China-India Brief #88

china-india-brief-87


Published Twice a Month
January 24 – February 14, 2016

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


Guest Column

India’s Doubts about Joining the Chinese New Silk Road Journey

by Siegfried O. Wolf

The China-Pakistan Economic Corridor (CPEC), a multi-billion dollar infrastructure investment project, is heralded as a game changer for Pakistan’s economy and regional cooperation. It is a crucial part of a major development initiative led by China, known as the New Silk Road or ‘One Belt, One Road’ (OBOR), to connect Asia with Europe and the Middle East with Africa via land (belt) and sea (road). For the CPEC project and for those involved, it evokes hopes and a myriad of interests, and it signals a significant geopolitical shift.

Praised as a new economic lifeline, CPEC is an essential link between the ‘belt and road’. In order to provide this connection, CPEC should connect Kashgar in China’s Xinjiang Uygur Autonomous Region (XUAR) with Gwadar port on the Balochistan coast in Pakistan’s south-western region. According to the plan, CPEC will be implemented through a ‘1+4 cooperation structure’ as follows: the Economic Corridor as an overall, multi-sectoral development project at the centre; and Gwadar Port (Pakistan’s deep-sea-port and flagship project within CPEC), energy, infrastructure, and industrialisation as its four key areas of collaboration. To operationalise this endeavour, the corridor combines several components, such as roads, railways, local public transportations, pipelines (for oil and gas), trade, special economic zones, transport, energy (both renewable and non-renewable), communication networks, financial services, centers for research, education, and health among others. The project, which is mainly financed by China (with some Pakistani co-funding), is expected to be completed by 2030 (i.e. the long-term projects). Some parts of it are likely to be ready within the next one to three years (i.e. the Early Harvest projects).

Having this in mind, OBOR in general and CPEC in particular, seem to offer many possibilities for regional cooperation, especially for India. But until today, New Delhi has hardly responded to any of the invitations to join CPEC. Nor has it spent made much effort to push its own economic corridor with China via Bangladesh and Myanmar (the second South Asian part of OBOR). This raises the questions of why India remains so reluctant to define its position towards and perhaps a potential role within OBOR? What are the roots of New Delhi’s obvious uneasiness with CPEC? Basically, besides all the opportunities associated with OBOR, there are certain issues that make New Delhi feel uncomfortable in joining the initiative.

Firstly, there are concerns among India’s decision-makers about the increase in Pakistan-China security cooperation alongside CPEC and the possibility that the Gwadar Port may one day become a Chinese naval base. In other words, CPEC heightens the notion that the Sino-Pakistani partnership poses a challenge to India’s regional standing and could be an attempt to contain New Delhi’s influence in South Asia and beyond.

Secondly, the fact that the corridor crosses Gilgit-Baltistan, a part of the disputed area in Kashmir, is a major roadblock for India’s participation in the project. Any potential cooperation which includes India in CPEC development might be interpreted as a legitimisation of the status quo regarding the territory controlled by Pakistan but claimed by India.

Thirdly, there are suspicions around the overall OBOR project, especially regarding China’s real intentions. Basically, there is a view that Beijing is aiming to push its own stagnating economy and to develop its remote western province (XUAR) by increasing connectivity with Central and South Asia. Additionally, taking the tremendous demands and nature of China’s manufactural industry into account, it is perhaps not surprising that the country is launching vast activities to ensure energy security and supply of resources as well as access to new markets. As such, major Chinese development projects outside its own territory are not rare and can be traced back to earlier economic development schemes like the ‘Go-global/global out’ strategy with which Beijing tried to encourage Chinese companies to invest abroad and/or to establish the so-called Chinese Overseas Special Economic Zones (SEZs). What is entirely new, however, is that China is attempting to transform its economic success abroad into political influence for the first time. Therefore, OBOR can be seen as the most visible expression of Beijing’s desire to create a new multi-polar order which sufficiently addresses Chinese national interests.

By looking at the tremendous geographical (around 60 participating states) and financial dimensions (The Economist cites official figures saying there are around 900 deals under way, worth $890 billion), it becomes apparent that OBOR is far more than just a ‘development initiative’. Even if Chinese officials refuse to use a term other than ‘initiative,’ it is clear that OBOR is China’s ‘New Grand Strategy’ determining the main focal point of its foreign policy and diplomacy.

