Status of India-China Relations: Report from a Field Visit to Chinese Think Tanks
Brig Vinod Anand, Senior Fellow, VIF

A multi-think tank scholars’ delegation from India visited China in the end of November, 2018. During the seven day visit, the delegates extensively interacted with a number of premier Chinese think thanks in Beijing, Haikou, and Guangzhou, discussing and deliberating upon issues ranging from the international trade war, the Indo-Pacific, terrorism in South Asia, to developments in the South China Sea, and people to people relations. The discussions brought out prospective avenues of collective and collaborative action, which could strengthen and shape the contours of bilateral ties between India and China. There was considerable emphasis on the need for India and China to work towards peaceful resolution of outstanding issues, and capitalize on the recent uptick in bilateral relations to devise a roadmap for cooperative action in the future.

One of the first meetings held was centered on the theme of India-China trade relations, leading to a mutually agreed upon understanding of the potential for greater economic cooperation and collaboration between the two countries. However, even as the bilateral trade relationship continues to grow, India’s trade deficit with China is increasing, as pointed out by scholars on the Indian side. India is importing a wide variety of Chinese goods, such as electrical equipment, medical instruments, heavy machinery and organic chemicals among other goods from China, but exporting minimally. Further impacting the existing trade imbalance is the fact that the demand for Indian goods is on a decline in Chinese markets, while China has recently emerged as India’s largest trading partner. As a result, diversification of the bilateral trade basket was suggested as an important corrective measure by the Indian side, to gradually mitigate the impact of the current the trade deficit between India and China.

Another related issue discussed during the visit was that of China’s non-tariff barriers such as unrealistic labelling standards, delays in customs clearances, port-related restrictions et cetera, with emphasis on the need for a cut down. Furthermore, unconventional energy is another sector where India and China can explore possibilities of joint investment in developing regional storage hubs, as pointed out by an Indian delegate.

Espousing the principles of globalization and multilateral trade, both sides declared that they were not in favor of the idea of protectionism, and instead would want to work towards creating a free and open international trade regime, and strengthening bilateral cooperation on key economic issues. Furthermore, both sides expressed common concerns regarding the on-going trade war between the United States and China. One of the Indian delegates went on to highlight the fact that the international trade war would have detrimental consequences for not just India and China, but other developing countries in Asia as well, making it all the more critical for India and China to take on leadership roles regionally, to challenge western dominance in international trade regimes and global value chains. However, it was further stated by the Indian side that though on the one hand the Regional Comprehensive Economic Partnership (RCEP) is a step in the right direction, there is much to be done before India could move towards signing RCEP as India remains wary of being flooded further with Chinese goods. It was also pointed out that Indian industries are already struggling to cope with the steady influx of Chinese goods into the Indian economy, while the trade deficit between the two countries is continuously widening, and stands at over $63 billion as of 2018. At a time when the US is opting out of multilateral arrangements such as the Paris Agreement, Trans Pacific Partnership and so on, regional agreements such as the RCEP are of great importance.

On economic development and growth, the Chinese side shared their experiences with the Indian delegates, and stated that consumption-driven growth will be the driving force behind the Chinese economy, as opposed to investment-driven growth. They further elaborated on how China is increasingly making efforts to carry out a drastic shift from being a manufacturing-oriented economy to one focused on the services sector, in order to keep up with public expectations of high living standards and a vastly improved quality of life. The Indian side mirrored Chinese thinking on initiating context-specific economic reforms domestically, and partner with each other in key areas of bilateral engagement such as better connectivity, infrastructural development, and participation in and strengthening of regional economic institutions.

As for China’s Belt & Road Initiative (BRI), there were concerns raised by the Indian side regarding the strategic objectives of the project. Allaying concerns regarding the China Pakistan Economic Corridor (CPEC), one of the foundations of BRI being used as a ‘debt trap instrument’, the Chinese side iterated the official Chinese position of the issue. They stated that no financial or technical difficulties were being caused to the participating countries, and that project-related development was taking place in phases, in order to give the partner country ample time to make domestic adjustments to the changes. To that, the Indian side responded by voicing support for connectivity projects to be developed and integrated into the regional matrix, but at the same time, implored the Chinese to rationalize the $20 billion investment in Pakistan, and share the method of repayment they had envisioned for the same.

On the question of the South China Sea (SCS), the Chinese side stated that the situation in the region had been peaceful overall, and that the joint military exercises conducted in the region, by China and some ASEAN countries, were a part of the mutually agreed upon, cooperative action plan. They further stated, that considerable progress had been achieved on the China-ASEAN maritime code of conduct front, and that relations with the Philippines had improved too.

According to the Chinese perspective, any potential flare up in the SCS region is likely to be caused primarily by US interference in the form of exerting diplomatic pressure or military intervention, or due to military deployments in the region by other claimants, or any other type of unilateral action in the disputed area, expressed the Chinese side. The Indian side responded by sharing concerns regarding the draft code of conduct not being legally binding and its inapplicability to all disputed features and overlapping areas claimed under UNCLOS, and requesting for clarification on the geographical coordinates of the ‘nine-dash line’. Nonetheless, they reiterated India’s official stance on the issue that lends supports to ensuring freedom of navigation, peaceful resolution of sovereignty-related disputes according to universally recognized principles of international law.

There was wide consensus and optimism in China regarding the outcomes of the informal Wuhan Summit. Experts on the Chinese side were of the opinion that India-China bilateral relations are at a critical stage, and laid emphasis on working together towards resolving thorny issues and better bilateral relations. They were of the opinion that India and China are two major growing economies of the world, and a prosperous India-China would mean greater prosperity for the world. The experts on the Indian side shared the post-Wuhan optimism, and laid emphasis on forging a good bilateral relationship, seeking synergy between the two sides on their respective economic strategies of ‘Made in China 2025’ and ‘Make in India’. There were also opportunities for mutual cooperation in developing smart cities both in India and China.

On the question of settling border disputes, Chinese experts put forward the belief that immense political courage would be needed on both sides, to satisfy domestic sentiments. When the leaders of Russia and China came together for instance, border disputes were settled, but at the same time, Russia’s negotiations with Japan did not yield results due to the lack of political courage on the part of Japan. One Chinese expert noted that border issues are sensitive, and therefore require strong leadership on both sides, to see negotiations through, and in today’s age of social media, it is even more difficult to settle such disputes, as negotiations cannot be made public. Since negotiations regarding border disputes are invariably time consuming, it is easier to come to an agreement on the mechanisms to ensure better control and management, and to develop information sharing protocols to prevent conflict escalation. Indian scholars pointed out the benefits of at least clarifying as to where the Line of Actual Control lies so that border incidents are avoided.

Throughout the visit, the Chinese side showed a great deal of curiosity towards the concept of the ‘Indo-Pacific’, as well as the Quad. The Indian side maintained that the Indo-Pacific is a concept under evolution, and that India has no inclination to join any US-led military alliance. As stated by Prime Minister Modi at the Shangri La meeting held earlier this year, India is seeking a free, open and inclusive Indo-Pacific with an Asian centrality, as without taking the interests of other Asian countries into consideration, the concept of Indo Pacific is unlikely to be materialized.

The Chinese side sought clarity on India’s pursuance of strategic autonomy, as the Communications Compatibility and Security Agreement (COMCASA) signed between India and the US was seemingly being perceived as militarily binding agreement and compromising India’s soverignity. The Indian side countered Chinese thinking on the issue, by citing a special clause and other exceptions in the COMCASA which gives India the option to withdraw from the agreement with a notice of six months.

One Chinese expert raised a serious concern about the issue of the ‘Bay of Bengal Initiative’ under which, as per the Chinese, the United States is extending military assistance/support to Sri Lanka, Bangladesh, and the Maldives. Referring to a State Department report, the Chinese expert said that the US would provide assistance to Sri Lanka to improve their own radar system, and to initiate patrolling in the region. The Indian side maintained that the statement had not received much attention in India, and it may be too peripheral an issue to consider.

Furthermore, the Chinese side sought cooperation on issues like climate change and global governance, and proclaimed that to enhance bilateral relations, regional cooperation was of utmost importance. The Indian side expressed willingness to promote regional cooperation, and to that effect, suggested cooperation be sought from Myanmar, Nepal, and other countries in the region, provided they agree to the terms of engagement. Indian experts noted that India and China share interests in Afghanistan vis-à-vis peace and stability in the region, but the approaches are not convergent, or even complimentary. Chinese experts noted that although India and China are both victims of terrorism, the definition of terrorism varies from country to country, which is why cooperation on counter-terrorism has been a challenge. However, there is a possibility of cooperation on intelligence sharing on counter-terrorism, provided a great deal of mutual trust exists between the countries.

On people to people relations, the Chinese side said that the potential for tourism had been explored to only a limited extent, and that it would be imperative for each country to have freer policies in that regard. In keeping with the spirit of enhancing people to people engagement, the Chinese side put forth the idea of having more direct flights on a daily basis, between Indian and Chinese cities.

The interactions largely ended on a positive note, even though the Chinese experts were not forthright on some of the issues that concern India. In fact, the Chinese side didn’t show much inclination to discuss such matters. Similarly, on the issues of cross border terrorism and the CPEC, particularly on the aspect of violation of India’s sovereignty, the Chinese experts did not enter into any worthwhile discussion. The reluctance to discuss thorny issues at a people to people level is worrisome. On the bilateral relationship, there is a tendency to only discuss the matters in which both countries can make progress. Though China desires to explore joint cooperation in some of the South Asian countries, it sees India’s role as being limited to the same region. Perhaps the Chinese experts do not see India playing a role beyond the region.

Even though China has developed huge infrastructure for its universities and think tanks, the perspectives and viewpoints across all institutions follow a singular agenda and thought process. Very rarely a differing, if not dissenting, viewpoint is expressed. Most of the experts follow the line of China’s Communist Party, and do not digress from that ideological position.

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