The new Chinese leadership wants to reach out to India and New Delhi
should make the most of the opportunity to move forward on the
strategic and economic fronts
Diplomatic scorecards are notoriously difficult to draw up. The game
goes on for too long and the points scored are often incommensurable.
Yet the temptation to pronounce an immediate verdict is difficult to
resist. Indeed, during the Chinese Premier's recent visit, the only
question that seemed of interest was: who got the better of the other?
However, any serious assessment of the visit should focus on questions
of continuity and change. After all, India will have to deal with this
Chinese leadership for the next decade or so.
Let us start with the big picture. Did Premier Li Keqiang's decision
to visit India on his first official trip abroad indicate anything
significant? Many seasoned Indian observers, including former
diplomats, have sought to deny this. Premier Li himself insisted that
the visit was meant "to demonstrate the high importance the Chinese
government attaches to India." This, in turn, reflects the wider
international considerations confronting China.
'Pivot' to East Asia
From a strategic standpoint, China faces a worsening situation along
its maritime periphery in the East China and South China seas — thanks
to its own swaggering style in recent years. The United States has
seized the opportunity to announce a "pivot" to East Asia. The Chinese
naturally assume that the move is aimed at them. More worrying to
Beijing is the new government in Tokyo — under the leadership of
Shinzo Abe — that seeks to reinterpret, if not rewrite, Japan's
pacifist Constitution and to invigorate ties with countries like
India.
From an economic perspective, too, the situation seems less than
sanguine. The U.S. is promoting a Trans-Pacific Partnership (TPP).
Signed in 2005 by Brunei, Chile, New Zealand and Singapore, the TPP
has drawn the interest of five other countries: Australia, Malaysia,
Peru, Vietnam and Japan. The TPP has an ambitious tripartite agenda.
It aims at a regular Free Trade Agreement with provisions for
protecting intellectual property; at the creation of investor-friendly
regulatory frameworks and policies; and at emerging issues, including
measures to ensure that state-owned companies "compete fairly" with
private companies and do not put the latter at a disadvantage. China
regards the TPP as an economic grouping directed at it. Here too, the
immediate cause for concern is the position of Japan. Prime Minister
Abe has announced his intention to push for Japan's entry into the TPP
and his willingness to take on the strong agriculture lobby that
opposes the idea. The Chinese are well aware that a successful TPP may
eventually compel China to come to terms with it — just as China had
to do with APEC and WTO.
In this context, it not surprising that the Chinese leadership wants
to reach out to India. Beijing knows that India is a "swing" power in
the present strategic constellation. Its choices could alleviate or
exacerbate China's problems. Premier Li was seeking reassurance as
well as reassuring India when he publicly stated that "we are not a
threat to each other, nor will we ever contain each other." China also
knows that the TPP will not be welcome to India either. Moreover, the
Chinese are keen on expanding economic ties with India, especially by
tapping into Indian markets. They also want to begin negotiations with
India on a China-India Regional Trading Arrangement (RTA).
All this opens a few windows of opportunity for India. These are
unlikely to remain open forever, so it is important that we make the
most of them. The government has been quick off the blocks, but more
needs to be done.
First, there is the possibility of progress on the boundary
negotiations. So far, the Chinese seemed reluctant to follow through
on the political parameters agreed upon in 2005. In particular, they
were less than happy with the provision which suggested that areas
with settled populations would not be up for grabs. When Premier Wen
Jiabao visited India in 2010, he openly said that the boundary dispute
would take long to settle. The current Chinese leadership appears to
have a different stance. Both President Xi Jinping and Premier Li have
indicated that they would like to move forward as soon as possible. It
is conceivable that they are offering progress on this issue to
palliate India. But it would be unwise to prejudge this issue.
Besides, any progress, however limited, will be in our interest.
The Chinese have also indicated that they want to strengthen the
mechanisms for maintenance of peace and tranquillity along the
frontiers. But it is unlikely that they will agree to commence an
exercise on clarifying the Line of Actual Control. The Chinese have
always insisted that this would be a distraction from the main task of
settling the boundary dispute. In any case, given the differences
between the two sides' perceptions of the LAC — especially in the
Ladakh sector — such an exercise would be doomed to failure.
Greater market access
Second, there is an opportunity to press for greater market access for
Indian firms in China. New Delhi has rightly insisted that further
deepening of economic ties will depend on redressing the prevailing
imbalance in trade. The Chinese leadership, too, is aware that the
current pattern of trade is unsustainable. Premier Li has said that
his government will work towards rectifying this situation both by
facilitating market access to Indian companies and by encouraging
Chinese firms to increase investment in India and expand trade in
services.
Even as the government keeps the pressure on this issue, it should get
its own act together for attracting investment from China. To be sure,
New Delhi has expressed interest in Chinese investment, particularly
in infrastructure. But it hasn't put its money where its mouth is.
Take the case of China Light and Power (CLP), which has invested in a
1320 MW power plant in Jhajjar, Haryana. This is India's largest
foreign direct investment in this sector. The plant was commissioned
ahead of schedule in 2012. Since then, it has languished for the lack
of coal supplies from Coal India Limited. The CLP's position is fast
becoming untenable, but the government has not been responsive. This
can scarcely be encouraging to other Chinese firms contemplating
investment in India.
Regional issues
Bilateral matters apart, the two sides also seem poised to work
together on regional issues like Afghanistan. Interestingly, it was
China which suggested earlier this year that they begin a dialogue on
Afghanistan. Both countries are concerned about the situation in
Afghanistan after the NATO withdrawal in 2014. Instability in
Afghanistan is bound to impact on existing and proposed investments of
India and China in that country. China has already made a successful
bid for the copper mines in Anyak and is keen to acquire stakes in
extraction of other natural resources.
In talking to India, China's interest may simply be to secure support
for its increasing presence in Afghanistan. But there seems to be more
in play here. Beijing is evidently not confident that Pakistan will be
able to secure Chinese interests in Afghanistan after the western
forces pull out. This is not to suggest that China's strategic
relationship with Pakistan is weakening. Indeed, Premier Li has had a
rather good visit to Pakistan. Yet Pakistan's ability to deliver in
Afghanistan, especially if the security situation markedly worsens, is
open to question.
The simple fact is that the main outlet for any resources to flow into
China will be through the north of Afghanistan. Pakistan and its
proxies have no influence in these parts. Conversely, the groups whose
writ runs in these areas have a good relationship with India. At any
rate, if Afghanistan descends into something like a civil war,
Pakistan cannot be of much help to China. It is in Beijing's own
interest, therefore, to ensure that Pakistan doesn't stir the pot too
vigorously after 2014.
So, the present strategic conjuncture presents interesting
possibilities for India. New Delhi should neglect the naysayers and
press ahead with engaging China on all fronts.
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