China-India Brief #18

Guest Column

Rising Powers in Third Countries: China and India’s Investments in Africa

By Selina Ho

There are two opposing views in the current debate surrounding the rise of China and India. The first view sees China and India as competing rising powers heading towards collision, particularly in their quest to secure critical resources. The second view sees the formation of “Chindia”, which is based on the idea of complementarity, that is, both countries possess comparative advantages that allow a division of labor between them, facilitating economic exchanges and collaborations. Adopting either of these two opposing views ignore the fact that competition and collaboration are not mutually exclusive categories of action available to states. Empirical evidence from China and India’s investments in Africa reveals that China and India interact with each other in a variety of ways, ranging from direct competition, avoidance of direct confrontation to collaboration. China and India, like all states, are capable of learning from each other as well as from their environment, and hence they will adapt and switch among these strategies to realize optimal results for themselves.

The elements of competition between China and India are most clearly seen in their investments in Africa’s natural resource sector, specifically oil and gas. China and India import about 70% and 46%, respectively, of the oil they consume domestically. Given the two countries’ dependence on energy imports and their desire to reduce reliance on Middle Eastern oil, Africa becomes critical in their efforts to secure alternative supplies of energy. These competing requirements for energy sources have led to cases of direct competition between them. In October 2004, China National Offshore Oil Corporation (CNOOC) outbid India’s Oil and Natural Gas Corporation (ONGC) for an oil block in Angola. This pattern of competition in which India loses bids to China because of the latter’s greater financial muscle is replicated in other parts of Africa, Latin America, and Asia. In the long term, direct competition not only injures Indian interest but also Chinese interest, as Chinese companies are forced to raise their bids in order to outbid Indian companies. In order to avoid such direct competition, which serves to benefit only the countries they are investing in, India proposed joint bidding to China in 2004. In 2006, Beijing accepted New Delhi’s proposal, and five Memorandums of Understanding (MOUs) on energy cooperation were inked. Additionally, a bilateral working group was formed to monitor the progress of cooperation in the Caspian Sea, Central Asia, Africa, and Latin America. There is evidence that Chinese and Indian oil majors are working closely with each other. In June 2012, for example, ONGC and China National Petroleum Corporation (CNPC) signed an agreement to jointly bid for energy assets in third countries. Earlier on, in 2003, ONGC joined CNPC as part of the Greater Nile Petroleum Operating Company, which produces the bulk of Sudanese oil. In the same year, ONGC and CNPC formed another partnership to develop the Malut basin oilfields in Sudan.

Apart from these instances of competition and collaboration between China and India in the energy sector, China and India’s individual economic strengths enable the two countries to operate in different sectors, thus avoiding direct confrontation with each other. China is heavily involved in infrastructure projects and low-end manufacturing in Africa, whereas India is focused on services and technology. For instance, China is engaged with over 35 African countries in infrastructure financing; the largest recipients are Nigeria, Angola, Sudan, and Ethiopia. As for India, the Tata Group has a huge presence in the transport, information technology, hotel, and mining sectors. Bharti Airtel, a telecoms company, established a continent-wide presence when it acquired the African operations of Zain Telecommunications. Indian banks are also well established in Africa. In addition, India, which has expertise in agro-processing and small farm mechanization, is active in the agriculture sector; it is the largest foreign leaser of Ethiopian farmland.

A geographical examination of Chinese and Indian activities also reveals that China and India are not operating in entirely similar areas. The top six African countries in terms of Outward Foreign Direct Investment stock for China are Algeria, Angola, Nigeria, South Africa, Sudan, and Zambia. For India, the top six African countries are Mauritius, Sudan, Nigeria, Liberia, Kenya, and Egypt. China and India overlap only in Sudan and Nigeria.

A learning process can be discerned from how China and India have interacted with each other in Africa. India’s initial forays into Africa have been private sector-driven. However, beginning from the late 1990s, learning from China’s state-driven approach, the Indian government began to take a more active role, and in 2005, it established the Energy Coordination Committee in response to China’s establishment of an Energy Leading Group to foster more coherence in energy policy-making. India also learned from its failure to outbid China in Angola, Nigeria, Kazakhstan, Ecuador, and Myanmar, and began to turn towards a more cooperative approach, by proposing five MOUs on energy cooperation with China. There are also indications of a similar process on China’s side. In the early 2000s, China’s private sector became more active in Africa, thus complementing China’s state-driven approach. Similarly, taking a leaf out of India’s community-based business strategy, China has taken initial steps to better integrate with the local population. For instance, the impression that Chinese companies import their entire labour force from China is not entirely accurate; in Sudan, 93% of workers in China’s oil operations are said to be Sudanese.

China and India’s encounters with each other in Africa are encouraging signs that relations between rising powers need not always be contentious or zero-sum games. Nevertheless, whether this state of affairs is sustained depends on several factors. Domestic politics and unresolved territorial disputes will affect their relations. The substance of relations in the economic sphere could also change in the longer run. Currently, India’s economic growth lags behind China’s growth. However, if and when, India closes the gap with China, it may be less willing to initiate cooperation with China and more willing to compete with China on its own terms.

Selina Ho is currently Global Postdoctoral Fellow at New York University Shanghai. She can be contacted at decb64_c2VsaW5haG9sY0BnbWFpbC5jb20=_decb64. Comments and feedback are welcome.

The views expressed in this 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.

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News Reports

Bilateral relations

China increases engagement with India ahead of Lok Sabha elections
The Economic Times, December 11
China has lined up a flurry of events to increase engagement with India ahead of next year’s Lok Sabha elections as part of a strategy to keep the recent strain in bilateral ties from turning into a poll issue. The measures are aimed at keeping India engaged until the new government is elected in New Delhi, officials in Chinese government told ET. Efforts to smoothen bilateral ties have till date not achieved much success since there is no sign of an early resolution of the boundary dispute.

India and China Move Ahead in the Asian Space Race
Bloomberg BusniessWeek, December 11
The Indian government-run mission control announced that India’s first mission to Mars had cleared a major obstacle on its way to the Red Planet. The Mars Orbiter, informally dubbed the Mangalyaan, is on track to reach Mars by September 2014. China’s lunar probe, the Chang’e 3 successfully passed a major test on December 11, entering an elliptical orbit that’s taking it as close as 15 kilometers from the moon’s surface. The probe “is expected to land on the moon in mid-December, and will be China’s first spacecraft to soft-land on the surface of an extraterrestrial body,” the official Xinhua news agency reported today. 

5 Chinese nationals held in E. India for allegedly smuggling sandalwood
Xinhua, December 11
Indian customs department seized 179 kg of red sandalwood, 2 kg of gold bars and 5 kg of drugs from the city airport and arrested 11 persons, including five Chinese nationals, said local media. Five Chinese nationals had come to the NCS Bose International Airport in Kolkata carrying huge bags to board the Kolkata-Bangkok Thai Airways flight TG-314 scheduled for departure early Wednesday morning. The Chinese nationals were arrested under Wildlife Protection Act and Foreign Trade Act.

There should be no discrimination in visa to Indians: India to China
The Economic Times, December 11
Against the backdrop of China issuing stapled visa to two archers from Arunachal Pradesh recently, government today said it has been conveyed to the neighboring country on several occasions that there should be no discrimination against visa applicants on grounds of domicile and ethnicity. Replying to a question in Lok Sabha, Minister of State for External Affairs Preneet Kaur said the issuance of visas by India and China is guided by the provisions of a MoU on simplifying visa procedures signed by the two governments in June.

