After just two Xi-Modi ‘personalised diplomacy’ summits, it seems clear that on the Chinese side at least, the India file continues to be handled at levels lower than Xi, with decisive input from the Central Military Commission and Ministry of Foreign Affairs.
BEIJING: Beginning in Wuhan last year and followed this year in Mamallapuram, both President Xi Jinping and Prime Minister Narendra Modi sought to take control of the troubled process of Sino-Indian rapprochement by holding informal meetings between them that could be used to articulate differences and work on solutions. Prime Minister A.B. Vajpayee sought to establish a substantively positive relationship with China, including by going the Jawaharlal Nehru way and making unilateral concessions on Tibet and agreeing without binding assurances on China’s entering the WTO. However, the bureaucratic establishment on both the Chinese as well as the Indian side proved unable or unwilling to follow the path set out by Vajpayee (and earlier by Rajiv Gandhi) to ensure that “breakthrough” solutions were found to bridge the lingering chasm between perceptions and policies, especially on the Chinese side. Despite the 2018 Wuhan summit, President Xi, apparently advised not to aim high during the coming interaction with Prime Minister Modi, consciously kept expectations in check for the Mamallapuram summit with Prime Minister Modi this year, curtailing his stay and flying back not to Beijing but (pointedly) to Nepal, a country that has long been of special interest to India. After just two Xi-Modi “personalised diplomacy” summits, it seems clear that on the Chinese side at least, the India file continues to be handled at levels lower than Xi, with decisive input from the Central Military Commission (CMC) and Ministry of Foreign Affairs (MoFA). Although routine meetings still take place to ostensibly find solutions to such issues as the boundary question and even as routine (but still unresolved) a matter as an agreement on the Line of Actual Control (LoAC), these have not succeeded in moving forward the process of reconciliation of differences even by an inch. Most recently, the abortive but vigorous effort by China to get the UN Security Council to re-open a discussion on Kashmir that had not taken place for half a century in that august body was followed by a push by Beijing to get Kashmir re-inserted among the collection of disputes pending attention by the UN, when the matter had been closed. The other four Permanent Members of the UN Security Council (Russia, the UK, France and Russia) opposed the Chinese demand, which was thereafter turned down. Kashmir is no longer listed as a dispute needing the attention of the UN, much to the dismay of both Islamabad as well as its “Iron Partner”, Beijing.
INDIA’S RUSSIA NOSTALGIA
The absence of forward movement from the Chinese side on the political and security spheres of the Sino-Indian relationship has been grounded on the belief in Beijing that there is no way that Prime Minister Narendra Modi will make India a security and defence ally of the US, as was once feared. In particular, the stubborn insistence by the Indian side of going ahead with the purchase and installation of five Russian S-400 missile defence systems is seen as a killer blow to any prospects of an in-depth US-India military alliance. It is observed with relief in Beijing that Delhi still sees Russia through Soviet-era lenses, when Moscow was the foe of both Islamabad as well as Beijing. Today, President Vladimir Putin has engineered a close strategic embrace with China, a fallout of which has been the steady and accelerating rise in Russia-Pakistan military linkages, not just through the Shanghai Cooperation Council (SCO) mechanism, but in bilateral terms. The Indian armed forces, however, still continue with its longstanding policy of relying on Russian defence equipment to protect against the two declared foes of our country, which are explicitly designated by the same military as Pakistan and China. In contrast, while US-Pakistan relations have been in an effective deep freeze for years, the Pentagon has explicitly called out China as its principal adversary, and has favoured an alliance with India to counter a fast-growing and assertive China. The S-400 purchase will lock India into relying on Russian weapons platforms for a generation more, in a context where China, an explicitly designated “hostile” country, is the closest military ally of India’s primary supplier of critical defence equipment in a context where the closest military ally of the other explicitly named “hostile” country (Pakistan) is China. The China-Pakistan-Russia tango seems not to have come to the attention of the Defence Ministry at South Block, looking at its insistence on continuing with Russian weapons platforms rather than substituting these with other Russian collaborations, for example in hydrocarbons, so that overall trade between Moscow and Delhi continues to grow despite defence trade getting phased out in view of geopolitical changes. Were India to be a military ally of the US, even in a de facto rather than in a de jure sense, those in Beijing who are dismissive of the world’s largest democracy will find their minds concentrating very fast on what concessions need to be made to ensure that the Sino-Indian relationship moves on to an amicable rather than remain in the present troubled orbit. An equal and friendly relationship between India and China would be to the best advantage of both, and a strong US-India defence and security alliance would not retard such an indefinitely delayed process, but speed it up, given the practicality of the Chinese in adjusting policy to changing ground realities.
