Dancing with the Dragon
The underlying mood may be tetchy, but overall India-China relations covered some important ground in 2016.
In 2016, particularly following the Nuclear Suppliers’ Group (NSG) plenary in Seoul in June, India-China relations became decidedly testy. Several reasons were attributed to this and it is possible all of them had a bearing on the outcome. Critics of the Indian government’s attempt to gain acceptance as a full member of the NSG blamed that motivation. They argued the bid was premature and grossly underestimated the Chinese ability to veto India’s entry, or Beijing’s ability to stand up to a request from Washington DC.
Subsequently, Indian officials and even the Indian external affairs minister were quite explicit in identifying the Chinese as the one or at least the principal and determining roadblock at the NSG. It is a fair assessment that without China’s veto the procedural and technical questions raised by a few other countries may have evaporated. In a strict “yes-no” situation, New Delhi remains confident these countries would have backed India; Beijing’s veto prevented the occurrence of that strict “yes-no” situation.
Since then, the mood has been tetchy. Even so, despite this near-term history, it is not as if India-China engagement is only bad news. Outlook for the business relationship remains positive, especially as the Indian infrastructure story gradually gathers pace and demand in the economy expands. This will create markets for Chinese products and companies and Beijing is mindful of that.
However, the shadow of a third country is clearly being felt on India-China bilateralism. This is not so much a reflection of India’s growing strategic proximity to Japan or the deepening of the relationship with the United States under the Narendra Modi government. While China [symbolised as the red dragon] does tend to take India that much more seriously at junctures when it feels New Delhi and Washington DC have that greater degree of alignment, it recognises that despite the scare-mongering and the occasional media frenzy, there is little chance of a “containment” policy in the region and of India joining political or military alliances aimed expressly at isolating China.
The locus of the India-China distrust, perhaps of its immediate manifestation, seems to be in Pakistan. To be precise, it is in the area of Kashmir occupied and controlled by Pakistan. As details of the China Pakistan Economic Corridor (CPEC) are emerging and as actual construction is being monitored, it is becoming obvious to Indian officials that some of the roads and facilities being built in the Pakistan-held Kashmir region scarcely have a commercial or trade purpose, and are not critical to a pure trade corridor to the Arabian Sea.
They seem to be designed to support military logistics and, in terms of the landscape of warfare, integrate China and Pakistan that much strongly. In a sense, both countries are seeking a strategic depth in each other’s territories, and there can be only one possible target.
Overall, the sense in New Delhi is President Xi Jinping has not quite appreciated the outreach by Prime Minister Modi. The Indian leader has made genuine and rigorous efforts to improve market access for Chinese companies, create opportunities for Chinese capital and surplus infrastructure capacities, resolve business visa problems and so on. Even on “One Belt, One Road”, while remaining sceptical of its overall thrust – several of its component projects make sense only as Chinese political investments and have thin commercial logic – India has done an intelligent cherry picking.
As founder member and second-largest shareholder of the Asian Infrastructure Investment Bank, India is indirectly contributing to OBOR projects. In India’s eastern periphery, there is hope that Chinese OBOR initiatives and Indian desire to enhance international connectivity for its east and northeast can find common room. The Modi government has been mature and open-minded, not instinctively hostile. It has been mindful of Chinese aspirations where these are not in conflict with India’s, or with a rules-based system. It has collaborated with China in founding the New Development Bank (the so-called BRICS Bank) as well.
Notwithstanding all this, Chinese non-tariff barriers on Indian exports – pharmaceuticals, dairy and meat products, IT services – have proven to be insurmountable. Despite efforts by the Modi government, Beijing has not been accommodative. That remains a sticking point for New Delhi.
Ashok Malik is a Senior Columnist