When we talk about India and China, the first thing that is
highlighted in our minds is that these two giants contribute 2/5th to the total population of the world. Therefore, a Chinese President’s visit to
India (after 8 years) bewitched global media.
For China, India is a part of its South Asian policy which
itself is a part of its peripheral diplomacy. But for India, the visit embarked
the biggest objective of including China in Indian economy to achieve the
developmental goals. As per World Bank estimates, India requires $110 billion
investment in infrastructure to come at par with Middle Income countries or we can
say that India requires $1.6 trillion investment in infrastructure over the
next 10 years to prove his metal in the geopolitical arena.
To make the visit a success, Indian Prime Minister Narendra
Modi made personal gestures to the Chinese President by breaking various
protocols (the same gesture he received from Japanese PM Shinzo Abe during his
Japan visit). India knows that Xi Jinping will be in power at least for the
next 8 years and he is very powerful in China and almost projects himself as
not only the President but also as the ‘Chairman’ of China, so it was important
to lure him through such gestures. Unfortunately, the border incursions by the
PLA of China breed suspicion and diverted the purpose and objective of the
visit and brought security issues back to the forefront. Prime Minister of
India raised the border issue with China for the first time ‘publicly’ and
categorized it as the foundation of overall Sino-India relationship. In return,
Chinese President used an encouraging formulation with regards to the border
agreements in the joint statement by calling to settle the boundary disputes at
the earliest. It is an unusual formulation with respect to a Chinese President,
irrespective of the actual delivery of the promises.
Absurd claims by the Chinese consulate of Mumbai, of Xi
Jinping planning to invest $100 billion in India (when its total investments
worldwide is $80 billion) and thereby Indian media going berserk over the issue
of reduction in the contemplated investments disappointed Indian masses. There
is a huge difference between investment and supply contracts, therefore only
MoU were signed and China will only realize the objective of investing $20
billion in India over the next five years. Moreover, Chinese investment in
India will come in the form of ‘Investor Funds’ (usually 5-10 year) which will
create production capacity in India and not in the form of ‘Sovereign Funds’
(usually 30-40 years) which creates infrastructure. But it’s reasonable because
sovereign funds take time to negotiate.
Two issues drive China’s foreign policy in Asia Pacific
region –
- The very serious economic difficulties being concealed by China which is weakening the Chinese economy week by week.
- Chinese isolation in Western Pacific region. One after the another frictions from his neighbors, and over arching it is the US’s strategy of a rebalance, which is on hold but not gone till now. China has a nightmare that it will solidify when India will join US as an ally in the region.
But China also contemplates that India is a very independent
player with a sense of strategic autonomy and India will never be a part of any
camp. This is soothing for Chinese ears.
Despite being his most ambitious project, China didn’t talk
about the Maritime Silk Road project except at a very low key and not at all in
the official address to the media because it knows that India is not willing to
buy it, but on the BCIM corridor (Bangladesh-China-India-Myanmar) issue, China
has got a positive reply from India. Chinese MSR project is actually a repost
to the American rebalance and it is busy to garner support from wherever it
can. It got enough support in the Indian Ocean but Western Pacific region didn’t
give him enough leverage. Also, India has also come up with MSR’s counter, with
a project named MAUSAM/ MAWSIM (in Arabic) – Maritime Routes and Cultural
Landscapes. It aims to reconnect and re-establish communication between
countries of the Indian Ocean and reinvigorate the traditional sea links and
cultural landscapes.
China will upgrade Indian Railways, supply us bullet trains,
set up Industrial Parks, especially in Maharashtra and Gujarat. But there is a
hurdle in the trade balance too, because Chinese banks are very reticent to
lend to Indian Corporate houses (Chinese investments in India currently lies at $415 million) except to blue chip companies like Reliance, and there is no direction from Govt Of China to
them to look at the Indian market as a serious investment destination. Also,
the sectors in which India has strengths, like pharmaceutical industry, China
is not giving market access to India till today. But in a joint statement,
China has agreed to look up to the demands of opening up their domestic markets
for Indian Pharmaceutical companies, IT industry, Agricultural products.
India seeks Civil Nuclear Cooperation with China but if it
is established then India would be left with no grounds to oppose the same
cooperation of China-Pakistan, except that India has a NSG waiver and Pakistan
doesn’t. Also there is no sufficient need and evidence for India to go for a
civil nuclear partnership with China, but if it needs to expand its resource
allocation base, India could eye towards South Korea in this matter.
Broadly, the recent bilateral visit of Chinese President was
accompanied with mixed signals from China where on one side it used positive
signals to enlarge futuristic cooperation of our bilateral relationship,
whereas on the other side, the security issues were dominating the negotiation
tables too. Since 1988, India has a strategy to carry on the relationship with
both China and Pakistan on two parallel tracks – One is the dispute resolution
track for which the framework was set up in 2003 and the other is economic
cooperation and development.
