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Chinese and Indian forces continue to amass in eastern Ladakh inside the disputed Line of Actual Control that borders the two countries.
Both sides blamed the other for the missed opportunity during a meeting last Monday intended to diffuse the situation. Indian officials say China has tried to “alter the status quo” in the region, while the Chinese said Beijing approached the conference to make a sincere effort to deescalate the situation but New Delhi “still insists on unreasonable and unrealistic demands,” according to The Wall Street Journal.
China’s People’s Liberation Army has increased troop presence there by nearly four times its 2020 levels—up to 50,000. India has responded by also sending troops and advanced artillery to the area. There are concerns that there could be a repeat of the deadly 14 June 2020 clash that resulted in the deaths of 20 Indian troops and four Chinese soldiers.
(See “DANGER ZONE: INDIA/CHINA BORDER DISPUTE HEATING UP,” 23 Jun 2020)
There have been reports that both sides have briefly detained opposition forces.
Tension in the region has been felt for decades. Both countries went to war in 1962 over the Himalayan region that eventually resulted in the current border defined slightly differently by both countries.
The Global Times newspaper, an arm of the Chinese Communist Party, has said the U.S. has played a role in the diplomatic standoff. According to one Chinese professor at the Institute of International Studies at Fudan University:
“(India) sees that Washington attaches great importance to New Delhi, as U.S. president Joe Biden has frequently interacted with the Indian government since taking office, and jointly discussed plans to thwart China’s growth.”
TREND FORECAST: India’s economy was on a long losing streak. As we have reported in the Trends Journal, in 2019, auto sales plunged and over one million workers in the auto industry were laid off. And, again, prior to the COVID War, India’s GDP had declined for seven straight quarters.
According to the Centre for Monitoring Indian Economy, India’s unemployment skyrocketed to more than 25 percent due to the lockdown.
Also, as a result of the lockdown, according to IHS Markit’s Purchasing Managers Index, India’s services sector collapsed from 49.3 in March to 5.4 in April. (Any number under 50 signals decline.)
But now, according to Jefferies brokerage firm, they forecast 8.5 percent to 9 percent GDP growth. However, with inflation rising, we forecast India’s central bank will raise interest rates from their current record lows, which will bring down India’s economy and its artificial cheap-money, juiced-up domestic equity benchmark indices… which hit record highs on Monday.
In addition, as Jefferies noted, “Corporate investment is still sluggish as capacity utilization and risk appetite is low.”
Therefore, considering the scale of the global lockdown and the slow phased reopening of businesses with a vast array of restrictions, we forecast India’s economy and its currency will begin its decline when interest rates rise, sinking into deep recession.
As a result, civil unrest, which had been tamped down with the lockdown, will again escalate. And as Gerald Celente has noted, “When all else fails, they take you to war.”
TREND FORECAST: One of the key underlying issues increasing the volatility between China and India is Beijing’s Belt & Road Initiative, a multi trillion-dollar investment to establish a global trading network, which we have written about in a number of Trends Journal articles.
India has refused to recognize the Belt & Road Initiative’s legitimacy over concerns it would signal weakness in its dispute with China and Pakistan over heated territorial issues such as the one witnessed last week in the Himalayan Galwan Valley.
While the U.S. will talk a tough game against China and claim it is supporting India, the U.S. will not get militarily ensnared in this conflict. It is worth noting that India and the U.S. have begun “Yudh Abhyas” military exercises in Alaska last week. Which leaves us to wonder what terrain in the Himalayas could resemble Alaska for potential ground fighting?