China-India Brief #163

Guest Column

The Crux of the Current China-India Relations 

By Liu Zongyi    

Photo by emiana from Flickr.

China and India are trying to resolve the boundary standoff and ease bilateral tensions through diplomatic and military channels. I recently participated in track-two dialogues aimed at deepening mutual understanding, some of which involved the Indian Ambassador to China. However, based on my observation, the ongoing boundary standoff is a reflection of the underlying problems within the bilateral relationship. There is a big gap between China and India on certain issues which make it difficult for the two sides to reach a consensus.

First of all, since Narendra Modi came to power, India has increasingly seen itself as a potential global power, with the goal of realizing “a multipolar world and a multipolar Asia”. The leveraging of third parties to ‘check and balance’ China as part of its overall foreign policy has been very prominent. India has continuously strengthened its military and strategic cooperation with the United States, Japan, and Australia, and hopes to advance economic and financial cooperation with these countries to hedge against China’s Belt and Road Initiative. After the outbreak of Covid-19, the Indian government has attempted to take advantage of the China-US trade war and China’s distraction with the pandemic to attract multinational companies away from China and to ‘de-sinicize’ the global industrial value chain.

Secondly, a number of differences over the border have made relations more difficult. For instance, China is cautious about India’s demand to verify the Line of Actual Control (LAC). In the Chinese view, it is premature to determine the LAC, and any attempts to do will only lead to further tensions and the deterioration of bilateral relations. The Donglang standoff in 2017 had previously brought China-India relations to a low point. China did not take any strong measures against India as it was concerned about the negative impact on the then upcoming BRICS Xiamen summit and other major events. Earlier this year, with China pre-occupied with managing the Covid-19 pandemic at home and dealing with the external pressure from the United States, the Indian government took the opportunity to ramp up their border infrastructure, constructing bridges, roads, and fortifications in places like the Galwan Valley.

The recent Galwan conflict has brought India’s policy towards China to a crossroads. The large number of casualties at Galwan has confronted the Modi government with a policy dilemma. Although China and India are carrying out negotiations through diplomatic and military channels to disengage the two armies and reduce tensions, Chinese decision-makers are concerned that Delhi may be tempted to take advantage of the current international situation, in which China is facing great pressure from the United States, to coordinate with Washington and its allies.

From China’s point of view, India’s reaction to Galwan have made the situation more complicated. On July 3, Prime Minister Modi visited the Ladakh front and delivered a speech making a thinly veiled accusation against China for its so-called “expansionism”. Two weeks later, Indian Defense Minister Rajnath Singh visited the Ladakh front and displayed new weaponry imported from the United States, Russia, France, and Israel. Indian officials have said that Australia will be invited to participate in the Malabar naval exercise this year, which will mean the formation of the Quad military alliance. A few weeks ago, US President Trump said he hoped to enlarge the G-7, inviting South Korea, Australia, India, and Russia, to form what some experts believe to be a bloc to deal with China. The Indian government has expressed its wish to join the enlarged G-7 and actively cooperate with its members. In addition, India has joined a “D10” club of democratic partners sponsored by the United Kingdom. The Indian government has also said it would send a senior diplomat as its new representative in Taipei and stated at the UN Human Rights Council in Geneva that it has been keeping “a close watch on recent developments” in Hong Kong.

Beyond these moves, the Indian government has announced the cancellation of two thermal power projects being built with the involvement of Chinese enterprises, stopped foreign direct investment projects from China, and tightened the clearance process for Chinese imports. On June 30, the Indian government banned the use of 59 Chinese mobile apps in India in the name of national security. On July 23, Indian government further upped the ante by restricting bidders from countries with which it shares a land border from participating in government tenders without approval from competent authorities. These measures indicate that India is voluntarily abandoning the principle of ‘separation of politics and economy’ in its China policy, and has embarked on the road towards ‘de-sinicization’ of its economy. These measures may be a response to some interest groups in India, but it also shows that the Indian government believes that global value and industrial chains will be restructured after the pandemic. The Modi government is hoping that India’s market will become attractive and believes that the United States and other Western countries will invest in India on a large scale. On July 9, Modi invited global companies to come and establish their presence in India, claiming that “India remains one of the most open economies in the world. We are laying a red carpet for all global companies”. This ties in with India’s ‘de-sinicization’ measures.

At present, it seems that even if there is another informal summit between the leaders of China and India, it will be hard for bilateral relations to return to normal. From China’s point of view, it seems that the Modi government is cooperating with the United States to contain China. The Indian government, political parties, media, and strategic circles almost unanimously blame China for the deterioration of bilateral relations, and few people reflect on India’s own problems. This suggests that the immediate prospects of China-India relations are worrying.

Liu Zongyi is a Senior Fellow at the Shanghai Institutes for International Studies (SIIS), where he is also the Secretary General of the South Asia and China Center.

