Published Twice a Month
June 13, 2018 – June 26, 2018
Centre on Asia and Globalisation
Lee Kuan Yew School of Public Policy
Shanghai Milestone in China-India Relations
By Khasan Redjaboev
The Shanghai Cooperation Organisation (SCO) was founded on June 15, 2001 in Shanghai by China, Russia, and the Central Asian countries barring Turkmenistan (due to its official state neutrality). Since its inception, the grouping has at times been chastised as a club of authoritarians, with organisational flows too rigid to move beyond issuing a few carefully-worded official statements. Moreover, attempts at redefining a new existential purpose for the SCO seemed to hit a dead-end many times, especially when its original raison d’etre of settling post-Soviet Eurasia’s borders with China, as well as countering non-traditional threats and non-state violence through a large-scale intelligence and data-sharing cooperation, had been effectively achieved.
China was the largest economic power in the region during the 1990s, investing and trading billions of US dollars on a plethora of social-economic interactions with Kazakhstan, Turkmenistan, and Kyrgyzstan. Despite Russian functionaries being creative in proposing to expand the SCO into an economic union, the idea initially failed to gain traction and the organisation remained a predominantly political-security grouping.
This however changed in 2015.
That year, not one but two new winds of change started to blow, exciting both experts and regional aficionados alike. At the 2015 SCO Summit held in Ufa, Russia, India and Pakistan gained the organisation’s unanimous consent to join the SCO, with relations formalised in 2016 in Tashkent, Uzbekistan, and the historic agreement signed in 2017, in Astana, Kazakhstan. Thus, India and Pakistan had joined the only major and formal Eurasian political organisation with China and Russia (BRICS does not perform that function) that did not include any European Union, North American member, or any of their allied Northeast Asian countries.
All eight members and their heads of states met at the 2018 SCO Summit in Qingdao, China, that took place on June 9-10. This was a major development despite (or thanks to) the seeming lack of interest amongst the major Anglophone or Euro-phone media. In an exclusive interview aired by China’s CGTN, Russian President Vladimir Putin, described the organisation’s growing significance: “The SCO member states account for one fourth of the world's GDP, 43 percent of the international population and 23 percent of the global territory.” “Historic,” “milestone,” and “a new chapter” – were some of the phrases used to describe the Qingdao Summit. The “SCO’s unity” stood in stark contrast to the conspicuous disarray shown at the G7 Summit in Canada. This month’s most covered political event, the summit in Singapore, where the consensus increasingly is that only “Kim Jong [Un] Won”, also differed from the “fine tradition of solidarity and coordination” showcased at Qingdao.
So, with India and Pakistan’s inclusion into a China-dominated and Russia-revered SCO, can the organisation evolve into a kind of Concert of Eurasian Powers? As the science of prognostication is the least fertile ground to plough, the best thing may be to take stock of some of the possible pluses and minuses of their entry.
First, India and Pakistan relations are not without troubles. Their long-standing acrimony has been fuelled by their past armed conflicts, and their complex relationship with China. The Doklam standoff saw a major souring of relations between China and India. New Delhi’s China policy has also seen a change in its commitment to normalisation with its norther neighbour, a commitment that used to dominate foreign policy across different governments until 2014. In the meantime, Pakistan is deepening its economic relations with China under the overall rubric of Beijing’s Belt and Road Initiative which is worrying India. Islamabad is also continuing to maintain its influence with radical groups in Afghanistan and Kashmir. So while India-Pakistan relations could disrupt the SCO, the organisation could provide an important platform for dialogue and confidence building measures between the two South Asian rivals.
Second, confidence building builds on consistency and regularity. These are present within the framework of the two annual SCO summits of the Heads of States and Heads of Governments. The official rhetoric has been optimistic. “We know there are existing and historical unresolved conflicts between Pakistan and India. But I think after they joined the SCO, maybe we can provide a better platform and opportunities for the building of relations between them,” according to the Minister for Foreign Affairs of China, Wang Yi. China and Russia will be particularly important in providing interlocking means of communications. Some positive developments have already taken place. For instance, India and Pakistan will take part in their first ever joint-military exercise in the Russian Urals in 2018 thanks to the SCO’s framework.
