Detailed below were the outcomes sought by President Xi and Prime Minister Modi at Wuhan, but there remains a considerable distance before this new era in Sino-Indian relations becomes a reality.
Lobbies influenced by external interests (principally Pakistan, but some developed countries as well) are working on overdrive to sabotage the non-formal Wuhan Accord reached between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping on 27-28 April at Wuhan, China. Wuhan was planned to be followed up by a meeting in India of the two statesmen early next year so that the “1 plus 1 Apex” format between Delhi and Beijing becomes a staple of bilateral diplomacy between the two most populous countries on the planet. Now that China has emerged as the second superpower, moving closer each year to becoming the globe’s biggest economy, the Modi government is engaged in a complex balancing of relations between itself as well as both the Trump and Xi administrations.
The present trade war between Washington and Beijing is expected to be followed by other steps designed to keep Chinese policymakers off balance and will continue beyond the term of the current US President.
Ideally, Indian diplomacy should ensure both a strong defense and security relationship with Washington, while at the same time entering into a robust commercial relationship with Beijing, on the assumption that tensions between the two superpowers would at no stage be permitted to end in actual military conflict between the two sides, as last happened during the 1950-53 Korean War. Another war between the two biggest (and extensively interlinked) economies on the planet would create a geopolitical nightmare for the international community while inflicting permanent damage to both the countries involved.
However, the relationship between the US and China will remain fractious for a considerable period of time. In Beijing, key policymakers say privately that the “Trump trade war” is less about imports and exports than it is a bid to reduce the annual rate of growth of the Chinese economy to 5% or less, a level that may exacerbate social tensions that weaken the “Mandate of Heaven” (or acceptance by the people) of Chinese Communist Party (CCP) rule that was first initiated in 1949 by CCP Chairman Mao Zedong on his comprehensive military defeat of KMT supremo Chiang Kai-shek. Such tensions are believed to be worked out by planners in Washington to weaken both the hold of the CCP on the country as well as the control exercised by President Xi Jinping over the different components of the CCP, which in effect is the agency ruling this vast country.
According to this analysis, the “Trump trade war” is just an initial salvo in what could be a long campaign designed to weaken the Chinese economy. Even if the Republican Party does poorly in the 6 November mid-term elections to the US Senate and the House of Representatives, President Donald Trump will only “double down rather than lowering the intensity of his mercantile assault” on Chinese exports to the US.
The present trade war between Washington and Beijing is expected to be followed by other steps designed to keep Chinese policymakers off balance, and “will continue for a long time, including beyond the term of the current US President”. This being the case, President Xi is working out a series of measures designed to reduce the impact of hostile US moves and to cushion their impact on the population. Inter alia, this involves boosting domestic consumption and scientific and industrial self-sufficiency, as well as the creation of financial and commercial supply chains that are independent of the present US-dominated global supply chains. US sanctions on Iran have provided an opportunity to the Chinese and their Russian allies to test new financial networks that do not intersect with those of the US, and which avoid the use of the US dollar in transactions and accounting. The anticipated prospect is therefore of a long-term increase in US-China tensions, reversing the entente between them that got formed after the 1972 meeting between US President Richard M. Nixon and CCP Chairman Mao Zedong. This has made India much more important as a commercial and if possible a strategic partner of China.
The “Old Thought” in Beijing believes that Indian policymakers will erect a firewall between “difficult issues” (such as the border or NSG) and other matters such as trade
OLD THOUGHT VS NEW MINDS
President Xi has been engaged in a process of replacing “Old Thought” with “New Minds”, and several of those who have begun advising the CCP on India are in their 40s, with some even in the 30s. These geopolitical planners do not have baggage from the past that weighs down analysis of relations with India, and which slows down both responses as well as policy initiatives directed towards Delhi.