INDIA-CHINA: A WIDE GULF
In 2001, the Vajpayee government withdrew Indian objections to China joining the WTO. In exchange for a move that ensured smooth entry into the WTO by Beijing, assurances were given by the Chinese side that 17 products would be given smooth access to the Chinese market. That was in 2001. Eighteen years later, only 9 of the 17 have received such access, some only recently. Issues relating to access for the other 8 products remain unaddressed by the Chinese side. Across China, patients suffering from diseases such as cancer are dying because cheap and effective medicines from India remain unavailable in China. The country still relies on expensive US and European brands, a reason being that the profit margin on these for Chinese distributors is much more than would be the case were pharma products from India to be made available, as demanded by millions of patients and their families in China. Out of a total spend of over $30 billion annually by Chinese entities on foreign pharmaceuticals, the share of items from India is $29 million, a negligible amount. Out of the total Information Technology exports of India in a year (around $180 billion), just around $90 million come from China. The only customers for Indian IT majors operating in China are foreign companies operating in the country. State Owned Enterprises (SOEs) persist in buying much more expensive European and US substitutes for Indian products, for reasons that have yet to be explained. Conservative estimates of pharma exports to China from India, if the path to the same were to be smoothened rather than obstructed, is $13 billion, while in the case of IT, China is a potential $20 billion market for India. Another potential market of at least $15 billion is tourism into India, provided this be given a boost from the present abysmal levels (less than 100,000 Chinese tourists came to India out of the 103 million citizens of the Peoples Republic of China who travelled abroad last year). A dismaying reality is that young people on both the Indian as well as the Chinese side know little about each other, despite the fact that both cultures are immensely congruent and attractive to each other. Whether it be in media exchange or in regular exhibitions of cultural items (including movies), the traffic between China and India is very low. This is despite a combined population of substantially over 2.6 billion that have had connections with each other across millennia.
WHY RCEP WALKOUT
The stalled process of Sino-Indian rapprochement despite the Wuhan and Mamallapuram Xi-Modi summits appears to have been an important factor behind the decision by Prime Minister Narendra Modi to pull India out of the Regional Comprehensive Economic Partnership (RCEP) negotiations some months back. As a consequence of India staying out, so did Japan. Thus two of the three biggest economies in Asia kept out of RCEP until matters get resolved to their satisfaction. The overall mood in Delhi where China was concerned had already been soured by Beijing’s efforts to get the UNSC to formally deliberate and adjudicate on Kashmir over the removal Article 370 from that part of the state that remained in India’s control after the ill-thought out ceasefire effective 1 January 1949 ordered by Jawaharlal Nehru, who persisted with allowing Louis Mountbatten and British officers commanded by London rather than by Delhi to determine the course of the battle to liberate Kashmir from invaders directed by British officers in Jinnah’s army. These officers wanted the whole of Kashmir to go to Pakistan, and so did the British officers still retained in control of the Indian armed forces by Nehru despite securing independence from the British on 15 August 1947. Thus far, efforts by Beijing to ensure the success of GHQ Rawalpindi’s objectives vis-a-vis India have not met with significant blowback from the Indian side. A test of whether such Indian forbearance will continue will come in the pending decision on whether or not to permit Huawei to bid for installation of 5G networks in India. While the company’s equipment and technology have cost and quality advantages over most if not all competitors, the meta data trove that Huawei will harvest from 5G operations in India will substantially assist in PRC efforts at becoming the most advanced country in the world where Artificial Intelligence systems are concerned. Should Beijing at the same time remain committed to furthering Islamabad’s goals at the expense of India, primacy in Artificial Intelligence by China would have implications for India in the matter of security, given that GHQ Rawalpindi is a continuing threat to stability and security in India. Some within the policy establishment in India would like to block Huawei from 5G in order to show China that there will in future be substantial costs to Beijing’s “all-weather” support for GHQ Rawalpindi vis-a-vis India. Others look only to the financial advantages that installation of Huawei systems bring to the table, and call for the company to be allowed to compete in the Indian market. It may be remembered that 69% of the mobile telephony market in India is already occupied by Chinese telecom companies, which together accounted for $55 billion in sales to India last year. In contrast to India, the mobile telephony market in China is dominated by domestic champions such as China Unicom and China Mobile. Nearly 96% of the domestic market in China is controlled by Chinese companies, despite the presence of global champions such as Nokia or Motorola. It may be instructive in understanding the single-minded dedication of the Chinese Communist Party leadership towards ensuring primacy for the PRC and its entities that the financial sector in China was kept away from external competition as long as it was profitable, but has been opened now (in what President Trump is claiming as a major concession) to foreign entities, at a time when the Chinese financial sector is under substantial strain, including on profitability, and would welcome an infusion of funds from almost any source.
