India-China diplomacy stand-off in South Asia

The global world order is changing, and increasing hinging on Asia as its axis. Both India and China want a share in it. In this context it is important to access the India-China diplomacy stand-off in South Asia.

Background:

• India-China ties are not one-dimensional. There are structural problems in India-China ties — boundary dispute, Pakistan factor, and historical mistrust.
• A delicate balance: Even when Chinese and Indian militaries were in a standoff in Doklam at the India-China-Bhutan tri-junction in the Himalayas in 2017, both governments were careful enough not to let the situation spiral out of control.
  • The Doklam incident was followed by the first Prime Ministerial level informal summit in Wuhan in 2018. Mamallapuram summit should also be seen against this background.
• Four constituents in the multidimensional India-China partnership that can take their ties to the next level:

1. Economic aspect: China is keen to make investments in India, especially in building infrastructure and fifth generation technology architecture. India, on the other side, wants greater market access in China, and action by Beijing to address the trade imbalance. At the Wuhan summit, leaders agreed to India-China cooperation in projects in third world countries.
2. Multilateralism: China’s influence in both established international organizations like the UN and in the new institutions China is setting up, such as AIIB may hamper Indian interests and goals in multilateral forums. Both India and China see the unilateral world order in decline, and are champions of multilateralism. Security and stability in Asia is the common interest of both countries.
3. Negotiable Pakistan stand: Last year, China agreed to Pakistan being placed on the FATF grey list, after India offered support for China’s vice-chair push at the FATF. China also removed its technical hold on the declaration of Masood Azhar as an international terrorist. This shows that China can take a U-turn on its iron-friend, Pakistan, given India’s diplomacy on international stage.
4. South Asia stand-off: India must have a clear foreign policy stand with respect to China, of which there are two way:

• • Competing with China for dominance of Asia.
  • Focussing on its own rise, of which competition with China is a part.

Foreign policy strategy

• Foreign policy must factor in three geopolitical constituents— immediate neighbourhood, extended neighbourhood and great powers.
  • An emerging power should stay focussed on building capacities while maintaining good ties with the neighbours, deep engagement with the extended neighbours and balancing between great powers.
• Six potential strategic options with India towards China: staying unaligned, hedging, building indigenous military power, forming regional partnerships, aligning with China, or aligning with the United States.

China in the neighbourhood

• Defence outreach: Back in 1980s and 1990s there was a Sino-Pak military axis; today even the defence forces of Bangladesh, Sri Lanka and Maldives have Chinese equipment.
• Friendlier approach: China is off late changing its hostile relationships with some neighbours to becoming friendlier. For example, with Philippines, Myanmar, Singapore, Japan and South Korea.
• Soft loans: China has been extending soft-loans to neighbouring nations to help them develop state of infrastructure. The downside of this has been countries being caught in a debt-trap, like in Sri Lanka and Maldives.
• Concerns about China involvement: China has only two real friends in the world: Pakistan and North Korea. Big and small nations are increasingly wary about Chinese intensions.
  • Even in The Arctic Circle council, Greenland (Denmark) expressed deep distrust towards China’s investment in its aviation sector.
• Reorienting diplomacy: China’s ‘major power diplomacy’ consists of four aspects: economic expansion, political penetration, “friendship” creation, and core interest protection.

China’s argument

• China’s concern: China has argued that India is trying to undermine China's efforts to maintain close ties with Nepal, Sri Lanka, Bhutan and other South Asian neighbours. According to China India is uneasy about China’s growing influence in the region.
• Bhutan example: India is one of crucial reasons why China and Bhutan, controlled by India economically and diplomatically, have not yet established diplomatic relations.
• Indian media hype: Whenever a top leader from India's neighbouring countries visits China, Indian media hypes that India is losing them or "China's emerging weight in South Asia will be New Delhi's new threat".
• Shared neighbours: Most of India's peripheral countries are also China’s neighbours. Promoting stable relations with surrounding nations plays a vital role in any country's own domestic development.
• Aid to regional development: Sri Lanka and Nepal are looking forward to joint projects with China, given their poor infrastructure. It is inevitable for China to boost defence collaboration with them to protect not only China's, but also the region's interest.
• Dalai Lama factor: India in intensifying its communication with the Dalai Lama tries to display its strength and leverage in order to put pressure on or counterbalance China.

India’s response

• India is not concerned: India is not worried over China's relation with its neighbours, and South Asian countries are free to have ties with any country including China.
  • India’s relationships with these countries are very strong; they are historical, with people-to-people contacts. For example, India and Nepal have open borders.
  • India has no concerns about China's rise. In fact Bollywood films like Dangal become a huge hit in China, while Chinese phone maker Xiaomi became the largest mobile handset seller in India.
• Sovereignty and territorial integrity: India is willing to be part of projects, provided they are transparent, meet ecological and environmental standards, and do not violate the sovereignty and territorial integrity of a country.
  • India objects to CPEC, which is a flagship project of BRI, because it violates India's sovereignty and territory integrity as it passes through the Pakistan-occupied Kashmir (PoK).
• China’s Quad concerns: China’s has concerns over the US, India, Japan and Australia quadrilateral grouping. India has never been a part of any alliance. Both India and China are too big to be part of any alliance; both have very independent domestic and foreign policies.
• India’s presence in South Asia: India has been supplying power to Bangladesh and Nepal, and is also working on prospects of a global electricity grid that may initially aim to link countries such as Myanmar, Thailand, Cambodia, Laos, and Vietnam with the sub-continent.
• India’ energy diplomacy initiatives include, supplying petroleum products and setting up liquefied natural gas (LNG) terminals.
• It plans to develop power transmission links with Sri Lanka.
• Economic independence: An important reason why India backed off from the RCEP was due to apprehensions over entry of Chinese goods in India through ASEAN route.
• China factor may wane in future: China’s economic engine has slowed to a 27-year low. Industrial output is below 2002 levels. Chinese economy is past its best growth years. China’s working age population is also shrinking. In future, China may not be as big a contender in South Asia, leaving more space for India.