Third, confidence building requires fresh and (more) impartial parties with a potential to mediate. One of the most exciting developments in India’s accession into the SCO is Russia’s potential in the complex China-India relationship. Russia and India share a historically close relationship that dates back to India’s independence. Russia reportedly sees China as its closest friend, and the feeling seems to be mutual. President Xi Jinping of China declared at the Qingdao Summit that “no matter what fluctuations there are in the international situation, China and Russia have always firmly taken the development of relations as a priority”. He also described President Putin as his “best, most intimate friend.” That puts Russia in a good position to pursue an interlocutor’s role, one with both the diplomatic zeal and proven track record in participating in complicated diplomacy. Russia’s ability to deal creatively with others and its measured narrative of ‘friendship with all’ are good assets for this kind of triangular diplomacy. Putin seems to be oddly popular in polls in China and India. That goodwill gives Russia an upper-hand of sorts especially when the United States has declared China a strategic rival and has lost credibility as an impartial mediator in Palestine-Israel relations. Add escalating conflicts over trade and a widely speculated US retreat from the Asia-Pacific and Russia suddenly has been handed a strategic opening.
Russia may play a vital role between China, India, and Pakistan. Russia has an important economic and strategic relationship with both China and India. Even though China’s USD 100 billion trade with Russia and umbilical energy relations dwarf that of India’s which stands at an estimated USD 9 billion, both countries import most of their high-end weaponry from Russia. This is in addition to other joint missile and space development projects as well as nuclear power projects that Russia has with both parties. Many observers outside the region question if the Eurasian giant would remain truly impartial. All major powers hedge against each other even while balancing against the hegemon. Russia may well use this opportunity to hedge against China using India and balance against the America-led Indo-Pacific initiative by hedging against India using Pakistan and China.
There were some challenges noted on India’s and Pakistan’s ascension to SCO, such as working languages (previously only Russian and Chinese), operating budgets, and intra-organisational cliques. Nonetheless, for the Qingdao Summit in 2018, all formal procedures were up and running in a formalised third language – English. Judging by the first meeting of the expanded organisation, the members including the newcomers all seemed to bond well.
The SCO is an important platform for continued, formal dialogue, with a strong culture of sensible behind-the-scenes work and discreet management of intra-organisational quarrels. As it was wittily noted: while people talk, arms don’t fight.
Khasan Redjaboev is a Research Assistant at the Centre on Asia and Globalisation (CAG), where he has worked on “Developing Asia-Pacific’s Last Frontier: Fostering International Cooperation in the Development of Russia’s Far-East” research project, assisted in research activities on the South China Sea, and is currently researching economic and security systems in the Asia-Pacific Region.
The views expressed in the 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.
Mamata cancels trip to China at last minute
The Times of India, June 23
Bengal chief minister Mamata Banerjee had to cancel her China trip hours before boarding the flight on Friday (June 22) after getting no confirmation till noon of a proposed political dialogue with Communist Party of China (CPC) Central Committee members. Banerjee, who was to leave for an eight-day trip as the head of a 40-member delegation, felt that there was no use going to China without a political dialogue with CPC members of a "certain level commensurate with her role in Indian politics", Bengal finance minister Amit Mitra said.
China to send military delegation to India soon
The Economic Times, June 22
China’s Western Theatre Command will send a delegation to India in the next couple of months, signalling the start of the high-level military exchanges between India and China that had stalled ahead of the Dokalam stand-off.
Indian, Chinese soldiers do yoga together
The Times of India, June 21
Setting aside simmering tensions along the Line of Actual Control (LAC) after the Doklam troop face-off last year, Indian and Chinese soldiers on Thursday came together to do yoga at a border personnel meeting point (BPM) in Eastern Ladakh.
India, China cannot stand another Doklam, says envoy Luo Zhaohui on border standoff
DNA India, June 18
Bilateral ties between India and China can't take the strain of another Doklam episode, Chinese envoy to India Luo Zhaohui said on Monday, emphasising the need to find a "mutually acceptable solution" on the boundary issue through a meeting of Special Representatives.
China and India in the Regions
China vows to back Nepal’s ‘territorial integrity’ as two sides sign US$2.4 billion of deals
The South China Morning Post, June 21
China has vowed to support Nepal’s efforts to maintain its “territorial integrity” as Beijing seeks to strengthen its ties with the Himalayan state and expand its influence in South Asia. The two sides also signed eight agreements worth US$2.4 billion, ranging from hydroelectric to water resources projects, cement factories and fruit production.