However, New Delhi is not the only one puzzled about the magnitude and security-related implications of the New Silk Road. Even though Beijing has emphasized that all its foreign investments are based on mutual benefit and not designed to create a hegemonic position for itself, the way OBOR is carrying out its projects does not help dilute India’s concerns. Especially worrying has been the lack of transparency of decision-making combined with an insufficient level of communication by Chinese authorities and the questionable profitability of several projects. All these aspects are now accentuating Indian skepticism about OBOR. The fact that China refuses to negotiate OBOR in multi-lateral arrangements seems to confirm the criticism about the amorphous character of the project which is complicating a constructive dialogue with India on the initiative. This is an unfortunate development because India would not only miss participating in a much-needed improvement of regional connectivity and economic opportunities but will also find its access to markets and resources in Central Asia and Africa more difficult.

To conclude, New Delhi will likely have to take a decision soon on whether to join OBOR, especially CPEC. In case it decides not to join, it will have to come up with a workable and credible alternative concept, or else it could find itself relegated to the backyard of the Chinese-initiated economic integration of new ‘Eurasia’.

 

Siegfried O. Wolf is Director of Research, South Asia Democratic Forum (SADF), Brussels, Belgium; Senior Researcher (Member), South Asia Institute (SAI), Heidelberg University, Heidelberg, Germany.

 

The views expressed in the article(s) 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 film aids cultural cooperation
Global Times, February 7
A movie starring Jackie Chan, which tries to marry the India-originated yoga with Chinese kung fu, made its debut in China’s cinemas on January 28, during the Spring Festival. The movie, Kung Fu Yoga, tells a story of a renowned Chinese archaeologist who is trying to locate a lost treasure in India. It features thrilling martial arts sequences and grand-scale exotic sceneries of the China-India border. At the first glance, the movie, the second product of a co-production treaty signed during Chinese President Xi Jinping’s state visit to India in 2014, apparently wants to boost China-India collaboration in the film industry and to further promote bilateral exchanges.

India raises concern as China blocks US move to get Masood Azhar banned
The Hindu, February 7
India has once again raised the matter of banning Jaish-e-Muhammed chief Masood Azhar with the Chinese government even as the latter has blocked yet another attempt was made by the US at the United Nations. This time US, UK and France had moved the UN Sanctions Committee 1267 to designate him as a terrorist of a blacklisted organisation Azhar is believed to have masterminded the Pathankot Air base attacks that took place in January last year, including several other terrorist attacks. He is based out of Pakistan. “We have been informed of this development, the matter has been taken up with the Chinese government,” Vikas Swarup, Spokesperson, Ministry of External Affairs said. Last year China had twice blocked using the method of ‘technical hold’ on India’s attempt to designate as a terrorist by the UN Security Council. If China would have supported the move then all of Azhar’s assets would have been frozen and travel banned.

China on Masood Azhar’s ban: ‘All members of UNSC should follow rules’
The Indian Express, February 10
Reacting guardedly to India’s diplomatic protests over its move to block US resolution to list Pakistan-based JeM leader Masood Azhar as a terrorist, China on Friday hoped all members of the UN Security Council who are part of the anti-terrorism committee will follow rules. “Will check on reports of India’s diplomatic protest,” Chinese Foreign Ministry spokesman Lu Kang told media briefing here when asked about yesterday’s démarche by India over China putting a technical hold of US resolution in the 1267 Committee of the UNSC to designate entities involved in terrorism. Lu said China already reiterated its stand on its technical hold two days ago. “China is a responsible member of the UNSC as well as a subsidiary organ. China has always been acting in accordance with UNSC resolutions and rules of procedure of its subsidiary organs. We hope that all members of the security council and its affiliation would follow the rules of the procedures,” he said.

Chinese soldier trapped in India after war makes it back after 54 years
Global Times, February 12
During the Lantern Festival this week, Wang Qi finally stepped back onto Chinese soil after being stuck in India for more than half a century. After landing in Beijing, he went straight to his long-missed hometown of Xianyang, Shaanxi Province. His son, one of his daughters, daughter-in-law and granddaughter also came with him. His Indian wife and other daughter were delayed in India because of visa issues. Wang Qi was a soldier dispatched to the China-India border in the 1960s to work as a surveyor building roads. He wandered into Indian territory by mistake one day and wound up behind bars for several years. After his release, he was not allowed to leave India and ended up marrying and having children. After years of efforts by his family, the media and the Chinese government, he finally came home this week.

