Vimarsha on ‘Transition in America and China: Implications for India’

7/30/2019 Vimarsha on Transition in America and China: Implications for India

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Transition in the American and

ChinaImplications for India


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1.Political Transition in the USAnalysis


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I.US 2012 Elections Turn-out

Voters Turnout DROPPED from62.3% of the eligible voters in 2008elections to 57.5% in 2012(estimated). (Bipartisan PolicyCenter, 2012).

Despite an increase of 8 millionperson in the eligible voters fromthe 2008 elections, the turnoutdeclined from 131 million voters in2008 to an estimated 126 million in2012.

Figure: The Dip at the end of theVotes line indicate the fall in

Turnout. Some analysts are attributing the

lower turnout to the failure of theRepublican ticket to energize theirbase, and hence the reason fortheir loss.


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II. Demography: 1.GenderAt the national level, as estimated in the exit

polls: Of all the Voters, 47% were male and

53% were female. Of all the male Voters, 45% voted for

Obama, while 52% voted for Romney

Of all the female Voters, 55% voted forObama, while 44% voted for Romney By estimated figures, based on Sex,

Obama got an extra 3 million votes fromWomen. Abortion was the main issue thistime, and the Democratic position on thishas traditionally been more appealing for

women. Remarks about legitimaterapemade by two Republicans, Todd Akinand Richard Mourdock, in the US Senateraces, further spoilt the appeal of theRepublicans.


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II. Demography: 2.Age

Clearly, Obama won by alarge margin over theRepublican Candidate,Romney, among the youth(18-39 years).

Romney won over Obamaamong the elders (40 andabove), but with a narrowmargin.

However, the youth (18-39

years) accounted for 36%(11+8+17) of the total votescast, while the elders (40years and above) for 64%.


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II. Demography: 3.Race Of all the Voters: 72% were White,

13% were Black, 10% wereHispanic/Latino, and 5% were Asianand Others.

Of the White Voters, 59% voted forRomney, while 39% Voted for Obama.

However, all other ethnic groups seemto have voted strongly in the favour ofObama. Immigration was important forHispanic voters and 71% Hispanicsvoted for Obama; African-Americansgave Obama over 90% of their vote.

Two major facts 1) Percentage of

White voters in the US elections hasdropped from 77% in 2004 to 75% in2008 to 72% in 2012. 2) In 2011,percentage of white new-borns out ofthe total new births went below 50%for the first time. Indicates the probablefuture trends for the US elections.


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II. Demography: 4.Income

Predictably, 60% of thepeople earning below $50,000 per annum voted forObama

Meanwhile, those earning$50,000 above preferredRomney by a narrowmargin

The positions on taxes ofthe two Parties played arole in this.

Polls repeatedly showedthat more people trustedRomney on the economy,but this did not translate intovotes, though it did in 2010.


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III. The Electoral College

The Electoral College is made up of chosen persons sent by eachState and DC to participate in the vote for the President and Vice-President. It meets in mid-December and competes the formality ofvoting for the two posts in accordance with the votes cast in theNovember election. The number of electoral college votes for a stateequals the number of Representatives and Senators. DC has three

electors. Thus, with 435 Representatives, 100 Senators and 3 electors from

the District of Columbia (under the 23rd Amendment of theConstitution), a total of 538 Electors. Thus one gets the total numberof votes in the Electoral College at 538, and the halfway mark at270.

Electors are generally chosen by the Presidential CandidatesPolitical Party, but state laws vary on how the Electors are selectedand what their responsibilities are.


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III. The Electoral College [contd.]

In most of the States, winner-takes-all system, i.e. all Electors of astate are awarded to the Presidential Candidate who wins a majorityin that state.

Only Maine and Nebraska use the congressional district method,selecting one Elector within each congressional district by popularvote and the other two Electors by a statewide popular vote.

After the Elections, the Governor of each state prepare CertificateofAscertainment. He/she lists all Candidates who ran for theelections along with their respective Electors and declares thewinning Candidates and the Electors from the state.

The winning Electors from each state meet in December of theElection Year and cast their votes for the President and the Vice-President in separate Ballots.

Electors prepare a Certificate ofVote from all states and send it tothe Congress. Votes are counted in a joint session of Congress on6th January in the year following the Presidential Elections and theresults formally announced.


