China-India Brief #44

China India Brief #44


Published Twice a Month
January 27 – February 10, 2015

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


In conjunction with President Obama’s visit to India followed immediately by Indian Foreign Minister Sushma Swaraj’s visit to China, this Brief features two Guest Columns that analyse the implications of both the visits on China-India relations.

 

Guest Column

Narendra Modi’s China challenge

by Stanly Johny

US President Barack Obama’s recent visit to India has triggered a fresh debate on the old question: Will India join hands with the United States to contain China’s rise? The Obama visit was otherwise welcomed by most Indian media and policy experts. The grand welcome Indian Prime Minister Narendra Modi offered to the visiting American leader, the “breakthrough” achieved by both leaders in the moribund civil nuclear deal and the decision to expand cooperation in defence production, all these point to, experts say, a renewed enthusiasm and confidence in bilateral relations.

The next question is obviously how this renewed enthusiasm in Indo-US ties will affect New Delhi’s China policy. The joint strategic vision document released during Obama’s visit lends credence to the argument that India will eventually be willing to play the American card in Asia. The document calls for “safeguarding maritime security and ensuring freedom of navigation…especially in the South China Sea”. Though it does not name China anywhere, it is beyond obvious who is being targeted when the United States and India are talking about freedom of navigation in the South China Sea. Beijing has increasingly been assertive in staking claims in the sea.

The joint statement is in line with the position India is taking vis-à-vis the South China Sea territorial disputes recently. In an earlier joint statement, issued when Prime Minister Modi visited Washington in September last year, both India and the United States “expressed concern about rising tensions over maritime territorial disputes, and affirmed the importance of safeguarding maritime security and ensuring freedom of navigation and overflight throughout the region, especially in the South China Sea.” In the same month, while visiting Japan, Modi warned against countries with “expansionist policies”, another reference to China. Importantly, New Delhi chose to articulate it in front of leaders from countries which are at odds with China.

The United States, though it enjoys strong trade and economic ties with China, is in a strategic competition to contain China’s rise. It sees India, the third largest economy in Asia as a counterweight to China. During his visit to India in June 2012, then US secretary of defence, Leon Panetta, called India a “lynchpin” in the United States’ strategic pivot to Asia. On the other side, India has its own problems with China, including a decades-old border dispute, security concerns as China is expanding its maritime reach, and a skewed trade balance. So, many experts believe there are objective conditions for both India and the United States to bond together against China.

This argument, however, has two problems. First, the United States is a declining superpower, while China is an emerging regional power whose influence is spreading in India’s backyard. Aligning with a declining power against an emerging neighbour could become a strategic blunder. Secondly, joining the US strategic project could cost India its strategic autonomy and harm its standing in the region, much like what happened to Pakistan during the Cold War. It was a partner of superpower America and that partnership status did little to solve its problems. Indeed, it may have worsened them.

Indian policy makers seem to have realised this strategic trap. Look at how the Modi government is dealing with China. The Prime Minister had met Chinese President Xi Jinping during the BRICS summit in Brazil in July, a couple of months before he travelled to Japan. When Xi visited India, Modi offered him an unprecedented welcome at his home state Gujarat. Soon after Obama concluded his India visit, Foreign Minister Sushma Swaraj went to Beijing where she met her Chinese and Russian counterparts and issued a joint communiqué that took a diametrically opposite view from the West’s on several global issues, from Ukraine to Syria. All these point to India’s resolve to take a nuanced position vis-à-vis China.

But then, how do we explain the Indo-American joint statements that frequently take indirect jibes at China? India’s China policy is multi-pronged. It has to accommodate both competition and cooperation. The disputes are largely territorial, while the areas of cooperation are related to the economy. India needs investments to develop infrastructure, which it could attract from China. During his India visit, President Xi had promised to invest $20 billion in India (in contrast, President Obama promised $4 billion investment).

On the territorial disputes, the strategy is to hold the line on the land frontier in the north and maintain the edge in the maritime south (Indian Ocean). To achieve the former, India is actively involved in talks with China and has developed several mechanisms for “resolving the border issue at the earliest”. On the other side, it’s also in India’s interest that China remains preoccupied with its immediate maritime theatre, the South China Sea or the Yellow Sea. Therefore, India taking up the issue of “free navigation in the South China Sea” with world leaders need not be seen as an effort of the country joining the China containment brigade. Rather, it could be a well calibrated attempt to strike a balance between competition and cooperation with China.

But the real challenge of this policy is the great game is Asia. The United States has already said that it is pivoting to the East. Australia and Japan are its strongest allies in the region. It would like India to play a larger role in this pivot. On the other side, the strategic and economic cooperation between Russia and China is on the rise, which is what’s called Putin’s pivot. Russia is angry with the West for reaching into its backyard in Eastern Europe, while China is concerned about US intentions. In other words, there are two pivots in Asia. And both sides expect India to play a role in favour of them. The challenge before Indian policy makers is to identify the areas of cooperation on both sides and limit the scope of partnership to those areas, irrespective of the pressure great powers exert on it. Only then maintain its strategic autonomy, which is imperative for its own rise.