Cargo ship with 23 Chinese sailors on board detained in India for over a month
Global Times, February 14
A cargo ship from Jiangsu province with 23 Chinese crew members on board has been detained at India’s Haldia port for more than a month. The ship set off from Nantong, east China in July last year, unloaded at Haldia port in December, and has been detained since then. The ship set off from Nantong, east China in July last year, unloaded at Haldia port in December, and has been detained since then. Captain Dai Xiaosong contacted Jiangsu News Radio and asked for help.

 

News Reports

China and India in the Regions

After 1962 war, CIA feared China could attack India through Nepal, Myanmar
Hindustan Times, January 26
Months after the brief but bloody India-China border war of 1962, American intelligence were worried about the possibility of further strikes by Chinese troops through Tibet, Myanmar and even Nepal and Bhutan. After a string of skirmishes along the disputed frontier led to a spike in tensions, Chinese troops mounted an offensive in October 1962 and advanced into Ladakh and the North East Frontier Agency (NEFA, now the state of Arunachal Pradesh). A month later, China announced a unilateral truce and withdrew its troops. By January 1963, wary US intelligence officials began studying the possibility of China “giving the Indians another black eye”, according to declassified documents recently posted on the Central Intelligence Agency’s website.

Our position clear, we are for freedom of navigation through South China Sea: India
The Indian Express, February 9
With nearly half of India’s trade passing through the disputed South China Sea, the government today said New Delhi supports freedom of navigation and over flight through the disputed waters based on the principles of international laws. In its ruling in July 2016, an international tribunal at The Hague, in accordance with the United Nations Convention on Laws of the Sea (UNCLOS) had ruled in favour of Philippines concluding China has no legal basis to claim rights to the bulk of the South China Sea. “Government’s position on this issue is very clear. India supports freedom of navigation and over flight, unimpeded commerce, based on the principles of international law, as reflected notably in the UNCLOS.”

 While Trump endorses ‘One China policy’, India adopts strategy to keep Taiwan engaged
The Economic Times, February 13
Even as US President Donald Trump endorsed One China Policy during his recent phone call with Xi Jinping, India has adopted strategy to keep Taiwan engaged by inviting a parliamentary delegation, a move that is likely to raise eyebrows in Beijing. A women’s parliamentary delegation is undertaking a trip to India from Monday, the first such visit since the new government took charge in Taipei in 2016, Taiwan’s representative to India Chung Kwang Tien told ET. India does not have formal diplomatic ties with Taiwan but maintains a cultural-economic office in Taipei and vice-versa with Taiwan.

‘China should ask Pakistan to address India’s concern on terrorism’
The Indian Express, February 14
The Trump Administration needs to convince China to ask Pakistan to take “good-faith measures” to address India’s concerns on cross-border terrorism which is a key trigger of Indo-Pak military escalation, a top American think-tank said in a new report. US Institute of Peace in the report warned that any terrorist activity coming from across the border might escalate into a major war, which could be disastrous for the region. “Washington needs to convince Beijing to urge Pakistan to take good-faith measures addressing India’s concerns on cross-border terrorism, which is a key trigger of military escalation. Beijing could in turn prod Islamabad to prosecute terrorists involved in attacks on India as a first step,” USIP said.

 

News Reports

Trade and Economy

India doesn’t deserve to be equal to China
Forbes, February 5
India doesn’t deserve to be next to China — when it comes to credit rating agencies that is. That’s according to all major credit agencies, which give China a near perfect score — close to the US — and India a near junk score. Fitch, for instance, gives China A+, and India BBB-. India’s credit rating lag behind China is also reflected in credit markets, where the Indian government has to pay almost twice as much as China to borrow money for ten years. That’s certainly upsetting to India’s government officials, who blame credit agencies for favoring China over India. Specifically, they are critical of the agencies for failing to lift India’s credit rating despite its improving economic fundamentals, like robust economic growth rates and fiscal discipline.