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IV. Election Campaign Contributors

Barack Obama Mitt Romney

University ofCalifornia

$1,092,906

MicrosoftCorp

$ 761,343

Google Inc $ 737,055

US

Government

$ 627,628

HarvardUniversity

$ 602,992

GoldmanSachs

$ 994,139

Bank ofAmerica

$ 921,839

MorganStanley

$ 827,255

JP MorganChase & Co

$ 792,147

Credit SuisseGroup

$ 618,941


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IV. Election Campaign Analysis:Investment Banks

Goldman Sachs, which was the largest contributor toRomneys campaign was the 2nd highest contributor toObama Campaign during the 2008 Elections.

Most of the major Investment Banks supported Romney,even though the Obama Administration did a lot to helpthe banks through the TARP programme, launchedunder Bush but continued and enhanced by Geithner.

Attitude of the investment banks is a consequence of theDodd-Frank Wall Street Reform and ConsumerProtection Act introduced on July 2010.

Dodd-Frank Act and the Volcker Rule: RestrictsInvestments banks, whose deposits are federallyinsured, from Proprietary Trade. Strongly opposed by theMajor Wall Street banks.


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IV. Election Campaign: TheSoftware Edge

President Obama received support fromthe Software Major companies: MicrosoftCorp. and Google Inc. They had supported

him in 2008 too.

The US election system runs on IOUs,and we may expect that these companies

will moderate some of the anti-outsourcingstances among the Democrats.


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IV. Election Campaign Analysisand Observations

Obama, while receiving the maximumsupport from Software firms, has beenhammering these firms for having outsourced

jobs to India. Romney, who received most of his campaignfunds from investment banks, has beenhammering these too big to fail banks and

Obamas special treatment for them. Hypocrisy is not the monopoly of Indian

politicians.


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V. Second Terms of the US Presidents

Name Year; ElectoralVotes won for the1st Term

Year; ElectoralVotes won for the2nd Term

Dwight D.Eisenhower

1952; 442 Votes 1956; 457 Votes

Richard M. Nixon 1968; 301 Votes 1972; 520 Votes

Ronald Reagan 1980; 489 Votes 1984; 525 Votes

William J. Clinton 1992; 370 Votes 1996; 379 Votes

George W. Bush 2000; 271 Votes 2004; 286 Votes

Barrack H. Obama 2008; 365 Votes 2012; 332 Votes


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V. Second Terms of the US Presidents[contd.]

Since the end of the World War II, the 2012 USPresidential Election is the first time that aPresident has been re-elected with lowerElectoral Votes than in his first election.

President Obama had won 365 electoral votes inthe 2008 elections, while in the 2012 electionscould only manage 332 votes.

President Obama is also the few Presidentssince Franklin D. Roosevelt (during the 1930s)to have been re-elected with high unemploymentrates over 7%.


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SENATE 2008 Elections 2010 Mid-TermElections

2012Elections

Democrats 57+2*=59

*Independent

51+2*=53

*Independent

53+2*=55

*Independent

Republicans 41 47 45

HOUSE OF

REPRESENTATIVES

2008 Elections 2010 Mid-

TermElections

2012

Elections

Democrats 255 193 201

Republicans 175 242 234

VI. Senate and House ofRepresentatives: A Comparison


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VII. First Hindu in the US Congress

Democrat Tulsi Gabbard became the first Hindu-American to enter the US House of Representativesafter defeating the Republican Kawika Crowly inHawaiis 2nd Congressional District.

The 31 year old, Iraq war veteran, raised by aChristian father and a Hindu mother, will be takingher oath on the Bhagavad Gita.

A certain positive for the Hindus in America.Meanwhile, the Republican Crowly asserted thatTulsis religion is not compatible with the USConstitution.

How deep is secularism in the US? Cases of BobbyJindal and Nikki Haley.


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VIII. Is Obama stronger?

The short answer is yes. But there are caveats. The margin of victory is unconvincing, specially in

that his own victory margin is lower than in 2008.Also, compared to 2010, the Democrats have

improved their position slightly, but they have notundone what Obama himself called theshellacking of 2010.

He is stronger in that he can allow the fiscal cliff toraise taxes automatically, but there is also thematter of the debt ceiling. It is US$ 16.4 tr and willbe hit in early 2013. He needs the Republicans toraise this further.