 

Dr Stanly Johny is Assistant Editor with The Hindu Business Line, Chennai


Guest Column

Holding the Ring in Sino-Indian Relations: Sushma Swaraj’s Visit to China

by David Scott

India’s Minister for External Affairs Sushma Swaraj went to China on a four-day official visit in early February 2015, and was accompanied by Subrahmanyam Jaishankar. This latter point was significant as Jaishankar had only been appointed as the new Foreign Secretary a few days previously, having previously been the ambassador to the United States. His appointment was seen by some commentators as representing a hardening stance towards China as well as increasing links with the US.

Chinese expectations were high in public. On the eve of the visit, Chinese foreign ministry spokeswoman Hua Chunying proclaimed that “political mutual trust between the two sides has been constantly deepened, bilateral cooperation in various fields has yielded fruitful results and the two countries have maintained sound coordination and cooperation in international and regional affairs”. Hua’s talk that mutual trust had been constantly deepened over the previous years was questionable, since opinion  poll ratings showed Indian perceptions of China and Chinese perceptions of India deteriorating in recent years. Some bilateral cooperation at the global level stands in contrast to increasing regional competition in Southeast Asia and the Indian Ocean. Chinese perceptions in the immediate run up to the visit were though quite assertive with the official state press agency Xinhua (January 6) arguing that “India needs China as a crucial cooperation partner”. On a more positive note, President Xi went beyond protocol in giving Swaraj a formal meeting rather than leaving it to his Foreign Minister and Prime Minister, with Xi enthusing about how China-India relations had entered a ”new stage”.

Chinese hopes were to gauge India’s intent to involve itself in South China Sea issues, and if possible to dissuade India from making common cause there with Vietnam and with the United States. Chinese hopes were also to get India to endorse its Maritime Silk Road proposal that it had pushed throughout 2014. However, Swaraj’s reservations on the proposal (“it has to be synergy based”) reflected the ambivalences that India continues to feel towards a proposal that though couched in win-win terms by China also opens up the uncomfortable prospect of greater Chinese involvement across the Indian Ocean, India’s strategic backyard.

Swaraj’s trip came immediately after Barack Obama’s second summit with Narendra Modi, in which a battery of economic, security and defence undertakings between the United States and India had been flagged in their Joint Statement Shared Effort. US-India cooperation at the regional level, and implicit criticisms of China, had also been made in their statement Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region, that China was unhappy over. The Chinese media warned India over ”sliding” (Global Times , January 26) into the US camp. Swaraj’s trip to China represented an element of holding the ring, a delicate trip to assuage Chinese concerns, even as India was moving forward with cooperation with the US.

As Swaraj arrived in China, official briefings by Hua Chunying argued that “the Chinese side is ready to work with the Indian side to sustain the sound momentum of the development of bilateral relations, build a more closely-knit partnership for development and realize peaceful, cooperative and common development”. His focus on development echoes the definition of India-China relationship as a developmental partnership in the Joint Declaration signed by Modi and Xi in September 2014.

India’s cooperation with China at the global level was reaffirmed through participation in the RIC trilateral mechanism alongside the Chinese and Russian Foreign Ministers. The RIC Joint Statement invoked “multipolarity” as a explicit shared goal, in implicit contrast to US “unipolarity”, and which Xinhua (February 2) welcomed as showing an element of ”balance” (i.e balancing) on India’s part. China and Russia giving public support for India joining the Shanghai Cooperation Organisation and the Asia-Pacific Economic Cooperation (APEC) groupings. The RIC formation continues to soften some of the bilateral irritants in India-China relations.

The focus of Swaraj’s trip was economic, in part because there was little tangible projects on the strategic-security-military front. This focus was why Swaraj’s set piece six-point speech in Beijing noted that “a critical change in nature of our bilateral ties over the last few decades has been its growing economic dimension”. Ambiguous statements were made in that speech by Swaraj. Her acknowledgment that “China is today our largest partner in trade in goods” skirted the unbalanced nature of their trade, which continues to produce a growing trade surplus for China and a growing trade deficit for India. Swaraj’s call in that speech that “we will make it easier for Chinese companies to do business in India and expect that similar encouragement would be given to our companies to expand their business in China” was a challenge laid down to the Chinese government. Her note that “serious discussions on enhancing connectivity have been initiated” was another way of saying they had not yet been concluded. Finally, her sense that “a particularly significant new area of collaboration is in railways”, but ignored the destabilising effect of infrastructure projects on both sides of their disputed frontier.