China won’t back down from building economic, commercial ties with Sri Lanka
Global Times, February 6
It would not necessarily be a bad thing if healthy competition between China and India in the Sri Lankan market could be further stirred up. While China and Sri Lanka ramp up efforts to finalize a free trade agreement (FTA) this year, India is pushing for the signing of the Economic Technology Cooperation Agreement with Sri Lanka to broaden the scope of its existing FTA. It seems that neither China or India wants to be left behind in boosting its presence in the island nation. As Sri Lanka is a key point along the Belt and Road route, China is increasing investment in the country that is situated along one of the world’s busiest sea routes. Some projects financed by China have helped Sri Lanka solidify its strategic position in South Asia’s geopolitical landscape. As China and Sri Lanka strengthen ties, India’s desires to maintain its balance of power in the region are understandable.

China is way ahead of India in terms of railway investment: Suresh Prabhu
The Hindu, February 12
India is way behind China on investment in railway, including border infrastructure, says Railway Minister Suresh Prabhu, even as he defends the government’s delivery record in MoUs with other countries such as Japan, China and Korea. “China has invested every year what we plan to invest in five years. Till 2014, when we came to power, they would invest in 6 months what we did in 5 years. We will now increase our investment to $142 billion over the next five years, and we are on track to do that, but that will still be nothing compared to China’s investment. China is way ahead of us in terms of railways investment. In any case, if India wants to have overall infrastructure of a good quality, we must step up railway infrastructure,” Prabhu said.

India demands greater access to China in pharma, IT sectors
The Indian Express, February 14
India wants a greater access to the Chinese market and there has to be an “evenness and balancing” of the country’s huge trade deficit with China for the two nations to be able to move together on the path of progress, economic affairs secretary Shaktikanta Das said on Monday. “For sustainable trade relationship, balance of trade is required between India & China,” the finance ministry said in a series of tweets attributed to Das after his meeting with a team of Chinese journalists earlier in the day. “We have trade deficit with China. We would like to increase our exports to China,” he said.

 

News Reports

Energy and Environment

Air pollution in China, India accounted for 2.2 million deaths
CBC News, February 14
China and India accounted for more than half of the total number of global deaths attributable to air pollution in 2015, researchers said. The U.S.-based Health Effects Institute (HEI) found that air pollution caused more than 4.2 million early deaths worldwide in 2015, making it the fifth highest cause of death, with about 2.2 million deaths in China and India. The institute’s study, the first of its kind, was based on the Global Burden of Disease (GBD) project, a database backed by the Bill & Melinda Gates Foundation that tracks the role that behavioural, dietary and environmental factors play in deaths across 195 countries. New evidence and methodologies mean that the estimate is significantly higher than the figure published by the World Health Organization last year, which put the number of global air pollution-related deaths in 2012 at 3 million, HEI said.

 


Analyses

Trump’s ambitions challenge Modi’s ‘Make in India’
Global Times, January 29
Since the US presidential election in November, analysts and academics around the world have spent considerable time and effort in predicting President Donald Trump’s possible policies on domestic and international issues. A common thread in the ensuing analysis is the “uncertainty” attached to the new president’s future actions. An outsider, Trump has never before held a position in the US Congress. Marked with contradictions and bombastic rhetoric, Trump’s speeches on foreign policy during and after his campaign have not succeeded in lending clarity to his possible international policies. Moreover, his attitude toward US allies as well as competitors remains largely unpredictable. The Indian case is no different. In April, during one of Trump’s campaign speeches, he mocked an Indian call-center employee. However, he subsequently stressed, “India is great place.” And in October, he declared, “If I’m elected President, the Indian and Hindu community will have a true friend in the White House. That, I can guarantee you.”

China, India could help stabilize Myanmar’s conflict-ridden Rakhine state
Global Times, February 8
The situation in Rakhine state on the western coast of Myanmar is facing an increasingly severe challenge as signs show that the Islamic State (IS) and other Islamic extremist groups from Southeast Asia are sneaking across the border into the area. Rakhine state is situated in an arc-shaped region in Asia with a large Muslim population that covers countries like Indonesia, Malaysia and Bangladesh, as well as regions including Mindanao in the Philippines, southern Thailand and southern Myanmar. The region is marred by social instability due to its ethnically and religiously diverse residents. In Myanmar, the most heated conflict is between Islamist and Buddhist groups. The state is also home to the Rohingya people, a Muslim minority group. Approximately 140,000 Rohingya people were officially quarantined in camps in the wake of a large-scale conflict between Buddhists and Rohingya in 2012.

