China’s interest in India’s infrastructure is opportunity and challenge

modi-china-updateThe BRICS decision to give all its members an equal stake in the New Development Bank should be welcomed. But let’s not have any illusion about what this means. China remains far ahead of all its BRICS peers. The size of its economy is larger than that of all the other BRICS members combined, and it continues to grow at a healthy clop.

At over $14.5 trillion in purchasing power parity terms, the Chinese economy is more than two and a half times larger than India’s. In 1990, we were roughly equal. Such disparities with, say, Japan or Germany may not matter. But China is not only a neighbour with whom our border is disputed, but also one who contests our primacy in South Asia and seeks to displace the US as the dominant Asia-Pacific power.

In the past two years, we have been witnessing a new Chinese policy towards India. One manifestation of this has been calls by Chinese leaders like President Xi Jinping and foreign minister Wang Yi to declare that they want a border settlement “as soon as possible”. What they haven’t indicated is the nature of the solution.

Most people would assume that this could be a straightforward swap of claims, such as the one Zhou Enlai and Deng Xiaoping proposed in 1960 and 1981. But officials say that since 1986-87, China has made a settlement contingent on Indian concessions in the eastern sector, which they have indicated means the Tawang tract.

The other is the enhanced Chinese interest in economic engagement with India. Since the 2000s, China has been wooing India’s South Asian neighbours with aid focusing on infrastructure development. Now China says it wants to significantly step up infrastructure investment in India. This is both an opportunity and a challenge for us.

It would, at one level, facilitate the increased integration of the South Asian economies. On another level, it would provide India the wherewithal to replace Beijing as the largest trading power in the region.

This is the baseline position with which the Modi government must conduct its foreign policy towards China. So what should be the features of a new China policy?

First, a need to reinforce India’s periphery. The government decision to go easy on environmental concerns on issues relating to national security is a good augury for India’s border infrastructure construction.

Our northern border is facing considerable pressure from China. The events in Pakistan and Afghanistan are creating an uncertain environment that could be exploited by Beijing.

The raising of the two new divisions, the mountain strike corps and its ancillary formations, will mean little if there is no infrastructure in place. The importance of border road construction can’t be underestimated. Plans made in the 1960s remain unfulfilled. Daulat Beg Oldi, for instance, close to the Depsang Plains, still requires a march of several days to reach and is supplied by air.

The second challenge is in shoring up our positions with our neighbours. In the last few years, India has shown in Nepal that it can draw a line in the sand to prevent Chinese influence from undermining our interests. But it needs to reinforce this lesson in Sri Lanka and the Maldives. New Delhi needs to equip itself with policy options that will make it both feared and respected in the neighbourhood.

The third challenge relates to India’s position in Asia. The two countries are already engaged in negotiations in the Regional Economic Cooperation Partnership that could shape the emerging Asian economy. China will clearly be its main driver, but India could well emerge as a significant second pole.

The bigger challenges are in China’s larger political goals. India has a view of itself as a regional power that would seek to offset any Chinese efforts to establish its hegemony in South Asia. The current imbalance requires India to get on to a path of sustained high economic growth and simultaneously develop linkages with countries like Japan, Asean countries and the US.

Sino-Indian relations will feature both competition and cooperation. How we fare depends on the policy choices we make and the skill with which we employ them.

The views expressed in this article are solely those of the author.

(Courtesy: ORF)

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