Amid the generally economic focus of the speech, a noticeable strand was Swaraj’s detailing of Buddhist links between the two countries. She complemented her Chinese hosts by approvingly citing how in his September 2014 visit “President Xi alluded to the civilizational links nurtured by inspiring personalities and the far reaching influence of Buddhism”. This reflects the so-called Buddhist diplomacy pursued both by China and India, which serves as bilateral link between them, even while their respective Buddhist-related diplomatic outreaches around each other reflect regional competition between the two.

In some ways the most important news was how Swaraj announced that “Modi is going to come [to China] in May. I will give them dates today. This is a preparatory visit”. This would echo her previous trip to China in August 2014 which served as a preparatory trip for Xi’s trip to India in September 2014. Swaraj’s preparatory visit in February 2015 represented a holding operation, with Sino-Indian relations awaiting further direction from the two leaderships in May 2015.

 

Dr. David Scott retired from teaching at Brunel University on 31 January 2015. He is now actively engaged in ongoing research and consultancy work on India and China foreign policy.


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News Reports

Bilateral Relations

Commemorating the constitution
Global Times, January 28
The Consulate General of India in Shanghai held a grand celebration at a downtown hotel to celebrate the 66th Republic Day of India. With deep saffron, white and India green – three major colors of India’s flag – a table tapestry decorated with flowers greeted hundreds of guests as they entered the reception. About 400 people attended the event, including municipal government officials, members of government advisory bodies, consul generals from other countries, Indian expats in Shanghai, and representatives from Chinese and Indian companies. The celebration began with the national anthems of India and China. Then Naveen Srivastava, Consul General of India in Shanghai, and several Shanghai officials lit a ceremonial Indian lamp. “Last year was a crucial year in the development of India-China relations,” Srivastava said at the celebration.

Foreign Minister Sushma Swaraj visits Beijing in balancing act
The Economic Times, January 29
External Affairs Minister Sushma Swaraj will be in Beijing to explore avenues of bilateral and multilateral cooperation, exactly a week after India’s joint declaration with the US on safeguard freedom of navigation and maintaining stability in the Asia-Pacific and Indian Ocean Regions. In what could be described as a case of classic balancing act in diplomacy, Swaraj will not only meet her Chinese counterpart Wang Yi but also have an interaction with Russian Foreign Minister Sergey Lavrov during her three-day stay in Beijing from February 1. The meetings with both Wang and Lavrov would enable follow up of Chinese and Russian Presidents visit to India last year when economic engagement with Beijing and defence and strategic partnership with Moscow topped the agenda respectively, according to official sources.

India, China natural partners in many areas: Sushma
The Hindu, January 29
External Affairs Minister Sushma Swaraj, who heads for Beijing in pursuit of what is being dubbed as New Delhi’s “multi-vectored” diplomacy, is expected to discuss broad themes, not necessarily on the radar during U.S. President Barack Obama’s just-concluded visit to India. Among them could be the next steps to strengthen the Brazil-Russia-India-China-South Africa (BRICS) grouping, and deepening of Sino-Indian economic ties. At her media briefing on Wednesday, Chinese Foreign Ministry spokesperson Hua Chunying signalled that Ms. Swaraj’s visit falls within the ambit of a 5-10 year framework plan that was unveiled during the visit to India last September by Chinese President Xi Jinping. She said China was willing to work with India to forge a closer partnership.

India committed to ‘early settlement’ of boundary issue with China: Sushma Swaraj
The Economic Times, February 1
India is committed to finding an “early settlement” to the vexed boundary issue, External Affairs. Minister Sushma Swaraj today said on her maiden visit to China as she proposed a six-point template to build Sino-India ties to realise the common dream of ‘Asian Century’. Addressing an India-China Media forum at the start of her four-day visit, she said the two countries should follow action oriented approach, broad base bilateral engagement, convergence of common, regional and global interests, develop new areas of cooperation, expand strategic communication, fulfil common aspirations to usher in an “Asian Century”.

India PM Narendra Modi to visit China in May
BBC Online, February 2
China is one of India’s top trading partners but they vie for regional influence and dispute their border. The announcement comes after US President Barack Obama’s landmark visit to India last week. India and the US share an interest in curbing China’s growing regional influence. During Mr Obama’s landmark visit he and Mr Modi signed the “Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region” pledging to work together to keep freedom of navigation, maritime security and air space safe, especially in the South China Sea. Correspondents say it was the first time India and the US had come together openly to say that they do not want Asia to be dominated by one power.

Sushma Swaraj meets Chinese President Xi Jinping; New Delhi, Beijing taking ‘solid steps’ for new momentum in ties
The Times of India, February 2
Chinese President Xi Jinping on Monday met external affairs minister Sushma Swaraj here and said China and India have taken “solid steps” to step up cooperation and implement the agreements reached between him and Prime Minister Narendra Modi. “I have full confidence on the future of China and India relations and I believe that good progress will be achieved in the growth of bilateral relations this year,” Xi told Swaraj who called on him at the Great Hall of the People here. Xi said that since his visit to India in September last year, relations between the two countries have entered into a new stage. The positive side of China-India relationship has been gowning, he said, adding that momentum of cooperation between the two countries picked up with solid steps being taken to implement the agreements between him and Modi.

