China-India Brief #121

Guest Column

India-China Reset and Japan

By Purnendra Jain   

Managing China relations has been one of the most challenging tasks for Indian foreign policy makers ever since the two fought a short but bloody war in 1962. China’s frequent and rising incursions into the Indian territories[1], its financial and military support to Pakistan – India’s nemesis, long-running border disputes, and India’s granting of asylum to the Dalai Lama have been some of the most sensitive geo-strategic and politically-charged issues that have troubled their relationships for decades.

A recent example of a serious military standoff occurred in mid-2017 in the disputed area of Doklam at the tri-junction between India, Bhutan and China. Although they disengaged after a 73-day face off, they have by no means come to any agreement on the border quarrel. The regions of Aksai Chin and Arunachal Pradesh – the former administered by China and the latter by India – have been hotly contested by the two. Together they constitute one of the world’s largest disputed territories.

While these sore points have continued to breed distrust and fester in the background, in recent months analysts have suggested that a reset or even a game change has occurred in the relationship[2]. The leaders of the two nations have met three times within a span of four months, beginning with an informal bilateral summit between Prime Minister Narendra Modi and President Xi Jinping in the Chinese city of Wuhan in April, followed by their meetings in June and July on the side lines of the Shanghai Cooperation Organisation (SCO) summit in China’s Qingdao and the BRICS summit in Johannesburg. Although no substantial progress in the vexed relationship has been made, these were important icebreakers between leaders of the world’s two most populous nations and centres of economic growth.

With this development in the India-China relationship, a moot question is what impact it might have on Japan and its relationship with India, a relationship largely but not solely, built in the last decade in the shadow of China’s rise. Both have territorial issues with China, are hugely concerned about the Asian giant’s military assertiveness and unilateral actions, as well as its relentless push using its money muscle to displace Japan’s and India’s spheres of influence in their traditional playing fields in South and Southeast Asia and elsewhere. Neither Japan nor India has the financial capacity to compete with China and outplay Beijing in this game.

Concerns over China has led Japan to woo India by injecting massive financial resources into the latter’s many infrastructure projects, including funding for its high-speed train project through aid money. India of course, also wants to cultivate deep ties with Japan on many fronts. The two nations’ passion for the new geographical construct of the Indo-Pacific and shared vision on many other bilateral and minilateral matters have taken the trajectory of their bilateral relationship to a new high in recent years.

The two nations’ prime ministers have met annually for more than a decade and have sought not only to promote bilateral ties but also cooperate on global matters such as terrorism, piracy, and infrastructure development, making them ‘strategic and global partners’. Partnership in the development of Africa is one such joint initiative.  Japan’s support for India to join the Nuclear Suppliers Group (NSG) and their joint efforts to reform the United Nations make them trustworthy partners and friends. They even signed a security declaration in 2008 covering wide-ranging areas on security matters – an agreement unthinkable just a decade previously. Prime Ministers Modi and Abe have developed a special chemistry, not seen between any other two leaders currently.

The deepening India-Japan relationship is not likely to be affected by the new bromance between India and China. This is because the warming of ties between the latter two has been largely a tactical response to the emerging domestic circumstances in China[3], as well as new global uncertainties accelerated by the Trump presidency, while the roots of their strategic distrust have remained unchanged. Tactically, India and China may cooperate on certain issues in a transactional manner, but strategically, they remain truly competitive and even conflictual, with an underlay of deep distrust of each other. New Delhi continues to refuse supporting China’s multi-billion dollar Belt and Road Initiative (BRI) because its flagship project - the China-Pakistan Economic Corridor (CPEC) - passes through Pakistan-occupied Kashmir, which India sees as a violation of its sovereignty and territorial integrity. Other unresolved irritants include Beijing’s refusal to endorse India’s bid for a permanent seat on the United Nations Security Council and membership in theNSG.

