Thursday, July 20, 2017

Standoff at Doka La: Some Thoughts

A lot has been written and said about this.

I am not convinced a threat to the Siliguri corridor is emergent. I am not seeing a path to de-escalation.

Someone seems to be selling the idea that if India went toe-to-toe with China on the Himalayan border the US would have India's back. This kind of assurance has been given in the past, but I am not sure whether it has led to an acceptable outcome for India/America. A very simply counter-move which the Chinese can mount to this is to pre-empt the cooperation, i.e. to escalate the situation before either India or the US are in a position to action on the proposed alliance. That will leave India and US in a hole that neither can climb out of.

I want to briefly review what I feel the situation in China is, and where I feel things are going internationally vis-a-vis China.

1) China controls a vast fraction of bulk manufacturing of goods on a global basis. The major driver of this dominance is low labor costs in China (approx 10x lower than US/EU). Most of the low labor costs emerge out of China's vast labor pool. China's labor pool is large because its population is large and its agricultural sector has significant amounts of hidden unemployment.

2) China has been able to steadily grow its industrial labor pool by pulling labor out of the agricultural sector. However recently China appears to have reached or crossed the "Lewis Point".  Given that it is no longer as profitable to transfer agricultural labor in to the industrial labor market, and the fact that the Chinese population growth rate has slowed - the industrial labor pool in China is not growing. This is causing labor prices to rise and margins in China based manufacturing to fall.

3) A typical US/EU based manufacturing business has a low margin ~ 5%. Shifting manufacturing to China, adds ~ 15% to the margin of the business. Most corporate executives can't resist that spike, the bulk of the margin goes into their bonuses and salaries. If that margin falls it cuts into the bonuses and parachutes of the corporate leadership in US/EU.

4) Neither the Chinese nor the US/EU corporate big shots like the idea of falling margins but there seems to be a divergence between these groups on what to do about it.

  • The Chinese want to cut down on transportation and energy costs. By shifting to renewables* and reworking sea/road/rail transport mixtures** to get lower $/ton-mile the decline in margin can be made back. Unfortunately this cuts into the paychecks of the coal and oil barons who sell fuel to China and it give China even more control over sea and land based communication routes. Done this way, the corporate bigwigs of today would be reduced to the rulers of Indian princely states in a few decades.
  • The US/EU corporates want China to hand them a slice of the emerging luxury goods market. The lust for branded goods in China's newly minted economic elite is high, and people are willing to pay a very high premium on branded products. Right now this market is supplied with knock-offs. If China agrees to respect the intellectual property and trademarks regime, the US/EU corporates would get access to a new market in China and that would make back the lost margins. This doesn't work for China as it puts too much control in the hands of US/EU corporate groups. It brings back Chinese memories of the colonial period where everything "good" was foreign made. 

5) It is no surprise therefore that the Trump Corporation is so keen to get access to trademarks and the apparent exclusivity they confer. It should also be no surprise if Trump is willing to throw his voters under the bus to get China to give his company a leg up.

6) Unfortunately Trump cannot directly leverage China with threats of a trade war. That would cause all corporate executives in the US/EU to turn on him. He can't carry that much heat, especially as people already suspect he is a RIS agent. So Trump has been reduced to applying lateral pressure on the Chinese.

7) China only sees India as a place to dump products that do not make it to US/EU markets. India doesn't care for that treatment. But lacking a real dependence on Chinese profit margins, and supported by its own expanding industrial labor market, India can afford to piss of China (Something neither US nor EU can really do). So when it comes to putting lateral pressure on China, India would be the natural place to start.

I suspect someone from the Trump side has gone around stoking the Indian Army's perennial fears about China. After 1962 the IA has something of a "we'll show them" psychosis when it comes to the PLA. It is simply too easy to bait the IA into a "stick it to the Chinese" adventure.

In wider terms, the Chinese insistence on treating Pakistan as "our Israel" always goes against India's strategic outlook which tends to see Pakistan as "our backyard".  With the large community of ill-educated Modi Bhakts who claim to know everything about the world, the India-China dissonance over Pakistan is a good lure also.

So in grand terms - India is perfectly positioned for a totally unproductive war with the PLA in the Himalayas. Various segments of the Indian national security community know this, but since the Modi regime only listens to sounds that come out of its own posterior (see demonetization saga for details), no one is willing to listen to them.

No one appears to want to hear that a confrontation with the PLA could escalate to levels that will be very painful to India.

No one appears to want to hear that the vulnerabilities attributed to the Siliguri corridor exist along every MSR used to 3 Div and Joshimath Bde forward positions. (FYI I don't know if these formations are on alert yet).

No one seems to care that an escalated conflict along the Himalayan border would invite China to deploy nuclear weapons in outer Tibet and that would put the entire Gangetic Plain with 700 Million Indians within range of China's nuclear tipped and highly tested SRBMs.

Fantasies about the capabilities of the SFF are easily sold these days to an army of twittards and an ounce of Bhakti is made to seem worth a kiloton of common sense.

So this is where the "Occupy Chumbi" ideas are coming from.

It's like the "Occupy Skardu" ideas of 1998-2002.

It is deja vu all over again. 


* China pays ~ 5x the price for carbon based energy because the fuel has to be transported out there from distant sources but solar panels are made cheaply and locally. By contrast the US pays ~ 5x the price of solar panels in China but carbon fuels are available cheaply and locally.