Media plays role in Sino-Indian peace
Global Times, February 3
The Sino-Indian relationship has seen robust development in the past few years. As Asian countries, both are considered as a regional powerhouse and approached by other major powers. Yet the lack of mutual trust and potential rivalry seem to hinder further development of bilateral ties. At the second India-China Media Exchange jointly held by the Global Times Foundation and India’s Observer Research Foundation in New Delhi in late January, media professionals and experts from both countries shared their views on these matters of concern.

China media: India’s ‘pragmatic’ diplomacy
BBC Online, February 3
Chinese papers describe India’s diplomacy as “pragmatic” and look forward to warmer Beijing-Delhi ties. Chinese President Xi Jinping met visiting Indian Foreign Minister Sushma Swaraj on Monday. The president reportedly said he was looking forward to Prime Minister Narendra Modi’s upcoming visit to China in May. Papers and experts say it is “rare” for a top Chinese leader to meet a visiting foreign minister, and the meeting shows that Mr Xi has attached huge importance to Beijing’s relations with Delhi. Ms Swaraj on Sunday also met her Chinese counterpart Wang Yi and Russian Foreign Minister Sergey Lavrov as part of the RIC (Russia, India, China) group’s summit. Commenting on the trilateral meeting, Xinhua News Agency describes India’s diplomacy as “pragmatic” and one which has the “intention to seek a balance”.

Ambitious Deadline Set for China Border Talks
The Telegraph, February 3
India and China have quietly set an ambitious May deadline for their negotiators to hammer out a “breakthrough” in their century-old boundary dispute in time for a visit by Prime Minister Narendra Modi to Beijing announced by foreign minister Sushma Swaraj yesterday. National security adviser Ajit Doval will soon travel to China for the first of a series of negotiations the two nations have agreed on during Sushma’s ongoing visit to Beijing where she today met President Xi Jinping, senior officials familiar with the plans have told The Telegraph

‘India upgrading defence infrastructure along China border’
Business Standard, February 7
India is working on upgrading its defence infrastructure along its border with China in the northeastern region, Defence Secretary R K Mathur said today. “We are not doing any defence deal with China, but a deal has to be on border management,” he said, adding, border disputes would be discussed during Prime Minister Narendra Modi’s visit to China in May.

China, India express willingness to deepen and broaden bilateral cooperation
Global Times, February 8
China and India are willing to deepen bilateral cooperation and collaborate in protecting common interests, said top officials from the two countries in Munich. The positive interaction between China and India is increasing and their momentum of cooperation is improving, said Chinese State Councilor Yang Jiechi when meeting Indian National Security Advisor Ajit Kumar Doval on the sidelines of the ongoing 51th Munich Security Conference. Both sides should seize the opportunities, remove the disturbances, and strengthen the positive trend of China-India relations, Yang said.

China asks India to sign a new Code of Conduct on Border management
IBN Live, February 9
Ahead of the 18th round of Special Representative Boundary talks between India and China, National Security Advisor Ajit Doval met his Chinese State Councillor Yang Jiechi in Munich on the sidelines of an international security conference and discussed steps to deepen the bilateral cooperation. China asked India to sign a new Code of Conduct on Border management to which the latter said it was open to the idea. China has called for pushing forward talks to resolve the border issue and remove “disturbances” in bilateral ties. The meeting assumes significance as it takes place ahead of Prime Minister Narendra Modi’s maiden visit to China in May.

 

News Reports

China and India in the Regions

China to deploy range of naval ships in Indian Ocean
The Economic Times, January 29
Riled by reports of the US sharing intelligence with India over movements of Chinese submarines in the Indian Ocean, China today said it would deploy “different kinds of naval ships” depending on requirements of operations and other nations “need not read too much into it”. Chinese military spokesman Col Yang Yujin said at a media briefing that China is deploying its naval fleet on escort missions in anti-piracy operations in Gulf of Aden and Somalia under UN resolution of 2008.

China, India, Russia FMs to meet in Beijing
China Daily, February 1
The foreign ministers of China, India and Russia will meet in Beijing next week, in the wake of US President Barack Obama’s visit to India. The 13th trilateral meeting scheduled for Feb 2 will coincide with Indian Foreign Minister Sushma Swaraj’s first visit to China since she took office, China’s Foreign Ministry spokeswoman Hua Chun-ying said at a news conference on Wednesday. Swaraj’s visit, scheduled for Jan 31 to Feb 3, will also be the first visit by a Cabinet minister of the Bharatiya Janata Party-led government to Beijing after India’s Prime Minister Narendra Modi took office in May. Western media reported at length about the upturn of India-US ties and the “shadow” of China looming over Obama’s high-profile visit, which concluded on Tuesday. Washington views India as a potential counterweight in Asia to China. In a veiled reference to China, the two leaders reiterated the “importance of safeguarding maritime security and ensuring freedom of navigation and overflight throughout the region, especially in the South China Sea”.