On the other hand, Japan, which was India’s harshest critic in the wake of the 1998 Pokhran-II nuclear tests, has today become one of New Delhi’s most important partners, with strategic networks to mutually support each other’s interests, both regionally and globally. China often views Tokyo’s cozying up to New Delhi with a critical eye and rebukes their initiatives and approaches as a ganging up against China. Beijing expressed its displeasure when the Quadrilateral Security Dialogue or ‘Quad’ was formed a decade ago and when it re-emerged  last year[4]. It was also critical of their decision to participate in multilateral naval exercises[5] even as China was itself expanding its military designs in the South China Sea and carving out spheres of influence elsewhere.

India-Japan relations today stand on solid ground with the institutionalisation of bilateral processes through an annual summit meeting between the prime ministers of the two nations, a 2+2 defence/foreign affairs dialogue, military to military talks and coast guard to coast guard cooperation, in the background of a long history of goodwill and little animosity towards each other. Some of the Cold War irritants and other concerns about India have long disappeared in Japan’s foreign policy outlook.

So solid is their foundation now that Tokyo is least concerned about the recent positive developments in India’s relationship with China. Furthermore, Japan-China ties are also on the mend, although unlike their Indian and Chinese counterparts who have met and hosted each other several times for official visits, the Japanese and Chinese top leadership have not conducted many bilateral state visits. Recently, the Chinese premier visited Tokyo and invited Prime Minister Abe to visit Beijing later in the year, as 2018 marks the 40^th anniversary of the signing of the China-Japan Treaty of Peace and Friendship. But the fact that the President of China and Prime Minister of Japan have not held regular bilateral visits since they came to power over five years ago signifies a deep distrust of each other.

Both Tokyo and New Delhi have responded positively to China’s recent charm diplomacy, but they will be watching with a close eye on Beijing’s strategic and military moves in their territories and in their regions and beyond while strengthening their own bilateral ties on regional and global matters.

Purnendra Jain is a Professor of Asian Studies at the University of Adelaide, Australia. He is currently a visiting Senior Research Fellow at the East Asian Institute, NUS

[1] The Times of India, “Chinese incursions into India rose in 2017: Government data,” February 5, 2018, https://timesofindia.indiatimes.com/india/chinese-incursions-into-india-rose-in-2017-govt-data/articleshow/62793362.cms.

[2] Rajeev Sharma, “Modi-Xi Wuhan Summit May Be a Game Changer in India, China Ties,” The Quint, April 24, 2018, https://www.thequint.com/voices/opinion/modi-xi-wuhan-summit-may-be-a-game-changer-in-india-china-ties.

[3] Chris Buckley, “As China’s Woes Mount, Xi Jinping Faces Rare Rebuke at Home,” The New York Times, July 31, 2018, https://www.nytimes.com/2018/07/31/world/asia/xi-jinping-internal-dissent.html.

[4] Shi Jiangtao and Laura Zhou, “Wary China on ‘Quad’ bloc watch after officials from US, Japan, India and Australia meet on Asean sidelines,” South China Morning Post, November 13, 2017, https://www.scmp.com/news/china/diplomacy-defence/article/2119719/wary-china-quad-bloc-watch-after-officials-us-japan.

[5] Firstpost, “Malabar Naval Exercise: Wary China calls war games a 'security concern' as India, US and Japan come closer,” August 13, 2018, https://www.firstpost.com/world/watch-malabar-naval-exercise-wary-china-calls-war-games-a-security-concern-as-india-us-and-japan-come-closer-3799563.html.

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

A year after Doka La standoff, Chinese PLA troops intrude 400 metres into Indian territory in Ladakh's Demchok
Firstpost, August 14
Troops of the Chinese People's Liberation Army (PLA) have reportedly intruded about 300 to 400 metres into the Indian side of the Line of Actual Control (LAC) at Demchok in eastern Ladakh, a year after the Doka La standoff in Sikkim.

India, China not ‘firing a single bullet’ over border dispute shows maturity: PM Modi
Hindustan Times, August 12
India and China have a border dispute but the fact that they have not even ‘fired a single bullet at each other’ in the last four decades shows their maturity, Prime Minister Narendra Modi has said in an interview to Hindustan Times.

Eastern Army Commander heads for China defence minister to visit Delhi
The Economic Times, August 11
India and China will be engaged in a series of military related confidence building measures (CBMs) over the next two weeks, including visit by Chinese defence minister to Delhi in the backdrop of the Wuhan Summit that gave strategic guidance to the two militaries. 