India walks fine line over China’s air defence zone
World Socialist Website, December 11
India’s government has to date avoided taking sides in the tense dispute over China’s announcement last month of an Air Defence Identification Zone (ADIZ) in the East China Sea. The US and Japan have challenged China’s declaration by flying military aircraft into the zone, which overlaps the Japanese ADIZ and includes the disputed Senkaku/ Diaoyu islands, leading to the danger of conflict provoked by a miscalculation or mistake. Indian External Affairs Minister Salman Khurshid first commented on December 5, nearly two weeks after China’s ADIZ was announced. Speaking at an energy event in New Delhi, he declared India’s “standard position” was that “any issue must be resolved between concerned parties through dialogue.” Saying India did not support “threats” or the “use of force,” he added: “When you ask key people to do a dialogue, then you are on both sides.”

India far behind China’s combat power
Hindustan Times, December 12
India is far behind the Chinese military with the Communist neighbour currently outnumbering the country’s combat power by a 3:1 ratio, a defence ministry document has revealed. India hopes to bridge the gap in the next 15 years by improving its fighting capacity with new stealth jets, aircraft carriers, nuclear-powered submarines, warships and land-based strike formations. The document predicts the picture will change by the end of the 14th Plan period (2022-27), with India narrowing the gap in combat power with China to a “desirable ratio” of 1.5:1. The dynamics of combat power encompass elements such as a military’s firepower, mobility, logistic capability, manpower and sustainability — factors that ultimately determine the outcome of a war.

India notes defence developments in China: IAF Chief
Zee News, December 12
India is taking note of defence developments in its neighbourhood, and is in a state of preparedness to thwart nefarious designs and threats, Indian Air Force chief NAK Browne said here on Thursday. “We certainly take note of each and every thing that is happening in our neighbourhood, but as I said, development is not targeted against one single country. Every country has the right to prepare itself. So does China, so do we,” Browne told journalists at the Advanced Landing Ground in Upper Shillong. India is no longer under the 1962 (India-China War) syndrome, said the IAF chief, set to retire at the end of this month. Browne was on a farewell visit to the Eastern Air Command headquarters in Meghalaya.  

Indian air force chief says China’s ADIZ no threat to India
Global Times, December 14
India’s air force chief said on Friday that China’s Air Defence Identification Zone (ADIZ) is not a threat to India. Talking to the press in Shillong in northeast India, Indian Air Force chief N.A.K. Browne said the ADIZ is “an issue between China and Japan”, according to Indo-Asian News Service. “Because this is an issue between China and Japan, why must we get involved?” he said.

China’s air defence zone unilateral, Shyam Saran says
The Times of India, December 15
National Security Advisory Board (NSAB) chairman Shyam Saran said that China’s new Air Defence Identification Zone (ADIZ) that had escalated tension in the region was a unilateral decision taken by Beijing. Speaking to reporters on the sidelines of an international relations conference organized by the Symbiosis International University and the Ministry of External Affairs, Saran said: “There is a need for multi-lateral security architecture in the region so that no country is able to pursue its interests in a unilateral fashion.” The ADIZ, declared over the East China Sea by China last month, requires airlines to submit their flight plans to Chinese authorities and has provoked strong reactions from the US, Japan and South Korea.

China invites Indian Navy for global fleet review
Hindustan Times, December 15
China has invited the Indian Navy to take part in an international fleet review being staged by it in waters off Qingdao in the Shandong province next year. The invite comes at a time when the Chinese navy is taking steady strides to expand in the Indian Ocean Region. The Indian Navy is expected to send some of its frontline warships for the review being held from April 21-24, even as New Delhi closely monitors the progress made by China to have a credible sea-based deterrence. India had for the first time taken part in a fleet review hosted by China four years ago to mark the 60th anniversary of the Chinese navy.

Chinese troops apprehend Indians in Chumar
The Hindu, December 16
Chinese troops apprehended five Indian nationals in the Chumar area of Ladakh, well inside the Indian territory, and took them to their side of the border — perhaps the first incident of this kind along the Line of Actual Control. The five Indian nationals, along with their cattle, were apprehended by the People’s Liberation Army (PLA) troops last week, a few kilometres within the Indian territory, and were taken to the PLA’s camp across the LAC in an apparent bid to stake their claim on the area, sources said. The five nationals were handed over to the Indian side by the PLA troops, after some efforts were made in this regard under the existing border mechanisms between the two countries, they added.

Border cooperation pact helped defuse tension in Ladakh: Antony
The Hindu, December 16
Defence Minister A.K. Antony gave the recently-signed Border Defence Cooperation Agreement (BDCA) the credit for quickly defusing the situation in Ladakh on the border with China. The Indian Army denied that Chinese troops entered India in the Chumar area of Ladakh on December 4 and forcibly took away five porters and their mules. The Army said: “Three Indians crossed the international border to retrieve their horses that had strayed across the border at Chumar. They were apprehended by the Chinese and returned after a flag meeting.” The Army sources said the Indian nationals were apprehended by the Chinese only after they crossed the border. However, they were returned during the flag meeting at the Spangur Chinese BPM Hut on December 11.

India to upgrade 73 roads along China border
Hindustan Times, December 18
The government has planned 73 critical and strategically important roads for development under Indo-China Border Roads Project and 61 of them have been assigned to Border Roads Organisation. Defence minister AK Antony told Rajya Sabha said that during the last five years formation of 12.16 km of such roads have been completed in Sikkim, 419.98 km in Arunachal Pradesh, 186.73 in Uttarakhand, 114.05 in Himachal Pradesh, 384.28 km in Jammu and Kashmir. There is, however, no plan to construct any four-lane road near China border, he said.

Space Program of India Vis-à-vis China
Press Information Bureau, December 18
India and China are pursuing their respective national space programmes with different priorities, according to Ministry of State for Personnel, Public Grievances & Pensions and Prime Minister’s Office V.Narayansamy stated. He continued: Since the inception of Indian space programme, India’s focus has been on peaceful uses of outer space and harnessing space technology for national development. In the field of space science and planetary exploration, both India and China have sent orbiters to Moon. India’s Mars Orbiter launched on November 05, 2013 has completed Earth orbiting phase and successfully escaped the Earth’s Sphere Of Influence on December 04, 2013. China has also made the similar attempt, but could not succeed.

India-China hold flag meeting
NDTV, December 21
Against the backdrop of recent incursions by the Chinese troops, India and China today held a flag meeting in eastern Ladakh where the Indian side is understood to have raised concerns over detention of its nationals by the People’s Liberation Army (PLA). The flag meeting has come after a recent incident where PLA troops had apprehended five Indian nationals in the Chumar area and took them to their camp across the Line of Actual Control (LAC) in an apparent bid to stake their claim on the area. The flag meeting was held at a designated meeting place in Eastern Ladakh where the two sides discussed the issues faced by them and sought to address them under the existing mechanisms, sources said here.

‘India, China boundary issue requires negotiations’
Hindustan Times, December 22
India has built mechanisms to keep the border with China peaceful and hard negotiations are required to settle the boundary issue between the two neighbours, National Security Advisor Shivshankar Menon said in New Delhi. “We have built mechanisms to keep peace on the border. On the settlement of the boundary issue, we are trying various ways. It needs hard negotiations,” Menon, who is also the country’s special representatives for the India-China boundary talks, said. “We had decided to separate the boundary issue with bilateral relations between India and China,” Menon pointed out.

