress.

The American economic engine is on the tracks and ready to roll

And President Joe Biden’s $1.9 trillion economic stimulus package will be pulling a big chunk of the world economy with him. For a start, it is only part of the American pandemic spending which totals $10.5 trillion if you include $2.5 trillion pumped into the economy by the Federal Reserve Bank. There is now something like $1.6 trillion in American savings banks just waiting to be spent by eager consumers on holidays, foreign goods and fancy restaurant meals. But it is not all good news. The danger is that the American economy could easily overheat, resulting in inflation and higher interest rates. And the American stimulus package can drag the rest of the world into inflation just as easily as it drags it out of recession. This could create severe economic problems as most governments have borrowed heavily based on the premise that interest rates were low and would remain so for the foreseeable future. At the moment the world is thanking President Joe, but it may in the not too distant future by damning him.

The UK-EU Covid vaccine dispute continued this week

European Council President Charles Michel claimed that Britain had “outright” banned the export of Oxford’s Astra Zeneca. Wrong, said 10 Downing Street. The EU just did a lousy job negotiating contracts. This angry cross-channel exchange was followed by a summoning to the British Foreign Office of EU charge d’affaires Nicole Mannion. He was told to pass on the message that EU leaders should stop whining. Whining was the operative word in Brazil where President Jair Bolsonaro told his countrymen to “stop whining” about the growing toll of dead Brazilians. On Tuesday of this week, Brazil logged a record of 1,972 new cases of coronavirus, giving it the second highest total after the United States. Eighty percent of Brazil’s intensive care beds are now occupied. In France, the hospitals in the Paris region have been told to reduce non-Covid treatments by 40 percent in order to free up staff and beds. The number of cases and deaths in Britain – where nearly a quarter of the population has received the first dose of the vaccine – is dropping. But scientists warned this week that cases could spike again in the summer before a big drop in the autumn. This, however, has not stopped Europe’s tourist hotspots from planning to reopen for the summer holiday season. Spain, Portugal and Greece have all announced that they are open from business for British holidaymakers from May as long as they have had two jabs. Economic and political basket case Lebanon is a different story. Politicians commandeered limited supplies of the vaccine for themselves and their families. They claimed they were essential workers. The World Bank disagrees and is planning to stop a $34 million emergency loan it extended to help pay for the vaccine.

This week the American Think Tank Freedom House downgraded India from a free to partly free country

This is a blow to all those who pursue democratic government in developing countries. Since independence, India’s proudest boast is that it is “the world’s biggest democracy.” The vision of Gandhi and his acolyte Jawaharlal Nehru faced virtually insurmountable problems in achieving that vision. There were, of course some failures. Pakistan, Bangladesh and the ongoing dispute over Jammu Kashmir to name but a few. But Nehru also managed to unite more than 500 different states in which something like 415 languages were spoken. They became one country united by the principles of secularism and democracy. From the start, Nehru recognised that secularism was essential if democracy was to work India. The problem was that roughly 80 percent of the population is Hindu, 15 percent is Muslim, three percent Christian and two percent Sikhs. Each of these religions have their own languages, traditions, cultures and histories going back centuries. The Christian community, for instance, dates to the first century and the apostle St Thomas. But to the majority Hindus, India is a Hindu nation just as Pakistan is Islamic. And as a Hindu nation it should reflect traditional Hindu values. The ruling BJP (Bharitaya Janata Party) led by Narendra Modi is a Hindu Nationalist Party committed to Hindutva or Hindu Nationalism. But the only way Hindus will achieve the political/cultural/religious supremacy they want is by suppressing the minorities – especially Muslims. This they are doing. According to the Washington-based Freedom House, the BJP government has abandoned secularism to discriminate against Muslims and pursue pro-Hindu policies and is cracking down on anyone in the media, academia and civil organisations prepared to protest. A week after the Freedom House report a Swedish think, V-Dem Institute, added their critical voice. India, it said, is now an “electoral autocracy.”

There is lots to discuss from China’s annual National People’s Congress

High on the agenda were electoral changes in Hong Kong, increased defence spending, the continuing drive for economic growth, Taiwan, Relations with the US… But to my mind one of the most important and least discussed are the pronouncements regarding Chinese law because the law underpins relations between all sections of Chinese society and China’s relations beyond its borders. Chinese law finds its roots in Confucianism and Daoism, both of which stress evolving consensus. This is different than Western law (which is primarily based on English Common Law) which stresses the immutability of the law and contracts. The different starting points between the two systems is one of the main reasons that there are so many disputes over Intellectual Property Rights and other issues between Chinese and Western companies and governments. From the Western point of view, a contractual agreement is the be all and end chiselled in stone and the final determination on all future relations. For the Chinese it is the starting point. At the NPC, Xi Jinping made it clear that he wants Chinese law to become the determinant basis for agreements inside and outside China. As part of this policy, he is moving more Chinese law firms into Hong Kong which up until now has been a bastion of English Common Law and contract law in China. XI faces considerable opposition outside China and if he insists too much on the prominence of Chinese contract law, he will find himself losing business.