Full text of joint communique of Russian, Indian, Chinese foreign ministers’ meeting
Xinhua, February 2
Russian, Indian and Chinese foreign ministers issued a joint communique Monday after wrapping up their 13th meeting in Beijing. The following is the full text of the document: Joint Communique of the 13th Meeting of the Foreign Ministers of the Russian Federation, the Republic of India and the People’s Republic of China.

Good US-India relations no threat to China: Obama
The Times of India, February 2
Surprised at the Chinese reaction over his visit to India, US President Barack Obama has said there is no reason for Beijing to be threatened by a good relationship between New Delhi and Washington. “I was surprised when I heard that the Chinese government had put out these statements. China doesn’t need to be threatened because we have good relations with India,” Obama told Fareed Zakaria’s GPS, a popular CNN Sunday talk show. In his interview, which was taped in New Delhi on January 27, the last day of his three-day India trip, Obama referred to his November visit to China and said he had some very successful meetings with his Chinese counterpart.

China, Russia back India’s anti-terror plan
Today Online, February 4
China and Russia have agreed to back a long-standing proposal by India at the United Nations to punish those who shelter and finance terrorism, a move which could upset neighbouring Pakistan. “I see this as a major achievement,” India’s External Affairs Minister Sushma Swaraj told reporters after talks with her Russian and Chinese counterparts in Beijing on Monday. The three countries called for an early conclusion of negotiations at the UN on the Comprehensive Convention on International Terrorism, which criminalises terrorism and deny terrorists, their financiers and supporters access to funds, arms and havens.

Sri Lanka’s new president to visit India, steers away from China
Reuters, February 4
Sri Lanka’s President Maithripala Sirisena will visit India on Feb. 16, his first state visit abroad, a government official said on Wednesday, part of efforts to repair relations with New Delhi which soured under the previous government. Sirisena earlier pledged to pursue a more global foreign policy in a break with his predecessor Mahinda Rajapaksa’s pursuit of close ties with China, a key supporter of Sri Lanka’s economy since its 26-year civil war ended in 2009.

India working to fix army modernisation glitches for edge over neighbours: Pentagon
The Economic Times, February 4
Aimed at addressing the problems of ageing equipment and to better posture itself in defence against Pakistan and China, the new Indian government is making efforts to overcome impediments to its major military modernisation drive, the Pentagon has said.  “India is in the midst of a major military modernisation effort – undertaken by all three military services – to address problems with its ageing equipment and to better posture itself to defend against both Pakistan and China,” Lt Gen Vincent R Stewart, Director of Defense Intelligence Agency, told members of the House Armed Services Committee during a hearing on global threat assessment on Tuesday.

Sri Lanka backs China port city deal after threat to cancel
Reuters, February 5
Sri Lanka’s cabinet said it would allow a $1.5 billion “port city” deal with China to go ahead, apparently dropping its earlier threats to cancel the project, approved by the last government. Cabinet Spokesman Rajitha Senaratne said new President Maithripala Sirisena would however discuss with Beijing controversial arangements over the freehold of land to be used, when he visited China in March. Sri Lanka’s neighbour India has raised concern over security threats posed by Chinese ownership of the freehold of 20 hectares of land next to the main commercial port in Colombo, as India is a major user of Colombo as a transshipment port.

Obama’s Prayer Breakfast Words to Dalai Lama Ruffle China and India
The New York Times, February 6
President Obama’s comments at this week’s religious gathering not only caused domestic problems — offending some conservative American Christians, who objected to the reference to “terrible deeds” during the Crusades — but have also left China and India piqued. The Chinese objected to the warmth shown to the Dalai Lama, while an Indian official reacted to the president’s remarks about acts of religious intolerance in the country by noting that India (read: not the United States) had openly supported the Dalai Lama for decades. For both India and China, Mr. Obama’s remarks Thursday may have come as something of a surprise. Just over a week ago, Mr. Obama completed a three-day visit to India aimed at reinvigorating a frayed relationship. And until this week, China and the United States had worked out a reliable pas de deux over the Dalai Lama, 79, the Nobel laureate and Tibetan spiritual leader whom Beijing sometimes describes as a “wolf in sheep’s clothing.”