Chinese envoy puts trade ties over border row
The Hindu, December 22
Trade and personal ties with India are more important to China than resolving the border dispute, Chinese Ambassador to India Wei Wei said. Inaugurating the ‘Haat of India,’ a conference of more than 150 producers, sellers and exporters from both countries here, Mr. Wei said that there were several historic issues that had to be resolved between the two countries. “While we pay attention to our border disputes, we must pay more attention to people-to-people contact and improving relations. Land disputes are flagging problems. We must give more attention to economic and cultural relations, which are more important than political and strategic ties,” he said.

News Reports

China and India in the Region

Pakistan offers road, rail routes to all regional countries: Saad
Business Recorder, December 10
Federal Railways Minister Khawaja Saad Rafique said on Tuesday that Pakistan was ready to offer its road and rail routes to all regional countries including China, India, Iran, Afghanistan, Turkey, Bangladesh and up to Central Asia. Opening up of the trade corridor, he observed, was in the best interest of Pakistan, citing, if these states used our roads and railway tracks, it would generate huge revenues, which was the lifeline of the economy of a country. He said “We have to watch our interests, as we have to eradicate poverty, terrorism and extremism for which an improved and vibrant economy is of vital importance.”

Longest Range Ballistic Missile All Set for Undersea Launch
The New Indian Express, December 10
India is finally gearing up for the maiden test firing of its submarine launch of longest range and nuclear capable ballistic missile code-named K-4 from an underwater platform off the Visakhapatnam coast by end of next month. The missile flies in hypersonic speed and is the world’s best weapon in this class. The much-awaited test which was scheduled for September was postponed due to technological developments. The new missile will enable India to target China and Pakistan from its waters.

Zuma should woo China for Aids cash’
Independent Online, December 10
President Jacob Zuma should use his influence to ensure that China donates money to the Global Fund to Fight HIV/Aids, said Professor Robert Soundre, chairman of Icasa and the Society for Aids in Africa. He asked Zuma to use his role in BRICS (Brazil, Russia, India, China and South Africa) to “appeal to China, as the world’s second biggest economic power, to follow in the footsteps of the US government and support the Global Fund”.

India set to sign transit deal with Af, Iran
Deccan Hearld, December 10
A proposed trilateral transit trade agreement among New Delhi, Kabul and Tehran may soon turn into a reality, providing India an alternative access to Afghanistan and the resource-rich Central Asia through Chabahar Port on the south-eastern coast of Iran. As an interim deal between Iran and “P5 plus One (US, UK, Russia, China, France and Germany)” late November raised hopes for a thaw between Washington and Tehran, New Delhi and Kabul now seem to have shed inhibitions and are set to ink the trilateral transit trade agreement. India’s move to get involved in building infrastructure around Chabahar Port in Iran came close on the heels of China’s Overseas Port Holding Company’s acquisition of management of a commercial port in Gwadar on the south-western coast of Pakistan.

Pakistan, India, China ‘encouraged’ Karzai to sign US-Afghan pact: Dobbins
Geo News, December 11
James Dobbins, the US Special Representative on Afghanistan & Pakistan has testified before a Senate committee that Chinese President Xi Jinping, Pakistani Prime Minister Nawaz Sharif and Russian President Vladimir Putin are among the leaders who have encouraged Afghan President Hamid Karzai to sign a security agreement with Washington. He expressed hope that India would persuade Afghan President Hamid Karzai to sign a deal allowing US troops to stay, as lawmakers voiced outrage at the delay. “His upcoming visit to India could, I think, be quite influential, because he highly respects and has good relations with the Indian government,” said Dobbins.

India To Train Vietnamese Sailors, Expand Ties
Defense News, December 12
India will train Vietnamese sailors in submarine warfare as part of its effort to reinforce defense ties with countries across the Asia-Pacific region. The development is expected to disturb Beijing, analysts and officials said, and will be closely watched by Pakistan. Vietnam has ordered six Kilo-class subs from the Russian Admiralty Shipyard in St. Petersburg to add to its of two South Korean-made Yugo-class midget submarines. India has operated Kilos since 1986. Like India, Vietnam has fought with China and is fast emerging as an economic power in the region, said an Indian Navy official, who said New Delhi should aid Vietnam in any way it can.

India-Pakistan nuclear war would cause famine to wipe out civilisation
South China Morning Post, December 15
A nuclear war between India and Pakistan would set off a global famine that could kill two billion people and effectively end human civilisation, a new study has found. Even if limited in scope, a conflict with nuclear weapons would wreak havoc in the atmosphere and devastate crop yields, with the effects multiplied as global food markets went into turmoil, the report said. The Nobel Peace Prize- winning International Physicians for the Prevention of Nuclear War and Physicians for Social Responsibility released an initial study in April last year that predicted a nuclear famine could kill more than a billion people. In a second edition, the groups said they widely underestimated the impact in China, which they calculated would face severe food insecurity.

‘Premature’ to pin Little India riot on labour tensions, Singapore minister says
South China Morning Post, December 16
Singapore, unsettled by its first riot in more than four decades that involved 400 foreign workers, will continue to tighten the influx of overseas labourers, said Acting Manpower Minister Tan Chuan Jin. The riot that broke out on the night of December 8 in the Little India district after a bus ran over and killed an Indian national has reignited the debate about Singapore’s dependence on overseas manpower. In a previous case of labour dispute, Singapore authorities prosecuted five Chinese nationals and deported 29 others over their involvement in an illegal strike in November 2012, an unusual public display of labour discord.

India looks to expand strategic footprint in Indian Ocean
The Times of India, December 16
A trilateral security group of India, Maldives and Sri Lanka will be expanded to include Mauritius and Seychelles. Senior officials of the trilateral group will meet on December 19 to prepare the ground for a formal joining of these countries. Taking the Indian Ocean more seriously as a target for India’s diplomacy, the External Affairs ministry is also crafting a new territorial division to take care of Indian Ocean countries. Maldives has complained that India has provided very few of the radars promised to monitor the 26 atolls of the island nation. Repeated delays by India make it easier for these countries to opt for China as an alternative source of security, just what India is trying to avoid. In recent years, China has made tremendous inroads in the Indian Ocean region, including in Maldives and Sri Lanka.

Millions in aid to China criticised as ambitious space programme is announced
The Independent, December 16
The British Government has come under fire for giving millions of pounds in aid to China, despite the Communist superpower being able to afford an ambitious space programme. The UK gave Beijing a £27.4 million in aid last year, while the country continues to invest heavily in the space race. The previous year the Government announced plans to cut foreign aid to India by 2015, after coming under scrutiny for sending over an average of £280 million a year despite its multi-million space programme.

China lands on moon, kicks off next lunar space race
New Scientist, December 18
China’s first moon landing, which took place on 14 December – the first time any nation has touched down in almost four decades – heralded a global space race. India and South Korea are also in the running to send missions to the moon that would involve combinations of landers and rovers. India could launch its Chandrayaan-2 mission by 2017, while the newly proposed Korean mission won’t be lifting off before 2020. China’s potential human mission to the moon could take place after 2025.

