Royal Flush with China in Afghan poker

China is damned lucky to get the strongest and best possible hand in the Afghan poker game. Called, Royal Flush, this is when a player gets cards in a standard five card game namely, ace, king, queen, jack and 10 all from the same suit. Taliban led Afghan is giving this royal flush to China. Here are the details:

Ace: China is ready to give a blank cheque where details could be filled in by Taliban. Whereas with Iran China negotiated 25 years US$ 400 billion deal, Afghan  is going to get the largesse may be the double the amount but for a  lesser duration. Not to forget the Afghan sits over approximately US$ 3 to 4 Trillion worth mineral and other resources. Mes Aynak Mine alone has the largest virgin copper deposit in the globe. China has already won the bid. Details to be worked out with Taliban to take it to logical conclusion.

King: Providing the sought after but alluding legitimacy that Taliban desperately wants but has become a bargain issue with the America led West. China accelerates the process of granting legitimacy, initially recognising Afghan sovereignty and giving assurance regarding non-interference in internal affairs of the country. Functioning as a bulwark for Afghan peace & development China has the wherewithal to stand with Afghan in the international forum and afford her diplomatic cover in case other countries try to impose sanctions via UNSC and other global institutions such as WTO. 

Queen: China gives access to Taliban on global setting where trade, finance and investment in geoeconomics are facilitated. Doha apart, China can arrange for seamless trade taking place to and fro Afghan via conduits like Pakistan & Iran, not to mention China itself and the adjoining Central Asian Countries. People’s Bank of China could also function as clearing & reserve bank in case Afghan institutions are firewalled by any sanctions. China led Asian Infrastructure Investment bank could also provide safety margin if finance from the West dries up.

Jack:  Peace & prosperity is the jack of everything in Geoeconomics power structure. Clear pathway to peace is the Afghan led & Afghan participated programme that has the potential to reconcile conflicting ideas and ethnic diversity towards national awakening. The good part in doing this can be played by an honest broker. In the Afghan horizon there is no country other than China who could fill this challenging slot. When peace breaks out in every nook and cranny of Afghan it is the prosperity which follows in earnest. A good handshake is to extend the China Pakistan Economic Corridor (CPEC) to Afghan as well. In principle, both Pakistan & China had agreed to do this. Now it is a matter of details for connecting the wires.

10:  Security vacuum is unsurmountable threat facing war torn Afghan in the post withdrawal phase. Already the alliance partners who invaded Afghan are talking about “over the horizon military manoeuvres” to push back any semblance of law & order taking root in Afghan. China is well-positioned to turn the table on these enemies in the shadow by offering membership in Shanghai Cooperation Organization (SCO). That is one thing.

The other is for China to canvas for full membership for Afghan in Russia led Collective Treaty Security Organization (CSTO. Incidentally at present Afghan is an observer state and elevating her as full member is a matter of course. Tajikistan is a participating member in CSTO and Tajiks form an important ethnic community in Afghan fibre and are fairly restless too. Tajiks are itching to play the role of spoiler; CSTO would put paid to this.

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

Fixing supply chain issues

Any unstable condition could impact business progress. Degree of such impact depends on how business strategy attempts to manage geoeconomics imperative. Recently due to Covid 19 entire globe got entangled in the longest and largest geoeconomics crisis: supply chain issues and how it can be managed.  Here are few hot takeaways:

To begin with, information management went awry at the outset of the pandemic. Already there had been no proper planning as regards to collecting and collating data regarding demand & supply movements. The lesson learned in the latest pandemonium was the urgent need to establish centres for doing this job on country wise and global basis. Unless demand is accurately forecast no business can venture into producing items that would later remain unsold. Equally important is the ability of taking into count changes taking place in terms customer tastes and buying patterns. Business must calibrate the production line so as to match with both demand and customer predilection.

The latest setback of chips manufacturing has resulted in several businesses going into red because they were unable to get products passing the finish line. Colossal shortage of required chips pushed motor companies to bring down their shutters. This is one thing. But the other most consternating one is the price of motor vehicles already in the hands of users shot up to unimaginable heights. When used items go up in price two things could happen. One, new cars rolling out would be priced more than what the market can bear. Two, this would have spin off effects over the supply of materials other than chips such as steel, aluminium, glass, plastic, rubber, fibre and electrical.

Freighting is another major variant that affects smooth processing of supply chain. There are several sub-plots here. Price of freighting overall has gone up due to non-availability of containers on one hand and lack of space in freight vessels on the other. Suez Canal debacle where a container ship got stuck over a muddy trench for more than six days, threw up worldwide shipping into the throes of chaos and resulted in heavy damages to the canal directly and froze global trade of several billion dollars indirectly. 

Freight Transport services have dual functions: facilitating the carriage of goods and networking with both buyers and suppliers in a co-ordinated manner. Eliminating delay is the cornerstone of any such transport entity worthy of its salt.   What is more such companies have to work with ports in case of sea freight and hubs in case of air-freight. To add to this there is another dimension: the railway network. For example, Yiwu – London Railway Line collects freight at Yiwu in, China for transportation to London UK covering a distance of about 7,500 miles and lasting 18 days. Sea freight in comparison would take 2.5 times of this duration. Moreover, in terms of speed it is faster than sea freight and in terms of cost effectiveness it is cheaper than airfreight.