India, China Hold Border Personnel Meeting To Mark PLA's 91st Anniversary
NDTV, August 2
A special border personnel meeting between India and China was held at Nathu La on Wednesday, marking the 91st anniversary of foundation of the Peoples' Liberation Army (PLA).

News Reports

China and India in the Regions

India keeps tabs on Nepal-China joint military exercise
The Times of India, August 13
Nepal will carry out its second joint military exercise with China, Sagarmatha, next month in a development being closely watched here. Nepal’s military diplomacy with Beijing remains a concern for India even as the neighbouring country treads cautiously on its foreign policy.

Maldives seeks scaling back of Indian presence as it woos China
Reuters, August 10
The Maldives wants India to withdraw military helicopters and personnel posted there following the expiry of an agreement in June, its envoy said, the latest snub to New Delhi by President Abdulla Yameen’s China-backed government.

India has asked China to stop construction in PoK: Government
The Economic Times, August 9
India has conveyed its concern to Beijing over Chinese construction activities in Pakistan Occupied Kashmir (PoK) and has asked them to stop it. The Rajya Sabha was informed today.

India not to join US-led counter to China’s BRI
The Economic Times, August 7
India has stayed away from a joint initiative launched by the Unite States, Japan and Australia to fund infrastructure projects to counter China’s BRI in the Indo-Pacific region.

Chinese investment in Bangladesh rings India alarm bells
Financial Times, August 7
The scale of Chinese investment in Bangladesh is evidence of Beijing’s deepening relationships across south Asia, where it has funded similar projects in Pakistan, Sri Lanka, Nepal and the Maldives. It is ringing alarm bells in India, which considers itself Dhaka’s natural and principal ally.

US sends strong message to China, confers India with STA-1 status, first South-Asian country to get coveted designation
India TV, August 4
India has become the first South-Asian country and the third Asian nation after Japan and South Korea to be conferred with the Strategic Trade Authorisation (STA-1) status after the United States issued a federal notification paving the way for the sales of high-technology products particularly in fields of civil space and defence sectors.

US bill relief for India, trouble for China & Pakistan
The Times of India, August 3
The US Congress has passed a defence spending bill that seeks to amend an existing law to provide waivers to America’s strategic partners like India from punitive sanctions against those doing business with Russia’s defence industry

News Reports

Trade and Economy

India's rupee hits an all-time low as the Turkish lira crisis spills over to other currencies
Business Insider, August 14
There are lingering signs of tension in emerging markets during Tuesday (August14) trade after the Turkish lira’s collapse last Friday sent shock-waves through Asia at the start of the week.

India denies China printing currency claim amid social media row
BBC, August 14
The Indian government has denied a report that a Chinese company would be printing its currency notes, calling it "baseless" amid social media outrage. The news spread quickly on social media, prompting outrage over how this could endanger national security.

Free-trade pacts hamper India's efforts to curb China textile imports
Money Control, August 10
China is exporting textiles to India through Bangladesh to get around a tax increase on imports, undermining New Delhi's efforts to support local manufacturers, industry sources said.

Asia Gold-India shifts to discount, while China buying picks up
Reuters, August 10
Gold was sold at a discount in India for the first time in six weeks on subdued demand as buyers bet that prices could fall still further after hitting near seven-month lows last week.

China-Backed Asia Trade Pact to Be Examined by India Panel
Bloomberg, August 9
A panel of Indian ministers will meet to consider objections by several departments against an Asian trade pact spearheaded by Beijing citing fears of a flood of Chinese imports, people with knowledge of the matter said.

News Reports

Energy and Environment

India to explore China’s participation in ISA
The Economic Times, August 9
The Ministry of New and Renewable Energy (MNRE) has been asked to explore with its Chinese counterpart the possibility of China joining the International Solar Alliance (ISA), a move that could be instrumental in improving the access to solar energy among other member-nations.

U.S. crude exports to India surge as China intake fades: Russell
Reuters, August 7
U.S. crude oil producers appear to have found an alternative buyer for cargoes no longer heading to China, with India on track to import record volumes in August.

