China-India Brief #108

Guest Column

India and the South China Sea

By Byron Chong

The ongoing disputes in the South China Sea (SCS) have been regarded as one of the most enduring and complicated regional conflicts in the Asia-Pacific. The disputes involve China along with several states in the region and encompass issues such as overlapping territorial claims and access to critical resources like energy and fisheries. Within this turbulent environment, India has been expanding its influence through implementing its Look East Policy (LEP). This has not been taken well by China, who has for years tried to curb New Delhi's growing involvement in the SCS. India’s decision to involve itself in such a complex environment, even at the risk of provoking its giant neighbour, demonstrates the significance it places on the region and its sea lanes.

The SCS is located in a region of great strategic interest for India. Geographically, it connects the Indian Ocean and the East China Sea via the Malacca Straits, which is one of the busiest sea lanes in the world. This important waterway serves as a vital economic artery for the South Asian state. Up to 97% of India’s total international trade volume is sea-borne, half of which, passes through the straits. In addition, the Association of Southeast Asian Nations (ASEAN) constitutes one of India’s largest trade partners, with total trade valued at $71 billion in 2016/2017.

Energy is another component of India's interest in the SCS. In 2015, India became the third largest oil consumer in the world, with industry experts predicting that its energy consumption would continue to grow by 4.2% annually. Already importing up to 80% of its total oil requirements, India will likely need to secure new energy sources as domestic demand rises. The potential energy deposits in the SCS have thus drawn New Delhi's attention. In 2013, The US Energy Information Administration (EIA) estimated the region to contain up to 11 billion barrels of oil and 190 trillion cubic feet of natural gas in reserves. As such, India has been continually involved in offshore energy development projects in the SCS since the early 1990s, bidding for new oil and gas blocks and conducting oil exploration in the region.

The region’s economic importance translates into national security interests for New Delhi. With half of its maritime trade passing through the Malacca Straits, any instability in the SCS would adversely affect the shipping lanes and have a knock-on effect on India's economy. Similarly, should a potentially hostile power come to control this region, it could threaten India’s access to this vital water way. New Delhi's involvement in the SCS thus, focuses on three objectives. First, to ensure peace and stability in the region and keep the vital sea lanes open; second, to maintain cordial relations with regional powers; and third, to ensure that no potentially aggressive external power comes to dominate the region.

Through the LEP, New Delhi has pursued these objectives by seeking to intensify its engagement with ASEAN states. Besides increased economic engagement, strategic cooperation was expanded through joint naval exercises, generous lines of credit, military training and sales of military hardware with regional states. Moreover, the enhanced presence of Indian military assets in the area not only served to protect the sea lanes, but also provided 'domain awareness' of potential regional developments.

Engagement also served to counter China's growing influence in the region. India’s relationship with its giant neighbour has been difficult and tenuous. Both sides have been embroiled in a long, ongoing border dispute that resulted in a war in 1962 and till today remains a source of tension that has resulted in occasional crises. This has perpetuated the sense of suspicion and mistrust between the two. As the Doklam standoff in 2017 shows, conflict between the two sides remains a very real prospect. Hence, from New Delhi’s perspective, it is imperative that the SCS does not turn into a ‘Chinese lake’.

Managing the region’s competing territorial disputes has required shrewd diplomatic awareness and delicate balancing from India. On one hand, the South Asian state wants to maintain friendly relations with the various SCS claimants; on the other, it has to avoid excessively provoking its Chinese neighbour. In New Delhi’s view, while activities such as energy exploration and weapon sales to the region would incur Beijing’s disapproval, such ventures are unlikely to instigate anything more than a verbal response from the Chinese. Taking a stand on the territorial disputes is another matter. China has repeatedly described the SCS as a “core interest”, indicating its willingness to use force to protect its claims. Thus, India’s stand on the issue has been one of deliberate ambiguity – not favouring any one side, but instead advocating freedom of navigation and peaceful resolution of disputes in accordance with international law, including the United Nations Convention on the Law of the Sea (UNCLOS). On the South China Sea Arbitration ruling in 2016, India, which had not taken sides in the dispute, urged all parties to respect and uphold the verdict of the UNCLOS-based tribunal.