China understands how geoeconomics work and how to fashion suitable business strategy in order to eliminate waste as well as delay simultaneously. Therefore, it is not surprising that even during the pandemic, production in China continued regardless and supply chains issues are fixed forever!

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

China: Fear is great motivator

In normal course, fear demotivates and courage motivates. Contrarian thinking alludes fear as the great motivator. China is the textbook case of fear motivating her to scale the heights not only in military matters but also in the geoeconomics arena. Read:

A range of fears engulfed China from near and far. Most of these arose from political and military side of international relationship. But when we quantify fears originating from these two areas it pales into insignificance in comparison with what is in store for China in the form of threats & risks of geoeconomics. The latter is of humongous proportion. To be sure, China is not underestimating any of these threats & risks. The politburo of the Chinese Communist Party (CPP) is seized with the topic of challenges that could emanate from the plethora of issues created by USA led west to scare the nation and to derail her economic juggernaut.

Accent on making fear an opportunity combined with garnering absolute strength continued unabated. Heads joined from across the country sat together to brainstorm and identify ways of means of doing exactly that.

Political clout of China has risen exponentially in the last two decades. China, has established full diplomatic relations with 178 out of the 193 United Nations member states. China went on to establish several diplomatic missions. Today it boasts the largest number of such missions more than any country in the world. That said, China continues to have cultural exchanges with more than 160 countries out of which about 140 protocol have been initialled.

Power index score of 0.0854 places China at third slot after USA & Russia. Total aircraft of 3.260, naval vessels of 777, land force pieces of 43659 along with total military personnel over 3.35 million enable China to qualify for this coveted status. (Here). Overall, out of the theoretical figure of 100% military prowess China stands at 85%. By any rate China stands as a giant in Asia.

In geoeconomics, China is slowly beating USA to second place. China received cash inflow of US$ 163 billion in 2020 compared to USA figure of 134 billion as net receipt arising out of trade & finance. BRI is key for China to bring peace & prosperity for 138 countries with a staggering US$ 200 billion by way of investment. By 2030 China would have invested humongous amount of US$ 1.5 Trillion. (Here).

China Pakistan Economic Corridor (CPEC) being the flagship project would receive more than US$ 62 Billion the highest amount granted for a single country project in the BRI network. The connectivity of the CPEC is phenomenal.  It opens up ancient Silk Road morphing from solely land into land and sea connectivity bound with Digital Silk Road. To start with 5G would be upgraded to 6G by 2030 or about. That means a paradigm shift as it is has no historical precedence.

Digital yuan is next power play by China. As a major challenge to the west the fourth industrial revolution intends to revolutionise domestic payment system via technology and usher in purely cashless society. Holding hands with rest of the world, this phenomenal deposit and exchange system of China officially establishes a “digital currency bridge” where People’s Bank of China being the central bank would function as corresponding bank as well as a clearing bank for all digital transactions across the globe.

The heart of the matter is, what China feared it has made it as an opportunity and transformed it as a power salience. Political, Economic and Military (PEM) is the first tier in the strategy spectrum. China is soaring here and the next paradigm would appear in few years’ time when China launches its own world wide web, a technology breakthrough no power can challenge let alone oppose!

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

Rules based international order, who is violating it?

Of late, the West is bellowing from the roof top at China accusing her of violating rule based international order (RBIO). But evidence indicates that these are in fact, hollow claims as the real blame is squarely placed on the part of America and her allies. Here is the proof:

Since 1940s the western democracies introduced and adopted rule based international order based (RBIO) on the twin anchors of political and economic liberalism. These were set of norms that are to be applied in terms of trade, finance and investment from one country to another across the globe. Significantly, liberalism means promotion of equitable rights and free enterprise, so to speak. After China miracle, the West has taken up cudgel against Chinese trade & investment. The following are samples of measures executed by the West that betray its own liberalism and destroy the level playing field in geoeconomics:

In a briefing paper titled “Recognising Geoeconomics Risk”, published by the Finnish Institute of International Affairs (FIIA) authors Christian Fjader et al, summarise these measures that includes:

•      Increased public scrutiny over direct investment and foreign state subsidies in order to prevent the foreign control of critical infrastructures or technologies, and to ensure fair competition.

•      Controls regulating the export of certain technologies with a dual-use potential, and thus deemed to pose a risk to national and international security.

•      State incentives aimed at the redesign of global supply chains, with the purpose of ensuring supply of sensitive technologies.

•      Actions to discourage universities and research centres from hosting students from certain countries so as to prevent the dissemination of knowledge considered strategic.

•      Measures to limit access to fresh capital, such as the US delisting of Chinese companies from stock markets, or redirecting government pension funds. (Here)

Ironically, these measures have boomeranged on the USA business enterprises who have hitherto had privileged position by capitalizing on the same RBIO had to be on back foot now when competing with China in her domestic market. That is because countervailing business policy adopted against USA on reciprocal geoeconomics manner by the Chinese authorities made the price & product advantages of USA exporters to China vanishing into thin air. As a double whammy USA manufacturers at present, could not compete with cheap Chinese products in the home turf even after imposition of Donald Trump’s tariff rates. 

Plainly put, USA is caught in a cleft wood in geoeconomics power play. Any disturbance of China supply line into America could result in the hiking of inflation that is trending around 1.8 percent now to shoot over 2.6% by end 2021. But the punchline is, America now receives more than 42% of imports sourced from China. If this exceeds half-way mark that could be a massive blow to the continuation of rule based international order!

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist