The Institute of Peace and Conflict Studies, in collaboration with the Brookings Institution held a 'Dialogue on China' at the Neemrana Fort Palace, Rajasthan from 19-22 March 2007. The American delegation, led by Professor Stephen Cohen of the Brookings Institution, included senior research fellows from the Brookings and the Centre for Strategic and International Studies. Leading experts from India and the United States participated in the dialogue.

Introductory Remarks

Maj Gen Banerjee and Prof. Stephen Cohen set the tone for the two days of discussions that followed. Gen Banerjee emphasised the need for cooperation in a world wherein the balance of power was shifting to Asia and the concept of 'security' was being redefined through steady democratisation. Underlining the requirement for mechanisms that prevent conflicts at various levels, Gen Banerjee called attention to the problems of energy security and lack of understanding between governments and institutions. Prof. Cohen spelled out the task of the conference as going beyond reiteration of what is already known about China and focusing, instead, on a critical examination and analysis of facts and conceptions of China.

Ambassador Salman Haidar, in his preliminary statement, made clear that in his view, India did not have a grand strategy and that it had been loath to follow the West in this regard. Despite the absence of a comprehensive grand strategy, the thread of independent foreign policy that was first seen under Nehru continues. India's changed economic position along with its cultural self confidence now requires a re-evaluation of India's strategic importance. Although India's neighbours have not always viewed it as a benign power, improving bilateral dialogues and the relationship with the US are elements that can have a far reaching impact on India's position in the region. While India and China are generally believed to be rivals, other possibilities also exist. If the two countries join forces on certain contentious issues such as the Kyoto Protocol, they could well change the rules of international relations. The relationship between the two countries need not necessarily be that of rivalry but can also be one of cooperation.

Session I

China's Grand Strategy (as viewed by the US), India's Grand Strategy and the United States' strategy towards China

Ambassador Lalit Mansingh highlighted the important changes in Indian foreign policy over the last ten years. According to him, there has been a shift from ideology to pragmatism where non-alignment is not a major factor. An economic component has emerged in Indian foreign policy which is no longer the prerogative of the Ministry of External Affairs or politicians alone. India may not have a single grand strategy but certainly has a global outlook. It recognises that there are ongoing transitions from unipolarity to multipolarity, although India accepts the US as a leading power but only as primus inter pares. Though there are no basic disagreements in the grand strategies of India and those of the US and China, problems do exist. Despite the new warmth in relations, India and the US differ on questions such as Iran. While relations with China have steadily improved, the perception that China is supporting Pakistan against India and devising a "string of pearls strategy" in the Indian Ocean continues. However, opportunities for cooperation exist, and confrontation is not a realistic option for any of the three countries and, therefore, their future strategies will have to be accommodative.

Mr Derek Mitchell stated that though the question of China's rise and its inevitability is debatable, the concerns of the US regarding this are important given the uncertainties involved. China at present does not seem to have a grand strategy that is confrontational towards the US but instead talks of including the US in the regional security architecture, since this would afford greater freedom for action. China's focus is largely on domestic issues. The primary goal for China is ensuring the predominance of the CCP. External affairs become a factor of this domestic need. The emphasis on a harmonious society and a harmonious world can be understood in this context. China has made commendable efforts in improving its relations with all major powers, resolving challenges in its periphery and strengthening ties with the developing world. The Taiwan factor remains contentious and China's military development belies the emphasis on peaceful development. The manner, in which China's relations with those powers that have security interests in East Asia evolves, will be of importance in the future.

Session II

China's military outreach: The PLA Navy, force modernization

Rear Admiral Michael McDevitt, remarked that the PLA was pursuing a period of modernization that was unprecedented in its history. PLA's capability assessments during the first Gulf War showed that it was not capable of fighting in the informationized age. Thus a process of modernization began aimed at tackling many contingencies, the first of which is Taiwan. Its objective is to fight and defeat other regional militaries and deter outside powers. The emphasis on the Navy in the drive for modernization reflects an important strategic shift in Beijing which recognises the importance of the Navy. While the Navy plays a limited role in the situation of Taiwan, its major role would be to keep the US Navy out. In the process of naval modernization, the question China continues to grapple with is that of the peace time uses of the Navy.

Dr Srikanth Kondapalli highlighted the acquisition of military hardware by the PLA during the course of modernisation while detailing the positioning of various military assets. He also emphasised Chinese attempts to establish a naval defence perimeter by establishing new bases and acquiring blue water capabilities. According to the 2000 Defence White Paper, China wishes to "deter" regional conflicts. This would then imply that China is ready and willing to undertake a greater role in regional issues of conflict.

Vice Admiral Premvir Das emphasised that the geostrategic context of China's military modernisation cannot be wished away. China is building an ocean going capability and by 2010 deployment will be possible in the Indian Ocean, but it will be pressured to provide logistical support for this deployment. Admiral Das also stressed the point that maritime equations in the region will not change in the near future since American interests in the region seem stable.

Session III

China's Nuclear Strategy

Rear Admiral Raja Menon highlighted the complicity of China in developing Pakistan's missile programme and aiding it in its nuclear ambitions. He viewed Chinese support for Pakistan's nuclear programme as a coherent strategy aimed at tying up Indian resources which would hence be spent in competing with Pakistan. The primary issues that were brought up during this session included the issue of Pakistan and its centrality in any discussion regarding Indian and Chinese nuclear strategy. The aim of the recent ASAT test conducted by China, as also the problem of a lack of civilian control over China's nuclear arsenal, were also discussed.

Session IV

China's and India's Approach to Regional Organisations

Dr Alka Acharya emphasised the interdependent and independent dimensions of China's long-term strategy in the global and regional dimensions. China's participation in regional organisations can be viewed as part of its attempts to maintain a peaceful external environment that would permit it to build the foundations of its development and prosperity. Domestically, this would ensure the legitimacy of the CCP and, at the same time, keep the chief strategic relationship with the US on an even keel. Participation in regional organisations allows China to strengthen ties in Asia and pursue strategic partnerships as a means of establishing its presence globally.

Dr Jing Huang noted that China has been more active in regional organisations, given that it does not have a global approach yet. Its major threats continue to be internal and China's rise as a major power is different from those before it since, unlike earlier powers, China lacks the capacity to fight wars on a global scale. Its growth is mainly economic and, therefore, vulnerable. China's rise may well engender conflict in the future and in order to mitigate this prospect, China has been participating vigorously in regional organisations.

Session V

Challenges to China's Economic Growth, and China's overseas Economic Outreach and Regional Integration

Dr Wing Thye Woo stated that four possibilities can stall China's growth in the future. The first relates to 'hardware failure,' that is, the failure of a weak banking system or the inefficient state sector. It is unlikely that these may happen since China's growth is premised precisely on dealing with these problems. The second factor is a high probability factor and includes "software failure." This refers not to the inequality per se in China but rather the political 'spin' on the same which highlights the inability of the government to meet the expectations of the people. The most probable factor that can derail China's growth is environmental. The fourth factor could be the collapse of multilateral trade formulations as developed states have fewer vested interests in these over time.

Prof. Madhu Bhalla underlined the fact that though China has witnessed positive indicators of growth, problems abound. Unemployment rates have remained steady; the Chinese seem to be buying less and China continues to have large over-capacities in key sectors of the economy. Although China has emphasised trade relations with ASEAN nations and championed the cause of economic integrations, its trade with the EU continues to be greater. China's policies in Africa, purportedly for the creation of greater equitable trade, have been viewed as largely exploitative - as extorting raw materials and energy resources. There also seems to be a conflict at the policy level where the central government has one strategy but the SOEs and provinces have another.

Session VI

Changing political and economic tectonics between India and China

Mr Mohan Guruswamy, comparing India and China on numerous fronts, found that China had better indicators of growth, greater share of the world manufacturing output and collected more revenue than India which could then be spent on building infrastructure and capacity. India's expenditure on education is greater than that of China and India's potential lies in its large employable population while China's is greying.

Mr Derek Mitchell highlighted the fact that Southeast Asia is slowly succumbing to China. The latter is increasingly a factor to be taken account of in problem areas of the region, such as Burma (Myanmar) for example. Rear Admiral Michael McDevitt stated that the relationship between Southeast Asia and China was still in the "honeymoon period." States of the region see China's growth as a driver for their own and expect China to give more than it receives. Whether these expectations are met or belied remains to be seen.

Session VII

Energy Security

Dr Sudha Mahalingam posited that the burgeoning Chinese oil demand could lead to tight markets and problems may be created by its mercantilist approach to energy security. Tensions could also increase as China enters into business with oppressive regimes or leveraged regional leadership to gain energy advantages (SCO, Kazakh Pipeline, Russian oil). China could also be viewed as free-riding on US-provided security to SLOCs. India's suspicion of the global energy market and differences in foreign policy agendas could create tensions between India and the US. For India and China, potential areas of competition would extend to overseas oil acreages, for despite Sino-Indian MoU, co-operation is likely to be sporadic and ad hoc but could extend to the creation of a strategic petroleum reserve, setting an Asian oil premium and an Asian marker for crude oil. China and India could also jointly lobby for the de-linking of the gas price from the crude price and research for the development of alternatives.