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2. Transition in China

Analysis


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I. Communist Party of China: TheNumbers

2270 Delegates at the 18th National Congress ofthe CPC.

They selected/elected 205 full and 170 alternate

members of the Central Committee. Central Committee elects/selects 25 members of

the Politburo.

And 7 members of the Politburo StandingCommittee [PBSC].


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II. Standing Committee Members

1st

Rank: Xi JinpingParty Positions:

General Secretary of the CPC.

Chairman of the CPC Central MilitaryCommission

Pointers: June 2012, Bloomberg, revealed Xi Jinping

family amassing disproportionate andunexplained wealth.

18 years in Fujian insight into both militaryand economic aspects of China Policies.

Worked three years [1979 1982] in theCMC as aide to Geng Biao, Minister ofDefence and Sec-Gen of CMC.

Worked briefly as Party Chief in Shanghai,links with Jiang Zemin.


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2nd

Rank: Li KeqiangParty Position: Deputy Party Secretary of the State

Council of the PRCState Position: First-Ranked Vice-Premier of the State

Council of the PRC; will becomePremier, barring the unforeseen.

Pointer(s): Protg of Hu Jintao, links going back to

Communist Youth League. Ranks higher than outgoing Premier,

who was third-ranked in the StandingCommittee.


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3rd

Rank: Zhang DejiangParty Position:

Party Chief in Chongqing, succeeded BoXilai, who was sacked and now facescorruption and moral turpitude charges.

State Position: Third-Ranked Vice Premier of the PRC

Pointer(s):

Holds Hilal-e-Pakistan award. Likely to be appointed Chairman of the

National Peoples Congress, given rank inthe PBSC.


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4th

Rank: Yu ZhengshengParty Rank: Chairman of the Chinese Peoples Political

Consultative ConferenceState Rank: [To be determined] Likely to be

appointed to head the CPPCC, given his

rank in PBSC

5th Rank: Liu YunshanParty Rank: Top-ranked Secretary of the Central

Secretariat of the CPC; head ofpropaganda department; worked for 20years in Inner Mongolia

State Rank: [To be determined]


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II. Standing Committee Members6th Rank: Wang Quishan

Party Position: Secretary of the Central Commission for

Discipline Inspection

State Position:

Fourth-ranked Vice Premier of the PRC

7th Rank: Zhang Gaoli

Party Position: [To be determined]

State Position: [To be determined]

All five lower-ranked members due to retire in

2017, replacements of the 5th and 7th ranked

members of the PBSC likely to be anointed

successors as General Secretary and Premier.


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III. Hu Jintao: Setbacks andAttempts at Retaining Control

Hu Jintao had to vacate the post of head of the Party CentralMilitary Commission. Reshuffled the top military staff beforeleaving the position. Placed close colleagues from the PLA inthe CMC in last months of his time.

Closest Aide Ling Jihua removed as the head of the generaldepartment of the CPC aftersons death in Ferrari Car Crash.Allegations that one of the SOEs paid money to the families offemale companions to buy silence being probed. Ling madehead of the United Front Work Department. Deals with the DalaiLama, among other issues.

Among other strong commitments, Hu holds firm views onTibet, where he made his reputation declaring martial law in1989. Hu Jintao selected Hu Chunhua, youngest Politburomember at 49 years. Speaks Tibetan. Groomed by Hu Jintao tomaintain, inter alia, hard line on Tibet and possible succession

to top job in 2022.


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IV. Hu Jintaos Work Report

Corruption Remarks: Ifwe fail to handle this issuewell, it could prove fatal to the Party, and evencause the collapse of the Party and the fall of thestate.

Need to restructure the economy current model

unbalanced, uncoordinated and unsustainable.China must find an alternative model, moredependent on domestic demand, speciallyconsumer demand.

Need to be able to Win a Local War in anInformation Age. Probable reference is to Taiwan.

Important reference to consultative democracy, firstsuch reference in such a major document. Theexperiment took place in Zhejiang Province when XiJinping was Party chief there.


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V. To Sum Up

Core Interests are non-negotiable issues for theCPC.

Include: Taiwan; Tibet; South China Sea And recently they have added the domestic

political system. Suggests there is little room forchange, though reference to onsultativedemocracy is noteworthy.

Despite the above points, there are seriouseconomic challenges as given in the Work Report;the social situation is precarious, with 180,000incidents of major unrest in 2011. Change isineluctable necessity.