Recent developments in the SCS, however, have been a source of concern for New Delhi. China, which lays claim to 85% of the contested region, has been reclaiming and militarising features in its possession. Between 2013 and 2016, China was reported to have reclaimed seven islands and built military installations including airfields, radar systems and missile bases on its reclaimed possessions in the area. Furthermore, Chinese vessels in the area have been known to act aggressively, harassing and intimidating vessels of other nations into steering clear of islands they claim. In response, other SCS claimants have also begun augmenting their deterrence capabilities on their islands with infrastructure such as coastal defences, airfields and surveillance systems. Rather than peace, such actions have generated tension and destabilised the region.

Even the United States (US), once a strong proponent for ‘freedom of navigation’ in the region, has been of little help to India. During his first year in office, President Trump failed to show any willingness to challenge Beijing over its behaviour in the SCS. The new administration seemed to lack a clear policy towards the SCS, choosing to focus its attention instead on North Korea. More recently however, there are signs that change may be on the horizon. In late 2017, the one dormant Quadrilateral Security Dialogue – a defence partnership involving the US, Japan, India and Australia – made a sudden comeback, indicating the growing unease over China’s rise. The recently unveiled US military strategy also indicates a shift in focus back towards China and Russia. While it is too early to tell how well this plan will be carried out under this administration, the US is likely to seek closer ties with India as a counterweight to China’s regional dominance. Furthermore, it may also signal Washington’s renewed interest to check Beijing’s behaviour in the SCS.

What does the future hold for the SCS? New Delhi’s decision to host all ten ASEAN heads of state later this month shows its intention to buckle down on its policy of strengthening ties with the region. Beijing’s policy in the SCS also seems unlikely to change. It has already swung the opinion of states like Malaysia and the Philippines, who have since softened their stances, and chosen to focus on cooperation with the Asian giant. With or without the US, India will have to continue to strengthen its ties with the region and play a part in managing its turbulent waters.

Byron Chong is a Research Assistant at the Centre on Asia & Globalisation in the Lee Kuan Yew School of Public Policy. He graduated from the S. Rajaratnam School of International Studies with a Masters in Strategic Studies. His research interests focus on Sino-Indian relations and international security in Asia.

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

Modi's amended enemy property law gives jitters to China
The Economic Times, January 22
The amendment of the 49-year-old Enemy Property (Amendment and Validation) Act after which the Narendra Modi government plans to auction more than 9,400 properties of those who took citizenship of China has made China jittery. Chinese investment in India has grown rapidly in the past few years. China fears India can confiscate assets of its companies, such as Xiaomi and Lenovo, if the two countries enter a military conflict.

India test-fires ICBM that puts all of China in striking distance
The Straits Times, January 18
India successfully test-fired an intercontinental ballistic missile (ICBM) on Thursday (January 18) that puts all of China within striking distance, the country's Defence Ministry said in a tweet. The nuclear-capable Agni-V is the country's most advanced ICBM and has an operational range of 5,500km-5,800km. The missile was fired from Abdul Kalam island off the coast of the eastern state of Odisha in the morning, reported CNN.

Army keeps close watch on Chinese troops, infra build-up in Doklam
The Economic Times, January 18
India is keeping a hawk eye on the continuing presence of Chinese troops and their construction activities in north Doklam near the Sikkim-Bhutan-Tibet trijunction, even as Army chief General Bipin Rawat said bilateral bonhomie had returned to the same level that existed before the 73-day troop faceoff in the region last year. 

With an eye on China, India is looking to buy more US-made advanced sub-hunting planes
Business Insider Singapore, January 16
India’s navy is considering adding to its fleet of P-8I maritime patrol aircraft, as the country shifts its military posture toward its southern approaches out of concern about Chinese naval activity. India’s Naval Chief Adm. Sunil Lanba told India Strategic magazine that aerial-surveillance capability was an important part of navy operations, and the country’s Defense Ministry has said the P-8I is able to provide “a punitive response and maintaining a watch over India’s immediate and extended areas of interest.”

India steps up China border patrols, vows to handle 'assertiveness'
The Straits Times, January 12
India will handle China's growing assertiveness and has stepped up patrols on their disputed border to head off more stand-offs, the country's top army officer declared on Friday (January 12). The nuclear-armed neighbours have in the past gone to war over their border and last year were involved in a showdown over a Himalayan plateau claimed by China and Bhutan which is an ally of India.

