CUTS International Washington DC Center
Monthly Brief #38, May 2021
Imperative of re-balancing China in the Indo-Pacific
With the Chinese economy opening up in the 1970s under Deng Xiaoping’s leadership, the diplomatic focus of the nation and its leader was in making friends and influencing people. But now, under President Xi Jinping and the Chinese Communist Party, under his unfettered command, their diplomats are using ‘wolf warrior diplomacy’ to aggressively push for Beijing’s unilateral interests and in shaping international discourse on issues in its favour.
This aggression can now be faced in South of India, as the Chinese have just acquired a 99 year lease of Sri Lanka’s Port City close to its capital Colombo. It is a distance of only 290kms to India’s Kanyakumari. Not that we don’t share a troubled border with China (Tibet) in the North, but this new development has taken all of us by surprise.
On a larger scale, a global consequence of China’s confrontational diplomacy is an increasing fear in and of Taiwan’s reunifications by force. This fear has not only increased Taiwan’s defensiveness, but has also reiterated President Tsai Ing-Wen’s commitment to establish alliances with like-minded nations who share similar values. Recently, The Economist has dubbed Taiwan as the most dangerous place on earth in view of the threat from the Chinese Communist Party, noting that the presence of the U.S. military had deterred an armed conflict between Taiwan and China.
It is in this context we have to understand the rise of an Indo-Pacific Quad of Australia-India-Japan-United States of America and its pledge to respond and address shared challenges including in cyberspace, counterterrorism and maritime domains. These and many other challenges may have to be subject to test sooner than most of us may have expected.
The Indian diplomatic community, too, has been calling to abandon India’s One China policy, amidst the aggravating mistrust in its dealing with China. There is not an iota of doubt that currently India is fighting on three fronts: Covid, Economy and China.
For India, the two main consequences of Taiwan being under Chinese control includes putting at risk the security of American allies. Taiwanese control will provide China with an enhanced geopolitical advantage of having undeterred access to the Indo-Pacific.

The conflict between China and Taiwan, and the American administration’s concern over the stability of the cross strait region does not impact just the security architecture in the Indo-Pacific, but also a potential destabiliser to Taiwan’s semiconductor industry that is central to every field, from defence to agriculture.
As Mark Liu, the Chairman of TSMC aptly put it, “Taiwan is the Silicon Shield”. With a majority of the world dependent on the nation’s high tech industry support, a war will go against the interest of every stakeholder.
It is, thus, an imperative for the Indo-Pacific Quad to look into the Taiwanese perspective, and recognise it accordingly in international space. If the Quad is able to thwart China’s attempt to invade Taiwan, it will prove its relevance in front of the world and will send a strong warning against the imperialist agenda of the Chinese Communist Party.
Pradeep S. Mehta

P.S.: Will the Biden-Putin Summit in Geneva next month result in adding new dimensions to the Indo-Pacific saga?

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EU Suspends China Trade Deal As Tensions Grow Over Xinjiang, Hong Kong
European and Chinese leaders are urging swift ratification of the trade deal they agreed to in December, after tensions over accusations of human rights abuses in China delayed approval of the deal by European Union lawmakers. EU Commission Executive Vice President Valdis Dombrovskis said last week that efforts to get the deal ratified by lawmakers in the European Parliament had been halted.

The data never lies - Indian companies are on an UK expansion drive
The number of Indian companies operating in the UK and their job creation levels have registered growth despite the challenges of Brexit and Covid-19 pandemic over the past year, according to the latest ‘India Meets Britain Tracker’. The 2021 tracker, collated annually by Grant Thornton and the Confederation of Indian Industry (CII) to weigh up the contribution of Indian businesses to the UK economy, found that the number of Indian companies operating in the country grew from 842 in the 2020 tracker to 850.
India reaches out to U.S. companies over investment in pharmaceutical, medical devices sector
India's Ambassador to the U.S. Taranjit Singh Sandhu has held virtual meetings with Alberta Bourla, the CEO of Pfizer, Thermo Fisher CEO Marc Casper, Bernd Brust, the chairman and CEO of Antylia Scientific, and Joseph Repp, the CEO of Pall Life Sciences. He also had a call with Emmanuel Ligner, the CEO and president of Cytiva. During his interactions with the pharma companies, Sandhu mentioned that India is seeking to encourage investments into the pharmaceutical and medical devices sector.
WTO TRIPs | Waiver on COVID-19 vaccines: Nobody is safe until everyone is safe
The debate is whether vaccines supply can be ratcheted up if there are no Intellectual Property Rights (IPRs) restrictions. To address this issue, India and South Africa had jointly proposed to the WTO to grant a temporary waiver of the specific provisions of the global agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Since October, this proposal is still under discussion without any resolution. On May 05, 2021, the Biden administration came out to support waiving of IPR for COVID-19 vaccines. This edition of ONW covers the discussions on the proposal requesting for TRIPs waiver on the Covid-19 vaccines so that the vaccines are available in an affordable manner worldwide.


U.S. partnered with India as PM Modi made commitment to deploy 450 GW renewable energy: Kerry
Prime Minister Narendra Modi has made a commitment to deploy 450 GW of renewable energy. We have created a partnership with India because of that commitment because they don’t have the finance and technology completely. So, we’re gonna try to help them bring the technology to the table, bring the finance to the table, and they have to do certain things internally to make this happen, U.S. Special Envoy on Climate Change John Kerry said.

