China-India Brief #150

Guest Column

Technology and China-India Relations 

By Karthik Nachiappan    

President Trump’s coercive throttling of Chinese telecom giant Huawei has compelled Beijing to engage in technology diplomacy to keep markets open, particularly in South and Southeast Asia, for the embattled company as it looks to secure national 5G licenses. One key market for Huawei is India—a country on the cusp of finalizing vendors for 5G networks. But America’s sweeping effort to asphyxiate Huawei has placed New Delhi in a tough spot diplomatically and domestically—should India acquiesce and block Huawei from the Indian market, it would please Washington but incense Beijing that is actively pushing Delhi to let Huawei vie for 5G licenses. Geopolitics aside, an Indian Huawei ban would have domestic implications. In the last decade, Huawei has helped develop India’s 3G and 4G networks; Indian telecom operators have relied on Huawei equipment to contain costs and expand network coverage to areas, particularly rural, that have limited broadband range. Restricting Huawei could stymie India’s 5G introduction and expansion, while permitting it could bring potential security risks. Stakes are high. The Huawei case shows that technology is and could become a key aspect of China-India relations and how India balances relations between major powers like China and the United States.

Huawei’s troubles began this year. In May 2019, the US Department of Commerce blacklisted the company from purchasing American products without Washington’s approval. The injunction arrived at an inopportune time as Huawei was constructing advanced 5G networks that are widely expected to drive the next frontier in wireless communication. 5G networks will provide exponentially faster data speeds compared to existing mobile networks which, experts claim, will fuel innovations in areas like autonomous cars and artificial intelligence. 5G networks also stand to transform warfare; with better coverage, large volumes of data can be used and shared to inform the deployment and use of weapons. There is growing consensus that China is ahead of the United States and other countries in terms of 5G development. In 2019, Huawei’s share of the global telecom market was 28% ahead of US companies like Verizon, Sprint and AT&T. Globally, Huawei’s imprint is expansive having worked closely with developing countries, particularly in Southeast Asia, to build their 3G and 4G networks; Huawei is intent on leveraging this global base by working with individual countries to build their 5G networks, an objective stymied by Trump’s sanctions on the company and pressure on allies like Germany, Australia and the United Kingdom, and partners like India and Singapore to remove Huawei from their 5G plans. Some countries, like Australia, have agreed while others like India are assessing options.

Pressure from the United States to desist from using Huawei equipment comes at a pivotal time which makes India’s decision a difficult one. America’s qualms vis-à-vis Huawei stem from the company’s proximity to Beijing and fears that the Chinese government will have access to the information collected through the telco. The Trump administration has cited concerns that private communications gathered through various devices could flow through a ‘backdoor’ to Beijing. New Delhi has taken on board American misgivings given the economic and security implications. Bilaterally, India and the United States are in the midst of their own trade squabble that involves tariffs both countries have imposed on various goods, and the H1B Visa issue regarding the movement of Indian professionals to America. As Washington and New Delhi negotiate these issues, American demands vis-à-vis Huawei burdens the existing conversation. Both US and India also diverge sharply on India’s proposed e-commerce and data rules that favour local technology companies. A potential Indian decision to allow Huawei to bid for 5G spectrum could lead to the US hardening its position on tariffs and visas. A positive Huawei decision could also constrain intelligence sharing between American and Indian agencies given US anxieties about how Huawei technologies are being used.

India has to balance Chinese concerns with American demands. The Chinese government has been pushing New Delhi to permit Huawei; given the telco’s current predicament, the Indian market is one it cannot afford to lose. Beijing has warned India of retaliatory measures or ‘reverse sanctions’ against Indian companies operating in China should New Delhi ban Huawei. Potential market restrictions could deepen India’s burgeoning trade deficit with China ($53 billion) that India has been attempting to reduce by directly prodding the Chinese to expand market access for Indian firms in industries like pharmaceuticals and IT. The latter demand was a key part of India’s RCEP strategy shaped by the reality that Chinese imports would have flooded the Indian market had India entered the regional trade agreement without enough concessions. Beijing could have also stressed the development constraints India could face as it moves forward on the digital economy front without Huawei technologies. A ban on Huawei could delay India’s 5G rollout given the dearth of existing market substitutes that can fulfil demands of the Indian market and the ambitions of the Modi government keen on expanding broadband access to power India’s growth. That said, potential security risks associated with Huawei’s involvement is not lost on New Delhi. Loss of communications and personal information to China is one reason why India is also keen on data localization or instituting rules that retain personal data gathered within India.

