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Zorawar Daulet Singh & Arun Sahgal: A 'reset' that never came

India's political leadership needs to seriously introspect on the sinews of national power to reshape China's India policy

Zorawar Daulet Singh & Arun Sahgal 

India’s political leadership needs to seriously introspect on the sinews of national power rather than relying solely on leveraging the international environment to reshape China’s India policy

If the impression prior to the Wen Jiabao summit was that India would manage to ‘reset’ its relations with Beijing by de-escalating the irritants that have flared up in recent years, then it has yielded little. Despite the official spin of a “stabilising” summit, the reality is that on core geopolitical issues India and China decided to agree to disagree. The dominant theme was the perpetuation of an unequal partnership between China and India Inc., and this structural asymmetry has arguably reduced any incentives that Beijing might have had in alleviating India’s concerns in other spheres.

While some observers have opined that China’s economic stakes in India’s growth story will soften or transform Beijing’s posture on other issues, Mr Wen’s visit has actually demonstrated that China can altogether ignore issues that concern India. Perhaps, this is because of the (accurate) perception that India’s economic dependence on China is too high for India to credibly restrict access to Chinese industry or switch to alternative sources.

Based on economic theory alone, India cannot sustain such large imbalances indefinitely. Unlike America, which actually prints the money that finances its deficit with China and thus transfers the vulnerability of its trade imbalance onto China, India loses precious foreign exchange reserves by recording stubborn deficits: for every dollar that India exports to China, it imports merchandise worth $2.6. Indeed, this situation has led to India now importing debt to finance this imbalance, as exemplified by Reliance Communications’ $1.9 billion loan from China Development Bank.

At a broader level, it appears that India Inc. is acquiring a veto over India’s China policy, with geopolitical questions being subordinated to the business goals of India’s oligarchs. While this should not necessarily be an adverse development if commerce with China helps resolve India’s huge infrastructural dilemma, the pertinent question is whether dependence on Chinese infrastructural capabilities is used as a window of opportunity to buttress India’s growth before indigenous capabilities are acquired. For if the latter does not occur (and present indicators suggest manufacturing capabilities are atrophying), India will be confronted with a structural dependence on Chinese industry at enormous cost to its strategic flexibility and industrial depth.

Analysts cannot be faulted with posing the legitimate question, what does India Inc. actually produce? Nearly all the ingredients of India’s growth momentum seem to arrive in containers from China, with India Inc. merely the project-cum-marketing manager. Whether it is telecom equipment or power plants or turbines, nothing seems to be ‘made in India’. And it is this fundamental qualitative asymmetry that could compel a future Indian strategist to accept a geopolitical fait accompli from China.

For now, the formation of a strategic economic dialogue is likely to institutionalise the influence of India Inc. in bilateral relations. India has conducted four rounds (since January 2005) of a separate strategic dialogue with China at the foreign secretary level. In contrast, China’s Strategic and Economic Dialogue with America has a much broader mandate that includes economic and security officials at the political level from both sides, who address geoeconomic and geopolitical questions under an overarching framework. Perhaps, India and China need to erect a similar integrated mechanism where economic and strategic issues are given equal and parallel priority without either one dominating the agenda.

Despite the dominance of geoeconomics, the visit revealed some posturing on geopolitical questions. India received no assurance over its concern on the Pakistan-terrorism nexus. Perhaps China saw little incentive for giving concessions on cross-border terror, considering India’s inability to extract meaningful cooperation on this issue from its strategic partners! Insofar as Pakistan’s two principal benefactors — Washington and Beijing — are concerned, the one issue that ironically unites them is preserving the viability and stability of the Pakistani state and the primacy of its military regime. Perhaps, China is simply emulating Washington’s policy of giving carrots to Rawalpindi. Clearly, India has its work cut out to counteract such diabolical and reckless policies.

The absence of an official affirmation of India’s traditional “one China” policy was evidence of India’s displeasure at China’s unfriendly posture on Kashmir. It is instructive to note that the January 2008 joint statement had, for the first time, not included a reference to Tibet, though India had indirectly affirmed its one China policy. The latest communiqué has been further refined to remove any mention of India’s posture on China’s territorial sovereignty.

Recent reports in China’s official media, of treating the length of the boundary with India as only 2,000 km (as opposed to India’s stand of 3,488 km) and thereby questioning India’s sovereignty even over the portion of Jammu and Kashmir that India presently governs, has added another layer of shadow boxing. These developments do not augur well for the dispute resolution with China, and imply that a psychological game is underway as China has now unequivocally reversed its stance of calculated ambiguity on the Kashmir question that was palpable in the 1990s to an anti-Indian position. And the issue of stapled-visas is a logical expression of this new posture and not a bureaucratic aberration, as speculated until now.

In this regard, Premier Wen’s suggestion during his trip, that both countries should “increase the safety zone” along the India-China border, would appear paradoxical to China’s overall posturing that denies the very existence of the western sector of the dispute. Apparently, even as China’s legal position on the dispute has hardened, it is aware of maintaining a stable status quo on the ground. Both India and China appreciate that until a mutually acceptable definition of the line of actual control is arrived at, both sides need to maintain stability and avoid any provocations. Could Wen’s proposal be an opportunity to de-militarise select pockets or increase restraint in border patrolling by both sides? Perhaps the Special Representatives will explore this in their next discussion.

Finally, the thrust on maritime cooperation, that found expression in the joint statement, is a positive development and one of the few areas where India presently has a relative advantage both in capabilities and logistics in the Indian Ocean.

India has been striving to reframe the terms of its engagement with China. India’s political leadership needs to seriously introspect on the sinews of national power rather than relying solely on leveraging the international environment to reshape China’s India policy.

Zorawar Daulet Singh is a research fellow at the Centre for Policy Alternatives; Brig.(retd.) Arun Sahgal is a consultant at the Institute of Peace and Conflict Studies

First Published: Sun, December 26 2010. 00:41 IST