The Wuhan meeting indicated the will of both Prime Minister Modi as well as President Xi Jinping to leap over established paradigms in an effort to create a new framework for bilateral relations between a country that will soon be the world’s biggest economy and its neighbour, which is on course to becoming the third largest on the globe, behind the US but ahead of every other country barring front-ranker China. However, within the Chinese establishment (as well as in India), there exist influential lobbies that continue to peddle nostrums that have clearly been shown by historical experience to be counter-productive. An example is a post-Wuhan proposal that President Xi pays a reciprocal visit to India early next year, ideally during February 2019, before the Lok Sabha campaign accelerates in earnest.
However, a lobby within the Ministry of Foreign Affairs (MoFA) in Beijing is opposed to such a timeline, and is pressing for Xi to make a reciprocal visit “only after the polls”. Their argument is that the outcome of such polls is uncertain, so it would be best to make the visit only after the result gets declared and the post-poll government settles down. Such a view ignores the need to institutionalize the Wuhan process by ensuring visits that are independent of political changes if any. A second Modi-Xi summit early next year would assist in ensuring that the “1 plus 1 Apex” format gets established as a permanent feature of relations between China and India, while a delay till after the Lok Sabha polls take place may result in an indefinite postponement of such a reciprocal visit, thereby diluting the gains of the Wuhan summit.
An example of “Old Thought” in Beijing on Sino-Indian relations is the effort by some elements in both the Foreign and Defence ministries in Beijing to continue the policy of blocking India’s accession to the Nuclear Suppliers Group (NSG), the next meeting of which is scheduled towards the close of November, and which is almost certain to include in the agenda the admission of India into the NSG.
The “New Thinkers” in Beijing understand the importance of this issue to future relations and are in favour of China supporting both Pakistan as well as India as members, leaving it to the rest of the group to decide on whether one or both should get admitted. This would change the present dynamic, which is a Chinese veto on the entry of India unless Pakistan gets admitted as well, something the Chinese side knows is impossible in the present circumstances of control of that country by its nuke-rattling military. A fresh Chinese veto over India’s entry into the NSG in the November 2018 meeting can be expected to have severe repercussions on other fields, such as trade and commerce. While the “Old Thought” in Beijing believes that Indian policymakers will erect a firewall between “difficult issues” (such as the border or NSG) and other matters such as trade, the “New Thinkers” are aware that such a separation is unrealistic, and that Delhi regards Beijing’s support on NSG membership of immense significance in accepting that Beijing sees India as an “equal partner” rather than as a “lesser country” than China.
“Old Thought” on India in Beijing continues to regard any settlement of the boundary question with hesitation, and are advising that such matters be pushed away into the distant future.
BUSINESS AND BOUNDARY
Chinese business groups are looking to India to make up expected losses caused as a consequence of restrictions placed on their US operations. Digital India has become a near-monopoly of US tech giants such as Google, Facebook, and Microsoft. 90% of the advertising revenue from India in that internet sector goes to Google, with an additional 5% accruing to Facebook, with the rest having to be shared by dozens of other (mostly domestic) players. Only Chinese tech players have the scale to seriously compete with their US counterparts, and should they be permitted the same freedom of access as US companies have been given in India by successive governments, they would cut into the monopoly now enjoyed by US West Coast tech giants in a market that is already home to much if not most of Facebook users, with Google and Microsoft as well seeing their overall numbers (and valuation) significantly boosted by operations in India, at the cost of paying taxes that are relatively insignificant. Such ease of access would be opposed by several security experts in India, who however see no problem in the country being almost wholly at the mercy of US tech giants. The present situation within our country is that Google may already have the power to discredit almost any public figure in India, while Facebook could conceivably create difficult situations on streets in cities across the country, so powerful is their reach and credibility.
Another sector where India could benefit from China is tourism. Should, for example, a Buddhist circuit get established in India by Chinese investors the way the Japanese have already done with such success, the number of Chinese visitors to India could rise significantly, given that over a hundred million Chinese go outside their country for visits each year. A third is an infrastructure. While the China-Pakistan Economic Corridor (which was strongly endorsed by both the Foreign as well as the Defence Ministries in the Peoples Republic of China) is proving to be a loss-maker with intended benefits yet to be reaped, a China-India corridor would be certain to generate surpluses, given the rate of growth of the Indian economy despite the prevalence of conservative fiscal and monetary policies designed to increase short-term collections and bureaucratic control rather than promoting long-term growth in the manner experienced by China since the 1980s.
