China-India Brief #105

china-india-brief-105


Published Twice a Month
November 15 – 28, 2017

Centre on Asia and Globalisation
Lee Kuan Yew School of Public Policy


Guest Column

Looking at the Big Picture in India-China Relations

by Alka Acharya

This short essay is a big picture effort to understand the contentions and collusions that characterise the India-China relationship in the current period. Since the turn of the century, against the backdrop of the excitement about the coming Asian century and the “rising/emerging powers” discourse in international relations, the China-India equation has become the cynosure of all eyes. In 2005, Premier Wen Jiabao had famously told his ‘elder brother’ Prime Minister Manmohan Singh that when India and China shook hands, the world watched – or words to that effect. That was truly the year of high expectations and big picture thinking.

With the Agreement on the Political Parameters and Guiding Principles (2005) for settling the boundary dispute, the Asian giants looked set to resolve one of the two prickly issues that held the potential partnership in check. The other – pricklier – issue is of course the Sino-Pakistani strategic understanding. By 2005, Sino-Indian trade had begun to gallop, and the Indian market had begun to attract potential Chinese investors. In most assessments, India-China relations, which thus far had largely moved along diplomatic conventional tracks, were poised to broaden. There were certainly differences between the two powers, but the politico-bureaucratic elite in both countries were seized of the measures that were necessary to ensure stability and to enlarge the ambit of cooperation. Both governments publicly proclaimed there was “enough space for both India and China” to rise.

The most-favoured framework for the relationship — notwithstanding the rather unimaginative formulation — was that of “cooperation and competition”. An objective fact-sheet on India-China relations at the time would have impressed even the sceptic. The fact-sheet would have included the numerous wide-ranging MoUs, joint statements (which showcased the convergence of interests at the global level), bilateral dialogue mechanisms, joint exercises, and the steady increase in trade and investment. The two countries also cooperated in most critical non-security areas, particularly climate change, which had a vital bearing on their future development and growth.

A little over a decade from 2005, solutions to the boundary dispute are nowhere in sight, and the most dynamic area of cooperation, trade, is mired in controversies due to the unsustainable deficits in China’s favour. In addition, Chinese investments are either hostage to structural reforms or security concerns in India. Chinese suspicions of India’s intentions vis-à-vis Tibet continue to dog the relationship, anxieties in India regarding the Sino-Pakistani nexus are at an all-time high, and New Delhi continues to oppose One Belt-One Route (OBOR).

A host of minor irritants, normal enough in any relationship, have acquired menacing overtones in the current atmosphere. The military standoff between Indian and Chinese forces in Doklam over the summer of 2017 was a gloomy end to a rather troubled phase, with mutual distrust at an all-time high and nationalist sentiments inflamed to an unprecedented level (especially in China). The most that can be expected now is a return to an even keel.

Arguably, the Pakistan factor, and China’s unambiguous tilt towards its South Asian ally, has moved to the top of the list of Indian concerns. The improvement in India-China relations had received a boost when China had seemingly taken a position of equidistance between India and Pakistan – Jiang Zemin had famously advised the Pakistani Senate to put Kashmir on the backburner and improve its relations with India. It appeared that China, at the time, had understood the need to place its relationship with Pakistan in a larger strategic framework for South Asia.

But that was in 1996, well before the PRC had pledged enormous investments to realize its strategic objectives in Pakistan. Since then, China has risen to the position of the largest economy in the world (in gross output terms) and most recently unveiled its OBOR-led grand strategy. The latter in the form of the China Pakistan Economic Corridor (CPEC) has complicated the territorial contestation between India and Pakistan. By the time the Doklam standoff occurred, the CPEC had acquired the status of the jewel in the OBOR crown. Since India is not prepared to accept any kind of dilution of its territorial claims and the work on the CPEC continues apace, India-China contention over Pakistan has sharpened.

Complicating the scenario further, old-fashioned geopolitics has returned to international relations. The geopolitical great game is back in Asia, particularly East Asia, and China is very much in the centre. The largest part of the great game is the shadow dancing between the United States under President Trump and China under President Xi.