China welcomes India-Pakistan dialogue on Kashmir
Global Times, December 18
China has welcomed India and Pakistan’s latest efforts to achieve a ceasefire at the Line of Control (LoC) in Kashmir, Foreign Ministry spokeswoman Hua Chunying said on Wednesday. Both India and Pakistan are important countries of south Asia, and improved relationship between them is vital to regional peace and stability, Hua said at a daily news briefing. “As a shared neighbor and friend to the two countries, China will as always support them to resolve relevant disputes properly through peaceful dialogue,” Hua said.

Traders smuggling gold to India
The Himalayan Times, December 18
Police said Nepali and Indian are working hand-in-gloves in smuggling of gold from the Chinese market of Khasa. A bus driver was held with 4 kg gold, which was being smuggled from the Chinese market to India via Kathmandu. A police officer said two traders in the Indian town of Raxaul had invested in the gold. Police said the traders smuggling gold from Khasa bazaar of China to India via Nepal stood to make Rs 2 hundred thousand profit on every kg. Police also informed that Nepali trader Ramnath Sah of Ranighat, Parsa, was involved in the racket. The market value of the gold has been put at Rs 18.4 million.

Indo-Japan to Strengthen Naval Ties against Rising China Threat
International Business Times, December 18
Amidst looming Chinese maritime threat, the first ever Japan-India Maritime Exercise (JIMEX) that will start from 19 December, is increasingly been seen as a step that will strengthen the Indo-Japanese maritime security relations. The four day exercise that will be held in the Bay of Bengal will focus on Maritime Security Co-operation. The Indian Navy will be represented by the indigenously built stealth frigate INS Satpura, the Guided Missile Destroyer INS Ranvijay and missile corvette INS Kuthar. From the Japan Maritime Self Defence Force (JMSDF) two Guided Missile destroyers, JS Ariake (with Commander Escort Division – 7 embarked), and JS Setogiri will participate, a statement from Press Information Bureau stated.

Pakistan inducts multi-role combat aircraft built with Chinese help
India Today, December 18
Pakistan Prime Minister Nawaz Sharif on Wednesday hailed the induction of Pakistan Air Force’s 50th JF-17 fighter aircraft, built with Chinese help, as a move towards “self-reliance” and said the country’s defence strategy is being devised on modern lines. Speaking about ties with China, Sharif said, “We have achieved a number of milestones in a short period during the journey of our enduring friendship with China. These include projects like Gawadar Port, Chashma Power Project, Karakoram Highway, Pakistan Aeronautical Complex and the recent Karachi Civil Nuclear Power Plant.”

India and Japan Begin Joint Naval Exercises
Wall Street Journal, December 19
Idian and Japanese navy ships started their first-ever joint exercises in Indian waters as the countries took steps to tighten military ties at a time when both are facing territorial disputes with China. Two destroyers from Japan joined three ships from the Indian Navy Thursday for the start of four days of military exercises in the Bay of Bengal. The exercises will be the second for the navies of the two countries. The first exercise was off the coast of Tokyo in June of last year. A stealth frigate, a guided missile destroyer and a missile launching ship from the Indian Navy will conduct drills with two guided missile destroyers from the Japan Maritime Self Defense Force, according to an Indian government statement.

China, Bangladesh, India, Myanmar to boost cooperation
Xinhua, December 20
An inter-government system has been set up among China, Bangladesh, India and Myanmar to help boost their economic cooperation, a Chinese Foreign Ministry spokeswoman. The establishment of the system was the outcome of a two-day meeting of the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor working group, which ended on December 19 in Kunming, capital of southwest China’s Yunnan Province, according to spokeswoman Hua Chunying at a daily press briefing. The four parties also signed a joint research plan on the construction of the corridor, said Hua.

News Reports

Trade and Economy

Unhelpful trade policies will only hurt Indians: Manu Bhaskaran
Live Mint, December 10
India will only see a modest economic recovery, with growth at around 5-5.5%, in the next few quarters, although monetary risks have diminished, said Manu Bhaskaran, Director of Centennial Group International. In the fiscal second quarter, India’s economic growth accelerated to 4.8% from 4.4% in the first. In an interview, Bhaskaran said China, which recently unveiled its boldest set of economic and social reforms in nearly three decades, would outperform India because it had managed inflation, reforms and the external accounts better. 

China-India border trade booms
Xinhua, December 11
China-India border trade in Renqinggang market in southwest China’s Tibet Autonomous Region posted a 23.3 percent rise in 2013, local authorities said Wednesday. Renqinggang saw trade volume reach 86.8 million yuan (about 14.3 million U.S. dollars), about 54 times that when the post reopened in 2006, a spokesman with the region’s commercial department said.

India to diversify trade basket with India to reduce trade deficit
The National Turk, December 12
In order to reduce trade deficit with China, India is making efforts to diversify the trade basket with the emphasis on manufactured goods. “India is making efforts to diversify the trade basket with emphasis on manufactured goods. We are also pursuing market access issues to tackle non-tariff barriers in the Chinese market at different fora,” India’s Minister of State in the Ministry of Commerce and Industry Dr Sudarsana Natchiappan informed Rajya Sabha – the upper house of the Indian parliament. He said China and India have formed joint groups on Economic Relations, Trade, Science and Technology, where trade related issues are taken up regularly.

‘India-China widening trade deficit a cause of concern’
The Times of India, December 13
Though there has been extensive growth in engagement between India and China, the widening trade deficit in the bilateral partnership has emerged a cause of concern, said Ashok Kantha, ambassador – designate to the People’s Republic of China and secretary (east) ministry of external affairs. Delivering the keynote address at the 6th All India Conference of China Studies which started off at the Indian Institute of Management, Kozhikode (IIM-K) on Thursday, he said the trade deficit has risen to $39 billion, which is not tenable.

India lags behind China in attracting R&D investments
The Hindu Business Line, December 13
Despite nearly half of the world’s top 500 companies investing in research and development (R&D) centres in India, the country lags behind China in attracting R&D investments. In a report, management advisory firm Zinnov states that while companies such as GE, IBM, Microsoft and Dell are setting up India centres, China continues to attract more mindshare, with around 385 global companies investing in the region. In comparison, India attracted investments from 228 companies. With their massive R&D budgets, the top 100 multinational companies can create 200,000 jobs by 2018, added the report.

India’s trade deficit with China nears record $30b
The Hindu, December 14
India’s trade deficit with China after 11 months of this year has reached a record $29.5 billion, exceeding the figure for 2012, according to newly released trade data. The latest figures have cast doubt on whether the target of $100 billion trade may be achieved. Even as China’s trade with the rest of Asia as well as with its major Western trading partners has picked up, trade with India has remained in a slump, suggesting that causes were more structural rather than a reflection of global trends. After 11 months of this year, India’s exports to China reached only $14.87 billion out of total bilateral trade of $59.24 billion, according to data released this week by the China’s General Administration of Customs.

Indonesia continues to grow faster than India
Business Standard, December 14
Indonesia, which replaced India as the second fastest growing economy in the world a few years ago, continued to grow faster than India in the second quarter of 2013-14, despite its economic growth rate standing at a four-year low. India’s growth rate in Q2 of 2013-14 stood at 4.8 per cent, sub-five per cent for the fourth quarter in a row. Compared to this, the Indonesian economy clocked 5.6 per cent growth in Q2, which was the weakest in four years. Indonesia’s economy rose 5.8 per cent in the first quarter of 2013-14. India’s economy, on the other hand, picked up pace from a four-year low of 4.4 per cent in the second quarter of the current financial year. Among the rest of the BRIICS nations however, Russia, Brazil and South Africa saw lower growth rates than India in the second quarter. China’s growth was the highest.