What does MEA budget show?

• Most important component of MEA budget over the years has been an aid to its immediate neighbours.
  • Of these, Afghanistan and Bhutan consume a major chunk.
  • Chinese inroads into Nepal, Myanmar, Bangladesh, Maldives and Sri Lanka require India to not only better its defence capabilities, but also developmental projects in these countries to ensure a higher level of Indian engagement and continued influence.
• Ministry of External Affairs (MEA) budget in the Union Budget was 1% of India’s GDP in 2012-13, and declined to 0.08% in 2018-19.
• Other details:
  • Allocation to BIMSTEC has increased, in the backdrop of a dysfunctional SAARC.
  • On the soft power front, allocation to Nalanda University increased.
  • Allocation to South Asian University fell.
  • Allocation to Indian Council for Cultural Relations (ICCR) also fell.
  • Chahbahar port and Seychelles were two areas of Indian aid of geo-strategic importance whose allocation declined.
  • Aid allocation to Maldives’s friendly new government increased significantly.
• India’s diplomacy, implemented through MEA, needs a higher budget outlay for carrying out its geo-strategic objectives.

70 years of China: Why China moved ahead of India and what can we learn?

• Common starting point: China became a communist republic in 1949, the same year when India adopted its constitution. Both countries began rebuilding in 1950 - China under Mao Zedong and India under Pundit Jawaharlal Nehru.
  • India adopted a socialist economic model where wealth creation and big private enterprise were not encouraged.
  • Indian economy grew at around 3.5 per cent rate through the 1960s and 1970s while population grew in excess of 2.5 per cent.
• China is ahead: China is ahead of India in respect of the economy, military power, and technological progress and even in pollution control, while India is still considered an emerging power. Technically, China was a "poorer" country than India in terms of GDP per capita till as late as 1990. Now, in 2019, the Chinese per capita GDP is 4.6 times of India's.
• Market economy: In 1978, after Mao Zedong’s death, China’s new leadership began opening its economy.
  • It invited foreign investment particularly in coastal areas making export-import easy.
  • It created SEZs marked with better infrastructure and access to cheap labour for investors.
  • The new regime started freeing agriculture from state control.
  • It enforced one-child policy in order to control population explosion and utilise the demographic dividend.
• Infrastructure: China laid an excessive emphasis on investment in infrastructure. This provided employment to millions of people and improved their economic status and purchasing power, which was an essential ingredient for industrial progress.
  • China still continues to invest heavily in infrastructure; as evident in its One Belt One Road (OBOR) initiative.
  • Estimates suggest, India's average investment in infrastructure in the first 5 decade after Independence was 3% of GDP when it required 6.5%. While China invested nearly 9% of GDP in infrastructure when it could have done with 6.5%.
  • Economic Survey 2019 found that investment was 27% lower than required. It called for an infra investment of 7-8% of GDP to make India a $5 trillion economy by 2025.
• Sectorial approach: China has followed a ‘sectoral approach’ and took to building labour-intensive industries - like textile, light engineering and electronics - to rope in available cheap labour.
• Military: In 1962 India and China fought a war. China occupied Aksai Chin. Since then China has revamped and modernised its military while Indian forces are still organised on World War II model.
• Energy: Energy is the key to survival and progress of a country and conventional sources of energy - coal and oil - are limited. China is energy conscious, has made substantial shift to reduce its dependence on coal, and has emerged as the second-largest solar energy producer.
  • China has aggressively pushed for use of electric vehicles - a step India is following.
  • According to a WEF report, China has the largest number of electric vehicles and public charging points.
• Access to sanitation: 72.01% of the population had access to at least basic sanitation services in 2017. Compare this with the 77.49% of Chinese city dwellers with access to sanitation in 2000, or the 90.79% today.
• Water: India has about four times more freshwater than China, which is three times its size. But India is facing a bigger water problem today than China. India is the biggest puller of groundwater and the volume used surpasses that in China and USA combined.
  • To overcome its water scarcity, China has been successful in teaching its farming community to use less water without compromising on agricultural productivity.
  • China imposes hefty fines on industries and businesses which overuse groundwater or pollute rivers and ponds.
• One flaw: While China has made many strides in growth and development, its system of governance lacks appreciation of individual liberty as a human value and fundamental right. Current situation in Hong Kong is an example. India has fared much better in this aspect.

Conclusion and Take-away

Many centuries ago in the 1600 and 1700s, both China and India were very important economic powers in the world. Both China and India are ancient civilizations. Despite contrasting forms of government, India and China have many aspects of governance and economic growth in common. Following the US approach, India should focus on its own rise and building capacities, not on conflicts and rivalries. At the same time, India should deepen its tactical engagement with the powerful China and learn from areas in which China has excelled. India should not be the focus of political debate of neighbouring nations. Relationship with India should be of a distinct character so that business with neighbouring nations does not depend on the party in power. Indian diplomacy should ensure bipartisan support across political spectrum; and unlike a situation where Bangladesh’s loyalty hinges on a particular party being in power.