China involved in six nuclear projects in Pakistan, reveals official
India Today, February 8
A Chinese official has confirmed that China is involved in as many as six nuclear power projects in Pakistan and is likely to export more reactors to the country, indicating that the much debated civilian nuclear cooperation between the two countries will go ahead despite concerns voiced that it is in contravention of Nuclear Suppliers’ Group (NSG) guidelines. While China has in the past declined to confirm or share details regarding the extent of its on-going civilian nuclear cooperation with Pakistan, a top official of the National Development and Reform Commission (NDRC), the planning body, was quoted as saying on Saturday that Beijing has been involved in the construction of six reactors in Pakistan.

Chinese tycoon executed for running mafia-style gang
The Times of India, February 9
A former mining tycoon who led a mafia-style crime gang that ran casinos and killed rivals has been executed along with four of the gang’s members, a court in central China said on Monday. Liu Han had been chairman of energy conglomerate Sichuan Hanlong Group in the southwestern province of Sichuan. The company owns stakes in Australian and US mines. Their penalties and executions come amid an anti-corruption crackdown launched by President Xi Jinping that has ensnared senior politicians and influential businessmen.

 

News Reports

Economy and Trade

Around 12 million tonnes of iron ore stuck at Indian ports
Reuters, February 4
Around 12 million tonnes of low-grade iron ore has been stuck at Indian ports for months, stranded as hefty export taxes and plunging prices make higher quality ore more appealing to buyers, said industry and government officials. Indian steel producers, many of which have been buying iron ore overseas amid short supply at home, are unable to use the low-grade material, which is typically shipped to top market China. Iron ore for delivery to China this week fell to its lowest since May 2009 at $61.30 a tonne, based on data from The Steel Index, extending losses to more than 50 percent from last year.

BRICS prospect remains promising amid global headwinds
Global Times, February 5
The current economic hardship detected in some developing countries has dampened confidence in the prospect of BRICS.But it requires wisdom and far-sightedness to see that the emerging-market bloc is still an essential engine driving forward the world economy. Economic slowdown in almost all five BRICS countries in the past year have unfortunately given rise to the “Broken BRICS” rhetoric, which has further gained popularity in the West with the recently-revealed 7.4 growth of the Chinese economy last year, slowest in 24 years. As for India, the World Bank has projected that its economy, expected to grow 6.4 percent this year and even faster in 2016, will be a “bright spot” in an medium global economic outlook.

PM Modi’s Make in India: China’s Huawei makes $170 million investment in R&D centre
The Economic Times, February 5
Chinese telecom company Huawei Technologies Co Ltd has invested $170 million to open a research and development centre in India as it ties itself to Prime Minister Narendra Modi’s “Make in India” campaign, the company said on Thursday. The campus in Bengaluru, is the first such investment made by a Chinese company in India and will be used to develop software components, Huawei said. It is also the company’s biggest R&D center outside China. Modi has been making a push to lure foreign investors to the country and boost its manufacturing capacity.

China’s AliPay opens account in India with 25% stake in One97
The Economic Times, February 5
Ant Financial Services Group, China’s leading online financial services company that owns AliPay, said it has entered into a strategic agreement with One97 Communications that runs mobile payment and commerce platform Paytm. Ant Financial will pick up a 25 per cent stake in One97 to support the growth of mobile payment and commerce platform in India. ET had reported last month that Paytm was likely to get funding of about $575 million from Alibaba and Alipay, the largest online payments services provider in China, for about 25-30 per cent stake in the company. Cyril Han, vice president of Ant Financial, did not disclose the investment amount but added that the deal that has been signed will close in the second quarter of this year. The investment may well value the company at over $ 1.5 billion.

India eyes U.S. aircraft carrier technology as arms ties deepen
Reuters, February 5
India wants to use state-of-the-art U.S. technology to boost the range and potency of a planned aircraft carrier, defence sources said, a move that would tie their arms programmes closer together and counter China’s military influence in the region. The proposal, referred to only obliquely in a joint statement at the end of President Barack Obama’s recent visit to New Delhi, is the clearest signal yet that Washington is ready to help India strengthen its navy. Ashton Carter, Obama’s nominee for defence secretary, said he would take a strong interest in strengthening U.S.-India ties if confirmed, and a “great deal” could be done to expand military and defence technology cooperation.

GDP growth in India and China: Catching the dragon
The Economist, February 8
Official statistics published on February 9th revealed that India’s GDP rose by 7.5% in 2014, a shade faster than China’s economy managed over the same period (see chart). Narendra Modi, India’s publicity-savvy prime minister, could scarcely have hoped for a better endorsement of his first few months in office.

Imitation drugs from India have big market in China
CCTV, February 9
Lung cancer is the deadliest form of the disease in China. Every year, 200,000 new lung cancer patients are treated with targeted drugs which could cost upwards of 15,000 yuan a month. But a generic imitation of a popular UK cancer drug is being secretly sold online in China for a fraction of the cost, posing great risks to public health. Type in a search for India Iressa and you’ll find many links selling it. But what people are buying is a generic copy of the cancer fighting drug Iressa, which is produced and patented by a UK pharmaceutical company. Despite the dangers of buying generic copies of drugs, the low price tag is pushing many desperate people to take the risks.