The next chapter in the space race is well and truly underway

It was given a boost this week by the announcement that China and Russia intend to build a space station on the moon. But the even bigger prize is Mars. Billionaire Elon Musk is planning a commercial flight to the Red Planet as part of his incredibly expensive project to start colonising Mars in just three years. NASA is a bit less ambitious with a proposal for a straightforward manned Mars landing sometime in the 2030s. It will be preceded in 2025 by a manned landing of an astronaut on an asteroid and a man and woman landing on the moon. China is coming up fast. Beijing plans to be on the moon in the 2040s building their space station with the Russians. Coming up in the outside lane of the space race is the United Arab Emirates. Their programme only started in 2015 and last month they managed to put a satellite in orbit around Mars. They want to build a station on Mars early in the 22nd century. Whoever reaches the fourth planet from the sun will be expected to abide by the verbose “Treaty on Principles Governing the Activities of States in the Exploration and use of Outer Space, including the moon and celestial bodies” (aka The Outer Space Treaty). The key provisions are that the environment of the moon, Mars, etcetera must remain “pristine”; weapons of mass destruction are banned; all countries have equal rights to conduct research and no country may claim sovereignty.

* American expat journalist Tom Arms is LDV's foreign affairs editor and author of the forthcoming book “America: Made in Britain.”

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8 Comments

  • John Marriott 14th Mar '21 - 8:55am

    Let’s face it, the world’s gone MAAAAAAAAAAAAD!

  • Charles Smith 14th Mar '21 - 12:38pm

    China’s ceremonial legislature on Thursday endorsed the Communist Party’s latest move to tighten control over Hong Kong by reducing the role of its public in picking the region’s leaders.
    The measure adds to a crackdown against protests in Hong Kong since 2019 calling for greater democracy. That has prompted complaints Beijing is eroding the autonomy promised when Hong Kong return to China in 1997 and hurting its status as a global financial centre.
    The National People’s Congress voted 2,895-0, with one abstention, to endorse changes that would give a pro-Beijing committee power to appoint more of Hong Kong’s lawmakers, reducing the number elected by the public. Delegates routinely endorse party plans by unanimous vote or overwhelming majorities.
    https://worldabcnews.com/china-moves-to-tighten-control-over-hong-kongs-electoral-system/

  • Paul Barker 14th Mar '21 - 1:31pm

    I really like these Reports, its good to lift our eyes above the headlines.
    However, I wonder if future articles could be divided into separate posts for each subject, it would make it much easier to comment.
    Todays is a case in point, I would actually like to respond to 3 of the subjects but that means 3 comments or a ridiculously long essay.

  • Paul Barker 14th Mar '21 - 5:09pm

    Space is The Place
    This topic feels personal to me, the first Space Race coincided with my childhood & now my Daughter works for The European Space Agency.
    The New Space Race is probably useful, Manned Space Exploration is too long term for most Politicians & Voters to get a handle on & Competition between an Alliance of Democracies on one side & Dictatorships on the other brings Space “down to Earth”.

    I am hoping that this New Space Race will last long enough for The Moon Base at least to begin to “pay for itself”.

  • Joseph Bourke 14th Mar '21 - 11:18pm

    I caught a little bit of Nancy Pelosi’s speech about the US stimulus package today on America this week. She was as impressive as usual. The economist leader covers the package this week calling it ‘Biden’s big gamble’, echoing the points Tom Arms make. The french economist and former chief economist at the IMF, Olivier Blanchard, spelt out his concerns last month https://www.piie.com/blogs/realtime-economic-issues-watch/defense-concerns-over-19-trillion-relief-plan
    Having listened to the Nancy Pelosi speech, I think Blanchard’s concluding comments that political imperatives rather than calibration of economic growth was the principal driver of the fiscal decisions here.
    “There are the political realities: a window of opportunity that may close in the future, the advantage of a hot economy during the midterm election season, the notion that sending Americans anything less than $1,400 dollar checks would be reneging on a promise”

  • Caron Lindsay Caron Lindsay 20th Mar '21 - 9:50am

    @Paul

    I don’t mind if you make comments on each of the aspects of the report, but this is meant to be a world round up column so it doesn’t make sense to split it up.

  • Peter Martin 20th Mar '21 - 11:07am

    If the more ardent Brexiteers wanted an I-told-you-so argument about the EU they couldn’t have wished for a better one than the mishandling of their vaccines program.

    To compound their problems of failing to provide adequate supplies, which to some extent can be attributed to some bad luck, they have managed to undermine public confidence in the supplies they do have. They have a large stockpile of vaccines that they haven’t deployed and at the same time they are being hit by more contagious Covid variants.

    France’s previous policy of refusing to administer the AstraZeneca vaccine to anyone over 65 has since been replaced by one saying it was unsuitable for under-55s. So presumably the French think there is something special about the 55-65 year old age group?

    Even though corrections and clarificatons are issued, it undermines confidence in the whole vaccination programme. Many countries in the EU have a strong anti-vax movement and the mishandling of health scares plays into their hands. It has a negative effect everywhere else too.

  • Peter Martin 20th Mar '21 - 11:15am

    ” For a start, it is only part of the American pandemic spending which totals $10.5 trillion if you include $2.5 trillion pumped into the economy by the Federal Reserve Bank. There is now something like $1.6 trillion in American savings banks just waiting to be spent by eager consumers on holidays, foreign goods and fancy restaurant meals. But it is not all good news. The danger is that the American economy could easily overheat, resulting in inflation and higher interest rates.”

    An other way to put it is that Joe Biden is going to keep his foot hard down on the economic accelerator , the fiscal stimulus, and keep it there. If the bus needs slowing down he’ll pull on the handbrake ie the increase in interest rates!

    But if this is the advice of the economic mainstream, what is there to worry about? What can possibly go wrong?

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