China-India Brief #61

China India Brief #61


Published Twice a Month
October 15 – 28, 2015

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


Guest Column

“Triangulation” dynamics: Jaishankar on India, China and the US

by David Scott

Subrahmanyam-Jaishankar-by-East-West-Center

Dr S Jaishankar, Foreign Secretary, Ministry of External Affairs, India

During the summer, Subrahmanyam Jaishankar delivered the 21st IISS Fullerton Lecture in Singapore, on the topic of India, the United States and China. Its focus was simple, “triangulation” dynamics in which “the inter-play of India with the US and China is among the key factors that will determine the strategic balance in Asia and beyond”. Jaishankar was well equipped to discuss this India-China-US triangle, having been appointed Ambassador to China in July 2009 and then Ambassador to the US in September 2013. These postings enabled him to give key speeches profiling India’s bilateral relations with each respective country such as India and China: Fifty Years After (2012) and India and the United: The Long View (2014);  speeches which outlined but also implicitly contrasted economic convergence with China and strategic convergence with the US. Since being appointed Foreign Secretary in January 2015, there have been little released speeches from Jaishankar, so this IISS Lecture was all the more significant.

In his IISS lecture, Jaishankar’s sense of India-US relations was that they had “definitely acquired new energy in the last year”, with a “convergence of interests, in the case of India, that is quite significant”. This convergence was exemplified by Jaishankar through the Joint Strategic Vision for Asia-Pacific and Indian Ocean Region drawn up in May 2015 between India and the US. Jaishankar’s take on the Joint Strategic Vision was that

  1. we affirmed our shared interest in safeguarding maritime security”;
  2. “ensuring freedom of navigation and over-flights throughout the region”;
  3. urged all parties to avoid the threat or use of force and pursue resolution of disputes through peaceful means, in accordance with international law”.

All three issues were China-related. [A] related to China’s naval appearance in the Indo-Pacific that concerned the US in the Western Pacific and India in the Indian Ocean. [B] related to China’s declaration of an Air Defence Zone in the East China Sea. [C] related to growing Chinese assertiveness and degree of coercive diplomacy in the South China Sea. Jaishankar pointed to a China-context in his wider sense that “the deepening and broadening of the Indo-US relationship has been among the key elements of a changing Asian calculus”, a calculus by China’s neighbours in the face of China’s growing power.

With regard to China, Jaishankar accompanied the Indian Prime Minister Narendra Modi on his trip to China in May 2015. In his IISS lecture, Jaishankar came back to how “on that occasion, the terminology agreed upon by the two countries to describe themselves” in the Joint Statement was as “‘two major powers in the region and the world”.  Here Jaishankar was referring to the simultaneous rise by India and China in the international system and global economy, but yet a “parallel if differential rise”. Ultimately China and India present different models of democratic/non-democratic economic rise.  An asymmetric trade relationship of (China) surplus/deficit (India) was not ignored, it “continues to be a major challenge”, but was enfolded with talk by Jaishankar of potential future Chinese investments in the India, and of a special task force being set up to deal with this growing trade imbalance and to meet in the future. Whether either development takes place, and with what effect, remains indeterminate though.

The immediate disputed Himalayan border issue was moderated by Jaishankar’s flagging up of “efforts to enhance communication between the militaries, promote leadership level contacts, establish more hot-lines, expand border commanders exchanges and create more meeting points”. However, this left obvious the lack of tangible movement on any actual negotiations let alone resolution of the disputed border – around which continuing arms build up continues. The ongoing  India-China trust deficit was pointed to in his euphemism of “we are also moving to address the familiarity gap in the relationship”.

A final nuance was Jaishankar’s assertion that “India’s maritime interests are significant … in recent months, considerable thought has been given to an integrated Indian Ocean strategy … defending our interests … and we think that those who are resident in this region have the primary responsibility for peace, stability and prosperity in the Indian Ocean”. This all pointed to Indian aspirations of leadership in the Indian Ocean (“India’s ocean”?). Though Jaishankar’s words could have been aimed against all external powers, in reality they were an implicit warning against a growing Chinese naval presence in the Indian Ocean; which has generated closer Indian naval cooperation in the Indian Ocean and Western Pacific bilaterally with the US, and trilaterally with the US and Japan.

Where did this leave the India-China-US triangle? In his analysis of the relationship “in Asia and beyond”, Jaishankar made a crucial point of levels that “India welcomes the growing reality of a multi-polar world, as it does, of a multi-polar Asia”. This points to a two-level dynamic in India-China relations. Whereas the global-level brings India together with China vis-à-vis the US, in international relations (IR) theory reflecting Kenneth Waltz’ “balance of power” logic; the regional-level brings India together with the US vis-à-vis China, in IR theory terms reflecting Stephen Walt’s “balance of threat” logic for India, especially with regard to Walt’s criteria of “geographic proximity” and “(perceived) offensive intentions” of China.