However, it is not at all certain that Asia will see a return to bipolarity. Around the turn of the century, it was still possible to discern a certain ideological tension between ‘socialism with Chinese characteristics’ and American neo-conservatism, which had led to the pivot to Asia under the Obama administration. There is now much uncertainty with Trump’s transactional approach to international affairs in relation to its allies, partners, and rivals. With the conservative turn in Europe as well, China appears to have taken on the mantle of the champion of economic globalization, and both the US and China find themselves oscillating between collaboration and contention in shaping the new world order.

While China’s economic – and increasingly strategic – clout has generated apprehensions amongst the smaller Asian countries, this has not resulted in any clear lines being drawn across Asia. The recent declaration of intent to set up a quadrilateral mechanism involving the US, Japan, Australia and India has not amounted to anything concrete. Nonetheless, it is being seen by some in the Indian strategic community as a hedging strategy against a rising China. On the other hand, China’s OBOR has garnered a fair amount of support in Asia (and elsewhere), and the Chinese discourse is all about win-win partnerships. Above all, China is happily located in a post-conflictual environment – in the sense that no country in its vicinity is capable of using force or threatening to use force to resolve any outstanding issues with China.

As a result of bilateral, regional, and global changes, India-China relations are under strain. In the aftermath of the Doklam standoff and various geopolitical developments, the Indian discourse on India-China relations has been marked by a fair degree of polarisation on whether China is more of a threat than an opportunity, with an increasing number of analysts veering towards the former view.

It thus becomes necessary to step back and look at the bigger picture. The so-called Indo-Pacific may be emerging as the new theatre for Asian interactions, encompassing the Buddhist, Sinic, Indian, and Islamic worlds. Unless India and China embark on a process of mutual understanding and accept the necessity of mutual accommodation, the Indo-Pacific will rapidly become a geopolitical battleground, with the US, India, and other members of the quad on one side and China and its friends on the other.

China has so far displayed a marked lack of enthusiasm in addressing emerging Indian aspirations and concerns, seemingly oblivious to the need for a genuine strategic understanding. At the same time, India is unable or unwilling to take the necessary leap of imagination to yoke its interests to unfolding opportunities. Indian and Chinese core objectives at this juncture have to be placed within a comprehensive assessment of domestic, regional, and global challenges and opportunities.

It will not be easy to persuade countries in the Indo-Pacific to check China – and if a choice is thrust on them, the outcomes are not at all certain. That China is central to the new economic and security issues in the Indo-Pacific is no longer in contention. The transformation within India’s immediate neighbourhood is one element of the dynamism referred to earlier. More crucially, we are witnessing the revolution of rising – and youthful – aspirations across the Indo-Pacific. The emerging “social imaginaries” of the people of this region will help re-conceptualize the Indo-Pacific not just as a geopolitical space but also as a cultural-civilizational space which encompasses societies that have interacted for several hundred years.

It is not enough to have this shared history as a reference point in the Sino-Indian discourse – it must be deliberately drawn into policy thinking. India and China must see this bigger strategic, economic, and cultural-civilizational picture. Their complex relationship will undoubtedly be central to the fortunes of the region.

 

Alka Acharya is Professor of Chinese Studies in the Centre for East Asian Studies, School of International Studies, Jawaharlal Nehru University. She is an Honorary Fellow of the Institute of Chinese Studies (New Delhi) and served as the Editor of China Report, a journal of East Asian Affairs until 2015. She was a member of the India-China Eminent Persons Group during 2006 – 2008 and also a member of the National Security Advisory Board of the Government of India during 2006-2008 and 2012-2014.

 

The views expressed in the article are solely those of the author and do not necessarily reflect the position or policy of the Lee Kuan Yew School of Public Policy or the National University of Singapore.