UN environment chief lauds India’s efforts to use solar energy, curb plastics
The Economic Times, August 7
The UN’s environment chief has lauded India’s efforts to meet its energy needs through solar and curb use of plastics but said that countries still need to do a lot more to protect the planet.

China Rejects U.S. Request to Cut Iran Oil Imports
Bloomberg, August 3

The U.S. has been unable to persuade China to cut Iranian oil imports, according to two officials familiar with the negotiations, dealing a blow to President Donald Trump’s efforts to isolate the Islamic Republic after his withdrawal from the 2015 nuclear accord

Analyses

Refocusing on Africa
The Indian Express, August 13
By Rani D Mullen, Visiting Fellow, Institute of South Asian Studies, National University of Singapore and Director, Indian Development Cooperation Research, Centre for Policy Research

Prime Minister Narendra Modi recently returned from a tour of Rwanda, Uganda and South Africa that included a flurry of agreements and a speech at the BRICS Summit in South Africa outlining 10 guiding principles for India’s engagement in Africa.

Disruption in world order: The nimblest power with least problems will fare best
The Economic Times, August 13
By Subrahmanyam Jaishankar, Former Foreign Secretary of India

It’s commonly believed in our country that China developed faster because they had less political constraints. That may be true but my own experience was that they also had developed better leadership and administrative capabilities.

China-India 'Cooperative Competition' In Iran
The National Interest, August 9
By Zoe Leung, Senior Program Associate and Michael Depp, Program Coordinator, EastWest Institute

Making inroads into Iran has become a priority for both China and India, with both nations seeking to expand influence in their respective regions. Located at a critical juncture, Iran links Central Asia, the Caucasus and the Middle East.

Let China pay for India’s solar push
Livemint, August 9
By Christoph K. Klunker, Senior Fellow, Climate, Energy and Resources, Observer Research Foundation

China’s solar sector is highly subsidized. This was the official reason for US’s 30% tariff on imported solar equipment in January as Chinese solar companies undercut US solar manufacturers. The Narendra Modi government has imposed a safeguard duty (SGD) on solar cells and modules from China and Malaysia, effective 30 July. About 85% of India’s solar cells come from both countries. The argument for such a trade intervention is the rising “dependency” on China on one hand and economic and employment loss on the other.

China and India need to talk, navy to navy, to prevent Indian Ocean hostilities

South China Morning Post, August 9
By Zhou Bo, Honorary Fellow, PLA Academy of Military Science

Should China and India talk about confidence-building in the Indian Ocean? On the face of it, this shouldn’t be an issue. The Indian Ocean is not India’s ocean. And unlike the Line of Actual Control in the border areas between China and India in the state of Jammu and Kashmir, which has yet to be verified, the two countries have no maritime disputes in the Indian Ocean.

India's Strategic Roadmap
The National Interest, August 9
By T. V. Paul, James McGill Professor of International Relations, McGill University

In recent years, India has developed multiple strategies to deal with China’s rise and threatening postures on both its land border and in the Indian Ocean. They include limited balancing based on asymmetrical arms buildups and informal coalitions with like-minded states and regular diplomatic engagement with Beijing both bilaterally and through multilateral forums

Books and Journals

China-India relations in economic forums: Examining the regional comprehensive economic partnership
Observer Research Foundation, August 8

By Nilanjan Ghosh, Senior Fellow and Head of Economics, ORF Kolkata, Parthapratim Pal, Professor of Economics, IIM Calcutta, Jayati Chakraborty, Research Assistant, ORF, Ronjini Ray, Research Assistant, IIM Calcutta.

This paper examines China and India’s economic engagements at the bilateral, plurilateral and multilateral levels. The evaluation is made in the context of the Regional Comprehensive Economic Partnership (RCEP), the mega-regional trade agreement in the east in which both nations are parties. The paper argues that irrespective of the nature of the two countries’ relationship, at its core is not cooperation, but mutual mistrust aggravated by China’s perceived “market imperialistic” predatory behaviour and India’s “protectionism”. The paper ponders the likelihood of India entering into a regional trade agreement such as the RCEP.