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#5301, 19 June 2017

Three Years of the Modi Government

India-China Relations: A Mixed Bag
TCA Rangachari
Member, Governing Council, IPCS; former Indian diplomat; and former Director, Academy of International Studies, Jamia Millia Islamia University, New Delhi

“The prospects of the 21st century becoming the Asian century will depend in large measure on what India and China achieve individually and what we do together.”  
                                                - Prime Minister Narendra Modi, Beijing, 15 May 2015

“Simultaneous re-emergence of India and China as two major powers in the region and the world offers a momentous opportunity for realization of the Asian Century. … India-China bilateral relations are poised to play a defining role in the 21st Century in Asia and indeed, globally….. The two countries pursuing their respective national developmental goals and security interests must unfold in a mutually supportive manner with both sides showing mutual respect and sensitivity to each other’s concerns, interests and aspirations.” 
                                                                -India-China Joint Statement, 15 May 2015

Has the relationship lived up to these exalted sentiments? 

The first question to ask is whether it is possible to make a worthwhile assessment of India-China relations by looking at this one short phase of a relationship stretching back a millennia and more? Or, should the relationship be viewed as a continuum where the past, present and future are all component parts?

The past will remain ever present in our bilateral dealings given that India and China have inherited a rich historical and cultural legacy. The present is relevant because that is what has to be dealt with; also because, in democracies, governments have to gain and retain the support of their peoples whose judgement will be based on real-time consequences and benefits. Ignoring the future is not an option as China and India are both projected to become the second and third largest economies of the world in a conceivable time-frame. The displacement of established powers with attendant implications for global governance makes it imperative to evolve new arrangements and adjustments. 

The broad choice before India and China is 'cooperate or compete'. Cooperation in a constructive spirit would contribute to peace, stability and economic betterment of the region. It will provide an impetus for speedier regional integration. Commonalities in the problems faced by India and China – poverty elimination; ensuring balanced and equitable growth; governance and rule of law; demographics; rural-urban migration; labour flows and employment; environment and climate change – should encourage cooperation. Containment would derail these objectives. It would aggravate bilateral tensions and hostility, and widen the trust deficit that the leaderships in both countries are committed to redressing. 
India and China both seem to be engaged in a combination of the two. There exists a clear acceptance of the need for a cooperative approach; the underlying suspicions, however, linger on. How successful both countries are in managing each other will significantly influence the achievement of our respective ‘dreams’ and influence regional and global stability and developmental goals. 

In this backdrop, the past three years have been a part of the continuum to maximise mutual benefit while limiting differences to manageable levels. There have been notable gains even as unresolved problems persist and new ones have emerged.

Multiple mechanisms have facilitated exchanges and dialogue at various levels. In the last three years, new ones have been added covering health, science & technology, vocational education and skill development, and other sectors. Civil society dialogue is being institutionalised. In acknowledgement of our federal polity, new arrangements have been agreed upon for exchanges at the state and city levels. Exposure to the progress made by China might help our state-level leadership overcome ideological or other reservations in formulating and implementing growth-oriented policies. Indian Prime Minister Narendra Modi’s initiatives like promoting Yoga have been warmly welcomed and supported.

The biggest gain has been on the economic side. Investments from China have shown a notable increase.On 31 August 2016, Chinese newspaper Global Times reported that against US$ 1.35 billion FDI in India during April 2000-March 2016, investments worth US$ 2.3 billion were announced in the second quarter of 2016.
Another report on 10 May 2017 noted that an increasing number of Chinese companies are now investing in India covering sectors such as hardware, software, marketing, medicine, e-commerce, manufacturing, insurance and research & development. In effect, the Summit level decisions of Indian Prime Minister Narendra Modi and Chinese President Xi Jinping are yielding results. The amounts are still much too small to offset India’s trade deficit in excess of US$ 50 billion. It will require much effort on the two sides for investments to leap-frog and the deficit to decline. Nevertheless, this is a welcome development.

Dialogue may have led to greater understanding of each other’s viewpoints but problems persist. Some of China’s policies and actions – some enduring, some of recent origin – including in our neighbourhood and the Indian Ocean, remain adverse to India’s interests. China’s position on India’s membership of the Nuclear Suppliers Group (NSG), its stand on the issue of Pakistan-based terrorist outfits and the China Pakistan Economic Corridor (CPEC) under the rubric of Beijing's Belt and Road Initiative disregards India’s interests and concerns. China’s own stated position is opposition to terrorism in all its forms. It has also been a victim of Pakistan-based terrorist groups. Most recently, on 10 June 2017, China expressed "grave concern" to Pakistan over the abduction and killing of two Chinese teachers in Pakistan. In these circumstances, covering up for Pakistan is inexplicable.

Equally inexplicable is the dismissiveness regarding India’s position on CPEC given China’s own position on sovereignty and territorial integrity. The border issue is not amenable to quick resolution. While the border areas have, by and large, remained peaceful, China needlessly complicated matters by upping the rhetorical ante by notifying, on 14 April 2017, Chinese names for six places in Arunachal Pradesh. The Chinese Foreign Office spokesman said this was “legitimate and appropriate.” “These names reflect from another angle that China's territorial claim over South Tibet is supported by clear evidence in terms of history, culture and administration.” Would it not, in consequence, be “legitimate and appropriate” for India to review its Tibet policy which was not predicated upon claim being laid to Arunachal Pradesh as “South Tibet?”

China might also view some of India’s policies as adverse to its own interests. One recent development relates to China’s fears that India is moving too close to the US.

At the multilateral level, there has been cooperation in several different forums, the latest being at the June 2017 Shanghai Cooperation Organization Summit (SCO) in Astana, with India finally becoming a full member of the SCO. Xi then said China wished to “maintain coordination and cooperation on major international and regional issues” with India. India and China are partners in the BRICS Bank, AIIB and other organisations. 

Thus, there is a mixed bag. Some positives, some negatives. 

If there is a lesson from the past three years, it is that India and China have to work together to accommodate differing, competing, even conflicting, interests in a cooperative arrangement.

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