The former level was illustrated clearly in separate and joint Indian and Chinese calls for global multipolarity, in the need for restructuring of global financial institutions, and in common stances on global environmental issues such as the “differentiated responsibilities” argument. The latter level was illustrated in the India-US Joint Strategic Vision for Asia-Pacific and Indian Ocean Region. Having emphasised India-US strategic partnership, Jaishankar’s sense that “Asia will no doubt go through some uncertainties before arriving at a new equilibrium” referred to power shift between a rising China and declining US. However, rather than Chinese sweeping away US power, Jaishankar invoked IR “realism” perspectives for a new balance, as alongside India and the US, “other factors and other nations will definitely have a say too, among them ASEAN members, Japan or Australia”.

 

David Scott is an ongoing consultant-analyst and prolific writer on India and China foreign policy having retired from teaching at Brunel University in 2015. He can be contacted at davidscott366@outlook.com.

The views expressed in this 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, India conclude anti-terrorism drill
Xinhua, October 22
China and India concluded a joint anti-terrorism training in Kunming, capital of southwest China’s Yunnan Province. More than 300 Chinese and Indian army soldiers took part in the closing ceremony, using grenade launchers, mortars, antitank missiles, flamethrowers and other arms. Zhang Bing, deputy chief of staff of the People’s Liberation Army Chengdu Military Area Command, said China and India have carried out cooperation in military exercises and personnel training in recent years. The drill is the fifth of its kind between the two countries’ armies, showing their will to deal with terrorist threats and cooperate with each other to create a good environment for development, said Zhang.

India is spending billions to populate a remote area claimed by China
Bloomberg, October 26
India plans to invest billions of dollars to populate a remote northeastern state it has neglected since fighting a war with neighboring China more than five decades ago. Prime Minister Narendra Modi’s government is finalizing blueprints for a $6 billion highway in Arunachal Pradesh, which is also claimed by China. Construction on the 2,000-kilometer (1,243-mile) road will start as early as 2018, Kiren Rijiju, minister of state for home affairs, said in an interview. “If China is developing on their side of the territory, we should develop on our side,” Rijiju, a native of Arunachal Pradesh, said at his New Delhi residence on Saturday. “India has failed the people living along that border. We’re now taking very concrete steps in that direction.”

 

News Reports

China and India in the Regions

China supports Myanmar’s peace process from start to finish: negotiator
Xinhua, October 15
China has supported Myanmar’s peace process from the start to the finish and there remains much to be done in cooperation with China to realize peace in the entire country, a Myanmar government peace negotiator said. U Aung Min, who is vice chairman of Myanmar government’s Union Peace Making Work Committee (UPWC), told a joint press briefing after the formal signing of the Nationwide Ceasefire Accord (NCA) between the government and eight ethnic armed groups that with the assistance and support of China, the government will continue to coordinate with remaining armed groups, which are yet to sign the NCA, to complete the process. Also at the briefing, Sun Guoxiang, special envoy of China on Asian affairs, stressed that China always attached importance to Myanmar’s peace process and had actively pushed forward the process. The signing of the NCA was witnessed by international observers from the United Nations, the European Union, China, India, Thailand and Japan.

China, Bangladesh pledge to strengthen parliamentary cooperation
Xinhua, October 15
China and Bangladesh pledged better parliamentary cooperation. China’s top legislator Zhang Dejiang met visiting Speaker of the Bangladesh National Assembly Shirin Sharmin Chowdhury at the Great Hall of the People, saying China’s National People’s Congress (NPC) was ready to strengthen exchanges and experience sharing with the Bangladesh National Assembly on nation building and legislative supervision. Chowdhury, on her part, said Bangladesh cherished the friendship with China. Bangladesh wanted to take the 40th anniversary of ties in this year as an opportunity to promote parliamentary exchanges, and bilateral cooperation on infrastructure construction and trade.

India hosts biggest Africa summit; plays catchup with China
Reuters, October 26
India hosts its biggest-ever Africa summit this week as Prime Minister Narendra Modi seeks to challenge China’s dominance on a continent that is blessed with vast natural resources and has the world’s fastest-growing population. New Delhi wants to project its soft power and historical ties to Africa, in contrast to China’s focus on resource extraction and capital investment that has sparked a backlash in some countries against Beijing’s mercantilist expansion. Of the 54 countries invited, the hosts expect more than 40 to be represented by their heads of state and government who, after a series of ministerial meetings, will hold a full summit.