Dr Jing Huang emphasized the shared interests between India and China in the energy sphere. However, neither of them has a consistent energy policy to ensure adequate supply, affordable pricing and safe delivery. China cannot deal with energy issues on its own and its efforts have been made largely in areas where it can seek cooperation. There is only one energy market and China cannot escape from it. Also, as energy nationalism grows and energy is viewed as a strategic asset, China will find it increasingly difficult to ensure supply from abroad on easy terms. The decision-making structure in China is also poor with decisions being made along a vertical hierarchy with inadequate input and communication horizontally. There is also increasing conflict between the government and oil companies. China's energy policy is now focused on diversification. Its emphasis is on gas via pipelines in Central Asia and Southeast Asia, since gas reserves are greater than oil reserves and the gas market in China is well-developed unlike that in India.

Session VIII

China's Leadership and Political Evolution.

Dr Cheng Li emphasized that the forthcoming 17th Party Congress was important because the scale of the leadership turnover would be very large. The Congress would discuss the question of Hu Jintao's successor and would likely witness Zeng Qinghong's retirement. The change in China's elite politics is reflected in the transition from one 'strong man' leader to a collective leadership where the leader is the 'first among equals.' There has also been a transition from zero-sum games to power-sharing among factions, regions and social groups. Dr Alka Acharya emphasised the leading role that the CCP continued to play in the political sphere and the changing social base of the Party since Jiang Zemin's introduced the Three Represents.

Summing up the proceedings of the conference, Maj Gen Dipankar Banerjee emphasised the need for greater partnership between the US and India on issues related to China's rise. He also underlined the need for more opportunities to develop expertise on China within India. Prof. Stephen Cohen expressed appreciation for the depth and the scope of the issues explored and hoped for more such interactions between the two institutions.

AMERICAN PARTICIPANTS

Prof. Steve Cohen, Senior Fellow, Foreign Policy Studies, Brookings Institution.
Rear Admiral (Retd.) Mike McDevitt, Vice President and Director of Center for Strategic Studies at the Center for Naval Analysis
Prof. Wing Thye Woo, Senior Fellow, Global Economy and Development Program, Foreign Policy Studies, Brookings Institution
Dr. Jing Huang, Senior Fellow, John L. Thornton China Center, Brookings Institution
Dr. Cheng Li, Visiting Fellow, John L. Thornton China Center, Brookings Institution
Mr. Derek Mitchell, Senior Fellow and Director for Asia, International Security Program at the Center for Strategic and International Studies
Mr. Dewardic McNeal, Assistant Director, John L. Thornton China Center, Brookings Institution

INDIAN PARTICIPANTS

Amb. Salman Haidar, Former Indian Foreign Secretary and Ambassador to China
Amb. Lalit Mansingh, Former Foreign Secretary and Ambassador to the United States
Vice Admiral (Retd.) P S Das, Former Flag Officer Commanding-in-Chief, Eastern Naval Command, Indian Navy
Rear Admiral (Retd.) Raja Menon, Former Assistant Chief of Naval Staff (Operations)
Mr Mohan Guruswamy, Chairman, Centre for Policy Alternatives
Prof. Madhu Bhalla, Department of East Asian Studies (Chinese Studies), University of Delhi
Dr Sudha Mahalingam Senior Fellow Nehru Memorial Museum & Library, Teen Murti House
Dr Alka Acharya, Associate Professor, Centre for East Asian Studies (Chinese Studies), School of International Studies, Jawaharlal Nehru University
Dr Srikanth Kondapalli, Associate Professor, Centre for East Asian Studies (Chinese Studies), School of International Studies, Jawaharlal Nehru University
Amb. Eric Gonsalves, Former Secretary, Ministry of External Affairs and President, Institute of Peace and Conflict Studies
Maj Gen (Retd.) Dipankar Banerjee, Director, Institute of Peace and Conflict Studies
Mr P R Chari, Research Professor, Institute of Peace and Conflict Studies
Ms Poonam Muttreja, Country Director, The John D and Catherine T MacArthur Foundation
Maj Gen G G Dwivedi, MGGS (Doctrine), ARTRAC
Brig. Rahul Kumar, Col. S S Mishra, Army HQ
Mr Jabin T Jacob, Research Fellow, Institute of Peace and Conflict Studies
Ms Rukmani Gupta, Research Officer, Institute of Peace and Conflict Studies