India Growth Rate Set to Rival China
The Wall Street Journal, February 9
India expects its economy to grow at 7.4% in the current fiscal year, a growth rate that rivals China’s, reflecting a strengthening recovery but also a recent radical revision in the way the country calculates its gross domestic product. The country’s upbeat growth figures—and the revised calculations that underpin them—provoked confusion and jubilation in roughly equal measure. The figures were released Monday by the Indian statistics ministry. “Those of us who follow India closely are really struggling to make sense of this,” said Eswar Prasad, professor at Cornell University and former Asia economist at the International Monetary Fund. “Essentially the numbers just don’t quite seem to add up.”

 

News Reports

Energy and Environment

No US-India deal on climate change
BBC, January 27
The world’s largest carbon emitter, China, announced for the first time that its emissions would peak by 2030. The second biggest polluter, the US, said it would cut carbon emissions by 26%-28% by 2025 compared with 2005 levels. All eyes were then on the third largest carbon emitter, India, for a similar commitment that could set the stage for a global climate deal to be signed later this year. Indian officials were, however, quick to argue that the development status of their country – where more than 300 million people have no access to electricity – was not comparable to China, and that they were also way behind even in per capita emission.”The world does not expect India to make a similar announcement (like the US-China one),” Indian Environment Minister Prakash Javadekar told the BBC during the UN climate meeting in Peru last December.

Russia, India, China to cooperate in energy, global issues
Deccan Herald, February 3
Russia, India and China Monday agreed to explore the potential for cooperation in the field of oil and natural among themselves and in other fields of energy and in environmental protection and to further strengthen coordination on global issues. External Affairs Minister Sushma Swaraj, her Russian counterpart Sergey Lavrov and Chinese Foreign Minister Wang Yi met for the 13th Foreign Ministers Meeting of the Russia-India-China trilateral here. In a joint communiqué, the three countries stressed on the importance of pursuing a new type of international relations featuring win-win cooperation and on the need to respect diversity of civilisations and the independent choice of development path and social system by the people of all countries and, support peaceful settlement of disputes through political and diplomatic means.

 


Analyses and Commentaries

Why China Is Nervous About Its Role in the World
Time, January 29
China’s fear of closer ties between the U.S. and India may indicate growing economic problems at home. In the wake of President Obama’s historic trip to India, China issued an unsolicited and perplexing statement downplaying the relevance of the visit. As the White House pointed out in response, the only thing significant about China’s statement was the fact that the Asian nation felt the need to make it in the first place. The rivalry between China and India for economic power and strategic control in Asia is longstanding and is likely to continue into the foreseeable future. But China’s taunt is not necessarily a sign of its hostility towards India but an inadvertent admission of its declining supremacy in the region.

The great game folio: Modi’s China problem
The Indian Express, January 30
Prime Minister Narendra Modi’s decision to expand the engagement with the United States on regional security in the Asia Pacific and the Indian Ocean has set off much hand-wringing in New Delhi’s foreign community about the potential Chinese reaction, writes Raja Mohan. This is not surprising, given the deep concerns in the UPA government that drawing close to America might provoke China. Although it was then-PM Manmohan Singh who took the initial steps in the first term of the UPA to expand the strategic partnership with the US and its Asian allies, there was a definite attempt at distancing Delhi from Washington in the second term. These fears were more about the lack of self-assurance in the Congress leadership and the security establishment rather than a credible assessment of China’s foreign policy record, or its current geopolitical calculus, or the nature of Asia’s international relations today.

Why China Doesn’t See India As a Threat
Diplomat, February 2
A warmer India-U.S. relationship will not hurt China-India relations — unless India makes a suicidal choice. The recently concluded trip by U.S. President Barack Obama to India was hailed by many as a turning point in U.S.-India relations. A short list of achievements includes agreements in defense, nuclear cooperation, climate change, and security. In particular, there is considerable hype that India has agreed to join the U.S. to contain China’s rise. There are also reports that that China is now worried about the warming relationship between the U.S. and India. A warm U.S.-India relationship will not worry China. In fact, the outcome might disappoint those in India and the U.S. who want to actively balance the rise of China.

India Joining the China Containment Brigade? Not So Fast.
Diplomat, February 3
A trilateral meeting between Russia, China, and India’s foreign ministers reveals the synergy between those countries. Analysts around the world (especially in the U.S. and India) are still buzzing about President Barack Obama’s trip to India as the chief guest at the Republic Day parade. The prevailing theory is that India is tilting toward the U.S. in its foreign policy, after decades of keeping Washington at arm’s length under the policy of non-alignment. But it’s important to keep in mind that a friendlier U.S.-India relationship will not automatically translate into a chill in New Delhi’s ties with other regional powers – including China. As proof of this fact, a week after Obama’s much-feted visit to India, Indian Foreign Minister Sushma Swaraj met with her counterparts from China (Wang Yi) and Russia (Sergei Lavrov) in Beijing for the 13th Russia-India-China trilateral foreign ministers’ meeting. The joint statement issued after their meeting agreed that the three countries “need to further strengthen coordination on global issues and practical cooperation.”

