India forced to ease anti-China policies

For India, it’s an alarming situation building up across the border. The Chinese are constructing three new airbases and upgrading five others in Xinjiang and Tibet. Simultaneously, they are creating new highways and rail links and rapidly expanding logistical facilities for the People’s Liberation Army.

What the Chinese are preparing for is abundantly clear: if there’s ever a Sino-Indian conflict, Beijing wants to be able to bring overwhelming force to bear. That leaves the question of whether the Chinese are looking at this potential eventuality from a defensive angle or whether they’re considering triggering a fight themselves.

The new bases and the ones being upgraded are coming up all the way from Kashgar in the west to Chengdu Bangda in the east. A new dual-use airport is being built at Shigatse Tingri which lies only 230 km from Doklam where India and China confronted each other in 2017.

Underlying China’s drive to improve the military and civilian facilities in Tibet and Xinjiang is an effort to meld the two border provinces and bring them closer to the rest of the country. But, at the same time, China’s moves to build its military strength in the region have clearly accelerated ever since the Galwan clash a year ago.

For India, Galwan upended our foreign policy calculations. Suddenly, our greatest enemy was not Pakistan but China, an altogether more muscular foe. And the Chinese, according to former foreign secretary Shyam Saran, aren’t likely to ease the pressure on us in the foreseeable future because it wants to show the world that it’s the unquestionable boss in Asia.

In dealing with the Chinese challenge and radically recast our policy priorities, the fact is we have few good options. Away from the icy Himalayan military arena, the government declared Chinese companies like Huawei persona non grata last year. Social media player TikTok also became an easy target. Beyond that, the government quickly discovered excluding Chinese companies from India was easier said than done.

Imports steady

That reality became overwhelmingly evident in the annual trade figures which revealed India’s 2020-21 imports from China held steady at $65.21 billion, virtually unchanged from the previous year’s $65.26 billion. But this was in a year when imports fell overall. So the upshot was China had a 16-per-cent share of India’s import basket, up from 13 per cent the year before.

What, you ask? Blame it on surging demand for pharmaceutical ingredients from China, on which we’re still worryingly dependent for basic drugs like antibiotics and painkillers, as well as demand for components for electronic products like mobile phones. Also, many Indian manufacturers were hit hard by lockdowns and resulting logistical jams and took time to restart their units. As a result, imports were the lone option. From the Indian side, our exports to China also increased, driven largely by iron ore. The Chinese have been importing huge iron ore quantities as they cut back on Australian purchases due to their ongoing feud with Canberra. Indian companies have been happy to step into the breach.

In other ways, too, the government has been forced to ease off on its anti-China policies. Last July, it ordered Chinese firms would need a number of clearances, including one from the Home Ministry to take part in public-sector procurement. More recently, it retreated from that tough line, saying companies with Chinese technology-transfer deals could go ahead. Also, Indian companies required more cheaply priced components only available from Chinese companies. Cutting out the Chinese would have meant reworking budgets and slowing down critical projects. Even then, the government rules are still causing problems and will have to be further amended.

Does all this mean we really have no options to counter the Chinese and must reluctantly bow down and acknowledge them as the most powerful country in Asia? Fortunately for us, former US President Donald Trump decided to take an extremely aggressive anti-Chinese stand and President Joe Biden is walking the same path.

Significantly, one of Biden’s first major foreign policy initiatives was to hold a virtual meeting of the Quad, the four-nation group of the US, India, Japan and Australia.

While his first in-person meeting was the G7 in Cornwall, followed a stopover at NATO and his tete-a-tete with Russian President Vladimir Putin. But even at these sessions there was a dragon in the room. Many foreign policy analysts now are suggesting Biden should ease back on the confrontation with Russia and focus on China as its true rival in the global Numero Uno stakes. But for Washington too, even with the deep-rooted Sino-US animosity, the economic interdependence between the two countries complicates the way forward.

And there are differing views on the Quad’s potential effectiveness. For the US, the main interest is the South China Sea. Many analysts argue the possibility of the US, Japan and Australia coming to India’s aid in the event of any military clash is unrealistic. Others insist the utility of the Quad is only just beginning. The Americans can supply military intelligence, provide us with satellite pictures in Ladakh and, at a later stage, also help us track shipping in the Indian Ocean.

In Asia, China is using its Belt and Road Initiative to create a zone where all roads lead to Beijing in a manner of speaking. But almost every country in Asia fears Beijing’s might and bullying tactics (except for smaller Communist countries like Laos and Cambodia) which could work to India’s commercial and tactical advantage. The Europeans, however, are pushing Biden to take a less antagonistic approach to dealings with China, mindful of Beijing’s economic clout as the second-most important power globally.

Interestingly, despite the cross-border ill-feeling, many Chinese companies still view India as a lucrative market. The 15-month standoff means that big-name projects like Great Wall aren’t likely to drive in here at high speed. But other firms continue to regard India as a market of the future. Companies like TikTok, for instance, would likely be very happy to return if it became possible.

How else can we counter the Chinese? Shyam Saran suggests we forge closer links with our neighbours like Bangladesh, Sri Lanka and Nepal. and allow imports freely from them. If Pakistan could be brought into such a region where trade takes place, that would be even better. But that’s a big if. Still, if we can strengthen our hand with other countries in the region, it would give us a fighting chance to hold our own against the mighty dragon next door.

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