The informal summit between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi at the end of April saw a reset in the tone of the two countries’ bilateral relations, with significant progress on the management of their border problems and some opening towards opportunities for increased economic cooperation. In the lead up to the summit, Vice-Chairman of NITI Aayog Rajiv Kumar, one of Modi’s chief economic advisors who was heavily involved in preparation for the summit, made it clear that India would benefit from a more positive approach to its economic relationship with China. Before the summit, Kumar met with He Lifeng, chairman of the National Development and Reform Commission (China’s main economic ministry). The meetings, held in Beijing, were part of the India–China Strategic Economic Dialogue that began in 2011 and was suspended last year following the Doklam border incident.
Despite India’s unease over Beijing’s posturing on their shared border and elsewhere, Kumar’s takeaway is clear: India should look at China as an opportunity, not as a threat.
‘A lot of conversation in India is about perceiving China as a threat to our entrepreneurs, to our markets, to our security … It’s certainly not the helpful way of looking at it. It may not even be the right way of looking at it’, Kumar said in an interview before the summit. He followed that it’s better to ‘see them as an opportunity and not as a threat’.
China is India’s largest trading partner, with two-way trade of US$84.4 billion in 2017. Although India has a substantial trade deficit with China, exports rose last year by a massive 40 per cent, to US$16.3 billion while imports topped US$68 billion. India is not integrated into international supply chains like East Asian economies. But the weight of the Chinese economy is steadily pulling India into closer and closer economic ties with its big neighbour.
For Kumar and other leading Indian policymakers, this brings acknowledgement that China ‘has to be engaged, and this engagement can be successful, along with taking care of [India’s] core interests’.
That requires working around the long-running border dispute between the two countries and, more recently, India’s hesitation about President Xi’s ambitious Belt and Road Initiative (BRI). India did not support the BRI at the recent Shanghai Cooperation Organisation meeting despite the political capital that President Xi has invested in it.
Both sides appear now to be seeing past these irritants, and the April summit took important steps to alleviate them. Their natural strategic rivalry has been put on hold.
China has many other problems on its plate and would clearly prefer a more constructive relationship with India. A looming trade war with the United States recommends improving relations with India and others like Japan. Just days after the summit with Modi, a high-level US delegation in Beijing brandished threats of tariff imposts on Chinese exports to America and the beginning of an economic battle with strategic implications well beyond the China–United States bilateral relationship.
In our lead essay this week, Sourabh Gupta suggests that ‘[t]he Modi–Xi meeting in Wuhan was notable on two counts: for what was agreed upon and (with requisite political will) shall be implemented; and for what the meeting denotes within the broader context of three decades of normalised Chinese–Indian ties’.
The more immediate outcome is that both leaders issued strategic guidance to their respective military forces to lower the temperature on the frontier. ‘A limited joint patrolling concept that has been successfully piloted at two sensitive points on their disputed boundary will likely be extended to other disputed areas along the Line of Actual Control. The pressure that both sides had heaped over the past two to three years along their unmarked boundary — pressure that culminated in the standoff last summer at Doklam (ironically one of the few resolved points along their vast Himalayan frontier) — is expected to gradually but perceptibly ease over the next few months’.
Beyond repair and on-the-ground stabilisation of the border situation, narrowing of the fundamental differences will have to await Modi’s re-election as well as the roll-out of a new negotiating strategy under a savvier Special Representative.
The big questions that hang over the China–India relationship are New Delhi’s military partnership with Washington, the issue of the sub-continent’s nuclearisation, both civil and military and, on the other side, Beijing’s ambitious infrastructure export schemes, headlined by its Belt and Road Initiative, that has undercut New Delhi’s influence in South Asia.
In the longer term, the improved atmospherics in the relationship promise important strategic adjustments on these three fronts. Beijing is likely to gradually accept New Delhi’s entry into the Nuclear Suppliers Group over time. It will also learn to live with US–India defence interoperability so long as it remains a fundamentally bilateral — not a trilateral or quadrilateral — endeavour. And on the BRI, New Delhi will soften its criticisms and perhaps even partner in some projects to catalyse sub-regional connectivity, integration and prosperity. Despite India’s rejection of the BRI, in 2017 it was in fact the largest borrower from the China-backed Asian Infrastructure Investment Bank.
This may seem a stretch for now, but the forces of economic and geopolitical gravity, it appears, are pulling strongly in these directions.
The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.
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