India’s Huawei conundrum illustrates the growing relevance and importance of technology to international affairs and how rising powers like India manage major power tensions that occasionally affects bilateral relations. The growing technological divide between China and the United States is fundamentally an ideological one that boils down to whether technology is used for coercive purposes as a mode of control or as a tool to drive globalization and openness. Countries that side with either China or the United States could end up making choices that fundamentally shape how political and societal change occurs. India has a clear choice ahead that could define and perhaps alter its political future.

Karthik Nachiappan is a Research Fellow at the Institute of South Asian Studies (ISAS), at the National University of Singapore. He is the author of Does India Negotiate? (Oxford University Press, October 2019).

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.

News Reports

Bilateral relations

India-China joint Army training exercise begins in Meghalaya
The Times of India, December 7

Titled ‘Hand In Hand 2019’, the counter terrorism excercuse under United Nations mandate is being conducted at Umroi in Meghalaya from December 7 to December 20.

Chinese Foreign Minister to visit India this month, discuss boundary issues
Business Standard, December 4

Chinese Foreign Minister Wang Yi is likely to visit India at the end of this month to hold talks with National Security Advisor (NSA) Ajit Doval on the boundary issues between the two countries, sources said.

Perceptional differences over India-China border: Rajnath Singh
The Hindu, December 4

Defence Minister Rajnath Singh on Wednesday (December 4) told the Lok Sabha that there are “perceptional differences” between India and China on the Line of Actual Control (LAC) on the border issues but the two countries have a mechanism that prevents any escalation of conflict.

Chinese research vessel expelled by Indian warship for operating near Andaman and Nicobar Islands
South China Morning Post, December 4

The Shiyan-1 was caught working without permission off coast of Port Blair inside island group’s exclusive economic zone. Indian naval chief says seven or eight Chinese vessels can be found in region at any time.

‘Should break strange circle of disputes’: China on ties with India
Hindustan Times, November 30

As two large developing countries, India and China should seek common development, vice foreign minister Luo Zhaohui said this week at a high-profile bilateral thing-tank held in Beijing.

1025 Chinese transgressions reported from 2016 to 2018: Government data
The Economic Times, November 28

Minister of State for Defence Shripad Naik, replying to a question in the Lok Sabha, said the number of transgressions by Chinese Army in 2016 was 273 which rose to 426 in 2017.

News Reports

China and India in the Region

Asian neighbors lose confidence in Xi Jinping's policies: Survey
Nikkei Asian Review, December 6

China's Asian neighbors welcome Beijing's economic rise but are losing confidence in the leadership of the region's biggest economy, a multinational survey published Friday (December 6) showed.

Maldives looks for new deal on China debt
South China Morning Post, December 6

The Maldives is seeking a “diplomatic” solution to restructure its Chinese debt as the small but strategically located atoll nation struggles with repayments, the foreign ministry has said.

China not among 41 friendly nations invited for Naval drills hosted by India
India Today, December 3

Indian Navy Chief Admiral Karambir Singh made it clear that only "like-minded" countries will be part of the upcoming Milan Exercise for which Indian Navy has sent invites to 41 countries.

Sri Lankan President Gotabhaya Rajapaksa plays down links with China on trip to India
South China Morning Post, December 1

Ties between Colombo and Beijing are “purely commercial”, new Sri Lankan leader says. If other nations don’t invest in island nation, Beijing will take its Belt and Road Initiative “all over”, he says.

Japan and India to conduct fighter jet drill in bid to deepen security ties
The Japan Times, December 1

Japan and India agreed Saturday to conduct their first joint fighter aircraft exercise in Japan as part of efforts to promote bilateral security cooperation in the face of China’s military buildup and regional assertiveness.

Ex Nepal PM seeks trilateral ties with India, China
Deccan Herald, November 30

Former Nepal Prime Minister Pushpa Kamal Dahal 'Prachanda' on Friday (November 29) rejected the India-China Plus formula mooted by Beijing but favoured a trilateral strategic partnership between Nepal, India and China based on mutual benefit.

News Reports

Trade and Economy

India Eyes Bilateral Trade Deals After Exiting China-Backed Pact
Bloomberg, December 10

India is reviewing trade and goods agreements with its Southeast Asian neighbors, as well as South Korea and Japan to boost exports after opting out of a China-backed trade pact.

Sri Lanka aims to increase investments from key markets including China
Xinhua, December 2

Sri Lanka's new government will aim to increase investments from China and a few other leading markets next year in order to boost the Foreign Direct Investments (FDI) sector and the economy of the island country, State Minister of Investment Promotion Keheliya Rambukwella was quoted in local media reports as saying here Monday.

