Rarely have Beijing officials gushed about a prime ministerial visit weeks after the event. But China seems to be still euphoric following the Narendra Modi visit and enthusiasm was discernible in our week-long interactions with decision makers: key foreign and information ministry advisers, senior officials of the National Development Reforms Commission, China’s highest planning body, officials of China railways that will build the Delhi-Chennai bullet train and senior officials of Guangdong and Shenzhen.
The message was simple: Let’s move on and not get enslaved in the bitterness of the past.
If Rajiv Gandhi’s visit in 1988 was considered a turning point in Indo-China relations, it is Modi’s emergence as the country’s leader that is likely to redefine the contours of Indo-China ties. Nothing dramatic overnight of course, but there are clear signs of breaking new ground.
Indo-China relations have always been top-down whether it was the Nehru-Zhou Enlai connection that had its highs as well as lows, or the turning point when the Rajiv-Deng Xiaoping interaction led to an agreement leading to a degree of perceptible tranquility along the borders. Prior to Rajiv’s visit, nothing significant had happened since the war in 1962. Ambassadorial ties were restored in 1976. Eight rounds of talks had been held since Chinese Foreign Minister, Huang Hua’s visit to India in 1981, but without much progress.
The history of Indo-China relations indicates innumerable missed opportunities with both sides failing to grasp the significance of two Asian giants working together. Now it looks as though the moment has arrived with enough on the ground to match the optics on the interaction between Xi and Modi.
Both Xi and Modi are known to assert themselves and create a blistering pace for their officials. Modi still commands massive support. A decisive leader, Modi is known to have introduced a ‘proactive’ element in India’s foreign policy which was for long following an unstated ‘reactive’ policy. Both leaders see economics as the driving force in foreign policy.
At first glance, it is easy to be intimidated by the dark side in the Indo-China relationship. We hear reports of China seemingly looking at the South China sea as it area of influence and the toughening of its stance on border issues without relenting or spelling out its claims. On the Indian side, the home ministry despite international clearances is not favourably disposed towards companies like Huawei wanting to expand in places like Chennai. Chinese investment proposals in Indian ports are viewed with suspicion. There is undoubtedly a trust deficit on both sides. Our visiting Indian delegation was told that an Indian suggestion that the Chinese put down their own version of the map on the border, would not cut ice. A senior official said this would only reopen old wounds. (This has been attempted in the past and Indians realised that the Chinese claims were much beyond even their stated positions.) There is however, a positive side too. Several billion-dollar contracts have been signed, and there is now clearly a movement on BCIM (Bangladesh-China-India-Myanmar) and in a last minute gesture, e-visas have finally been granted to visiting Chinese.
So where is the Indo-China relationship moving? With economic goals being the stated positions of both leaders, could these compulsions override age-old disputes? Even if the countries are daggers drawn on certain issues, there is one irrefutable fact. China is an overheated economy and the world’s largest. China has to go in for big-ticket investment and India’s huge growing market is the only one that would give it adequate return. If China looks around the globe there is no other place to invest.
On the other side, ‘Make in India’ needs massive investment and China is the country that has the money. Yet China does have some options – the emerging manufacturing bases in Indonesia, the Philippines, Thailand and Vietnam. Their labour costs are relatively cheaper.
A top Chinese official connected with the highest Chinese policy planning body told us bluntly that countries not interested or ambivalent over the ‘One-Belt One-Road’ plan may be left behind. He said a large number of countries had expressed support. It was however, clear that they were keen on Indian endorsement since most countries along the proposed Silk Road do not have the economic power to reap the benefits.
The fact is that India should have been an automatic choice. But in reality, it isn’t. Can Modi pull it off, keeping India’s interests in mind? Or would he allow himself to get bogged down by the bitterness of the past? Xi’s ‘One-Belt, One Road’ is a huge plan to leave a legacy for future generations. The road and sea routes traverse nearly 60 countries, promising prosperity all around. It is being touted in China as a decisive bold move that would revive the global economy. India is being welcomed as an equal Asian partner.
Modi’s ‘Make in India’ plan again is challenging. It would get no help from the West, which has shown little or no interest in setting up manufacturing hubs in India. But China certainly has, and also has the wherewithal to do so. Both Modi and Xi one assumes are realists and unlikely to let go of an opportunity to fulfill their dreams.
How is China dealing with countries with which it has even worse security-related issues than India? Let’s just take two – Japan and the United States.
China’s relations with Japan have not been the best. With Prime Minister Abe at the helm, reviving Japanese nationalism of sorts, the Chinese media has been demanding his apology for the way Japanese treated the Chinese in World War II. Recognising that Chinese pressure on Japan was not succeeding, Xi has changed course. In addition to engaging directly with Abe, China resumed the high-level security dialogue with Japan after a hiatus of almost four years, restarted the Sino-Japanese parliamentary dialogue, and revived the trilateral mechanism between Chinese, Japanese and South Korean foreign ministers. Abe’s decision to forego a visit to the Yasukuni Shrine since he paid his respects there in December 2013 has helped create a more positive atmosphere.