Consensus needed to back India’s request
Global Times, February 9
A bid by the US to get the UN to include Masood Azhar, the chief of the Pakistan-based Jaish-e-Mohammed, as a terrorist has been vetoed by China, according to Indian media, which accused China of pursuing double standards on terror. It comes weeks after India’s failed efforts last December to get him banned by the UN.  Lu Kang, China’s foreign ministry spokesperson, said at a press briefing Wednesday that China has put the request on technical hold, to allow the relevant parties more time to consult each other. Chinese analysts said they believe India did not provide enough evidence to support its proposals, as evidence is required not only because of the need to maintain the UN’s authority, but also because of the complexities in the region. Unlike Indian media’s criticism of China’s veto, Pakistani media reported that people in the country welcome the news, which reflects the deep divisions among people in the two countries.

Delhi, Tokyo, Canberra
The Indian Express, February 10
Donald Trump sent a tremor through one of America’s most solid alliances last week in his leaked phone call with the Australian Prime Minister Malcolm Turnbull. He reportedly got angry at one of his country’s most loyal allies and cut short the conversation before it could move to major issues such as fighting ISIS. The friction was over whether America would honour the Obama administration’s parting promise to Canberra to take 1,250 refugees left in limbo by Australian border control policies. In a tweet, President Trump attacked this “dumb deal”, implying he might change his mind and reject it. The larger question matters to all of America’s security partners, including India. It is about strategy and geopolitics in a confusing new era — and whether US allies and partners can continue to trust the commitments of Washington or the confidentiality of their top-level discussions.

Tibet meddlers must face consequences
Global Times, February 10
On February 2, the University of California San Diego (UCSD) announced that it has invited the 14th Dalai Lama to address the graduating students at commencement in June. The announcement, however, triggered anger from Chinese mainland students at the university.  By calling the Dalai Lama “the exiled spiritual head and leader of the Tibetan people” and “a man of peace,” the UCSD has shown admiration for the Buddhist monk. What is laughable is that the person behind the infamous invitation was campus Chancellor Pradeep Khosla, an Indian American. The campus website posted a photo of Khosla who met the Dalai Lama in Dharamsala, India, last October. This shows how some Indian Americans agitate China-India and China-US relations. Khosla is imposing his views of the Dalai Lama on the student population at the university and using such an important occasion as commencement to promote someone who has nothing to do with education.

 


Books and Journals

Buddhism in Current China-India Diplomacy
Journal of Current Chinese Affairs, 2017
Buddhism is being emphasised strongly in both Chinese and Indian public diplomacy, as they both seek to increase their soft-power attractiveness. This article, by David Scott, finds that while Buddhism has served to draw the two countries together in their bilateral relationship, their current invocation of Buddhism as a bridge is in many ways an ahistorical reconstruction. The article also finds that Buddhism operates as a tool of diplomacy in a competitive way, as China and India both seek influence among Buddhist countries elsewhere in Asia and among international Buddhist organisations. Finally, this article finds that whereas China’s use of Buddhism is straightforwardly tactical and to a degree disingenuous, India is able to incorporate genuine spiritual elements into its use of Buddhism, albeit within a setting of Hindu reinterpretation of Buddhism. In the future, China could shift from a short-term tactical to a long-term normative use of Buddhism within international socialisation scenarios.

Demographics and Market Segmentation: China and India
The Frontiers of Applied Demography, November 2016
China and India are the two most populous countries in the world but have followed different demographic courses. Both countries have experienced substantial expansion of their markets for a range of commodities. However, dissimilar household composition and socioeconomic paths have affected household preferences in the two countries. The paper, by Jo Martins, Farhat Yusuf, Gordon Brooks and David Swanson, reviews macro demographic trends that have led to different demographic structures with significant implications for productivity and household purchasing power and discretionary spending in the two countries. It then conducts an examination of household expenditures based on household surveys undertaken in 2005 and assesses similarities and disparities in household preferences for broad categories of goods and services in rural and urban areas, and also for households with varying levels of income. This provides a basis for hypothesis building concerned with market growth for progressive commodities, in view of current demographic structures in the two countries and projected fertility and population growth.


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