Look beyond the giants 
Bangkok Post, December 16
ASEAN could play a vital role in rebalancing the Asian economy in order to help reduce the region’s reliance on the economic influence of China and India, according to the Asian Development Bank (ADB). The international organisation in October sharply revised down its 2013 economic growth projection for Asia to 6%, a drop of 0.6 percentage points from its previous projection. The forecast for 2014 was cut 0.5 points to 6.2%. The main reason was the slowing economic growth in Asia’s two largest economies: China and India. In China, years of double-digit, export-led growth have given way to a focus on more domestic consumption and sustainability. Under this approach, authorities in Beijing have made it known that annual expansion of around 7% to 7.5% will be acceptable, even desirable. In India, where growth rates have plunged from above 9% to below 5%, the reasons are more complex, and poor economic management by the government is part of the explanation. 

Indian SMEs look to China for quality sourcing needs
The Financial Express, December 16
Many Indian Small and Median Enterprises (SMEs) have been sourcing products from China. Sanjoy Jain, CEO of X’cel Healthcare Products gets supplies from Fujian. He says the quality of the Chinese products and the fact that, “The Chinese government provides tax rebates of 10-18 per cent on the product, something which we don’t have in India for my segment. There are no skilled technicians in India for manufacturing, leaving me with no other option but to source it from China which not only has a skilled workforce, but also a huge cost advantage,” he said. “SMEs are forced to look abroad for their needs because India does not have defined policies for such SMEs,” Lovleen Bhargava, founder of an SME, said.

Christie’s to hold its first art auction in India
South China Morning Post, December 17
Christie’s International will hold its inaugural auction in India this week with the offering of US$8 million of modern and contemporary South Asian art in Mumbai. Increasing affluence in India and China, where Christie’s and Sotheby’s both held inaugural auctions this year, is creating a growing base of collectors that international auction houses are keen to tap. “China has already developed a very strong indigenous market for its own art,” said Hugo Weihe, Christie’s international director of Asian art. “India is a few years behind but we see similar enormous possibilities. There is obviously great wealth and great art.”

China’s equities seen overtaking India’s in 2014
CNBC, December 17
Chinese shares may be poised to become an unlikely star of Asian emerging markets in 2014, outshining India, thanks to cheap valuations and optimism about reforms. Investors have been underweight China for years. Foreigners have bought a net $18.8 billion worth of Indian shares this year, according to the market regulator’s data. Official statistics are not published for China, but data from fund tracker EPFR shows a net $5.5 billion outflows for the year to Dec. 11 for China-focused equity funds.

Global economy is improving, but remains vulnerable: UN report
Xinhua, December 19
Global economy is improving, but remains vulnerable to new and old headwinds that could derail growth, a UN report said, adding that a bumpy exit from quantitative easing by major central banks poses risks for financial stability and global growth. Growth in the United States strengthened somewhat, the report said, adding that a few large emerging economies, including China and India, managed to backstop the deceleration they experienced in the past two years and veered upwards moderately. These factors point to increasing global growth, according to the report.

Infosys wins contract from Chinese company FESCO
The Times of India, December 17
IT services major Infosys said it has bagged a contract from Chinese firm FESCO to develop a human resource (HR) services platform. FESCO is the first Chinese firm to provide professional HR services to foreign enterprises, financial institutions and economic organisations in China, India’s second largest software services exporter said in a release. The Bangalore-headquartered firm said: “It has been selected by FESCO to develop HR services platform, iSynergy.”

State buying may explain China’s gold import surge
Financial Times, December 18
The Chinese state could be behind a surge in bullion imports that will see China overtake India as the world’s largest consumer of gold, according to one of the sector’s most influential investors. Evy Hambro, chief investment officer of BlackRock’s Natural Resources Equity team, said the investment community had been surprised by the amount of gold flowing into China given its position as the world’s biggest gold producer. Demand from India has also been muted because of a series of government restrictions on gold imports. Indian consumption slumped 32 per cent in the third quarter to just 148 tonnes, the lowest since early 2009.

Business sentiment down in Asia
South China Morning Post, December 19
Business sentiment among Asia’s top companies has dropped sharply in the final quarter of this year, extending the third quarter’s declines, with global economic uncertainty and rising costs weighing on the region’s firms, a Thomson Reuters/INSEAD survey found. China scored 75 and India 82 in the regional sentiment index, but export-driven East Asian economies such as South Korea as well as regional trading hub Singapore also showed weaker readings, underscoring still-anaemic global business conditions.

Macquarie prefers China, Korea over India, ASEAN
Moneycontrol, December 19
Viktor Shvets of Macquarie bank states, “We continue to prefer relatively ‘safer’ North East Asia (principally China and Korea) versus ASEAN and India (we are only overweight the Philippines). While NE Asia is facing numerous structural challenges, it has greater fiscal and monetary flexibility and is far more liquid.”

Low prices inhibit trade with India: Chinese auto firms
Business Standard, December 19
India is one of the largest export after-sales market for auto components but trade with the country was still poor owing to more demand of cheaper variants, Chinese auto parts makers have said. They say prices of auto parts sold in India were on an average 30 to 40 per cent cheaper than in Europe, US, the Middle East, South America and Russia despite rising manufacturing costs in their country. “Trading with India is low owing to lower prices. We can’t compete with them (Indian firms),” Xing Wen Chao, general manager with Xinxiang Huazheng Radiator Co. Ltd., said.

India and China Lead Global on Materialism, Economic Optimism
The Diplomat, December 21
A survey released last week by Ipsos, a market research firm, studied “Global Attitudes on Materialism, Finances and Family” with some important revelations about consumer attitudes in certain Asia-Pacific countries. The findings on materialism hold the most salience for APAC, where China and India topped the rankings as the most materialistic based on the number of respondents who agreed with the statement that “I measure my success by the things I own.” Seventy-one percent of respondents in China and 58 percent of Indian respondents agreed with that statement, the highest among countries surveyed by Ipsos. The global average saw 34 percent of respondents agreeing, making the Chinese and Indian responses stand out not only regionally, but on a global level.

News Reports

Energy and Environment

India-China agree to exchange information on Brahmaputra basin
The Hindu, December 12
Union Water Resources Minister Harish Rawat on Thursday said India and China have agreed to share information on the hydro power projects activity being undertaken in the Brahmaputra river basin following Prime Minister Manmohan Singh’s recent visit to Beijing. Delivering the inaugural address at the two-day conference on “Promoting Hydro Power: A Counter Strategy against rising fossil fuel prices’’ in New Delhi, Mr. Rawat said a new beginning had been made with the decision to exchange information between New Delhi and Beijing and India would like to take this further. “Prime Minister took up the issue of sharing of waters. China has agreed to share only hydro information. We have made a beginning and we would like to take it ahead. In Brahmaputra, nearly 85 per cent of the water emanates from India. We are able to tap only 5 per cent of it. We are also working on inter-basin water transfer in India,’’ he added.