“Old Thought” on India in Beijing continues to regard any settlement of the boundary question with hesitation, and are advising that such matters be pushed away into the distant future. However, the “New Thinkers” are aware that a lack of progress on the boundary issue could affect even commercial ties. In such a context, the Indian side is known to be proposing that at least the “Middle Sector” of the Sino-Indian boundary get demarcated as evidence of progress. Added to Chinese acceptance of India as a member of the NSG, a boundary settlement in the Middle Sector would give a major boost to relations between Beijing and Delhi. However, this is being opposed by the “Old Thought” lobby, which incidentally has very close links with GHQ Rawalpindi. This lobby sees the Pakistan military as the guarantor of Chinese interests in Pakistan, which is why Chief of Army Staff Qamar Javed Bajwa was given a talking to after coming to Beijing following suggestions by the Imran Khan government that work on the CPEC needed to go through a “pause” of at least a year. Business groups in Karachi have been complaining that CPEC contracts have been grabbed by Lahore business groups close to Nawaz Sharif as well as GHQ Rawalpindi. General Bajwa is learned to have promised that Prime Minister Imran Khan would ensure that work on the CPEC proceeds uninterrupted, of course at a great cost to the Chinese exchequer.
The “New Thinkers” regard India as a country ranking along with Russia, Japan and the US in the top tier of Chinese interests and concerns, and it is clear that President Xi shares such a view.
THE DALAI QUESTION
A worry for the Chinese side comes from reports that elements in the US and the UK are working on installing a small child from Tibet or nearby provinces as the XV Dalai Lama of Tibet with headquarters in Dharamsala, should the present Dalai Lama ascend to another dimension. While the Himachal town has been converted into the effective headquarters of the XIV Dalai Lama after his moving to India in 1959, the settling thereof a claimed successor would in effect make Dharamsala not the refuge of the present Dalai Lama but the effective headquarters of any successor not recognized by Beijing. As it is likely that a successor would get discovered in Tibet who may take up residence in the Potala Palace, this would create a situation of tension that is likely to have long-term consequences on Sino-Indian ties, in the manner that the 1959 decision of Prime Minister Jawaharlal Nehru to give asylum to the present Dalai Lama has done. These are matters that can be resolved only in the context of a warming of relations between Delhi and Beijing and in a substantial increase in the trust level between the two sides. These were the outcomes sought by President Xi and Prime Minister Modi at Wuhan, but there remains a considerable distance before this new era in Sino-Indian relations becomes a reality.
The “New Thinkers” regard India as a country ranking along with Russia, Japan, and the US in the top tier of Chinese interests and concerns, and it is clear that President Xi shares such a view. However, this ranking of India as being among the top priorities for China is opposed by those clinging on to “Old Thought”. To them, India is in effect a US satellite, and needs to be kept off balance through deft diplomacy in South Asia. The “New Thinkers”, in contrast, look towards greater imports from India as well as greater investment into India as being factors that would promote trust and closeness in Sino-Indian relations. Some are even considering the option of looking to bring tens of thousands of Knowledge Industry personnel from India to help Chinese entities compete with US global giants. At present, while several hundred thousand such “brain workers” work in the US or for US companies, only a few hundred are active in China. Both Xi, as well as Modi, are expected to meet later this year at Buenos Aires for the G 20 summit, where both trade, as well as other matters, are certain to be discussed among two of the Big Four global leaders (the others being Presidents Putin and Trump). The rewards of close ties are obvious. What is still uncertain is whether “Old Thought” (and not only in China but in India) will allow the two leaders to bypass past disagreements and enter into a synergistic relationship. China will be looking to sensitivity on matters such as Dharamsala, while India will regard another Chinese rebuff at the NSG as evidence that “Old Thought” still prevails over “New Thinkers” within the circle of policymakers close to Xi. Clearing the way to join NSG and Xi paying a Wuhan-style visit to India early next year would, on the other hand, help ensure that Sino-Indian relations transit from rough weather to smooth.
1. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.