India aspires to grow faster, eyes Africa – Jaitley
Reuters, October 27
India wants its economy to grow much faster, Finance Minister Arun Jaitley said on Tuesday, as Asia’s third-largest economy eyes new opportunities for trade and economic cooperation with Africa. “India today aspires to grow much faster. We are not satisfied with present growth rates,” Jaitley told a seminar held before a major India-Africa summit to which all of the continent’s 54 countries have been invited. India has decided to set up a project development company in Africa, Jaitley said in a speech to the event organised by Exim Bank. India’s annual trade with Africa has grown to $72 billion but lags China’s $200 billion.

Liberia’s Sirleaf off to India, China
Star Africa, October 27
Liberia President Ellen Johnson Sirleaf has departed the country for official visits to India and China beginning October 27 through November 6, reports said on Tuesday.According to a presidential mansion press statement issued here Tuesday, the Liberian leader will participate in the third edition of the India – Africa Forum Summit which takes place in New Delhi from October 28-30 and will later pay a state visit to the People’s Republic of China from November 1-6. The India-Africa Forum Summit will enable consultations at the highest political level between the heads of state and government of all 54 nations across Africa and the Indian government to give a new thrust to an age-old partnership. It will also provide an opportunity to not only reflect on the past, but to define the road ahead in tune with the present times.

China refuels Nepal as India fails to deliver
Financial Times, October 27
China is to supply fuel to its impoverished neighbour Nepal for the first time, amid a halt in Indian supplies that has severely disrupted life in the mountainous country still struggling to recover from April’s massive earthquake. Nepali officials flew to Beijing on Monday to negotiate the terms of the petroleum purchase deal, which will in effect end the longstanding role of India’s state-owned Indian Oil Company as Nepal’s monopoly fuel supplier.Nepali government officials have said the initial transaction will lead to China providing 1.3m litres of fuel, but analysts suggest it could evolve into a long-term arrangement that would end Nepal’s dependence on India.

Japan’s new defense policy sparks widespread uncertainty on regional security
Xinhua, October 27
Japan’s new security legislation has gone against calls to repair mutual trust with its neighbors and prompted increased vigilance in the Asia-Pacific region, experts said ahead of a widely watched trilateral summit between Japan, China and South Korea in Seoul. Japan has abandoned the 70-year-long pacifism it had maintained since the end of World War II as the parliament last month enacted a controversial legislation pushed by Prime Minister Shinzo Abe’s government to remilitarize the pacifist nation. Though Abe has made assurances that Japan’s security shift will proactively contribute to global peace, the bill added great uncertainty to regional security and thus immediately drew harsh criticism from China and South Korea. Japan is planning to jointly develop submarine technologies with Australia and is considering transferring patrol aircraft and surveillance vessels to India and the Philippines.

 

News Reports

Economy and Trade

The Chinese firms opening factories in India
BBC, October 21
Toys based on the character from the TV show Sesame Street, are, as is often the case, being made by a Chinese firm for export to the US. What’s unusual however, is that this factory isn’t in China, but in rural Andhra Pradesh, in southern India. It is one of more than 100 businesses in the Sri City Industrial hub – many of them Chinese – attracted by the Make in India campaign. Launched by Prime Minister Narendra Modi last year, the ambitious campaign aims to turn the country into a global manufacturing hub. As part of the scheme, the government has said it will incentivise foreign companies to manufacture in India. “In plain terms, if you invest $100 [£65] here, we will give you $25. Then state incentives are also available,” Union Minister Ravi Shankar Prasad said recently. The founder of the industrial zone, Ravindra Sannareddy, says the incentives make India a very attractive manufacturing base for Chinese companies.

How India and China’s gold-buying habits are changing
The Wall Street Journal, October 23
Gold buying in India and China, which together account for half the world’s gold demand, is set on divergent paths at the start of a normally crucial period for retail sales of the yellow metal. Indian and Chinese consumers typically both flock to gold sellers around this time of year. A succession of national holidays in early October in China kicks off several months of gold buying there that culminates around Chinese New Year. October also sees the beginning of India’s Hindu festival season, when many people consider it auspicious to buy the precious metal.

India, China becoming hotbed for global venture capital investments: Report
The Times of India, October 26
Asia-Pacific has emerged as a sweet spot for Venture Capital (VC) investors attracted by the region’s growth prospects, says a report by research agency Aranca.  The report — ‘Asia Pacific -An evolving VC Market’ — has said China and India have grown at a substantial rate over the past decade and are fast becoming a hotbed for global venture capital investments.  According to the report, during 2010-15, nearly 7,773 companies raised funds via VC investors in Asia-Pacific.  The region witnessed nine big ticket deals in 2014 raising over $ 19.7billion, up nine times from $1.9billion in 2013. This trend continued in 2015, and since the turn of the year, the region captured $15.9 billion (a total of 754 investments) in venture capital funding till date.