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3. Implication for IndiaThe Changing Nature of the US-

India-China Relations


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I. International Economics in theGlobalised Age

there is a risk that the international diffusion ofthe U.S. recovery will not take place according tousual patterns, which might in due course hurt theU.S. economy itself, even if it is less dependent

than other industrialized countries on exportdevelopments. Traditionally a U.S. recovery hasfueled exports of developing countries, increasingtheir orders of equipment goods from countriessuch as Japan, Germany and France, and the

interdependence between European countries hasled to a diffusion in Europe of these expansionaryforces, thereby sustaining the world recovery.[Giscard dEstaing, Foreign Affairs, Fall 1983]


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II: Economic Dynamics: Foreign Direct Investment,Total Net (US $ million):

Source: Asian Development Bank

1990 1995 1997 1998 2003 2005 2007

Peoples

Republic ofChina

2,657.0 33,849.0 41,673.7 41,118.1 47,229.0 67,821.0 121,418.3

Republic ofKorea

-263.1 -1,776.2 -1,605.2 672.8 100.0 2,010.4 -13,696.7

India 96.0 2,143.0 3,562.0 2,480.0 2,388.0 3,034.0 15,545.0

Malaysia 2,332.0 6,642.0 6,787.7 2,708.0 1,103.7 995.8 -2,561.7

Thailand 2,402.0 1,183.0 3,298.0 7,360.0 4,614.0 7,545.0 7,819.4

Japan -48,968.9 -22,591.0 -22,767.8 -20,960.2 -22,477.6 -43,004.8 -50,999.5

Viet Nam 120.0 1,780.0 2,220.0 1,671.0 1,450.0 1,889.0 6,550.0

II Economic D namics Di ti f T d


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II: Economic Dynamics:Direction of Trade:Merchandise Exports (percent of total merchandise

exports)Source: Asian Development Bank

To Asia Europe North andCentral America

From 1990 2007 1990 2007 1990 2007

China, PeoplesRep. 67.7 40.8 14.7 23.5 10.0 22.9

Korea, Rep. of 34.0 51.4 15.5 16.1 33.4 17.5

India 21.0 32.6 47.2 23.4 16.3 17.6

Malaysia 58.0 57.0 16.6 13.5 18.1 17.3

Thailand 37.8 54.1 25.3 15.5 25.3 14.5

Japan 26.1 42.8 23.0 16.8 36.3 24.9

Viet Nam 39.1 36.8 48.1 23.1 0.6 25.0


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III. US-China Relations in theGlobal Economy

Dichotomy: While the Security aspects between the US andChina seem to be putting relations under strain, theireconomic equations have strengthened over the last twodecades.

The common notion that the US is dependent on China

economically must be questioned. In 2011, Chinese investment in US Treasurys was $1.3trillion. It has now dropped to $1.1 trillion. Meanwhile, theshare of investment by Japan, the UK, the Persian Gulf oilexporters and India, has increased.

$1.1 trillion investment is a big number, but for a US$ 16

trillion economy, it comes to just 6.85% of the US GDP, andthe same for its national debt. The US is not dependent onChinese money, and the trend of Chinese holdings isdeclining.


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III. US-China Relations [contd.]Foreign Holdings of US National Debt (US $ billion)

Source: US TreasuryCountry Jan 2011 July 2011 Jan 2012 Aug 2012

PR China 1154 1314 1161 1153

Japan 886 885 1082 1153

Persian Gulfoil exporters

215 244 267 263

India 40 40 42 52


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IV. Priorities: for America

The top priority is obviously the Economy. The fiscal cliffis an expressive term but there may be less to it thanmeets the eye. A reversion to Clinton-era tax levels andacross-the-board spending cuts may cause a short-termrecession, but would right the fundamentals. Even

Greenspan has said something similar recently.

The foreign policy concerns are China & the APR,Afghanistan-Pakistan, and the Middle East.

The strategies proposed by the Obama Administrationfor all three are likely to be reinforced after his re-election. The pivot to Asia emphasizes the criticalimportance of India as a strategic partner.


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V. Priorities: for China

Economy: the main point has been quoted from theWork Report; the model has been dependent on highinvestment, including FDI, high and rising exports, andcheap labour. All three are now giving diminishingreturns.

