China-India Brief #117

Published Twice a Month
May 23, 2018 – June 12, 2018

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

Guest Column

Shangri-La Dialogue: Prime Minister Modi outlines Act East Policy and Indo-Pacific concept in competing with China for influence in Southeast Asia.

By Blake Harley Berger

U.S. Secretary of Defense James N. Mattis meets with Indian Prime Minister Narendra Modi at the Fullerton Hotel in Shangri-La, Singapore on June 2, 2018.


With the International Institute for Strategic Studies (IISS) annual Shangri-La Dialogue concluding on June 3rd in Singapore, India has emerged as a key player in the major power contest for influence in Southeast Asia. As both China and Japan advance their regional connectivity plans, the Belt and Road Initiative (BRI) and Partnership for Quality Infrastructure (PQI) respectively, to strengthen their influence in the region, Prime Minister Narendra Modi through the Act East Policy is seeking to bolster India’s political and economic engagement with the region. Throughout his Shangri-La Dialogue speech, Prime Minister Modi took jabs at China while underscoring his commitment to elevating ties with the Association for Southeast Asian Nations (ASEAN) and advanced the Indo-Pacific concept which placed Southeast Asia at its heart. As the tussle for influence in Southeast Asia continues, it should come as no surprise that China is India’s chief challenger especially in the context of raised tensions between the two states over the Doklam dispute and China’s activities in South Asia and the Indian Ocean.

Prime Minister Modi, since assuming power in 2014, has sought to bolster India’s engagement with Southeast Asia under the Act East Policy banner by focusing on enhancing economic, diplomatic, and security ties with the region. In the days leading up to the Shangri-La Dialogue, Modi embarked on a three-stop tour visiting Indonesia, Malaysia, and Singapore seeking to demonstrate his commitment to strengthening ties with the region and providing a counterbalance to Chinese influence.

During the Indonesia leg, Indonesian President Joko Widodo and Prime Minister Modi unveiled the "Shared Vision of India-Indonesia Maritime Cooperation in the Indo-Pacific,” which reaffirmed the commitment of both states towards “achieving a free, open, transparent, rules-based, peaceful, prosperous and inclusive Indo-Pacific region, where sovereignty and territorial integrity, international law, in particular UNCLOS, freedom of navigation and overflight, sustainable development and an open, free, fair and mutually beneficial trade and investment system are respected.” The statement alludes to both India and Indonesia’s concerns over recent Chinese actions in the disputed South China Sea. Stoking China’s ire, on May 18 , India and Indonesia announced an agreement to develop the Sabang port in Aceh, strategically located on the Malacca Strait and 90 miles from India’s Andaman and Nicobar Islands. Part of the rationale behind Jakarta’s decision as expressed by Indonesia’s Coordinating Minister for Maritime Affairs Luhut Pandjaitan, was that “Indonesia does not want to [be] controlled by [the] Belt and Road Initiative. Indonesia follows an independent foreign policy and is not aligned to one big power or the other like India. Jakarta has good relations with Beijing but wants to balance [the] BRI.” The India – Indonesia statement and port development agreement together set the stage for Modi’s speech in Singapore and highlighted India’s role in the emerging competition for influence in Southeast Asia. 

This year’s Shangri-La Dialogue marked the first year an Indian leader has made the keynote address and Prime Minister Modi took advantage of the opportunity to emphasise Southeast Asia’s important role in the Indo-Pacific concept and Act East Policy. Reaffirming ASEAN centrality in India’s conception of the Indo-Pacific, Modi iterated that “Southeast Asia is at its centre. And, ASEAN has been and will be central to its future. That is the vision that will always guide India, as we seek to cooperate for an architecture for peace and security in this region.” Throughout his speech, Modi took subtle jabs at China on a series of issues ranging from the South China Sea to the BRI. Alluding to the South China Sea dispute, Modi made multiple references to the need to maintain free, peaceful, and open sea lanes, highlighting that “we should all have equal access as a right under international law to the use of common spaces on sea and in the air that would require freedom of navigation, unimpeded commerce and peaceful settlement of disputes in accordance with international law. When we all agree to live by that code, our sea lanes will be pathways to prosperity and corridors of peace.”

In turning to the concerns surrounding the BRI, Modi did not shy away from levelling criticism at China’s actions in funding infrastructure and connectivity in South and Southeast Asia. While emphasising the need for infrastructure financing, Modi stressed that “we must not only build infrastructure, we must also build bridges of trust. And for that, these initiatives must be based on respect for sovereignty and territorial integrity, consultation, good governance, transparency, viability and sustainability. They must empower nations, not place them under impossible debt burden. They must promote trade, not strategic competition.” Modi’s statements on the BRI should be viewed within the larger context of not only the controversy surrounding Sri Lanka’s Hambantota Port and its 99-year lease to China, but also the recent Malaysian election victory of Prime Minister Mahathir Mohamad and his statement on needing to review Chinese projects and prevent Malaysia from becoming the next Sri Lanka. As the BRI continues to elicit debate throughout Southeast Asia, Modi in highlighting India’s partnership with Japan wants to demonstrate to the region that India is a serious partner in developing deeper connectivity.
Undeniably, China’s influence in Southeast Asia is far greater than India’s. The breadth and scope of the BRI exceeds any initiative that India so far has put forth, including the Mekong-India Growth Corridor and the Trilateral Highway. However, as China’s BRI encounters challenges and the South China Sea dispute persists, India has the opportunity to present itself as a viable alternative in the region. Through the Act East Policy and Indo-Pacific concept, Prime Minister Modi, as demonstrated by his speech and visit to the region, is poised to offer Southeast Asian states an additional partner in the economic, diplomatic, and security spheres.