 

News Reports

Energy and Environment

Britain to grant China a large stake in nuclear industry
The New York Times, October 21
In an important breakthrough for Chinese industry and global influence, the British and Chinese governments agreed to give China a substantial stake in the British nuclear industry, both as an investor and as a contractor. The deal was the commercial highlight of President Xi Jinping’s pageant-filled, four-day state visit to Britain, which is eager to get more Chinese investment and to export more British products to China. Mr. Xi also hailed the nuclear deal. He said that China respected the rule of law and “attaches great importance to human rights,” but on “a path suited to China’s conditions.”

China begins testing self-developed 1000 MW nuclear reactors
The Economic Times, October 27
China has begun testing of its indigenously built 1000 mw nuclear reactors as part of the country’s ambitious plan to increase electricity generation and use of non-fossil-fuel energy. The testing of the pressurized nuclear reactors started at Fangchenggang in Guangxi Zhuang Autonomous Region, the first nuclear power plant built outside China’s east coast. The project, which began in 2010 in South China has now entered a 168-hour test period under full power to assess its readiness for commercial operation, the China National Radio (CNR) reported. The project, co-established by China General Nuclear Power Group (CGN) with Guangxi Investment Group Co Ltd, included construction of two pressurized-water reactors using independently developed technology in its first phase. China is aggressively marketing its 1000 mw nuclear technology. Pakistan, Argentina and recently Britain opted for new Chinese nuclear reactors.

 


Analyses and Commentaries

Concurrent India drills spark unnecessary speculation
Global Times, October 14
Two exercises involving the Indian military are running concurrently – one in China and the other off the Indian east coast. The 10-day India-China anti-terrorism joint military drill, code-named Hand-in-Hand 2015, commenced in the Chinese city of Kunming, Yunnan Province. The next day, a trilateral drill by India, the US and Japan was launched in the Bay of Bengal. Malabar, a bilateral navy exercise involving the US and India, includes Japan this year. Speculation has therefore mounted that Washington and New Delhi are considering turning Japan into a permanent partner. Malabar reportedly includes a “submarine hunt” this time.  Rabble-rousers say that India is eyeing China by including Japan in the Malabar exercise and the trilateral drill is targeted at China.

India pushes Nepal into China’s arms
Foreign Policy, October 23
Nepal’s announcement of its new constitution in late September invited domestic and international opposition. The constitution’s newly proposed federal divisions have proven to be extremely controversial. India, in turn, has voiced its objections to the new constitution arguing that the new constitution has failed to “support a federal, democratic, republican, and inclusive” Nepal. The result: an unofficial blockade stopping the transport and Indian goods and fuel to the country. India’s unofficial blockade of Kathmandu seems like an attempt to force the Nepali government to concede to New Delhi’s demands as well as demonstrate India’s ability to influence Nepal’s domestic politics. This aggressive stance against a small South Asian state may indeed force Nepal’s hand; however, it will also push Nepal closer to China as well as demonstrate to other neighboring states the dangers of India’s regional clout.  Ironically, India’s show of strength may prove to actually weaken its future position in the Subcontinent.

Perhaps India, rather than China, should be the target of Britain’s charm offensive
The Guardian, October 24
According to Steve Hilton, former chief strategist to David Cameron, Britain is humiliating itself unnecessarily by “sucking up” to China when instead it could be “rolling out the red carpet” for India. “We should prioritise our relationship with India because that’s where the opportunity is,” he said this week on BBC Newsnight, striking a resonant chord with the many British citizens, of Indian origin and otherwise, who see India as the more natural and sympathetic ally. Parliamentary democracy, a free media, the English language, tea with milk: however ruthless and greedy British imperialism may have been, its 250-year history in India left that country with several of the imperfect institutions, beliefs and habits that Britain finds familiar and admirable.

How China’s ‘One Belt One Road’ will help India integrate South Asia
The Wire, October 25
One current trend not so well recognised by analysts is that GDP in the South Asian region is growing at close to 6% per annum in the midst of a near recession in most of the emerging economies outside of China. China itself is slowing down to relatively lower levels of growth compared to its past performance, but is still expected to clock at least 6.5%. Indeed, it is in this backdrop that China is actively pursuing plans to invest an estimated $150 billion on its One Belt One Road (OBOR) project  connecting countries from Asia to Europe via rail, road, energy pipeline, sea lanes and port infrastructure. OBOR, under the broader supervision of China, will force open many a trade barrier between India and Pakistan too. It will create a non-linear, positive kicker for trade between the two largest South Asian economies.