12 global firms evinced interest to shift base from China to India: Sitharaman
Livemint, November 30

A task force has already started contacting companies to shift back to India, she said at an event in Mumbai. Talking about the GDP growth rates, she expressed hope that the next numbers should be better.

Japan says it won’t sign China-backed RCEP trade pact without India
The Print, November 30

Japan is not considering signing a Chinese-backed regional trade pact without India, the top Japanese negotiator said Friday (November 29), ahead of a series of diplomatic exchanges in the coming weeks that include a visit to Delhi by Prime Minister Shinzo Abe.

India’s economic growth cools to six-year low
Financial Times, November 29

India’s economic growth slowed further in the third quarter, highlighting the depth of the downturn afflicting a nation that was only recently revelling in its status as the world’s fastest-growing large economy.

News Reports

Energy and Environment

Global Warming: India, others call out developed countries for failing to meet target
ET Energyworld, December 6

India along with China, Brazil and a handful of developing countries are calling out developed countries for failing to meet the targets that had to be achieved by 2020.

Natural gas consumption to rise 3-folds in 10 yrs for 15% target: Pradhan
ET Energyworld, December 5

Natural gas currently makes up for 6.2 per cent of all energy consumed in the country. To cut dependence on polluting coal and liquid fuels, the government is targeting its share to rise to 15 per cent by 2020-30.

Growth in global carbon emissions slowed in 2019: report
Reuters, December 4

A surprise drop in coal use in the United States and Europe has helped to slow the growth of global carbon dioxide emissions this year, with softening demand in China and India also contributing, according to a study published on Wednesday (December 4).

From India to China, food is getting more expensive
Livemint, November 28

UN data shows global food prices rose at the fastest pace in October in more than two years. Asia’s two largest developing economies face a price surge for staple products—pork in China and onions in India.

Analyses

How is Belt and Road being viewed by Asian elites?
CGTN, December 8

By Ji Xianbai, Research Fellow, International Political Economy Program, S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore

In September 2013, Chinese President Xi Jinping pronounced China's international economic cooperation vision, as incarnated in what was later termed the Belt and Road Initiative (BRI), in Kazakhstan. Six years on, how is the BRI being perceived in BRI partner countries?

Cracks in Xi and Modi’s shared world vision
East Asia Forum, December 7

By Chris Ogden, Senior Lecturer in Asian Security, University of St Andrews

The annual ‘informal summits’ offer an opportunity to scrutinise the geopolitics of China–India relations. They also provide potential indicators of how the two leaders view the current world order and raise the question of whether there is real impetus for warmer ties.

China and India's simultaneous slowdowns demand radical change
Nikkei Asian Review, December 3

By James Crabtree, Associate Professor of Practice, Lee Kuan Yew School of Public Policy

China and India have been Asia's growth engines for the best part of two decades. That golden period of rapid expansion now appears, at least temporarily, to be coming to an end.

The China-Pak nexus is a threat. India is countering it well
Hindustan Times, December 1

By Jayadev Ranade, Former Additional Secretary in the Cabinet Secretariat, Government of India; and President, Centre for China Analysis and Strategy

Such decisiveness and swiftness of action are essential for India to successfully navigate the challenging period ahead. With a clear assessment of threats and boldness, a better future awaits India

India wants to woo Sri Lanka. But China stands in the way
Channel News Asia, December 1

By C. Raja Mohan, Director at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore

As a giant neighbour physically so proximate, India has a very complex relationship with Sri Lanka and is very different from that between Beijing and Colombo.

Books and Journals

Status competition among Russia, India, and China in clubs: a source of stalemate or innovation in global governance
Contemporary Politics, Vol. 25, Issue 5 (May 2019)

By Deborah Welch Larson, Professor of Political Science, University of California, Los Angeles

The conventional wisdom in international relations is that rising powers seek additional status and influence from the hegemon. But emerging powers may also compete among themselves for status. While attempting to enhance their status vis-à-vis the West, the ‘strategic triangle’ of Russia, India, and China sometimes compete for status and influence within clubs such as the BRICS, SCO, and BRI. This pattern is difficult to explain in terms of neorealist, club, or constructivist theory. An explanation for this phenomenon is provided by social identity theory (SIT) from social psychology, which argues that groups seek a positively distinctive identity. The BRICS are able to cooperate when acting in terms of a superordinate identity. To avoid escalation of their rivalry, Russia and China have established niche diplomatic areas in Central Asia, an example of social cooperation. Status competition among Russia, India, and China both motivates and obstructs cooperation on global governance.