SILO MENTALITY A PROBLEM
As India already has free trade agreements with 12 of the 15 countries that are part of RCEP, in effect, signing on to the RCEP agreement would have meant a free trade agreement between India and China, a country with which it already has a $57 billion trade deficit, a shortfall that has expanded greatly since 2014. The Chinese side did not respond favourably to India’s requests for a liberalised schedule for duty reductions that reflected India’s less prepared position so far as its domestic industry was concerned. Neither were there affirmatives from the Chinese side to Indian requests for an extended date for liberalising import restrictions, or to a mechanism that would put in place speed brakes to sudden surges of goods into India, a phenomenon that has often been experienced by India so far as Chinese products are concerned. On instructions from Prime Minister Modi, negotiators on the Indian side were clear that measures had to be put in place that would protect small and micro enterprises in India across 200 lines of manufacture, but again, such a demand did not find approval from the other side, leaving India with no alternative but to exit the RCEP. Foreign Minister Wang Yi of China, who is trusted by President Xi, is going to be in Delhi for the 22d round of boundary talks that have gone round and round without making any progress all these years. Thus far, Chinese officials have relied on the silo mentality of their Indian counterparts, in which issues are dealt with in segments, with one segment of policymaking often taking decisions that impact negatively on another. Taking a 360-degree view of the situation and adopting a comprehensive policy that meets the overall national interest of India (rather than, as in the S-400 case, the immediate needs of a particular segment) has been absent for long in India, and this has given confidence to the Chinese side that unhelpful activity by them in one field will not impact decisions taken by the still influential Lutyens Zone elements within the Central government in other fields. Beijing is also increasingly confident that “Howdy Modi” style events notwithstanding, prospects for a military alliance between India and the US are almost nil under the present dispensation, a teaming up that they were earlier worried may be on a fast track towards such a partnership. The sudden withdrawal from RCEP surprised the Chinese side, and it is to be seen if more such moves will follow, so that the Government of India takes decisions that are in the overall long-term interests of the nation. As an example of wasted opportunities, passenger aircraft buys by Indian carriers are among the highest in the world, yet the Civil Aviation Ministry (especial in the UPA era) failed to secure any advantage for India from such a fact. Instead, domestic interests were repeatedly ignored to benefit foreign entities, as for example in the going up of slots in airports across the world. Selling off the national carrier Air India at a dismally low price to a foreign buyer will meet such pattern, if this be done. The value assigned to Air India by an external financial agency is suspiciously low, and hints at efforts by a section of the bureaucracy at taking over the carrier’s assets for a song. Unlike what happens in India, the Chinese are shrewd and tough negotiators, as shown in the way they have faced down Donald Trump in the ongoing trade war between the two sides. Where the Chinese appear to have miscalculated is the importance of good relations with India to their own future. As yet, there is little sign that this realisation has dawned in Beijing, despite Xi and Modi’s efforts at ensuring that Sino-Indian relations move into a positive track. Wang Yi’s visit should not be yet another exercise in symbolism designed to mitigate the hard feelings in Delhi caused by Beijing’s ongoing efforts to internationalise Kashmir for the benefit of GHQ Rawalpindi. Despite Wuhan and Mamallapuram, Sino-Indian relations remain mired in mutual mistrust and misperceptions. Instead, the Chinese foreign minister should build on the rapport between Xi Jinping and Narendra Modi to offer breakthrough solutions and initiatives so as to set Sino-Indian relations on to a healthy track.