Seize the moment
The Indian Express, October 25
New Delhi will host the third India-Africa Forum Summit over the next four days. It is one of the largest gatherings of African countries outside Africa – all 54 nations of the continent will be represented — and provides an opportunity for India to forge a constructive and deeper alliance with the resource-rich continent. For the most part, India has lagged behind China, which has aggressively used foreign policy, seamlessly aligned to its economic security interests, to build infrastructure and sew up vital supply contracts. The current deceleration in the Chinese economy provides India an opening to gain a better footing. India should leverage the one asset that it has more than China — goodwill. China has, for long, been resented for “resource colonialism”, especially by western and southern African countries. India, by contrast, is not seen to nurse any expansionist aims.

Africa, India’s next frontier: Today’s gambit is different
Hindustan Times, October 25
The ancient Romans had a saying: “There is always something new out of Africa.” Two thousand years later, this still remains true. Soon, Prime Minister Narendra Modi will host the India-Africa Forum Summit. This isn’t new: it’s the third in a row and Africa summits are hosted by China, the European Union — even Turkey. But it is shaping up to be the biggest one ever: Over 40 heads of state or government are scheduled to come, over 50 African states will be represented. Even China didn’t do so well. This marks a new era in India-Africa ties. India’s earlier attempts at a continent-wise relationship were grounded in anti-colonialism, diaspora ties and nonalignment. How shallow this was became clear when most African states supported China in the 1962 war. Today the gambit is different. “We are looking forward to a qualitative upgrade in our engagement with a resurgent Africa,” says Navtej Sarna of the Indian foreign ministry about the summit.

Can India really be the ‘next China’?
The Economic Times, October 27
The bulls say India is the ‘next China’. Odds are they are right, if not today then within a decade or so. But even if this proves to be right in terms of growth, India is a very different country than China on many fundamental dimensions, demography and democracy being key. But most importantly, China has been built on infrastructure, investment and manufacturing, while India has barely scratched the surface on all three. India began its economic reform in the early 1990s, more than a decade after China. But in the past 25 years, China has turbocharged its economy while India has languished in relative terms. Why?

In the race for Africa, India and China aren’t all that different
Quartz, October 27
As state leaders and delegates descend on New Delhi this week for the third India-Africa Summit, Indian officials are working hard to differentiate their country from China, the African continent’s leading Asian partner. It’s an attempt to catch up to China, one of the Africa’s largest trading partners, now that India needs more energy and commodities to fuel its industries, as well as diplomatic support for strategic moves like India’s bid for a permanent seat on the United Nations Security Council. Another summit focusing on India-Africa economic ties will be held in Nairobi next month. Then in a little over a month, South Africa will host the 6th Forum on China-Africa cooperation. But it’s not clear that India is that much of an alternative to China. The kind of relationship that Delhi is pitching—one focused on mutual need, helping Africa grow, and south-to-south cooperation among two formerly colonized, now fast-developing regions—sounds a lot like what Beijing has pushed for years.

 


Books and Journals

Linkages between poverty, food security and undernutrition: evidence from China and India
China Agricultural Economic Review, 2015
China and India are two of the fastest growing economies in the world, and poverty reduction has been substantial in both countries through the past few decades. Yet they have very different profiles in terms of food security and undernutrition—while at the micro level China has performed well in terms of undernutrition, India has not. This paper, by Alan de Braw and M.H. Suryanarayana, hopes to examine linkages between poverty, food security, and undernutrition in both countries.

City Power and Urban Fiscal Crises: The USA, China, and India
International Journal of Urban Studies, 2015
This essay, by Xuefei Ren, comparatively examines the current urban fiscal crisis in US, Chinese, and Indian cities from the perspective of city power. The urban fiscal crisis in the USA is closely linked to the subprime mortgage crisis of 2008 as municipal governments largely depend on property tax as revenue sources. In China, municipal debt has increased sharply since 2008, not because of the recession, but because of the binge borrowing and overinvestment in infrastructure under the state stimulus programme, which was initiated by the central government to minimize the effects of the global recession on the Chinese economy. In India, cities have been in a perpetual state of fiscal crisis due to the stalled devolution of power from state to municipal governments. The comparison on authority, responsibility, and fiscal autonomy of city governments in the three countries demonstrates that the urban fiscal crisis has to be understood in plural terms, as the various assemblages of city power have given rise to a multitude of urban fiscal crises with different origins and consequences.

 


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