Slowdown seen in petroleum use
China Daily, December 13
The average annual rise in China’s petroleum use will drop to 2.5 percent during the years 2013 to 2020 as the government tries to slow down economic growth and reduce carbon emissions, said experts. The figure will keep declining to 1.5 percent from the year 2020 to 2030, predicted Dai Jiaquan, deputy director of the Oil Market Research Office with the CNPC Economics and Technology Research Institute, on Thursday. Meanwhile, China’s natural gas use last year reached 144.5 billion cubic meters, up 12.8 percent year-on-year — much higher than the growth in petroleum use. During the 11th Five-Year-Plan (2006-10), China’s annual use growth of petroleum was as high as 7.7 percent on average. The International Energy Agency’s newly released outlook echoed the trend, saying that India will become the country with the fastest growth in petroleum use after 2020.

India among high risk nations in water stress survey
The Times of India, December 14
India ranks 41 among 181 countries so far as water stress is concerned and its in the bracket of second high risk nations. The first-ever global water stress rankings by World Resource Institute (WRI) reveals that 37% countries assessed by it experience high to extremely high baseline water stress. The report says that stable supplies are increasingly hard to come by in many countries, as water-related risks increase. For example, recent droughts threatened GDP growth in the United States and monsoon floods killed hundreds and displaced thousands in India. In China, the increased competition for water may impact energy production, the global institute said.

Rosatom set for larger share in global nuclear energy market
Russia and India Report, December 16
Rosatom, the Russian state nuclear corporation, has concluded a record number of transactions this year for the construction of nuclear power plants. Rosatom will build the first nuclear power plants in Bangladesh and Jordan, expand its presence in China and India with the help of new power units, and build the Hanhikivi-1 nuclear power plant (NPP) in north-west Finland. The company is also negotiating an agreement on co-operation with South Africa.

India poised to boost oil imports from Iran after Apr-Nov shipments slide
Business Today, December 18
India’s oil imports from Iran fell 34.8 per cent in April-November from a year ago despite a jump last month, giving the government room to import more till March and still win another waiver of US sanctions. The US State Department extended a six-month Iranian sanctions’ waiver at the end of November to China, India, South Korea and other countries as a reward for them reducing purchases of Iranian crude oil earlier this year. The waiver extension came after the United States and five other global powers, known as the P5+1, agreed in Geneva to pause efforts to reduce Iran’s crude oil sales, allowing consuming countries to continue buying their “current average amounts of crude oil".

Analyses and Commentaries

Chinese dreams complement Indian realities
Hindustan Times, December 10
Wei Wei highlights that further steps of deepening reform in China have been adopted at the third plenary session of the 18th central committee of the Communist Party of China (CPC) held last month in Beijing. China has set off a new round of reform that will have a profound impact not only on its domestic economy, but also on the development of the Asia-Pacific region and the world at large. It surely will usher in new prospects for cooperation between China and India aimed at common development and prosperity when China is implementing measures of comprehensively deepening reform. Among the proposals at the third plenary session, deepening economic reform is the principle task. The ‘decisive’ role of the market in allocating resources is affirmed.

Should India-Japan Ties Worry China?
The Diplomat, December 11
Ankit Panda highlights that India-Japan relations popped up at the top of China’s radar this past week after Emperor Akihito and Empress Michiko of Japan completed a historic and rare visit in India. China said that it hoped that India’s relations with Japan would be “conducive” to regional peace and stability, according to The Hindu.  In return, a senior Japanese diplomat, Sakutaro Tanino, who accompanied the Emperor to New Delhi and served as Japanese Ambassador to both India and China, clarified that the visit served an explicitly bilateral function. He juxtaposed the depth of Japan’s ties with China with its ties with India: “The difference in Japan’s ties with China and its ties with India is staggering. This visit gives us another moment of proximity with India.”

China’s Backdoor Breakout
Foreign Policy, December 12
Richard Boucher argues that while Washington was occupied with Thanksgiving and the health-care debacle in late November, the Prime Ministers of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan were meeting in Tashkent, Uzbekistan, at a summit of the Shanghai Cooperation Organization (SCO) to discuss economic and security cooperation. Russia is being pushed out, China is moving in for trade and resources, and countries like Kazakhstan and Turkmenistan are playing the big powers against each other. There are even grandiose plans under way to extend gas pipelines and electricity lines into Pakistan and India and to bring Persian Gulf hydrocarbons across the region into China through the back door.

Why China and India Love U.S. Universities
Scientific American, December 13
Harold Levy asks: Can the U.S. stave off the erosion of its longtime preeminence in science and engineering – particularly due to competition from China and India? Levy highlights what he calls the “full depth of America’s educational failure,” masked by the diversity of nationalities among grad students in those fields: Of the 1,777 physics doctorates awarded in 2011, for example, 743 went to temporary visa holders from many lands—and that figure excludes foreign nationals who had won permanent resident status. Only 15 of those 1,777 doctorates were earned by African-Americans. Foreign nations—particularly China, India and South Korea—benefit hugely from U.S. investments in higher education. Where economists used to bemoan the “brain drain” that afflicted much of the developing world, many foreign graduates are now taking their American diplomas and returning to their home countries in search of opportunities greater than those they see in the U.S. 

Central Asia – Why India must act before its influence wanes
DNA India, December 13
Jaideep Prabhu explores why India is dawdling on making strategic inroads in the grand prize of the new Great Game. Like many others, India has enjoyed free-riding on a global security commons founded initially upon the balance of power between the Soviet Union and the US, and later, as the Cold War ended, upon a US strength of arms. However, that strength was hardly felt in Central Asia and whatever little existed is on its way out by the middle of next year. Until recently, China was content to take a back seat in the Central Asian Great Game. However, its insatiable hunger for energy and resources has made it take note of its western neighbours. Furthermore, unrest in its own Xinjiang province necessitates Beijing’s interest in maintaining a calm Central Asia. The major difference between China and the other powers, however, is that Chinese entry is backed by billions of dollars in aid.

Imagine all the people
The Times of India, December 14
Kanti Bajpai, assessing McKinsey’s recent report Re-imagining India, highlights some vital challenges for India in areas such as environmental conservation, climate change mitigation, human development and infrastructure. The author argues that there is no hope of sustained economic growth or effective competition with China with the current abject lack of development in these areas. He further states that India, with such terrible public transport, energy supply, sewage systems and electronic communications cannot deliver a decent life, nor can it compete with other societies.

India needs cleaner air with cleaner resources
The Economic Times, December 14
Yasmine Hilton highlights that India is set to become the world’s third largest energy consumer by 2020, after China and the United States. With burgeoning population and rapid industrialisation, domestic energy production cannot keep pace with growing energy demand. Crude imports have grown annually at close to 10% in the last decade and coal imports have grown at over 20% every year during the same time. India’s energy situation requires a three-pronged approach: to improve energy efficiency, accelerate development of domestic resources, and promote the use of cleaner energy sources. As economy and population grow, the challenge will be to pursue economic imperatives alongside energy security; environmental stewardship and good health for future generations, all at the same time.

Seeking to Counter China’s Influence, India Extends Cooperation with ASEAN Members
The Epoch Times, December 15
With the recent appointment of a separate mission to the Association of South East Asian Nations (ASEAN), India has slowly but surely started to counter China’s influence in the region, opines Venus Upadhyaya. Bibhu Prasad Routray, a Singapore based security analyst and former deputy director at India’s National Security Council Secretariat, said in an interview with Epoch Times, “To me the choice of India’s ambassador to Myanmar is a demonstration of its seriousness to pursue its interests in Myanmar. Ambassador Gautam Mukhopadhaya was posted to Yangon from Kabul where he had done exceptional work.” All this is according to Routray, also a signal to China that “New Delhi would pursue its strategic interests in the area seriously and would not shy away from using its relations with other countries to deal with the challenges posed by Beijing.”