** Road + Rail offer significantly lower cost per ton-mile than shipping for smaller volumes. A shift away from high volume sea transport creates an incentive for an innovation driven agile manufacturing sector which affords much higher margin for China and US/EU corporate types. This is why the Chinese put that much effort into running a train all the way up to London.

10 Comments:

At 11:22 AM, Blogger Ralphy said...

I don't think china wants a war with India. border advantages....yeah sure but war? er no. so they will push right up to the brink. they are very good at it. same with south china sea with the US.

India has never allied itself with the US on anything else so it is ridiculous to think the US will go to the brink to support India in a border skirmish with china. ad hoc supply of high tech military gear on a moments notice? yeah sure, but no major assistance otherwise.

 
At 11:32 AM, Blogger Ralphy said...

one reason is that the globalists in the US fearfully dread any disruption in US-China trade as you have pointed out.

however there is one exception .....north korea. that is where the whole US-China trade scheme could collapse like a house of cards. china has treated noko like its pet junk yard dog and now.....the junk yard dog may be in control of china's global domination scheme.

so no. a border skirmish with India does not worry china.

 
At 5:52 PM, Blogger tantrik-porter said...

After 1962 the IA has something of a "we'll show them" psychosis when it comes to the PLA. It is simply too easy to bait the IA into a "stick it to the Chinese" adventure.

Maverick ji, with all due respect;
Seriously? Seriously? Seriously??

 
At 7:32 PM, Blogger maverick said...

Cmon tantrik you know it's true as much as I do. They really don't consider 1962 over.

Do you think they enjoy sitting with their ass sticking out at DBO, Nyoma or Fukche?

Do you feel they are chill about infiltration held like dagger at their throats in the river valleys of the Zanskar?

I am not saying anything new.

Siliguri corridor my foot. It's a blood feud.

 
At 7:36 PM, Blogger maverick said...

The only thing holding them back is the civvies. The pols don't want a fight with China.

The CPI guys tell the truth.

All the others mumble.

Bhakts make it look like they are with you but tomorrow shtf these people will turn on the Army to save Modi's skin.

 
At 4:37 AM, Blogger maverick said...

@Ralphy,

No one in their right minds wants this war. IA and PLA posture in the Himalayan region is unstable.

Both armies have their ass cracks straddling sharp mountain ridges.No one knows whether they have enough reserves to sit it out if a shooting war starts.

If one side pushes the other too far, the response will be disproportionate and a runaway will occur. There is no guarantee anything will converge to an escalation cut-off or where the dust will settle.

When this thing broke weeks ago, it was just a minor border incident. Now its spiraling towards a major catastrophe.

This was supposed to be just another episode of the Himalayan telenovela, in this episode the IA was supposed to act tough and the PLA was supposed to back down. That isn't happening and I am concerned things will go off script.

The Bhakts and the TRP rating seeking elements of the media they love to hate are beating the drums of a two front war.

This war is a fantasy. The Indian Army does not have the resources to fight two nuclear armed enemies at the exact same time. The Army is being set up to fail.

One might ask the question - why is this being done? or who wants the Indian Army to fail? Who would gain in stature if the Army was discredited publicly?

The answer is one that most people will not like.

Recall what the Nazis did to the Heer (and the Mullahs of Pakistan tried to do to the Pakistan Army)?

The Nazis marginalized the Prussian military officer caste, infiltrated the ranks of the German Army with elements of the Sturmabteilung loyal to the Nazi party and created an army within an Army by re-badging the most capable regiments of the Heer as SS regiments which swore loyalty to the Nazi Furher. The entire professional German army was reduced to carrying the pail and towel for a mass murdering sociopath.

In order to achieve that level of control the Nazis fed off latent resentment over the Prussian led Heer's failure to protect Germany in WWI. That visible failure made it possible to damage the disciplined and law abiding leadership of the Heer and replace it with Nazi drones who were willing to sacrifice all of Germany on the altar of its fake glorious Aryan illusion.

History gives us valuable hints of what lies in the future.

 
At 7:59 AM, Blogger Ralphy said...

oh my goodness, the hindfundoos are screaming for war.......I mean they are really blood thirsty! i wonder how long modi can withstand this? seriously......

 
At 8:05 AM, Blogger Ralphy said...

and India is a big customer of china......I wonder at the ramifications.....

 
At 8:51 AM, Blogger maverick said...

The Bhakts are getting their asses chapped because they are afraid this issue will turn into a political embarrassment for Modi.

The Bhakt position is clustered around the apparent infallibility of Modi's decision making. They are already reeling from the beating his image has taken after Holy Cow murders, Demonetization Fail etc...

They can't afford taking another hit on the nose.

They are pushing for action, but IA is not ready for a full confrontation with China.

IA knows that it is in a superior logistical position at Nathu La which makes an excursion into Chumbi Valley feasible, but then

a) Shannan Military Sub-district might come at Tawang where IA is in a logistically unfavorable condition

b) Linzhi based 53 Mountain Bde might walk over Dong La and come visit Ahling.

c) PLA might decide to occupy Barahuti plateau

I don't know if Modi can pull a rabbit out of a hat here, but unlike Bhakts, I have an open mind.

 
At 12:55 PM, Blogger Ralphy said...

I looked up "Bhakt".......blind follower.....an apt description/

 

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