News Reports

China and India in the Regions

Pakistan and US key factors in rebuilding India-China ties: Swamy
The Hindu, January 18
India and China can break fresh ground if Beijing re-works its relationship with Pakistan on terrorism, in tune with firm assurances from New Delhi regarding its ties with the United States, says senior Bharatiya Janata Party (BJP) leader, Subramanian Swamy. Dr. Swamy. He said, India’s concerns on terrorism radiating from Pakistan had been firmly conveyed during his conversations. The Chinese side, on its part, highlighted its perception of India’s growing ties with the United States, within the framework of the Indo-Pacific quad grouping.

China making new inroads in Indian Ocean with cheap subs
The Asahi Shimbun, January 15
China is waging a submarine sales offensive at bargain prices to nations with Indian Ocean coastlines. To date, Bangladesh, Pakistan and Thailand have either purchased or agreed to acquire Chinese submarines. China's aggressive marketing of submarines has got India worried about Beijing's intentions in light of the Asian power's steady maritime advances in the region, as well as Pacific waters.

With new Chinese link, Nepal ends India's internet monopoly
Reuters, January 12
Nepal has joined hands with China to offer internet services to its citizens, officials said on Friday (January 12), ending India’s decades-long monopoly of the Himalayan nation’s cyber connectivity network. For years, Nepal depended on Indian telecom companies, such as Bharti Airtel and Tata Communications Ltd, for access to the worldwide web, which Nepali officials said made connections vulnerable to network failures.

China objects to Vietnam's call for Indian investment in South China Sea
The Times of India, January 11
China on Thursday objected to Vietnam's invitation to India to invest in oil and natural gas sector in the disputed South China Sea + (SCS), saying it is firmly opposed to infringement of its rights using development of bilateral ties as an "excuse". Vietnam's Ambassador to India Ton Sinh Thanh on Tuesday had told an Indian news channel that his country would welcome Indian investments in the South China Sea.

Trade and Economy

IMF revises up 2019 Asian growth due to India's strength
Nikkei Asian Review, January 22
The International Monetary Fund revised up its economic forecast for developing Asia to 6.6% for 2019 from 6.5% previously, largely due to expected strength in India. In its World Economic Outlook released Monday (January 22), the IMF maintained its growth forecast for the emerging and developing economies of Asia at 6.5% for 2018, on par with 2017's rate of expansion. It said that a strong Indian economy would offset decelerating growth in China.

India defends solar panel makers from Chinese rivals
Financial Times, January 22
India has become the latest battleground in the fight to protect solar panel manufacturers from cheap Chinese rivals, as regulators plan a 70 per cent import duty that developers warn could halt the fast-expanding industry in its tracks. Some of the country’s biggest builders of solar farms are battling proposals by Indian regulators to impose an emergency tax on solar cells imported from China and Malaysia, as well as more developed economies. The plans are likely to have a big impact on the Chinese industry, which has ramped up exports to India in part because of domestic oversupply.

India lags BRIC, Pakistan on inclusiveness: WEF survey
The Times of India, January 22
India was ranked 62nd among 74 emerging economies on World Economic Forum's Inclusive Development Index. Although India was ranked lower than Brazil, Russia, China and even Pakistan, it was among the 10 emerging economies with 'advancing' trend. "The 2018 index measures progress of 103 economies on three individual pillars-growth & development, inclusion & inter-generational equity and sustainability. Of the three pillars, India ranks 72nd for inclusion, 66th for growth & development and 44th for inter-generational equity," the report said

US slaps anti-dumping duty on polyester staple fiber from China, India
Livemint, January 18
The Trump Administration has slapped anti-dumping duties on stainless steel flangs and finer denier polyester staple fiber from China and India. Exporters from China and India received countervailing subsidies of 41.73 to 47.55% and 9.50 to 25.28%, respectively, the US commerce secretary Wilbur Ross alleged on Wednesday (January 17).

Step aside, China: India is now the world’s fastest-growing mobile payment market
Tech in Asia, January 11
According to research firm eMarketer, India is now the world’s fastest-growing “proximity mobile payment” market in the world. Proximity payments refer to scanning, tapping, swiping, or checking in with a mobile device at the point of sale. The number of mobile payment users in India surged 75.5 percent from 32 million in 2016 to 56.2 million in 2017. This number is expected to grow to 77.8 million – nearly 30 percent of India’s total number of smartphone users.