Corruption has also been mentioned. That, and Partydiscipline are real threats to the system.

Foreign policy: bleak outcomes after five years ofmuscular assertiveness India, Japan, Philippines,Vietnam, even Myanmar and North Korea looking

worrisome. Increasing focus on Af-Pak as one region of promise;

hence increasing attention as US draw-down nears.


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VI. Indian Priorities & Perspectives

Economy: betterstructurals than almost any other majoreconomy in the world. Principal requirement is to getfiscal deficit under control. Early steps offer hope.

External: India is called upon by the US and the Asia-Pacific allies to show greater participation in the SouthChina Sea and South-East Asian affairs.

However, the US and the Asia-Pacific allies need take aclear stand over the border security threats that Indiafaces from China [and Pakistan]. Political changes inChina are likely to increase these threats and thereforeIndia is justified in expecting the US and Asian partnersto address this issue.


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VII.Afghanistan: the next hotspot

On the one hand, China strictly opposes Al-Qaeda andits activities in Xinjiang. It has strongly pressurizedPakistan to control the terrorist groups from entering andinterfering in Xinjiang.

On the other hand, China has cooperated with the

Taliban from 1996 to 2001. Today, their attitude is similarto that of the Americans in the 1980s, who felt theycould use the jihadis against the USSR, and would beable to contain their hostility towards themselves, whichwas in evidence then too.

China is also confident that it can control Pakistan andits state support for the jihadis, and therefore feelsconfident enough to use the same forces against

America.

f


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VII. Afghanistan: the nexthotspot [contd.]

China signed Treaties of Friendship with Afghanistanand Pakistan in the period 2005-6, and Zhou Yongkangvisited Kabul shortly before stepping down from PBSC.

Extract from US-Afghanistan SPA: the parties shall

hold consultations on an urgent basis to develop andimplement an appropriate response, including, as maybe mutually determined, political, diplomatic, economicor military measures, in accordance with their respective

constitutional procedures. All of this suggests that there will be a determined

struggle over the future of Afghanistan. India is not well-positioned physically or mentally to play its due role.


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VIII. Indian Foreign Policy Choices

What we are seeing then is a distancing betweenUSA and China, both in the traditional securitysense, and in the economic engagement. Still earlyto form a definite opinion, but trend bears watching.

America has been open about the growing weight ofIndia in its strategic calculus, as brought out in the2012 Strategic Guidance and subsequentcomments by senior officials.

For China, India is important in one major negativesense: Tibet. That would be about the only thingthey need from us constant reassurance that weshall not be party to any unrest in Tibet.


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VIII. Indias Foreign Policy Choices

[contd.] However, of late, India is also important in the

economic sense. As Chinas trade surplus hasshrunk from $300b in 2008 to $155b in 2011, itssurplus with India has grown, and is now, at

$40b, about 25% of its total surplus on tradeaccount. As consumer spending slows down inEurope and in the US, India is one of the mostimportant growing markets.

Walmart buys $30b from China, compared toIndia which buys $50b.


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[contd.] Is nonalignment the answer? On the one hand,

America, with which we have just one real conflict ofinterest Pakistan.

On the other hand, China, with which we have a

serious border dispute. China is not even making aneffort to resolve this. Can we be nonaligned in this strategic setting? That

would be tantamount to being nonaligned with ourmost basic national interest.

Unless China moves seriously to settle the borderquestion, nonalignment would be the wrongresponse.


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[contd.] In the current setting, it is also essential for India also to

maintain close ties & understanding with other countries,the most important of which are Russia, France andIsrael. Iran is also vital for us, specially in the context of

Afghanistan.

On gaps in power: Chinas GDP is three times ours. Wenever stop to note that our GDP is nearly ten times thatof Pakistan; or that Chinas GDP is less than half that ofthe US.

Parallel facts regarding defence spending, or size ofmilitary.

No, the reason is not inherent weakness, but lack ofpolitical will.


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[contd.] We need urgently to see if we can agree on a

new platform for future relations with America.They have their exceptionalism, we have ours.Can the two be made compatible?

On the table: Pakistan, and Indias core interestsvis--vis China and Pakistan which Americamust agree to respect, publicly and with action;

American issues on the economy, civil nuclearcooperation, and the framework for deeperdefence cooperation.

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Vimarsha on ‘Transition in America and China: Implications for India’

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