Pressure on Xi came from the provinces. In 2012 when there was a boycott of Japanese goods in China, trade which was of the order of $214 billion plummeted. It was pressure from provinces like Guangdong and powerful business entities that enabled Chinese leadership to resume its dialogue with Japan.
Guangdong, which we visited, is the third largest province in China. All the leaders who only the other day saw the Gujarat Chief Minister signing six contracts worth billions of dollars are only too eager to work with other states in India. China is now the world’s second-biggest economy, but some of its provinces by themselves would rank fairly high in the global league. Guangdong’s GDP (at market exchange rates) is almost as big as Indonesia’s; the output of both Jiangsu and Shandong exceeds Switzerland’s. Guangdong province alone exports as much as South Korea.
China’s animosity towards Japan is historical and yet China appears more flexible in its approach as long as economic ties are the priority. They seem to be applying the same yardstick towards India. The Chinese proposition seems to be that border and territorial disputes should not come in the way of deeper economic partnership. Besides, in the global scenario, the concept of a geopolitical strategy based only on the security environment, is over. It is only Russia’s Vladimir Putin who seems to be on the brink of looking at the US as an old Cold War enemy.
China, which is now moving closer to Russia on the economic front, is unlikely to be swayed by Putin’s attempt to create a strategic front against the US. For one it has been doing business with US for years. If it pulls the plug on the US it would be counterproductive. Xi’s visit to the US in September is expected to ease tensions. Just as it is with Japan, with the US too, China’s security relationship is totally opposed to its mutually dependent economic relationship. The world’s two biggest economies have been trying to ease tension over everything from trade and human rights to exchanges of accusations of hacking and Internet theft. The US charged five Chinese military officers with hacking into U.S. companies to steal trade secrets. China showed its anger over the allegations by shutting down a bilateral working group on cyber security.
Still, the two countries also work closely on many important international issues, such as efforts to curb the nuclear programmes of Iran and North Korea. As per 2013 figures, China-US trade is to the extent of $ 520 billion.
Some Indian policy makers believe that playing the US card and endorsing US plans in the South China seas would help compel China to take India more seriously. The problem with running with the hares and hunting with the hounds is that you could miss out an important opportunity.
In China too negative stories about Indo-China border skirmishes have an adverse impact. Xi has to be careful about the public mood.
Perceptions in India and China won’t change overnight. Contrary to the general impression, local newspapers and TV stations are not totally controlled by the establishment when it comes to reporting on foreign affairs. A sense of national pride has swept over China and a “nationalist” media story becomes popular whether it reports on the Indo-China border, the refusal of Abe to apologise for atrocities perpetrated in the past or US “designs” on China.
At our interaction with senior research scholars studying in Beijing, media got the flak for hardline reporting on Indo-China ties. But one Chinese scholar did concede that the media by itself cannot be blamed; “we should set our own house in order.”
In our interactions with the popular Shenzhen TV, channel executives told us that they were finding it challenging to report “positive” stories. Hard stories that painted India negatively were popular and driven by ratings, an issue in India too. What is worse is the social media that periodically attacks the leadership.
Xi clearly has his plate full. It would require skilful maneouvering to mould public opinion in favour of his policies. First, hunting too many ‘tigers’ in his anti-corruption drive might damage the public’s faith in the Communist Party’s leadership. Second, there is criticism that Xi may intend to amend Deng Xiaoping’s idea of “collective leadership” and seek a more decisive or even autocratic role as the CCP’s top leader. But the fact remains that XI is extremely popular in China. Distinguished Harvard scholar Roderick MacFarquhar compared Xi’s authority with that of Chairman Mao Zedong.
The Chinese now realise that for Modi land acquisition is not going to be easy for bullet train projects, the Vadodara technological park and a host of other projects. There is also recognition that unlike in Gujarat, Modi now cannot have a real hands-on approach since the projects are being implemented by States. Still Chinese officialdom hails him as India’s most decisive leader with a mandate for reform.
There is a sense of frustration one could sense and it looks as though the Chinese too, like most Indians who voted for him, expected Modi to magically transform everything. Yet there is hope that if anyone can ride over initial humps it is only Modi and Xi; both have a vision and yet are realists. Neither is likely to be bogged down by ideological constraints.
Based on Xi’s interaction with Japan and the US it is clear that for China the economic priorities far outweigh other perceived geopolitical security considerations. Domestically too, having ridden the reforms tiger it would now be difficult for them to dismount. The same internal economic pressures that are compelling them not to disengage with US and Japan are forcing the leadership to look at India.
In a way, geopolitical strategy-driven Beijing or New Delhi may count for less but rising Guangdong and Indian States like Andhra Pradesh, Gujarat and Maharashtra may play a decisive role in shaping Indo-China policies.
Whether India grabs the opportunity on its own terms would depend on Modi’s ability to think beyond borders and redraw an Indian economic map to convert the Make in India dream into reality.