Energy and Environment

India, China to co-host energy meet in Delhi
Hindustan Times, January 22
India and China, along with South Korea, will co-host a meeting of energy ministers from 60 countries in New Delhi in April. The meeting, which will be inaugurated by Prime Minister Narendra Modi, will see ministers discuss global energy security and transition to renewables at the biennial International Energy Forum (IEF) on April 10-12.  It will have representation from all major energy producers and consumers in the world.

Huge opportunity to export LNG to India, China: IEA chief
Money Control, January 17
There is a huge opportunity for the US to export LNG to India and China in the next five years as they push to replace coal, the head of the International Energy Agency has said as he highlighted the growing importance of the two nations in the energy market. Fatih Birol, executive director for the agency, said both India and China use gas at a minimum level. Globally, the share of gas in the global energy mix is about 25 per cent, and in both these countries, it is less than or around 5 per cent only.

India taking lead role against climate change when others are failing: Guterres
The Hindu, January 13
India has taken on a major leadership role in fighting climate change when others are failing, United Nations Secretary-General Antonio Guterres has said. “We have a very solid commitment to climate action,” Mr. Guterres said on Friday (January 12). “We cannot be defeated by climate change and we are not yet winning this battle” and the biggest victims of climate change are the developing countries that are members of the Group of 77 (G77).

Home fuel blamed for 25% of India’s air pollution deaths
Financial Times, January 12
Indians burning fuel at home are responsible for a quarter of the country’s air pollution-related deaths, according to a nationwide study of the causes of the country’s toxic smog. Burning fuel such as wood, coal or even cow dung at home for cooking and heating is the biggest cause of the country’s 1.1m annual deaths in which air pollution is a contributor, according to the US-based Health Effects Institute.

Analyses

China’s clout grows in South Asia, but can India raise its game?
South China Morning Post, January 19
The past year has marked a turning point in Sino-Indian relations in more ways than one. If 2017 began with India taking a strong stance against China’s ambitious “Belt and Road Initiative”, it ended with China’s tightening grip in South Asia. In between was the 73-day long Doklam stand-off between Asia’s two giants. The year’s events underscore the challenges for this bilateral relationship in ways few would have anticipated in the recent past.

India and Asean look to each other to balance against China’s rise
South China Morning Post, January 18
Only twice in the past 65 years have India’s Republic Day celebrations hosted two foreign dignitaries, rather than one, as chief guests. So the presence of 10 Asean heads is expected to boost India’s acceptance across the region, and also the fledgling Indo-Pacific discourse. Its implications will be assessed in all major capitals, including Beijing.

Can India Complement And Gain From China’s Belt And Road Initiative? – Analysis
Eurasia Review, January 14
China will eventually embark on its vision of building roads, railways and pipelines across Eurasia, irrespective of India’s endorsement of the Belt and Road Initiative (BRI). This attempt to lay foundations of a Sino-centric Asia provides India opportunities and challenges alike. An obstructionist approach does not favour India’s interests. It would be more advantageous to complement BRI, providing key low cost links in the greater Chinese jigsaw to optimise competition for strategic space.

The Invisible Chinese Threat
DNA, January 14
Forget Pakistan, focus on China. This was a recent statement made by India’s Army Chief Bipin Rawat. Though he was referring to defence concerns and border disputes, the deeper issue is more than security issues. In the last few years, China has moved ahead in sectors where India had developed strengths. From automobiles to pharmaceuticals to information technology, China has outclassed India in many ways. The real threat from China that we don’t see is in its focus on high technology sectors. India is falling behind because of decades of neglect.

Does money loaned through China’s development finance institutions actually help countries develop?
Scroll.in, January 11
There is an emerging consensus that China is now a major player, maybe the major player, in global development finance. Recent studies have inspired headlines such as “China and US ‘neck and neck’ in foreign assistance spending”. Contrasted against the Trump administration’s apparent contempt for longstanding American support for global development promotion, such headlines seem yet further evidence of China’s emergence as a leader of global economic governance and influence.

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Compiled and sent to you by Centre on Asia and Globalisation and the Lee Kuan Yew School of Public Policy, National University of Singapore.

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