Chinese president Xi Jinping was dreaming about reclaiming the lost glory of China by reviving the ancient silk route through the BRI (Belt and Road Initiative). The aim was to establish China’s dominance through economic hegemony in the world. The unreal and infeasible project is expected to cost around USD 4-8 trillion. Already swinging in the doldrums, the new economic partnership of the regional countries will prove to be the final nail in the coffin of Chinese economic hegemony.
Indo-Pacific Economic Framework
Announcing the new economic pact of the Indo-Pacific region for economic prosperity, in its press release the group stated that “We, the United States, Australia, Brunei Darussalam, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam of the Indo-Pacific region, acknowledge the richness and the diversity of our vibrant regional economy”.
Further, declaring the goal of the IPEF (Indo-Pacific Economic Framework), they stated that “We share a commitment to a free, open, fair, inclusive, interconnected, resilient, secure, and prosperous Indo-Pacific region that has the potential to achieve sustainable and inclusive economic growth. We acknowledge our economic policy interests in the region are intertwined, and deepening economic engagement among partners is crucial for continued growth, peace, and prosperity”.
Chinese hegemony at the centre
The grouping is directed against the Chinese predatory lending and port-hijacking diplomacy. With its vast manufacturing base, China has almost become the master of the global supply chain of goods. But the disruption caused due to covid -pandemic has taught a lesson to every country that the world cannot depend on a single state for its requirements of goods and especially in an autocratic country like China that does not work on rule-based order.
The IPEF, in its vision document, focuses on the supply chain & declares that “We are committed to improving transparency, diversity, security, and sustainability in our supply chains to make them more resilient and well-integrated”.
Further, targeting China for its bribing diplomacy to get economic projects, the IPEF commits to promoting “Fair competition by enacting and enforcing the effective and robust tax, anti-money laundering, and anti-bribery regimes in line with existing multilateral obligations, standards, and agreements to curb tax evasion and corruption in the Indo-Pacific region”.
IPEF will starve China of money
It is evident that providing an alternate option to China’s ‘development and financial projects’ has become important because China, in the name of development, tries to get the project by hook or crook. It is the result of its debt-trap and port-hijacking diplomacy that many countries have been forced to lease ports to the Chinese because they were unable to pay the high interest and even principal amount of the ‘joint developmental projects. And, Sri Lanka’s economic deprivation and default on the loan are the direct results of its relationship with China.
But the announcement of the new Indo-Pacific Economic Framework will give China a strong opposition to its aggressive diplomacy and break the monopoly of Chinese economic hegemony. Furthermore, it will starve China of money as the cooperation by IPEF on the line of businesses, logistics support, supply of raw material, process materials, semiconductors, critical minerals, and clean energy technology will almost diversify the foreign investment from China to other members of the group.
It is pertinent to note that the regional economic partnership of Indo-Pacific is RCEP (Regional Comprehensive Economic Partnership) involves China but not India or USA. The exclusion of China and inclusion of India & US speaks volumes about the IPEF. The inclusion of the world’s oldest and largest democracy will ensure reliability in the world’s supply chain management of goods and shift the investors’ eye towards other countries.
Moreover, India’s young population will provide a great manufacturing hand and US money will supplement the financial requirements. In a way, India will be the biggest benefactor of this grouping as, on one hand, the country’s youth will get better employment opportunities; while on the other hand, the growing Chinese aggressive diplomacy will have a break in the region.