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HOME » Politics » Opinions » Hit by Coronavirus, economically vulnerable China snubs all-weather ally Pakistan in FATF – all to placate India

Hit by Coronavirus, economically vulnerable China snubs all-weather ally Pakistan in FATF – all to placate India

Akshay Narang
by Akshay Narang
20 February 2020
in Opinions
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PAkistan, FATF, Coronavirus, Imran Khan, china, Modi, Xi Jinping, China
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In what marks a major shift in Beijing’s stance towards Pakistan and Islamabad backed terrorism, China has issued a stern warning to Pakistan to complete its commitments on action against terror financing and money laundering, given to the Financial Action Task Force (FATF). 

China’s warning comes at a time when the Paris based anti-terror financing watchdog is all set to retain Pakistan in its greylist. The dragon has nearly always backed Pakistan at the FATF, but now it has dumped its all-weather ally Pakistan altogether. Its decision to dump Pakistan primarily on two grounds. 

Firstly, it cannot keep supporting Pakistan-backed terrorism forever. China-Pakistan relations are based on geopolitical considerations, whereas India being a rising economic power, China cannot afford to upset New Delhi for very long. 

Moreover, the issue of cross border terrorism is a big concern for India and PM Modi. Even at the Mamallapuram Summit between Jinping and PM Modi last year, the two leaders shared the concern of the “common threat” of terrorism. This seems to have laid the foundation for a shift in Beijing’s stand towards Pakistan. 

Pakistan failed to honour most of the commitments it had undertaken with the FATF. In fact, Pakistan had the audacity of declaring that Jaish e Masood chief, Masood Azhar went missing ahead of the FATF meeting. It was pinning its hopes on its all-weather ally China to help it out. 

But China has time and again shown the tendency of relenting after making all possible attempts to bail out Pakistan over the issue of terrorism. In 2018 too China had withdrawn from supporting Pakistan at the FATF. 

Last year too, China had also relented on the issue of designating JeM chief Masood Azhar as a global terrorist after supporting Pakistan over the issue for a considerable time. 

Secondly and more importantly, China understands that battling the Coronavirus epidemic that has almost taken the shape of an apocalypse, it cannot afford to upset India. 

China’s export-dominated economy is close to facing a massive, unrelenting slowdown if the world does not stand with it and make exceptions for it. As such, Beijing must be expecting India to show some goodwill towards it. 

Currently, China’s big cities are under lockdown. Chinese industries are going to be hit hard by the current crisis triggered by the Coronavirus infection. By some estimates, its economic growth is set to drop down to 3.5 per cent due to the airborne disease. 

The rest of the world, including its trading partners, is looking at China with suspicion. The country stands the risk of getting isolated which doesn’t augur well for the Chinese economy, whose stability depends largely on exports. 

At a time when China’s industries and export sector are facing a lot of trouble, other countries, particularly India are facing a shortage of raw materials for their manufacturing sector, from smartphones to automobiles and pharmaceuticals. 

But as India’s companies face paucity of Chinese raw materials, many other countries in the region and the globe might try to replace China and offer India with a substitute for Chinese raw materials and products. 

India itself might think of encouraging its local producers, and any misadventures by China would have pushed India further to find a replacement to Chinese products. 

As such, countries like Vietnam had tried to make full use of the trade war in order to challenge China’s hegemony in manufacturing and exports. India too saw an opportunity to make the most out of the US-China trade tensions. 

Now, with Coronavirus weakening China’s position, there is no reason why countries which have always wanted to replace China’s status as a humongous economic bloc won’t try to emerge as big producers in the current context. 

India could be looking to shift its reliance on Chinese products permanently, something that could hurt the Chinese economy in a big way. China’s products at threat of being boycotted given the Coronavirus contagion. By the time, China gets over Coronavirus, other countries, including India, might have found permanent substitutes to the Chinese products and raw materials. 

Given India’s trade deficit to the tune of $56.8 billion with China last year, and now if Beijing were to lose out substantially on its massive trade surplus with India then it could prove a huge blow for the Chinese economy which is already facing a major drag owing to the Coronavirus. 

Recently, China removed several trade tariffs on goods imported from the United States in the background of a slowing Chinese economy and an ailing manufacturing sector, along with weakening exports on account of the Coronavirus that has hit the country. 

China understands that it will have the placate the US and India if it wants to bounce back after it gets over the Coronavirus. It might feel that if it supports India over the pertinent issue of cross border terrorism, India could shower goodwill towards Beijing.

New Delhi might lift travel restrictions that it has imposed upon China, which China may pick up as a major PR exercise for its industries and exports. Coronavirus and an ailing economy might, therefore, be at the centre of Beijing’s shift in its stance towards Pakistan at the FATF. 

Tags: ChinaCoronavirusFATFImran KhanModiPakistanXi Jinping
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