When it comes to taming the growing influence of China in the world, especially in India’s neighbourhood, the things have been quite tricky for Modi government. China’s Silk Road Diplomacy has wooed the India’s neighbours with quite a success and it is a worrying situation for India.
CPEC
Most of the neighbours are becoming China’s ambitious “One Belt One Road” or OBOR project. India, however has not decided to become part of it as China-Pakistan Economic Corridor or the CPEC passes through the disputed territory of Kashmir, the POK. This has been a key concern of Modi government as both Pakistan and China are getting strategic advantage over the Kashmir region which is quite worrisome. China has promised to invest over $50 billion in Pakistan.
Also, CPEC has potential to revive Pakistan’s economy along with more collaboration in defence sector which is concerning point for India. Revival of Pakistan’s economy will lead to its increase in defence budget where it will spend more on development of Nuclear weapons and other conventional weaponry. Pakistan is also allowing Gwadar port to China to base its submarines which is strategically a point of concern for India. This is encircling India at major strategic route to Gulf region and to Iran.
CPEC also signifies the growing influence of China in Pakistan which brings them closer. It is a matter of concern for India which Modi government has failed to gauge and respond back with effectiveness. It has failed to apply enough pressure on China to stop investing heavily in improving Pakistan’s infrastructure and economy which is detrimental for India in longer run.
Modi government has tried to create an alternate to reach out to Afghanistan through Iran using Chahbar port where it has promised over a billion dollar for its development but things have been slow. Modi government is failing to circle Pakistan and reduce the influence of China in Sistan countries too which are falling in line with China in its OBOR project.
Also, China has tried to block India’s membership in the Nuclear Supplier’s Group along with its bid to designate Jaish-e-Mohammad Chief Masood Azhar as a global terrorist. China has irked India despite Modi’s constant attempt to woo China with inviting Xi Jinping and trying to amend the relation.
Modi government has laid down red lines in ties of India with China by boycotting the OBOR forum in Beijing in May 2017 which is another concerning point for dealing with China in the region.
South-East Asia
China is continuously swarming over India in South Asia. Its “String of Pearls” initiative to encircle India by establishing naval base across different neighbours of India is the latest example of aggressive China. China has also given over $24 billion in aid, loans and investment commitments to Bangladesh under Xi Jinping who visited there in 2016. Moreover, China is arming Bangladesh with its weaponry and Chinese equipment. Even though Modi government has been successful in dealing with and removing the dispute between India and Bangladesh over some territory, it has failed to contain the growing influence of China in Bangladesh.
When it comes to other bordering countries like Nepal, India’s contribution has dipped while China has emerged as top donor to this country. It is also influencing the political landscape in Nepal too which is another challenge for Modi government. More worrisome are the various internal trends which suggest growing Chinese influence in the country.
Talking about Sri Lanka, the new Srisena government has promised to revisit and review many of the alleged pro-Chinese steps but there hasn’t been any change on the ground. The port of Hambontota is the latest example of China’s growing influence in Sri Lanka where it has gained 99 years lease due to non-repayment of loans by Sri Lanka. This port is also being used as naval base against India which is another failure of Modi government’s diplomacy in terms of Sri Lanka. The growth of Chinese influence in Sri Lanka is the reality which India has to take into account.
Central Asia
During the 90s, India used to think itself as a player in Central Asia but China has been successful in recent years to grow it influence in different “stans”. Chinese banks hold a great portion of government debt of these countries. Most of the countries in this region has agreed to become part of Chinese OBOR project which is reducing the influence of India in Central Asia. Modi government is failing to contain the influence of China in these countries as Chinese bilateral trade in this region has been over $50 billion which is way more than India’s $1.3 billion. Chinese pipelines and railroads are turning these countries away India’s influence towards China and damaging India’s historic ties with these countries. Modi government should have tried to influence these countries to boycott the OBOR project and increase the bilateral trade but failed to do so. This is a concerning cause for India’s diplomacy.
Doklam
Having faced down Beijing in Doklam, India is in a good position to engage Beijing. Not much will come from this because issues between the two are not open to quick resolution. In recent years, they have displayed a dangerous tendency not to respond to the numerous CBMs that have kept peace between the two countries in recent decades.