 

News Reports

Bilateral relations

China hints it can rename CPEC if India joins OBOR initiative
The Times of India, November 24
The Chinese foreign ministry on Thursday (November 23) responded to a statement by its ambassador in India, Luo Zhaohui, who recently said Beijing is prepared to rename the China-Pakistan Economic Corridor (CPEC) to address India’s concerns. The ministry neither endorsed nor denied Luo’s statement, suggesting that it was encouraging Luo to negotiate with New Delhi over the issue, while ensuring that it did not upset Islamabad either. The ambassador had said during a speech in Delhi last week that China “can change the name of CPEC” and “create an alternative corridor through Jammu & Kashmir, Nathu La pass or Nepal to deal with India’s concerns”. In return, it was suggested that India join its One Belt One Road (OBOR) connectivity plan

China upset as Indian president Ram Nath Kovind visits disputed border region
The Straits Times, November 20
China on Monday (Nov 20) criticised a visit by Indian President Ram Nath Kovind to the remote state of Arunachal Pradesh, which China claims, saying China opposed any activities by Indian leaders in disputed areas. The latest row over Arunachal Pradesh suggests the Asian giants remain far apart, despite recent attempts to defuse tension over a region that China claims as southern Tibet. The Indian president went over the weekend, inaugurating a new state assembly building.

Army tones up muscles along China border, enhances troop presence in peaceful areas
India Today, November 19
In a bid to strengthen position against the threat of Chinese troops carrying out incursions along the Line of Actual Control, the Indian Army has enhanced its presence in relatively peaceful areas, such as Himachal Pradesh and Uttarakhand where new formations have been deployed. In recent past, along with raising the Mountain Strike Corps to tackle the rising Chinese military presence along the borders, the Army has also deployed additional two brigades (approximately 8,000 troops) in eastern Ladakh for better security preparedness.

India, China hold first border talks post-Doklam
The Times of India, November 18
India and China held their first border talks after the Doklam military standoff, which ended last August, in Beijing on November 17. The talks under the Working Mechanism for Consultation and Coordination on India-China Border Affairs (WMCC) were “constructive and forward-looking”, the Indian embassy said in a statement. This will be followed by border talks, expected next month, between special representatives of the two countries. The SR mechanism explores the possibilities of resolving the border dispute in all its dimensions while the WMCC’s focus is on maintaining peace in the border area on a day-to-day basis.

 

News Reports

China and India in the Regions

Nepal elections: An India-China battle at the ballot box
Hindustan Times, November 25
Nepal votes, in the first round of a two-phase election, on Sunday (November 26). The outcome will not just decide the internal balance of power in the country, but will also shape the external balance and determine whether India continues to be the decisive and dominant actor in the country, or whether Nepal’s shift northward towards China deepens. Indeed, Nepal joins a list of other South Asian countries where India and China are competing through their favoured domestic allies at the ballot box.

China offers loans to Djibouti as they vow to establish closer ties
South China Morning Post, November 23
China vowed to establish a strategic partnership with Djibouti, the site of its first overseas military base, as leaders of the two countries signed an agreement on November 23 for Beijing to provide an undisclosed amount of loans to the Horn of Africa nation. The framework pact for preferential loans was signed during Djibouti President Ismail Omar Guelleh’s three-day visit to China. Both leaders reiterated their commitment to deepened ties and cooperation. Xi said China supported Djibouti to play a bigger role in regional and international affairs, and would provide medical assistance to the nation.

China and Pakistan agree to push forward economic corridor plan after dam deal scrapped
South China Morning Post, November 21
China and Pakistan agreed on Tuesday (November 21) to push ahead with their huge economic and infrastructure scheme. Pakistan had previously rejected China’s demand to use the yuan in the Gwadar Free Zone, saying this would compromise its “economic sovereignty”, the Express Tribune reported. Last week, Pakistan pulled the plug on a US$14 billion deal to build the Diamer-Bhasha Dam – excluding it from the CPEC – saying China’s conditions for funding the project were unacceptable and went against its interests.

China moots economic corridor with Myanmar for easy access to Indian Ocean
The Economic Times, November 21
China has proposed to build an economic corridor with Myanmar to enhance trade investments, which Chinese experts say would allow access to the Indian Ocean for the country. The direct economic corridor, which would help Myanmar’s development plan and needs, will start in China’s Yunnan Province, extend to the central Myanmar city of Mandalay and then east to Yangon and west to the Kyaukpyu special economic zone, forming a three-pillar giant cooperation pattern, Wang said.