What the cyber-attack on the U.S. oil and gas pipeline means and how to increase security
The recent cyber-attack on the U.S. major oil and gas pipeline could become one of the most expensive attacks to an economy. It's also the latest reminder that both the frequency and severity of catastrophic digital shocks on critical infrastructure are on the rise. The increasing digitalisation of critical infrastructure sectors such as oil and gas, and the associated industrial systems, is changing the nature of cyber risks.
The talk over hydrogen is designed to change the climate
The India H2 Alliance (“IH2A”), will majorly be focussed on commercialising hydrogen technologies and systems to build net-zero carbon pathways in India. Chart Industries is a NASDAQ listed global manufacturer of high-end engineering equipment and with the muscle power of Reliance Industries will work to build the hydrogen economy and supply chain in India while helping to develop blue and green hydrogen production and storage.

U.S. Raises Concerns Over Europe’s Planned Carbon ‘Border Tax’
Implementing a border levy to price carbon-intensive imports and protect European industries will be “extremely complicated,” warned Jonathan Pershing, a member of the U.S. climate envoy’s team. The carbon border adjustment mechanism, due to be revealed in July, aims to put a price on imports from countries where it is cheaper to pollute, as a way of protecting European manufacturers facing higher carbon costs.


Four areas of conflict that threaten India-U.S. partnership
Democracies are supposed to get along, but that has not always been the case for the United States and India. Indeed, the relationship, though perhaps at a historical high point (Paywall) today, still suffers from New Delhi’s lingering distrust of Washington derived from raw Cold War geopolitics and India’s longstanding foreign policy of nonalignment. The most recent bilateral irritant pertains to the ongoing explosion of Coronavirus cases and deaths in India.

What’s going wrong with India’s Act East policy?
Prime Minister Narendra Modi graduated Look East into an Act East policy. Three developments over the past five years are, however, testing Indian diplomacy in the region. First, the rising profile of China combined with growing China-India tensions; second, disappointment in the region with India’s economic under-performance; and, third, rising concern in the region with India’s approach towards its minorities, especially Muslims and Christians.
India’s growing interest in Taiwan
In the past, though India and Taiwan had de facto diplomatic relations, (Paywall) most agencies in the Indian government barely recognized Taiwan as a separate country. Several years ago, India adhered so strictly to a “One China” policy that it did not recognize Taiwanese credit cards and banks. The most important determinant of how India would respond to a Taiwan crisis is how close it moves to the U.S. over the coming years. India has a testy relationship with China but has been wary of aligning too closely with Washington.
What Explains America’s Antagonism Toward China?
In the last few years, the view of China as a strategic rival has taken over the American political mainstream, with leaders largely choosing confrontation over cooperation. Two features of this shift stand out: how quickly it occurred, and the extent to which Americans – and their leaders – have united behind it.


Preparing army of cyber professionals for Digital India
Over the past few years, the Government of India has come up with various new schemes to support Citizen services, welfare programmes, and upliftment of underserved communities. Such schemes have also been upgraded to various Digital Platforms and Applications. This has also presented additional opportunities to cybercriminals. While the Government has already taken up many initiatives to escalate and secure Cyberspace, with an accelerated pace of digital transformation in view of the pandemic, we must build a full-fledged Army of Cyber Professionals.

U.S., China, Europe and India — all are mulling the possibility of a digital currency, but no one is ready to bite the bullet, yet
A lot has been said about cryptocurrency prices recently, especially with regulations in China stirring up prices over the past week. While governments around the world have been resistant to accepting cryptocurrencies as legitimate payment systems, they aren’t opposed to the underlying blockchain technologies that run all of these currencies. Enter Central Bank Digital Currencies (CBDCs).

Digital Sovereignty In An Era Of Global Surveillance, Disinformation, And Info-Demics
Concerns over the management of that growth and related apprehensions over the velocity, variety, veracity, and value of data are growing in tandem. Private and public sectors of the economy are increasingly engaged not only in the proliferation of information but also in its effective and responsible management, analysis, and knowledge extraction; elements essential in giving them a competitive advantage in a densely interconnected and highly networked global economy.
India, UK agree on co-production of military hardware; technology collaboration for combat aircraft
In a major move, India and the UK on Tuesday, May 04, vowed to expand bilateral defence cooperation, including through technology collaboration in developing combat aircraft and complex weapons, during a virtual summit between Prime Minister Narendra Modi and his British counterpart Boris Johnson. A 10-year roadmap unveiled at the summit for boosting overall India-UK ties mentioned that the two countries will strengthen cooperation to take "decisive and concerted actions" against globally proscribed terrorists and terror entities.


Biden calls for new U.S. report on Covid-19 origins in 90 days
U.S. President Biden asked U.S. intelligence agencies to “redouble their efforts” to determine the origins of the coronavirus, saying that he was calling for a broad government report that incorporated findings from American labs and other federal agencies on whether the virus was accidentally leaked from a lab or transmitted by an animal to humans. He asked intelligence officials to report back to him in 90 days on the results.

U.S. soft power inextricably linked to global recovery
President Joe Biden’s plans to ship 80 million doses of COVID-19 vaccine to the developing world, coupled with U.S. support for waiving vaccine intellectual property protections, are much-needed humanitarian initiatives. They will save lives and, in the short run, boost U.S. soft power which suffered greatly during the Donald Trump era.

India’s infrastructure investments get a boost from Europe’s EIB
India’s push to develop world-class infrastructure got a further boost last week when the Indian government and the European Investment Bank (EIB) signed the finance contract for the second tranche of 150 million euros for the Pune Metro Rail project.
Return of the West
That the West is deeply divided, that it is in terminal decline, are ideas that gained ground in recent years. But U.S. President Joe Biden and his colleagues in the club of the world’s richest democracies are saying “not so fast”. This week’s ministerial meeting in London of the Group of Seven — the political directorate of the West constituted by the seven leading industrial nations anchored by the U.S. — signalled that the West is rebuilding its unity and strength.