Blake Harley Berger is a Research Associate at the Centre on Asia and Globalisation. His research interests include The Association of Southeast Asian Nations (ASEAN), regional integration, international relations theory, political economy, United States foreign policy towards East and Southeast Asia, and international trade policy.


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 only SCO member to oppose China’s BRI
The Times of India, June 11
China’s hope of winning unanimous support for its Belt and Road Initiative from members of the Shanghai Cooperation Organisation remained unfulfilled with India emerging as a silent dissenter after two days of deliberations attended by Prime Minister Narendra Modi.

India strikes river, rice deals with China as relations thaw
Reuters, June 9
China and India on Saturday settled a dispute over the flood-prone Brahmaputra river that flows from Tibet to Bangladesh in a sign of growing cooperation between them.

India, China to set up ‘people-to-people mechanism’ to carry forward ties since Modi-Xi Wuhan summit
Hindustan Times, June 9
India and China have decided to set up a new “people-to-people mechanism” to build on the momentum in bilateral ties from the Wuhan Summit, as Prime Minister Narendra Modi and Chinese President Xi Jinping held talks on Saturday (June 9) during their second meeting in nearly six weeks.

India, China aviation officials discuss increasing air connectivity
The Economic Times, June 2
Amid growing interest of Chinese airlines to increase flight services to India, the aviation authorities of the two countries met in New Delhi after a gap of 10 years and discussed ways to enhance air connectivity. A Civil Aviation Ministry official said the talks on Wednesday and Thursday opened a “new chapter” in ties.

India and China should work together for Asia's future: Modi
Nikkei Asian Review, June 2
Cooperation by India and China will benefit Asia and the world, Indian Prime Minister Narendra Modi said at the Shangri-La Dialogue in Singapore on Friday (June 1) as the two most populous nations mended fences amid a changing global order.


News Reports

China and India in the Regions

Sri Lanka pushes forward plans for Chinese investment zone in controversial port
South China Morning Post, June 7
Sri Lanka’s cabinet has approved a proposal for Singapore-based urban planning consultancy to draw up a plan for a Chinese investment zone in the country’s southern port city of Hambantota, a government spokesman said on Wednesday (June 6). China has invested billions of dollars building ports, roads and power stations in the island nation just off the southern toe of India as part of its Belt and Road Initiative to increase its trade and other connections across Asia and beyond.

Stop work in Pakistan-occupied Kashmir, says India after being urged to back 'One China'
The Economic Times, June 7
China has urged India to support the “One-China policy”, something that India has not done in official documents since 2010, a development that has come following the improvement in bilateral ties. The one-China policy acknowledges only the People’s Republic of China and does not recognise the existence of Taiwan or Republic of China.

Indian leader Modi wants no part of China-US rivalry, but still manages to keep Beijing happy
South China Morning Post, June 5
During his speech at the Shangri-La Dialogue over the weekend, Indian Prime Minister Narendra Modi appeared to avoid mentioning the “quadrilateral strategic dialogue”, also known as “the Quad”. He also refrained from criticising China ahead of the Shanghai Cooperation Organisation summit. Modi’s remarks were well received in Beijing.

Bangladesh 'very concerned' over China building dams on Brahmaputra
The Times of India, May 31
Amid reports of China trying to build dams over the mighty Brahmaputra river, Bangladesh on May 31, said it is "very concerned" about diversion of water and prepared to participate in a joint water basin management. Bangladesh high commissioner to India Syed Muazzem Ali batted for joint-dredging of rivers and said the prime ministers of the two countries had an extensive discussions on the issue.

Indonesia, India plan to develop strategic Indian Ocean port
Reuters, May 30
Indonesia and India pledged on Wednesday (May 30) to step up defense and maritime cooperation, with plans to develop a strategic Indonesian naval port in the Indian Ocean, the leaders of the two countries said after meeting in Jakarta.


News Reports

Trade and Economy

India, China Should Set Up New Trade Target Of $100 Billion: Xi Jinping To PM Modi
NDTV, June 10
President Xi Jinping has suggested Prime Minister Narendra Modi that the two countries set up a new bilateral trade target of $100 billion by 2020 as Beijing is looking at importing non-Basmati rice as well as sugar to address the trade deficit.