To counter OBOR, India pushes its own idea of connectivity to the world
The Times of India, November 19
As China continues to grow, OBOR as a foreign policy is being perceived as a certain threat by countries like India and Japan. Therefore, India has pushed its own connectivity mantra with most of its international partners, but with very different rules from China. Joint statements between India and its international partners have used words like “good governance”, “rule of law”, “openness” and “transparency” showing how New Delhi is trying to change the language of development aid and connectivity initiatives as well as getting its friends to agree.

 

News Reports

Trade and Economy

Lotte, Peugeot Propose to Invest as Much as $6 Billion in India
Bloomberg, November 23
South Korean conglomerate Lotte Group and French carmaker PSA Group have separately discussed proposals to invest as much as $6 billion combined in India. Expanding its business in India may help the Seoul-based group to hedge the risks it faces in neighbouring China. When tensions between China and South Korea simmered over a U.S. decision to deploy a missile shield on South Korean soil earlier this year, Lotte was among the hardest hit companies as Beijing retaliated by hindering operations of Korean companies in the mainland.

India Xiaomi’s No 1 priority as Chinese firm eyes country’s demand for cheap smartphones
South China Morning Post, November 21
India has emerged as the top priority for electronics and software maker Xiaomi – even more than the Chinese market – and it is ready to replicate its domestic success there. India’s population of 1.4 billion consumers is obsessed with cost-effective electronic gadgets, according to Xiaomi founder and chief executive Lei Jun. “We have adopted the India No 1 strategy, which includes design, research and development, manufacturing and supply,” Lei told Indian business daily Mint this week. He said India was one of the best performers among its 60 markets in terms of shipment and scale of work, although Xiaomi has never released revenue numbers for the country.

Toyota to Re-Enter Electric Vehicles From 2020 in China, India
Bloomberg, November 17
Toyota will introduce electric vehicles in China and India from 2020 as it accelerates a push into battery-powered autos amid rapidly tightening environmental regulations. Selling electric vehicles will mark the return of Toyota into the battery-powered market after halting production of the RAV4 EV in 2014. Toyota President Akio Toyoda said in September the company is a “little bit late” in pursuing EVs, even as rival automakers rush into the segment. China plans to introduce a cap-and-trade policy linked to zero- and low-emission vehicles from 2019. India is targeting selling only electric cars by 2030.

 

News Reports

Energy and Environment

India to Step Beyond Renewable Goal With China-Scale Tenders
Bloomberg, November 24
India announced that it will tender enough renewable energy projects over the next three years to surpass 200 gigawatts of green capacity build by 2022. This marks a major increase over its original target of 175 gigawatts. With renewable energy targets second only to those set by the government of China, India has a long way to go from a current base of 60 gigawatts.

As India Endures Blanket of Smog, China’s Battle Offers Lessons
Bloomberg, November 16
As New Delhi suffers through a surge in the most harmful type of smog – a toxic stew that makes India’s capital one of the most polluted in the world – Beijing offers lessons in how to clear the air. China for more than a decade has been one of the world’s biggest contributors of air pollution. However, strictly enforced government policies in recent years have allowed China to stabilise concentrations of PM2.5 — tiny, deadly particles linked to respiratory disease. In contrast, PM2.5 numbers in India have continued to soar. 

World has more farmland with India, US and China ranked as the top three globally
South China Morning Post, November 15
Global cropland totals 1.87 billion hectares (4.62 billion acres), 15% to 20% higher than earlier estimates, according to a map released on November 14 by the US Geological Survey. The increase is due to the assessment of areas previously mapped inaccurately, or left unmapped, the USGS said in a statement. India has the largest cropland of any country at 179.8 million hectares, compared with 167.8 million in the US and 165.2 million in China.

China and India Chase Stakes in Abu Dhabi Offshore Oil Fields
Bloomberg, November 15
China and India are each targeting a share of Abu Dhabi’s largest offshore oil fields. China National Petroleum Corp (CNPC) agreed on November 15 with Abu Dhabi National Oil Co. (Adnoc) to study cooperation in areas including offshore energy and natural gas deposits. India’s state-run Oil and Natural Gas Corp. will also be making a bid through its wholly owned international arm ONGC Videsh Ltd.