Warring over Sino-India growth pointless
Global Times, February 4
According to the IMF, India is expected to grow at 6.5 percent in 2016, which will overtake China’s projected growth rate of 6.3 percent. Analysis also shows that India might keep this leading position for quite a long time. Some Western scholars are thrilled to hear this prediction, because they have finally found proof for their claim that India’s “democratic system” gives more spur to development and innovation than China’s “authoritarian system.” They always refer to the political systems of Western countries to analyze the economic growth in China and India, examining whether their political systems are similar or identical to those of the West. Those who believe the political system is everything are actually not familiar with specific circumstances of China and India, especially the ethnic culture of the two. Thus, it is impossible for them to get a thorough understanding of the change of the two nations’ growth rate, writes Ding Gang.

Reciprocity must dictate India, China relations
The New Indian Express, February 3
External affairs minister Sushma Swaraj’s four-day visit to China was mainly to prepare the ground for prime minister Modi’s visit sometime in May. It reflected India’s growing clout in the region. One of her tasks was to attend the Russia, India, China (RIC) foreign ministers’ conference where they reached an understanding on fighting terrorism. All the three countries have been experiencing terrorism in one form or another. One good news for India is that China and Russia supported India’s inclusion in the 21-member APEC and the Shanghai Cooperation Organisation. They also want India to play a greater role in the UN, though it does not mean China wants India as a permanent Security Council member.

India subtly shifts on climate change agreements, but power gap persists
Global Times, February 5
After the US-China agreement on climate change was signed in late 2014, expectations were high that India would also come on board during US President Barack Obama’s recent visit to the country, writes Dhanasree Jayaram. Although a “concrete” agreement was not reached in terms of greenhouse gas (GHG) emissions reduction commitments, a few crucial steps were taken in the direction of securing a stronger agreement at the Paris climate convention later in 2015. India being the third largest emitter of GHGs is expected to take on the leadership role on the global climate change scene. However, India’s per capita emissions stand at a meager 1.7 metric tons (mt), far behind the 17.6 mt of the US and China’s 6.2 mt. Even in terms of aggregate emissions, India accounts for only 6.41 percent of the world’s total GHG emissions.

India, China and an opportunity
The Hindu, February 7
Keeping up the momentum in India-China relations, External Affairs Minister Sushma Swaraj came back from her three-day visit to China with several deliverables — including a new Chinese openness in seeing India take up permanent membership of the Shanghai Cooperation Organisation (SCO) and Asia-Pacific Economic Cooperation (APEC). Previously, the Chinese had linked SCO membership with a greater role for Beijing in the South Asian Association for Regional Cooperation (SAARC). It is in such a scenario of contact and consultation that “strong leaders” such as Mr. Modi and Mr. Xi can think about making some hard decisions when it comes to the decades-old boundary dispute that keeps surfacing during major bilateral visits. So far, the coalition nature of Indian governments has been seen as a major obstacle to the give-and-take, compromise approach on the border question. Today, Mr. Modi is in the happy situation where he can take a political call on issues, rising above intra-coalition pressures.

 


Journal Articles

Energy Security in the Asia-Pacific Region
Contemporary Economic Policy, January 2015
Michael Intriligator looks at the nations of the Asia-Pacific Region, including its three sb-regions of Northeast Asia, Southeast Asia and South Asia, and the potential dangers they face in securing the energy needed for their economies. His paper focuses on these dangers and discusses the future prospects for these vulnerable nations, including their need for closer cooperation.

The Energy Metabolism of China and India between 1971 and 2010: Studying the Bifurcation
Renewable and Sustainable Energy Reviews, January 2015
Raul Velasco-Fernandez, Jesus Ramos-Martin and Mario Giampietro’s paper presents a comparison of the changes in the energetic metabolic pattern of China and India, the two most populated countries in the world, with two economies undergoing an important economic transition. The comparison of the changes in the energetic metabolic pattern has the scope to characterize and explain a bifurcation in their evolutionary path in the recent years, using the Multi-Scale Integrated Analysis of Societal and Ecosystem Metabolism (MuSIASEM) approach. The analysis shows an impressive transformation of China׳s energy metabolism determined by the joining of the WTO in 2001. Since then, China became the largest factory of the world with a generalized capitalization of all sectors, especially the industrial sector, boosting economic labor productivity as well as total energy consumption. India, on the contrary, lags behind when considering these factors.

 


Compiled and sent to you by Centre on Asia and Globalisation and
the Lee Kuan Yew School of Public Policy, National University of Singapore