Sino-Indian Ties: Thinking Beyond Wen

Written by  //  December 18, 2010  //  National Politics  //  4 Comments

Of all the big-ticket foreign dignitaries visiting India in the last three months, Wen Jiabao was undoubtedly the least conspicuous. He came, signed a few business deals, sang some carefully chosen paeans to India’s democracy and culture and left for Pakistan where his visit has been the high point in a terribly troubled year.  There was no mention of 26/11, no role of Pakistan’s involvement therein, no customary visit to the Taj Mahal, no support to India’s pet project of a permanent seat in the UN Security Council; Jiabao did not bother pressing the buttons which make India and Indians happy about themselves. He chose instead to concentrate on a slew of large, yet unexceptional business deals which left diplomats on both sides scurrying in search of reasons to brand the visit “a success”.

The warmth and camaraderie, the shared underlying values and principles and common aims and goals in the 21st Century, so evident in the visits of Messrs Obama, Cameron and Sarkozy, was strikingly absent in Wen’s three-day tour. The indifferent nature of this visit coupled with China’s seemingly intractable posturing on boundary disputes in Sikkim and Arunachal Pradesh and its belligerent attitude towards sovereign nations, including India, who accepted the Nobel Committee’s invitation to attend the Peace Prize Ceremony in Oslo, when seen in the context of the inevitable economic clout that both China and India will wield in the coming century, raises significant questions regarding the future of this bilateral relationship. In fact, I would cautiously predict that the relationship will be akin to a 21st Century Cold War, a grudging and superficial public acceptance of each other’s power, tied to a substantive underlying trust, with ideology being replaced by the unfettered economic quest for new markets as the chief driver of conflict.

In this atmosphere of potential and continued soft conflict, how should India deal with its larger, richer and more dominant northern neighbour in the next decades? I suggest we follow a four-pronged approach which I describe as the CABE doctrine(Compete/Arm/Befriend/Expand). This is not intended as a comprehensive doctrine encompassing Sino-Indian relations but stresses instead on its most salient aspects, with a view to securing India’s foreign policy, economic and security interests. Briefly, CABE stands for:

Compete: Economically India must ensure that it remains in a position to compete with China in the coming decades. Not only does this require registering high GDP growth but equally ensuring accompanying infrastructural development and distributional networks to make this growth equitable. Of specific significance in this process, will be maintaining a competitive advantage in the service sector; as the Chinese workforce augments its English language skills, it will be imperative that the workforce in India remains effective, skilled and cheap. A failure to maintain this threshold level of economic performance will render any talk of future competition superfluous.

Arm: A significant theme in the coming decades will be China’s military presence in South Asia. With a numerically superior military, a strong strategic presence in Myanmar, Pakistan and most recently in Sri Lanka with the development of the port at Hambantota, China has taken significant strides in militarily encircling India. In response, India must ensure that its own armed forces can compete in terms of number of forces, weapons and strategic partnerships. Of particular importance will be the last, creating an effective minimum deterrence against an aggressive China.

Befriend: Crucial for the above and essential per se in countering China will be cultivating effective strategic friendships across the world. Natural allies would be the United States and Japan, both, like India, wary of China’s muscle-flexing. Multi-layered, economic, cultural and military ties with such nations will not only present a credible counter to China’s economic potential, equally it would be the epicentre around which like-thinking nations can consolidate. The logical culmination of such a process would be to stymie China’s power by isolating it at the international high table.

Expand: Mere isolation at the international high table however will not be sufficient to counter an aggrandizing China. Equally significant would be to launch a joint, concerted expansion drive into hitherto untapped regions, both for diplomatic support as well as in order to create expanded markets. Much like Europe was the laboratory for the Cold War in the mid-20th Century, ideologically and economically divided by the Iron Curtain, the new theatres of conflict in the 21st Century will be the markets of South-East Asia, Africa and Latin America. China’s footprint in these regions is considerable, especially in the first two. It will be necessary for India, together with nations it befriends to actively expand into these territories, not only extending financial support, but equally inculcating values central to their vision of the world, while respecting local cultures at the same time. India’s recent efforts in West Africa bear testimony to the possibility of performing such a balancing act. It is time that India redoubled its efforts in this regard and made its presence more global, with a little help from its friends.

Of course, the doctrine requires careful substantiation in specific contextual settings. But its emphasis on strategic partnerships and quiet, covert competition with China rather than overt confrontation are relevant to shaping India’s foreign policy today. It is imperative that we adopt the contours of this approach and not be hoodwinked by the seemingly strident Sino-Indian economic, financial and civilisational ties that Wen repeatedly referred to. We made a mistake of taking a visiting Chinese premier’s words at face value once and paid a heavy price. If we don’t learn from our Nehruvian blunder, this time, the price may be too heavy to pay.