China distances itself from envoy's idea of India-China-Pak trilateral cooperation
The Times of India, June 20
China today (June 20) distanced itself from its envoy's comments on the idea of trilateral cooperation between India, China and Pakistan under the aegis of the SCO, but underlined the importance of strengthening of dialogue between New Delhi and Islamabad to improve mutual trust.
Seychelles won't move forward on naval project with India: President Danny Faure
The Times of India, June 17
Seychelles has cancelled the agreement with India to build a military facility on Assumption Island. In a press conference earlier this month, Seychelles president Danny Faure said he would not discuss the Assumption Island project with Prime Minister Narendra Modi when he comes here. Announcing that the project was, for all intents and purposes, dead, he said Seychelles would build it with its own funds next year.
As ties nosedive, India voted against Maldives at the UN Security Council
The Print, June 15
As the relationship between India and the Maldives nose-dives, it is learnt that Delhi voted against Malé and in favour of Indonesia for a non-permanent seat at the UN Security Council last week.
Trade and Economy
China-led AIIB to spend $3.5bn with focus on India
Nikkei Asian Review, June 25
China-led Asian Infrastructure Investment Bank said Monday (June 25) it will invest or lend $3.5 billion this year to India, Bangladesh, Turkey and Egypt for projects aimed at strategically connecting Asia and Africa.
China Accuses U.S. of Trade ‘Abuses’ as India Hits Back at Trump
Bloomberg, June 21
Global trade tensions deepened Thursday (June 21) with China reiterating it will hit back if the latest tariff threats from Donald Trump materialize, while India followed the European Union in slapping retaliatory levies on U.S. goods.
RPT-India ships more cotton to China as 25 pct tax spoils U.S. supply
Reuters, June 21
India’s cotton shipments to China could grow five-fold to 5 million bales (850,000 tonnes) in the next crop year as exporters rack up orders amid a trade war that is forcing the world’s top consumer to look for other sources of supply.
India in talks with China, Australia, New Zealand to crack mega trade deal
The Hindu Business Line, June 20
India is holding bilateral dialogues with China, Australia and New Zealand to get them to agree to less ambitious tariff cuts for sensitive products. The aim is to end the logjam in the negotiations for the mega regional trade bloc, the Regional Comprehensive Economic Partnership (RCEP).
To bridge trade gap, China opens door to Indian raw sugar
The Economic Times, June 20
India will export 1-1.5 million tonne of raw sugar to China after almost a decade and is waiting for a formal notification from Beijing greenlighting the consignment. Though sugar exports attract a 50% duty in China, officials said it was still viable because of the high prices there.
Government to study ways for boosting pharma export to China
The Times of India, June 18
India’s commerce ministry has commissioned a study on ways to boost the export of pharmaceutical products to China. The study aims to have a proper understanding of Chinese market and to help the domestic pharma industry to evolve appropriate and focussed strategy for the entry of the Indian generic drugs, the ministry said.
Energy and Environment
Chinese move may pull down solar power bid tariffs further
ET Energy World, June 24
China's decision to slap deployment caps and reduce feed-in-tariffs for solar projects may lead to a further plunge in module prices, which in turn is likely to result in a further reduction in solar bid tariffs, say experts.
China has handed the world a 111-million-tonne trash problem
The Times of India, June 21
China has imported 106 million tonnes of old bags, bottles, wrappers and containers worth $57.6 billion since 1992, the first year it disclosed data. So when the country announced last year that it finally had enough of everybody else's junk, governments the world over knew they had a problem.
Oil traders ready for musical chairs as China tariffs loom
Reuters, June 20
Oil markets are bracing for a reshuffle of global trade flows as China threatens to impose tit-for-tat tariffs on imports of U.S. energy products, including crude. China, which has bought an average 330,000 barrels per day (bpd) of U.S. crude oil this year, is threatening to place a 25 percent tariff on various U.S. commodity exports, including crude oil, although it is so far unclear when such a measure would come in place.
China and India Want to Buy More U.S. Oil to Counter OPEC
Bloomberg, June 14
India and China are discussing ways to boost imports of U.S. crude to Asia, a move aimed at reducing their dependence on cargoes from members of the Organization of Petroleum Exporting Countries (OPEC), according to an Indian government official. The two nations want to put pressure on OPEC producers to keep prices under control, he said in New Delhi on Wednesday (June 13).