Rapidly growing economies in China, India will swamp U.S. climate change efforts
Yakima Herald, December 15
Andrew Morris opines that the United States can do next to nothing about greenhouse gas emissions alone and should not burden its economy to attempt to do so. China and India are growing so rapidly that their additional greenhouse gas emissions swamp any reductions possible in the U.S. today. He states as an example, Chinese car ownership today on a per-capita basis is not even equal to U.S. car ownership in 1920. When — not if — Chinese consumers close that gap, they’ll be driving more than 20 times the number of cars they are driving today. Chinese electricity consumption is similarly rapidly too, with new coal-fired power plants opening like clockwork. Unilaterally cutting U.S. emissions would be pointless and would handicap negotiators in any effort to reach an agreement with developing economies like China and India.

China, India in race to exploit India Ocean seabed
The Sunday Times, December 15
Nuwan Peiris writes about what he calls “a serious and cracking battle,” that is about to begin in the deep Indian Ocean seabed as China moves to explore polymetallic sulphides in the southwest Indian Ocean ridge – an area beyond national jurisdiction of any state. Intensity of this conundrum reached new proportions when India’s Deputy External Affairs Minister E Ahamed was questioned in Rajya Sabha on December 3 on this. He responded that the Government was aware that the International Seabed Authority (ISA) had approved the plan of work for exploration of polymetallic sulphides by China Mineral Resources Research and Development Association (COMRA),” The author asserts that it is important that Sri Lanka begins to engage in deep seabed matters through ISA in its foreign policy deliberations – for its own benefit, protection and future survival in the face of China-India competition.

Japanese Help to Thwart China
The New Indian Express, December 16
Saroj Gaur sees a commonality of interests between Japan and India regarding China’s aggressiveness in pursuing its territorial disputes with them. This provides the opportunity for India to endorse the Japanese position on China’s new Air Defence Identification Zone (ADIZ) over disputed areas in the East China Sea. Japanese Prime Minister Shinzo Abe is already pursuing an enhanced relationship with India and “China’s dominance in the region has challenged Japan’s post-War pacifism.” The recent visit to India of Japanese Emperor Akihito and his wife Machiko was not only a symbolic journey down the memory lane but a clear signal from the Japanese government that India is a vital ally to Japan on strategic, diplomatic and economic fronts. The royal couple decided to visit India on a pressing request from Abe, even as there were over 50 nations whose invitations to the duo were pending. This clearly shows Abe is upbeat on India-Japan ties.

China’s Arunachal Pradesh Fixation
The Diplomat, December 16
Aakriti Bachhawat highlights that China has been stepping up claims to territories abutting its borders, land, sea and now air. One of the more recent additions to its interests is Arunachal Pradesh, a northeast Indian state that China recognizes as “South Tibet.” Indian President Pranab Mukherjee’s visit to the state in late November and his speech calling the area an “integral and important part of India” have generated an angry response from Beijing. This came barely one month after an agreement to resolve border disputes peacefully was signed by Indian Prime Minister Manmohan Singh and Chinese Premier Li Keqiang. Beijing’s increasing assertiveness and growing territorial claims raise important questions about China’s intentions and strategic direction.

India-Myanmar Economic Cooperation: The Road Ahead – Analysis
Eurasia Review, December 16
Mihir Bhonsale analyses the prospects of India-Myanmar economic cooperation. India, emerging from the policy of pragmatism towards Myanmar in the 1990s, has established itself as Naypyidaw’s fourth largest trading partner and a major investor in infrastructure and oil sectors. However, the lack of realisation of the full potential in enhancing India-Myanmar economic cooperation is likely to hurt Indian interests at a time when Myanmar is taking baby steps in globalising its economy. India is eying a substantial increase in trade with the Association of South East Asian Nations (ASEAN) countries by 2015, and for that to happen enhancing economic cooperation with Myanmar is important as Myanmar is India’s only land-bridge to South East Asia.        

Prepare for war in East China Sea
India Today, December 17
Manoj Joshi highlights that on December 5, a Chinese naval vessel tried to force a U.S. warship to stop in international waters in the latest instance of the growing Chinese tendency to flex their muscles. This incident comes hard on the heels of the already roiled situation in the East China Sea region where Beijing had declared a Air Defence Identification Zone (ADIZ) on November 23, which included the Japanese-controlled, but disputed Senkaku islands, called Diayou, by the Chinese. Some alarming analysis suggests that the Chinese may not be above seeking a limited conflict in the region. Conversations with Chinese think tank officials reveal a certain candidness about Beijing’s changed global posture which, of course, has implications for India. They say that the era of the 24 character strategy is over. Indeed, they acknowledge that, as of 2012, they have become more assertive.

India’s ‘look east’ policy is already paying dividends
The National, December 17
Harsh Pant highlights the high-level visit earlier this month by Japanese Emperor Akihito and Empress Michiko to India underscores the growing centrality of India in Japanese foreign policy. In an unprecedented move, Indian Prime Minister Manmohan Singh appointed a former minister as a special envoy to oversee the preparations for the visit. A multifaceted partnership is burgeoning between Japan and India and this visit, likely to be one of the last foreign trips for the 79-year old emperor, was aimed to put the imperial imprimatur on the ties between the two Asian powers. With the Japanese Emperor deciding to make India the destination for one of his rare visits abroad and Abe bringing New Delhi back in focus in Japanese foreign policy priorities, these are heady days in India-Japan ties.

China’s Reactor Sale to Pakistan: A Nuclear Mistake? – Analysis
Eurasia Review, December 17
Manish Vaid opines that by moving ahead with its plan to sell its nuclear reactors to Pakistan, China has put the cat among the pigeons. The deal between the China and Pakistan will constitute the first ever foreign sale by China’s indigenous 1,100 MW nuclear reactor series, called Advanced China Pressurised- 1000 (ACP-1000). The US$9.1 billion deal of two nuclear reactor sale, to be installed in Karachi coast, will be done through 82 per cent financing by China. This development is believed to be largely meant to balance India’s ties with the US and Japan which are now extending on nuclear energy front as well. In case of Japan, for instance, the article titled, “India gets close to Japan at its own peril”, published in Communist Party backed Global Times, clearly pinpoints the Chinese belief of India’s strategy of getting closer to Japan as a balancing tactics against China. But, the sketch of China’s aggressive posture on its nuclear policy with Pakistan in South Asian region has already been drawn post the Indo-US civil nuclear deal.

Chinese intrusions across the LAC
IDSA Issue Brief, December 17
Namrata Goswami derives three critical policy insights from China’s intrusions across the Line of Actual Control (LAC): China’s repeated intrusions are bolstered by its rapid military infrastructure development in its border regions; China showcases its military power to India across the LAC due to its lack of political legitimacy in Tibet and its perception that India intends to free Tibet from China; and the American pivot to Asia has only made China more aggressive, as evidenced by China’s establishment of an Air Defence Identification Zone (ADIZ) over disputed areas of the East China Sea.