India, China fail to resolve differences on trade tariffs
Livemint, June 6
India and China failed to resolve their differences on tariff liberalization under the proposed Regional Comprehensive Economic Partnership (RCEP) free trade agreement after two days of talks in New Delhi.

Indian economy outpaces China, expanding 7.7% in Jan-Mar
Nikkei Asian Review, May 31
India's gross domestic product grew 7.7% year-on-year in the January to March period, the fastest pace in six quarters and well above neighboring China's 6.8% for the same period. The figure indicates that disruptions caused by the twin shocks of the November 2016 demonetization and the chaotic rollout of a goods and services tax in July last year have faded.


News Reports

Energy and Environment

India Increases Its Massive 2022 Renewable Energy Target By 28%
CleanTechnica, June 10
Several years ago, India set what seemed like a lofty target of 175 gigawatts of wind and solar energy by March 2022. Few believed that was a practical target, but then India plowed forward and happily impressed the world. This week that goal was increased to 227 gigawatts.

China to launch broader environmental inspections this month
Nikkei Asian Review, June 9
China will expand environmental inspections to more cities and regions in a new round of checks from this month to April next year, the Ministry of Ecology and Environment (MEE) said in a statement on Friday (June 8), part of a three-year anti-pollution plan.

China’s New Solar Policy May Delay India's Panel-Making Plans
Bloomberg, June 7
India’s efforts to build out solar power equipment manufacturing capacity may be set back as China’s recent policy shift is expected to trigger a global equipment supply glut and price crash.

China Can Give India Lessons On Curbing Water Pollution, Says UN Environment Head Erik Solheim
Bloomberg Quint, June 5
“Five years ago, the country [China] had some of the worst polluted rivers in the world, but now they are clean,” Solheim told BloombergQuint in an interview. It has evolved techniques to manage waste in confined areas and has opened rivers, lakes and wetlands to prevent contamination, he said. “If China can do that, then India can do that in the Ganga and other rivers.”



How Beijing, Delhi and the China-Pakistan Economic Corridor could reshape global foreign policy in Asia
South China Morning Post, June 11
By Raffaello Pantucci - Director of International Security Studies at the Royal United Services Institute in London

After a positive summit in Wuhan, presidents Modi and Xi both made it clear they wanted the event to be the opening gambit in a rapprochement between India and China. In Islamabad, however, there is a sense of concern about Pakistan being the potential loser in this larger regional rapprochement.

Modi’s address charts turbulent seas in the Indo-Pacific
East Asia Forum, June 10
By Sourabh Gupta - Senior Fellow at the Institute for China–America Studies in Washington DC.

India’s leaders have time and again displayed a keen and consistent grasp of their country’s strategic purpose despite the breadth of these questions. In his keynote address at the Shangri-La Dialogue on 1 June, India’s Prime Minister Narendra Modi endorsed a vision of the Indo-Pacific where the major and middle powers both, with Southeast Asia at its centre, serve as anchors of stability and prosperity.

With India a reluctant partner, the US South China Sea strategy is more about muddying the waters than concrete action by Quad allies
South China Morning Post, June 8
By Prateek Joshi - Research Associate with VIF India, a New Delhi-based public policy think tank

After the revival of much hyped Quad alliance between Australia, India, Japan and the US last year, Washington has moved towards institutionalising its vision for the Indo-Pacific. Apart from the impact on bilateral ties, the intensification of rivalry should be analysed in terms of the existing regional balance, at a time when Washington expects India and other allies to play a greater role in confronting China in the South China Sea. However, the reality is that India and its maritime neighbours may have little to gain from this.

Bangladesh balances between big brothers China and India
East Asia Forum, June 6
By Ishrat Hossain – Doctoral Candidate at the University of Oxford

Recent statements by Bangladesh’s leader point to a new reality for the country, where balancing two of Asia’s rising powers is slowly becoming the diplomatic mainstay. As the strategic rivalry between India and China intensifies, Bangladesh increasingly finds itself embroiled in a great game along the Indian Ocean region.

India must get smarter about handling China
Nikkei Asian Review, May 29
BySyed Munir Khasru - Chairman of The Institute for Policy, Advocacy, and Governance

With both the U.S. and China paying increasing attention to the Indian subcontinent and the vast seas that surround it, Modi cannot afford to ignore his growing foreign policy problems -- especially juggling the multiple strategic conundrums in the critical Indo-Pacific region.

Books and Journals

Governance Institutions and Economic Development: Emerging China, India, East Asia and Brazil
World Scientific, May 2018
By Kartik Roy - Honorary Adjunct Professor at Bond University, Australia and formerly of University of Queensland, Australia.

With over three decades worth of research and analysis, Roy compares ten countries — India; Brazil; Indonesia; China; Japan; South Korea; Singapore; Vietnam; Thailand; and, Malaysia — in the role of the state in economic development. Comprising of a rich body of work on state intervention and developmental states, Roy postulate on the idea of 'virtuous' and 'vicious' interventionist states.



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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