 


Analyses

What China does when it disagrees with you
Livemint, November 27
Recent developments have highlighted China’s growing influence over foreign governments and civil society. In the past, China has admonished other countries to move beyond a “Cold War mentality” – presumably meaning engaging in relentless global competition using all means available. Yet these developments suggest that China itself may have learnt a lesson or two from it. The much touted Chinese principle of “non-interference” in the workings of other powers is past its sell-by date in Xi Jinping’s China.

From IPhones To Cancer, the India-China Relationship is Full of Irony
South China Morning Post, November 19
For more than a decade, India has benefitted from importing cheap made-in-China products like electric lights, crackers, toys and even mobile phones. Half-baked calls to boycott Chinese goods in India must keep in mind this reality. If Indian manufacturers have been unable to start an industry or fill a demand gap for whatever reason, Chinese companies cannot be blamed for coming in to fill the gap. It is only important that the government and consumers ensure that both quality and safety standards are met.

Will Quad fly? The answer is in Beijing
The Straits Times, November 17
Amidst all the ASEAN and East Asia summit meetings this week in Manila, another gathering in the Philippines capital that took place on the side-lines did not quite get the notice it probably deserves. Two days before the ASEAN Summit, senior officials from the United States, Japan, Australia and India sat down for talks aimed at, in their words, keeping the Indo-Pacific region “free, open and inclusive”. With this, the so-called Quad, short for Quadrilateral Dialogue, got a renewed lease of life. Should it gather momentum, Asia’s security landscape could be altered for the next 100 years.

Will the Quad Mean the End of ASEAN Centrality?
The Diplomat, November 15
A working-level meeting between diplomatic staffers from the United States, India, Japan, and Australia on the sidelines of the Association of Southeast Asian Nations (ASEAN) and East Asia Summits (EAS) has caused quite a lively reaction among Asia-watchers and the policy community. The idea that the Quad (quadrilateral format) is back is exciting at a time when Donald Trump’s administration seems unable to formulate a policy for the Asia-Pacific beyond doing more of what Obama’s team did, minus trade liberalization and plus Twitter-brinksmanship with North Korea.

China and India should now join the TPP
The Straits Times, November 15
After US President Donald Trump pulled the United States out of the TPP on his first day in office in January, many observers pronounced the agreement to be all but dead. But thanks to the persistence of the remaining 11 members, led by Japan, it has been formally resurrected following the meeting of the leaders of the Asia-Pacific Economic Cooperation forum in Vietnam over the weekend. However, there are three glaring omissions in the composition of its membership: the US, China and India.

 


Books and Journals

India Turns East: International Engagement and US-China Rivalry
Oxford University Press, December 2017

By Frédéric Grare  

The author is a Non-Resident Senior Fellow in Carnegie’s South Asia Program. His research focuses on security issues and democratisation in India, Afghanistan, and Pakistan. Previously, he led the Asia bureau at the Directorate for Strategic Affairs in the French Ministry of Defence.

This volume describes how India found itself in a rapidly changing Asian environment increasingly shaped by the US-China rivalry and the uncertainties of US commitment to Asia’s security. The Look East policy initially aimed at reconnecting India with Asia’s economic globalisation. As China became more assertive, Look East rapidly evolved into a comprehensive strategy with political and military dimensions. Frédéric Grare argues that, despite this rapprochement, the congruence of Indian and US objectives regarding China is not absolute. The two countries share similar concerns, but differ in their tactics as well as their thoughts about the role China should play in the emerging regional architecture. Moreover, though bilateral US policies are usually perceived positively in New Delhi, paradoxically, the multilateral dimensions of the US Rebalance to Asia policy sometimes pushes New Delhi closer to Beijing’s position than to Washington’s. This important new book explores some of the possible ways out of India’s ‘Eastern’ dilemma.

 


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the Lee Kuan Yew School of Public Policy, National University of Singapore