New chapter in foreign relations
Global Times, December 18
Ling Yuhuan and Sun Xiaobo highlight that China’s diplomacy has turned a brand-new page in 2013 after its new leadership stepped into the global arena, vowing to better integrate with the world while keeping in mind “the Chinese dream.” Chinese leaders have left their footprints in dozens of countries throughout Asia, Africa, Europe, Latin America and North America and welcomed the visits of more than 50 state leaders to Beijing. Xi paid his maiden visit to Russia in March, one week after he took office, and half of the 14 foreign trips he has made this year have been to China’s neighbours. Li visited India and Pakistan before going to Europe, and seven out of nine countries Li toured this year border China. Concrete steps were adopted this year to carry out strategies such as the “maritime silk road” and the “community of common destiny” in a bid to strengthen China’s ties with its neighbours, such as deepening energy and economic cooperation with Central Asian countries, improved ties with India and inter-connectivity with ASEAN countries, Su said.

BCIM project cooperation could be key to development of border regions
Global Times, December 18
K. Yhome analyses the impact of the Bangladesh-China-India-Myanmar (BCIM) economic corridor, calling it a test case for cooperation between India and China in regional development as well as addressing common challenges. India’s development initiatives in the Mekong region and China’s growing presence in South Asia are now converging in the BCIM region. India and China’s inroads into each other’s peripheries have increased their economic presence and political profile. The ideas driving the BCIM economic corridor project are a combination of domestic and external interests of both New Delhi and Beijing, notwithstanding the security reservations in some quarters of the Indian establishment. The BCIM project is an important part of New Delhi’s and Beijing’s strategies to open up their landlocked frontier regions to the neighbouring countries.

Binding Vietnam and India: Joint energy exploration in South China Sea – Analysis
Eurasia Review, December 18
P.K. Ghosh states that Vietnam’s recent granting of seven oil blocks in the South China Sea for exploration by India is part of a plan to internationalise Hanoi’s territorial dispute with China. Hanoi hopes to create more stakeholders who can withstand Chinese hegemonic ambitions in the area. While the Chinese had not objected to Vietnam allotting the lucrative Block 6.1 to India in Nam Con Son Basin, it objected to India taking up exploration in blocks 127 and 128. Chinese objections have included demarches, pressure on companies not to sell equipment to India and the alleged buzzing of an Indian warship that had transited through the disputed portion of the South China Sea. Following talks between Prime Minister Manmohan Singh and General Secretary Trong during the Vietnamese leader’s recent high profile visit to India, eight agreements were signed. There was also a MoU between both countries in which Vietnam offered seven oil blocks in the South China Sea to India – including three on an exclusive basis – and joint prospecting in some Central Asian countries with which both Hanoi and New Delhi have good political ties.

Eyeing Pakistan, India Treads Carefully As It Mulls Expanded Afghan Role
Radio Free Europe Radio Liberty, December 19
Frud Bezhan analyses the growing Kabul-New Delhi relations and its impact on Washington and Islamabad. New Delhi has poured billions of dollars into the reconstruction effort in Afghanistan and trained hundreds of Afghan officers. And Karzai is expected to plead for further assistance, including lethal military hardware, during his trip. But any expanded Indian role in Afghanistan after the drawdown of international forces next year will set off alarm bells in neighbouring Pakistan, which is already suspicious of New Delhi’s activities in the country. Michael Kugelman, South Asia associate at the Woodrow Wilson International Center for Scholars in Washington, says as a regional military and economic power, New Delhi can play a key role in terms of regional security and developing Afghanistan’s aid-dependent economy.

The Castaway
Business Today, December 22
Shweta Punj opines that India is steadily losing ground to China as a trading partner of South Asian countries. India’s global trade was worth an estimated $800 billion in 2012/13, of which only about $17 billion was with the South Asian Association for Regional Cooperation (SAARC) partners. But India has failed to inspire trust among its partners in South Asia and is still seen as a competitor, point out experts. China has been quick to recognise the importance of the region and has moved swiftly. Chinese economic engagement with South Asia has grown quickly. Trade has grown from $40 billion in 2006 to $85 billion in 2011. In terms of foreign direct investment (FDI) in the region, China is way ahead of India. The onus however is on India to build trust and improve trade relations with South Asian countries, say experts.

Journal Articles and Publications

3-day Conference of China Studies at IIM-K from Dec 12
Business Standard, December 11
Aiming to spread interest and strengthen research in China and East Asian Studies in India, the Indian Institute of Management-Kozhikode will be hosting the 6th All India Conference of China Studies in collaboration with the Institute of Chinese Studies, New Delhi, from Dec 12-14. The annual All India Conference of China Studies (AICCS) is a flagship event of the ICS. This year’s conference in IIM-K has been partially funded by the Indian Council of Social Science Research (ICSSR). 

Nation On Three Cylinders
Outlook, December 14
The article reviews McKinsey & Company’s recent publication, Reimaging India, highlighting that one implicit theme that underlies the entire narrative is a basic Chindia equation: “if China can do x, why cannot India do y?” Yasheng Huang, the China-born MIT professor, writes a chapter which confronts the belief that India’s growth is impeded by its messy democracy, while China’s authoritarian system allows it to power its way forward. He seeks to demonstrate that there’s no empirical evidence to support this, and that, in fact, there’s perhaps more reason for China to move in the direction of India’s political system than vice versa.

Faceoff: China/India
World Policy Journal: Winter 2013/2014
The winter 2013/2014 issue of the World Policy Journal features articles that focus on China-India relations. The issue includes case studies of countries that have been impacted by the China-India rivalry and examines how each country views the other. Articles focus on China’s and India’s legitimate claim to hegemony, leadership and a shared or competitive future; competition over shared water resources; higher education in both countries, and several other aspects. World Policy Journal also examines three small but strategically situated nations, sandwiched between China and India – Myanmar, Nepal and Bhutan, which have long been a focus of efforts by both major powers to win hearts, minds, and loyalties.

Global gas market integration and implications for the East Asia Summit region
Energy Market Integration in East Asia: Deepening Understanding and Moving Forward, 2014
Yanrui Wu’s chapter in the forthcoming book, Energy Market Integration in East Asia looks at the future of the global gas market, with particular emphasis on East Asia.Wu argues that as both the US and Germany also exported natural gas, Japan was effectively the world’s largest net gas importer in 2010. Apart from Japan, other important gas importers in the EAS area include South Korea, China and India.

Asymmetrical Threat Perceptions in India-China Relations
Oxford University Press, December 13
Why are China and India not able to develop a long term, stable, and friendly relationship? Shedding light on this important question, this book, part of the Oxford International Relations in South Asia series, provides a new perspective for understanding India-China relations. It examines the chief impediments to a stable relationship—the nuclear issue, the border problem, the Tibet issue, regional competition and cooperation, and India-China relations in the global context. Author Tien-sze Fang proposes that the asymmetry in threat perceptions of China and India is responsible for instability in their bilateral relations. The prospect of forging closer political ties hinges on the convergence of the security perceptions of both sides.

Introduction: positions of Asian donors in the aid discourse toward post-2015
Asian Education and Development Studies, 2013
Shoko Yamada introduces Asian Education and Development Studies special issue focusing on matters related to the Asian countries which provide assistance to developing countries for their advancement of education. There are an increasing number of donor countries which are formerly recipients of development assistance. Their emergence as donors is changing the landscape of international educational development. Being outside of the self-regulating community of traditional donors, they bring different logics and motivations to this field that often go beyond the frame of meaning making among traditional donors. Asia-Pacific region is unique in the sense that it has both traditional and new types of donors. The former group includes Japan and the USA, while the latter has Korea, China, India, and many others.