The views expressed in the article are solely those of the author(s) 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

Troops Disengaged On Most Of India-China Border, Claims Beijing
NDTV, July 28

Chinese and Indian troops have “completed disengagement” on most parts of the disputed border between their two countries, China's foreign ministry said Tuesday, after violent clashes broke out earlier this year.

India and China should firmly resist US ‘hegemonism’: Beijing
The Times of India, July 28

Claiming that some US politicians looked at China with a Cold War mentality and sought containment, the Chinese embassy said countries like India and China should firmly resist “hegemonism and power politics”.

India, China Agree on ‘Early and Complete’ Disengagement of Troops From Eastern Ladakh
The Wire, July 24

India and China discussed early and complete disengagement of the troops along the Line of Actual Control (LAC) and de-escalation from India-China border areas in accordance with bilateral agreement and protocols, according to an official statement by external affairs ministry.

India China standoff: No one can take an inch of Indian Territory, says Rajnath Singh in Ladakh
Financial Express, July 17

Calling Prime Minister Narendra Modi as a “decision-taking PM”, Singh also stated that no “guarantee’’ could be given on the extent of the current situation between India and China be resolved.

China, India forge peace on one border as other frictions emerge, this time in Iran
South China Morning Post, July 26

Clash of interests in the nearby nation may be new source of tension, as Beijing and Tehran negotiate an economic and security pact. The deal could jeopardise New Delhi’s strategic plan to invest in the Iranian port of Chabahar, analysts say.

In jab at India, China reiterates claim over Bhutan nature park
Nikkei Asian Review, July 23

China has doubled down on its territorial claim on a nature preserve in Bhutan, a move seen by some as a thinly veiled message over its border disputes with India.

China Cannot Threaten Countries And Bully Them In Himalayas: Mike Pompeo
NDTV, July 22

Slamming China for its aggressive moves against its neighbours, including "instigating" a deadly confrontation with India in eastern Ladakh, US Secretary of State Mike Pompeo has said that Beijing cannot threaten countries and try to bully them in the Himalayas.

Bigger IOR exercise next: Joint Naval Exercise near Andamans as USS Nimitz exits SCS
The Economic Times, July 21

Indian warships are conducting a short passage exercise (PASSEX) with the US Nimitz carrier strike group that is making its way from the South China Sea to the Indian Ocean, symbolising the close strategic partnership between the two nations.

Pakistan gets China's help in building dam
China Daily, July 20

Construction of the Diamer Bhasha Dam near Chilas, a city in the Diamer district in the Gilgit-Baltistan region in northern Pakistan is expected to meet both water and energy needs of the region, according to officials and experts

India reiterates its stand, says South China Sea a part of global commons
Business Standard, July 16

India on Thursday (July 16) said the South China Sea is a “part of global commons” and it firmly stands for the freedom of navigation and overflight in these international waterways, an assertion that comes days after the US rejected most of China's maritime claims in the region.

Modi raises China dispute at India-EU Summit, Brussels talks about both being ‘democracies’
The Print, July 15

PM Modi said India and the 27-nation bloc are ‘natural partners’. During the summit, both sides also launched a high-level trade & investment dialogue.

Another blow to China: India to cut low-quality imports from March 2021; BIS to frame new standards
Financial Express, July 28

As India strives towards self-reliance, imports of many non-essential items will be curbed from March 2021.

With $4.5 billion in loans, and a $1 billion more in pipeline, co-founder India is top China-led bank borrower
Hindustan Times, July 28

Since its launch, India has emerged as the overall top borrower—$4.5 billion—from the Beijing-based Asian Infrastructure Investment Bank, and also the top beneficiary of Covid-19-related relief fund.

China will take ‘necessary measures’ against India's app ban: Chinese embassy
Global Times, July 28

China will "take necessary measures" to safeguard the legitimate rights and interests of Chinese businesses in India, the Chinese Embassy in India said on Tuesday in response to India's recent ban on 59 Chinese apps, which led to the suspension of WeChat services for Indian users on Saturday (July 25).

Modi government builds trade barriers amid China-India border dispute
South China Morning Post, July 24

Firms from nations that share a land border with India are barred from bidding for government contracts until they register with the industry department. The move is the latest in a series of steps taken by the Modi administration to wean India away from reliance on China—New Delhi’s biggest source of imports.

Pompeo urges India to reduce dependence on China
Channel News Asia, July 23

US Secretary of State Mike Pompeo urged India on Wednesday (July 22) to focus on domestic supply chains and reduce its dependence on China for telecommunications and medical supplies, as Washington's ties with Beijing deteriorate dramatically.

