Almost unknown three years ago, these days, Prime Minister Narendra Modi of India is almost as well known in the Chinese capital as US President Barack Obama. His home-state welcome to China’s President Xi Jinping, followed by the latter’s return gesture in Xian, has entered the diplomatic annals of the world’s other superpower. Aware of the immense power of the Indian bureaucracy to hold back, few policymakers in Beijing expected Modi’s promises of smooth passage for PRC investment into India and e-visas for Chinese tourists to become the reality that both did within weeks of Prime Minister Modi’s announcement. The recent statement of Defence Minister Manohar Parrikar about Delhi not seeing Beijing as a threat has further dispelled the clouds of mistrust between the two sides. However, in the same way as the Pakistan army serves up a terror attack on India soon after friendly discussions between the two civilian governments, the entrenched pro-Pakistan lobby in Beijing bowls a googly just when relations seem on a significant upgrade. The latest has been the self-defeating decision by Beijing to block the United Nations Security Council (UNSC) from declaring Masood Azhar a global terrorist, despite all fourteen of the other UNSC backing India’s request and China frequently claiming to be a frontline state in the war on terror.
Although the perception is that such a decision would have been cleared at the level of President Xi himself, knowledgeable officials point out that the decision to protect Azhar at the behest of Pakistan GHQ was unlikely to have gone to the top. They point to the example of the entry of PLA forces into border territory controlled by India during Xi’s India visit, and how this too was blamed on Xi by Sinophobes across the world, who later had to recant when the PRC President ensured the withdrawal of the intruding troops soon after his return to Beijing. This leaves open the possibility of a rethink, should there be a discussion at the top between both sides on why it makes no sense for Beijing to back a global terrorist. The reality in China is that corrupt elements in the bureaucracy have been waging a silent war of attrition against Xi Jinping because of his battle against corruption, and upsetting the growing mood of bonhomie between Delhi and Beijing through a decision to protect an international terrorist at the behest of the ISI was a sample of the way in which clandestine efforts by the anti-Xi faction are ongoing to prevent a full normalisation of relations between India and China, including a border settlement that may earn both Narendra Modi and Xi Jinping a Nobel Peace Prize.
There are increasing tensions within Pakistan between the Pashtun people and the Punjabi-dominated Pakistan military, and these are in addition to the violent battle for human rights and justice being carried out by the Baloch people. Although not for the record, pro-Xi officials in Beijing acknowledge that it will be a difficult task to complete the $30 billion China Pakistan Economic Corridor (CPEC) and a near impossibility to ensure that it reaches financial viability. “A $50 billion China India Economic Corridor would be far better for both economies than the CPEC, a road passing through some of the most unstable regions of the globe”, an economic expert based out of Shanghai said, adding that “both Xi and Modi have the authority and mutual trust to make this happen”. However, such a project would be a nightmare for the generals in Islamabad and their backers in Beijing, who are wary that closer ties between the two giants of Asia may lead to a diminution of importance of the militaries in Pakistan and China, both of whom “feed off mistrust between Delhi and Beijing”.
A senior official pointed out that “the trust at the top (between Xi and Modi) makes it necessary for a Sino-Indian settlement to be led and effectuated from that level”, as at lower levels, the trust levels are still not high, despite the substantial progress in relations since Narendra Modi took over as Prime Minister in May 2014.
For China, massive infrastructure projects are of critical importance, as the country has developed a world-class infra sector in the big cities, but because of the slowdown in economic growth, more than 30% of the capacity is unutilised. “The machines that are idle can very quickly be put to work in India and help make Modi’s plans a reality”, such as housing for all by 2020 and 50 new Metro rail systems. However, it was pointed out that some of the tax policies followed by North Block stand in the way, as for example, steep duties on second-hand machinery that would nullify the cost advantage of the same. “If leasing were permitted, equipment that is surplus in China can get redeployed to India”, an engineering official claimed, adding that “almost none of the construction needed in India require ultra-sophisticated equipment”. Workers would get trained on older models and later on, graduate to more and more sophisticated versions.
In such a context, it was suggested that “for a year, a few Chinese workers be permitted to work on infrastructure projects, so that they can train their counterparts in India”. Otherwise, the worry was that “more than a year would go by in the process of on the Job training, in a context where time is money”. Of course, care would need to be taken to ensure that domestic industries such as steel and cement not get adversely affected by cheaper imports from China. Such items would need to be excluded from the trade basket.
Apart from roads, railways and housing, other sectors where Chinese companies are looking to do business with India are in solid waste management, water preservation, wind energy and solar energy. Chinese companies are aware that the market is huge, with a starting estimate of $100 billion during the present term of Prime Minister Modi. However, for such a situation to come about, the Chinese Communist Party will need to rein in the pro-Pakistan elements who are looking to sabotage the Xi-Modi rapprochement through bowling googlies such as the recent decision to protect an international terrorist from justice.