China has many ways of affecting Indian politics. Indeed, an India-China ‘reset’, as envisaged by the Narendra Modi government and represented by the “informal summit” between Modi and Chinese President Xi Jinping in the central Chinese city of Wuhan, has the very strong domestic context of several major state-level elections later this year and the general elections next year.

There are two big expectations that the Modi government appears to entertain here — both of which rest on shaky foundations.

LAC Transgressions

The first big hope is that China will not trouble India too much on the Line of Actual Control between the two countries or in Doklam in Bhutan this coming summer.  Modi will not want to be distracted by or have the Chinese make him look ineffective on foreign policy as he moves into election mode at home.

Such a hope is misplaced. High-level visits between the two sides have a record of being accompanied by news of some Chinese transgression or the other on the border. Whatever their reasons in the past, under Xi Jinping, Chinese transgressions have been of a qualitatively different order – think Depsang in 2013, Chumur in 2014 and Doklam in 2017. No doubt, the present visit will be spun on both sides as being successful but it is hardly likely that transgressions will stop or that the next big one is not around the corner. Doklam was a loss of face for the PLA — something that the Chinese are not likely to forget in a hurry but will wait to avenge in time.

Given the gap in capabilities between the two countries in favour of China, Beijing has no reason to be as committed to “maintaining peace and tranquility in the India-China border areas” or “the smooth development of bilateral relations” as the Indian government hopes. Further, the Chinese have a finer understanding of the structural realities of international politics and realise that India as an equal partner in Asia is not conducive to their own ambitions.

The Chinese leadership led by Xi is, therefore, unlikely to be swayed by the occasion.

The realisation is perhaps not lost on India either, with reports following a meeting of foreign ministers at the Shanghai Cooperation Organization indicating that India’s name is missing from the list of countries supporting China’s Belt and Road Initiative (BRI). Similarly, no joint communiqué or statement is expected from the Modi-Xi meeting, just “heart-to-heart discussions”. This is as good a sign as any that neither side is pinning any great hopes from the meeting. Even the Rajiv Gandhi visit in 1988 – the original “reset” of India-China relations – resulted in a joint statement and the beginning of a roadmap for a series of border agreements that would be concluded within the next decade.

Economic Ties

The second hope is related to the Indian economy. With the economy yet to hit its stride since  Modi took over, and jobless growth and poor results overall for the ‘Make in India’ campaign tarnishing his record, China has some very practical uses for  Modi.

While successive Indian administrations have rejected any form of association with the BRI except in the case of the Asian Infrastructure Investment Bank (AIIB), this looks increasingly an unsustainable position if the Indian economy is to receive the capital infusion it requires for rapid infrastructure development. For their part, the Chinese, too, are desperate to enter the Indian market; Chinese state-owned enterprises are none too happy about being forced into what they believe is a dead end in Pakistan.

This might be something India and China could work on and it is inevitable that, despite the latest SCO episode, India and China will reach some modus vivendi in which more Chinese investments and infrastructure projects receive clearance in India while not exactly being referred to as BRI projects. The Chinese have, in any case, been open to the idea for a while.

At the same time, it will be important for the Modi government and successive administrations to keep a sharp eye on Chinese investments and acquisitions of Indian companies including technology startups as well as the ingress of Chinese technology products and standards into the Indian market. This will be essential to protect both domestic industry as well as critical infrastructure.

Meanwhile, the Indian trade deficit with China – an issue that is blown out of all proportion – is unlikely to go away soon. The Chinese will continue to keep Indian pharmaceuticals out of the market for reasons of domestic protectionism and the best that can be hoped for is that increasing Chinese investments will ameliorate the angst surrounding the trade deficit.

Conclusion

Modi’s visit will likely be shorn of the symbolism attached to the Rajiv Gandhi visit. As early as the second morning of that historic visit, then Chinese President Yang Shangkun had reportedly told Gandhi that his visit was already a success. It is unlikely any such grand gestures will be accorded to the Modi-Xi “informal summit”. And that is how far the world situation has changed in China’s favour since 1988.

This article originally appeared in with the same title in the Business Standard, 26 April 2018.

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