India’s pivot to Eurasia
The Hindu, June 20
By P.S. Raghavan - Former diplomat, and currently Convenor of the National Security Advisory Board
Sandwiched between U.S. President Donald Trump’s acrimonious public exchanges with other leaders at the G-7 (group of seven industrialised countries) summit (June 7-8) and the headline-hogging U.S.-North Korea summit (June 12), the Shanghai Cooperation Organisation (SCO) summit in Qingdao, China (June 9-10) attracted little international attention.
Building capabilities in the Indo-Pacific region
Livemint, June 19
By Yusuf Unjhawala - Editor of Defence Forum India and commentator on defence and strategic affairs
China, which is looking to expand its footprint in the Indian Ocean, will be forced to focus more on South China Sea. Smaller countries are susceptible to China if larger countries like India avoid confrontation. This can be offset if countries like India, the US and Japan work together to build infrastructure and provide development assistance to these countries to prevent them from falling under Chinese influence.
From China to Central Asia, a regional security bloc’s long, slow march towards an alternative world order
South China Morning Post, June 18
By Raffaello Pantucci - Director of International Security Studies at the Royal United Services Institute (RUSI) in London
The SCO may have done remarkably little beyond hold big meetings and China’s activity in all of the SCO member states at a bilateral level is infinitely more significant than its efforts through the bloc. But at the same time, this is a forum that has consistently met and only grown. Under its auspices, China has managed to slowly encroach on Russia’s military and political dominance in its own backyard, and has now persuaded the world’s biggest democracy that it is an important group to be involved in.
China and India’s border dispute is a slow-moving environmental disaster
The Conversation, June 18
By Ruth Gamble - David Myers Research Fellow, La Trobe University
Most analysis of the Sino-Indian border dispute has focused on the potential for another war between these two nuclear-armed neighbours. The environmental impacts of their continued entrenchment are rarely mentioned, despite the fact that they are significant and growing.
Countering China in the Indo-Pacific
Livemint, June 17
By Satoru Nagao - Visiting Fellow at the Hudson Institute in Washington, D.C.
Security cooperation between Japan, India, the US and Australia is on the rise. At the recently concluded Shangri-La Dialogue in Singapore, Prime Minister Narendra Modi and the defence ministers of Japan, the US and Australia reiterated their shared commitment to the Indo-Pacific region. It was closely followed by Japan-India-US Malabar exercises in Guam.
Books and Journals
Asian Waters: The Struggle Over the South China Sea and the Strategy of Chinese Expansion
The Overlook Press, June 2018
By Humphrey Hawksley
Humphrey Hawksley’s work as a BBC foreign correspondent has taken him to crises on every continent. He was expelled from Sri Lanka, opened the BBC’s television bureau in China, arrested in Serbia and initiated a global campaign against enslaved children in the chocolate industry. His work has appeared in the The Guardian, The Times, Financial Times, International Herald Tribune, Yale Global and other publications. His university lectures include Columbia, Cambridge, University College London and the London Business School. He is a regular speaker and panellist including at Intelligence Squared and the Royal Geographical Society, and he has presented his work and moderated at many literary festivals.
In the sphere of future global politics, no region will be as hotly contested as the Asia-Pacific, where great power interests collide amid the mistrust of unresolved conflicts and disputed territory. This is where authoritarian China is trying to rewrite international law and challenge the democratic values of the United States and its allies. The lightning rods of conflict are remote reefs and islands from which China has created military bases in the 1.5-million-square-mile expanse of the South China Sea, a crucial world trading route that this rising world power now claims as its own. No other Asian country can take on China alone. They look for protection from the United States, although it, too, may be ill-equipped for the job at hand. If China does get away with seizing and militarizing waters here, what will it do elsewhere in the world, and who will be able to stop it?
In Asian Waters, award-winning foreign correspondent Humphrey Hawksley breaks down the politics―and tensions―that he has followed through this region for years. Reporting on decades of political developments, he has witnessed China's rise to become one of the world's most wealthy and militarized countries, and delivers in Asian Waters the compelling narrative of this most volatile region. Can the United States and China handle the changing balance of power peacefully? Do Japan, the Philippines, South Korea, and Taiwan share enough common purpose to create a NATO-esque multilateral alliance? Does China think it can even become a superpower while making an enemy of America? If so, how does it plan to achieve it? Asian Waters delves into these topics and more as Hawksley presents the most comprehensive and accessible analysis ever of this region.
Compiled and sent to you by Centre on Asia and Globalisation and
the Lee Kuan Yew School of Public Policy, National University of Singapore