4 Comments on "Sino-Indian Ties: Thinking Beyond Wen"

  1. Alok December 18, 2010 at 7:02 pm ·

    I think the illusion here is that China and India will, in the future, be equals. The fundamental point that I disagree with Arghya is that China will ever see, or India will ever actually be recognized by anyone as being equal to China in the diplomatic, military or economic front. Barring something radically unforeseen, we will lag behind China economically, militarily and on the international stage for at least the next three to four decades.

    The tone, tenor and depth of China’s engagement with India also suggests that the Chinese think it’s a laughable idea that India would ever be seen as equal to China in pretty much any front. An honest assessment of our economy, polity, readiness of armed forces and diplomatic weightage will tell us this as well.

    Realistically speaking, the EU and the US are as terrified of China as we probably are. Sure, they’ll make the right noises about free trade and a multi-polar world, but they are spooked by the rise of China; a country they understand little but which, they feel, nurses many grievances against the Western world and has enormous economic and military power at its disposal.

    In this front, Arghya is right that India’s best option is to form a loose understanding (alliance would be too strong a word) with the EU and the US (and possibly Japan) to contain China’s dominance of Asia, geopolitically. Economically, of course, we cannot compete with China for exports AND run a (somewhat) functioning (riotous and unruly) democracy, but we can avoid China’s export crazed growth path and consequent dependence on the health of foreign economies.

    Militarily, our best defence is geography. Thank the Indian plate for slamming into the Eurasian plate and creating the Himalayas; and also putting us right in the path of Middle East oil headed to China. China has nothing like the American capability for power projection and will be hard pressed to do so for at least a couple of decades. Besides, we are kidding ourselves if we think 21st century wars will be fought by brave men in tanks and battleships. (Hint: http://en.wikipedia.org/wiki/Estonia_Cyberwar).

    Lastly, Pakistan. India’s problems with Pakistan (and necessarily Pakistan’s problems with India) will always be there for China to exploit any time we even come remotely close to challenging China on equal terms. Short of cloning Genghiz Khan and handing him nuclear missiles (not that he needed them the first time around, but I’m sure he would greatly appreciate a few anyway) there is nothing comparable we can do to check China.

  2. Alok December 18, 2010 at 7:07 pm ·

    Small clarification:

    Lest I be misunderstood, I am not calling for a return to autarkic Nehruvian socialism on the economic front, but a more balanced set of economic policies that balances exports and imports and creating internal demand for goods and services. In this respect, it may help if we present India as a market of a billion for actual Chinese goods as opposed just Chinese made American/Japanese goods.

  3. Ruchira December 19, 2010 at 8:16 pm ·

    China follows a pattern of growth that relies on encouraging private investment in export intensive sectors. Its BOP surplus is a sign of “strong economic fundamentals” which attracts autonomous flows of foreign capital. In fact the Chinese case is rather unique in trade economics. It has a BOP surplus but also a net import of capital.

    The result is that China is sitting on a mountain of dollar reserves. These are very dangerous as if the Chinese Central Bank allows these reserves to affect the currency, it will appreciate and Chinese exports will suffer as will Chinese growth. (India has the same problem though it has a BOP deficit) So the Chinese Central Bank hoards these reserves but that would mean increasing liquidity as assets must equal liability in the balance sheet. The Chinese resolve this by selling government securities which have higher rates of interest than foreign currency which is usually held as US Treasury Bonds because they are safer so they borrow dear to lend cheap. India does the same.

    Meanwhile, the US maintains a huge current account deficit and gets away with it only because so many countries hold their reserves in the dollar. But countries are quietly converting dollars to SDRs forseeing the fall of the dollar. Which in turn means that the dollar will fall one day.

    The situation is highly unstable and likely to result in a chaotic recession.

    As it is, the world is in a precarious state. Should we, in a bid to compete with China, start attracting more FIIs by lowering caps? Because that would be quite disastrous. Should we have more SEZs to boost the current account deficit? (Even worse.) To attract private investment should we let corporates away without proper liability agreements? Should we encourage crony capitalism?

    The US is as concerned with containing China as we are but falling into the US lap may be a horrible idea.

  4. Arghya December 20, 2010 at 7:04 am ·

    Alok, I agree with you. The article presumes broadly equal relations in the decades ahead. It is a contestable assumption but getting into this debate will be a post in itself and I’ll leave this defence for another time.

    Ruchira, I don’t think either Alok or I are advocating “falling into the US lap”. In fact, if anything Obama’s visit has shown that no one’s going to be falling into anyone’s lap in Indo-US relations, it’s largely a relationship between equals and will most certainly be one in the years ahead. And frankly I see our principles as a nation as certainly more congruent with a realistic USA rather than a belligerent China. Furthermore, given Wen’s rousing reception in Pakistan and giving the Pakistanis what they want to hear on terror, aid and India, strategically it would be foolish to adopt a wait-and-watch policy on China or not compete for some reasons I certainly don’t understand.

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