India can power post-Covid-19 global recovery, says PM Modi
Hindustan Times, July 22

As countries and businesses around the world seek to reduce their dependence on Chinese supply chains, hit first by President Donald Trump’s tariffs and then by the Covid-19 epidemic, India is positioning itself as the alternative destination, seeking to fight off stiff competition from Vietnam.

Indian economy will suffer due to planned sanction of Chinese firms: experts
Global Times, July 21

Indian economy and customers will suffer as New Delhi plans to sanction several Chinese companies due to their “military connection,” because India can't find an ideal replacement from other countries, said Chinese analysts.

Eyeing China, India plans solar power park in Sri Lanka
Livemint, July 22

By leveraging the country’ solar expertise, India’s largest power generation utility NTPC Ltd plans to set up this project in the island nation under the aegis of International Solar Alliance.

China Floods and Japan Downpour Blamed on Indian Ocean Hot Spot
Nikkei Asian Review, July 21

The 2020 monsoon season in East Asia that is wreaking havoc in China and Japan can be traced back to a warming hot spot in the Indian Ocean, experts say.

China’s $42 Billion Clean Energy Debt Is Only Getting Worse
Bloomberg Quint, July 20

China has used offers of generous subsidies to amass the world’s largest array of wind and solar power. But there’s a problem: it’s not fully paying them.

OPEC has new competitor as China ships oil from swelling storage
Financial Post, July 20

Some oil from China’s swelling storage tanks is finding its way back into the international market as traders jump at the opportunity to source cheap crude for resale to regional refiners.

Floods in India, Nepal displace nearly four million people, at least 189 dead
Reuters, July 19

Nearly four million people in India’s northeastern state of Assam and neighbouring Nepal have been displaced by heavy flooding from monsoon rains, with dozens missing as deaths rose to at least 189, government officials said.

Global coalition of democracies, amid China’s assertion, could open a range of new possibilities
The Indian Express, July 28

By C. Raja Mohan, Director, Institute of South Asian Studies, National University of Singapore

While India must pay close attention to the unfolding China debate in the US, it must also note the structural changes in American engagement with China over the last two decades.

Banning Chinese apps bad for India's trade
China Daily, July 28

By Wang Shida, Deputy Director of the Institute of South Asia Studies, the China Institutes of Contemporary International Relations

The latest move may further intensify tensions between China and India, as bilateral relations are already frayed after the border clash in the Galwan Valley on June 15.

On the economy, don’t disengage with China
Hindustan Times, July 27

By Zorawar Daulet Singh, a historian and strategist based in New Delhi

The debate on the future role of China in the economy is now at the forefront of India’s strategic conversation.

This Time the US Is Taking India’s Side Against China
The Diplomat, July 23

By Rajeswari Pillai Rajagopalan, Distinguished Fellow and Head of the Nuclear and Space Policy Initiative at the Observer Research Foundation (ORF)

Unlike in 2017, U.S. support for India at a time of confrontation with China is much more pronounced this time around.

India-Australia closeness draws attention
Global Times, July 21

By Qian Feng, Director of the research department in the National Strategy Institute at Tsinghua University

Driven by changes in international and regional affairs, the "Quad" mechanism of the US, India, Japan, and Australia has attracted much attention from all parties, and has taken on new courses of actions.

To Fight China, India Needs to Forget Russia
Foreign Policy, July 16

By Sumit Ganguly, Distinguished Professor of Political Science and the Rabindranath Tagore Chair in Indian cultures and civilizations at Indiana University, Bloomington.

The best way for New Delhi to modernize its military and protect itself from Beijing’s aggression is to forget its old relationship with Moscow and build closer ties to Washington.

Can China remake regional order? Contestation with India over the Belt and Road Initiative
Global Change, Peace & Security 32(2): 199–217

By Lai-Ha Chan, Senior Lecturer in the Social and Political Sciences Program, School of Communication at the University of Technology Sydney (UTS)

This article argues that China’s Belt and Road Initiative (BRI) can be understood via the lens of regional ordering, whereby China attempts to redefine the shared goals and values for the region of Eurasia and to socialise regional states into the new values in order to have their consent to its leadership. The success of this strategy would then depend, to a large extent, on how its target regional audience reacts to the order-remaking strategy and practices. Taking an ‘eye of the beholder’ perspective, this article focuses on Indian perceptions of China’s order-remaking strategy in South Asia. It posits that India uses the ‘debt trap diplomacy’ narrative to delegitimise China’s infrastructure investment activities based on state capitalism, which have been perceived as a move to upend the status quo and challenge New Delhi’s traditional leadership in the region. To counter China’s growing influence, India is networking with other like-minded countries to promote a ‘free and open Indo-Pacific’ through groupings such as the Asia-Africa Growth Corridor, the Quad, Malabar exercises, and increasing political and economic bonds with the ASEAN countries. A serious contest over order between China and India in the Indian Ocean is looming on the horizon.