This is an area of interim borders and unsettled claims. While tensions have calmed since the last stand-off on the Doklam plateau, along the Line of Actual Control (LAC) which ended in August of last year, both sides are continuing to build up their ground forces in this inhospitable terrain.
The plateau, which lies at a junction between China, the north-eastern Indian state of Sikkim and the Himalayan kingdom of Bhutan, is currently disputed between Beijing and Bhutan. India supports Bhutan’s claim over it.
They say “the imagery confirms that both China and India are pursuing a wide-ranging strategic build-up that has only accelerated in the wake of the 27 August agreement”.
Today, the People’s Liberation Army (PLA) remains on disputed territory in Doklam, as does the Indian army. August’s “disengagement” was a reduction in tensions. In practice, troops on both sides retreated their positions from the stand-off point by 150 meters each.
Reporting clarifying this state of affairs at Doklam emerged some weeks after the “disengagement” was announced. In effect, this should somewhat dampen Indian celebrations about a tactical victory at Doklam.
Yes, New Delhi successfully attained an outcome where the PLA was unable to extend a road that terminated just 60 meters from the Indian border post at Doka La, but an extended and increasingly robust PLA presence at Doklam is foreboding.
For India, the prospect should be cause for concern. Even as the stand-off continues, heading into the harsh winter months, there is little prospect currently of a comprehensive diplomatic resolution.
The damage done over the course of the crisis at Doklam — particularly to bilateral agreements and understandings since 1993 — will have important spillover effects in the coming years.
While Xi and Modi were able to maintain face during their meeting in Xiamen, the mistrust generated in India over the duration of the Doklam crisis will linger, with implications for the development of bilateral ties.
Bilateral Trade
Today, China is India’s largest trading partner, with a bilateral trade of $71.5 billion. The total imports from China during the last fiscal year stood at $61.3 billion against India’s export to China worth $10.2 billion. The trade deficit, which stood at $37.2 billion a few years ago, now stands at a whopping $51.1 billion.
One of the main reasons for this unfavorable trade balance is that India exports only raw materials like iron ore and copper to China. The deficit can be reduced only when India starts exporting value-added products. Unfortunately, the Indian manufacturing industries have to go a long way before they are geared up to export value-added products to China.
India is one of the largest manufacturers of generic drugs. But it has not been able to export to China because of Beijing’s protectionist policies. While Indian pharmaceutical companies exporting generic drugs to the United States and Europe, as most of the drugs have received FDA and EU approval, it is quite striking that China does not allow imports of drugs from India.
Indian pharmaceutical companies have taken up the issue with the Indian Commerce Ministry to facilitate export of generic drugs to China, especially since a Chinese delegation completed inspections of their manufacturing facilities a year ago. The Indian Commerce and Industry Minister has also taken up the matter with his Chinese counterpart in this regard.
Healthy trade between two countries has the potential to reduce tensions. The leaders of both the countries have so far shown flexibility in improving relations. India should reconsider imposing restrictions on Chinese goods, as it has the potential to aggravate an already fragile status quo. China, on its part, should help India reduce the trade deficit by importing generic drugs and IT enabled services.
Chinese companies have huge investments in the cell phone business, telecom, and power sectors. Such goods have become the backbone of India’s own manufacturing. One of the reasons for the popularity of Chinese goods is that they are cheap, compared to locally manufactured goods, as well as comparable imports from the United States or other Western countries.
If India decides to put an embargo on Chinese goods, and decides to import from other countries, it would involve a huge cost escalation which would translate into rising costs of goods and services, such as power generation. Similarly, the telecom and IT industries, which depend on import of hardware from China, will also be affected.
References
http://www.orfonline.org/research/india-and-the-world-foreign-policy-in-the-age-of-modi/
https://thediplomat.com/2017/05/modis-strategic-foreign-policy-vision-a-glass-half-full/
http://www.eastasiaforum.org/2017/08/01/modi-upturning-indian-foreign-policy/
https://www.thequint.com/voices/opinion/3-years-modi-government-foreign-policy
https://www.brookings.edu/wp-content/uploads/2015/05/modi365_final-book.pdf
https://www.dailyo.in/politics/india-foreign-policy-diplomacy-pakistan-china/story/1/21476.html
https://thediplomat.com/2017/08/how-to-fix-india-china-trade/
https://thediplomat.com/2017/10/the-doklam-standoff-between-india-and-china-is-far-from-over/
