An India-China ‘reset’ and the future of Asia

The “informal summit” between Prime Minister Narendra Modi and Chinese President Xi Jinping in Chennai on October 11-12 had the expected mix of pageantry, culture, history and religion. India’s post-visit statement reveals the leaders had an “in-depth exchange” on long-term and strategic issues of global and regional importance. They evaluated the “direction of bilateral relations in a positive light”, and the need for them to reflect the enhanced global roles of both nations. A “rules-based international order”, including an international trading order, was desired. These anodyne incantations needed closer examination to decipher the facts.

The last-minute announcement of the visit, the diplomatic jousting between India and China at the United Nations, after the August 5 Kashmir gambit of the Modi government, and Mr Xi hosting Pakistan’s PM Imran Khan literally before leaving for India set the scene for the summit. Just as the Wuhan summit in April 2018 was preceded by the Doklam Sino-Indian standoff in 2017 summer, when Indian troops intervened in Bhutanese territory to stop the Chinese incursion, this summit’s primary purpose was to reset the relations after India upset the status quo in Kashmir, albeit by domestic constitutional changes.

India also repositioned itself to counter China. Since August 5, India has stymied Chinese attempts to put Kashmir on the UN Security Council’s agenda. India also thwarted Pakistan rustling up enough votes to get the UN Human Rights Council at Geneva to discuss the matter. The “Howdy, Modi” Houston rally, attended by US President Donald Trump, signalled increased bonhomie between leaders of India and America. On the UNGA sidelines, India attended the meeting, just upgraded to foreign minister level, of four democracies of the Indo-Pacific — Australia, India, Japan and the US, known as the Quad. On October 3, India’s defence secretary led a delegation to Vietnam to discuss military cooperation. Finally, days before the Chennai summit, India conducted an Integrated Battle Group exercise in Arunachal Pradesh (which China claims), using new equipment and tactics, demonstrating mobility and punch to counter any Chinese transgression across the Line of Actual Control.

China arrived at the summit after celebrating the 70th anniversary of Communist rule and a Tiananmen Square parade which besides the usual marching troops displayed 580 pieces of weaponry, including DF-41 ballistic missiles capable of hitting any US city, as well as a hypersonic glide weapon. On the negative side, the continuing civil unrest in Hong Kong challenging the “one-country-two-systems” formula, exactly the principle that the BJP overturned in Kashmir, has been an embarrassment that the Chinese leadership has so far handled without brute force of the kind used to quell the Tiananmen Square uprising in 1989. China also faces a slowing economy and ongoing trade war with the US, with a deal stuck on Chinese unwillingness to commit on paper systemic changes to level the trading playfield.

The Indian economy has also been sputtering as demand collapses. India needs investment and technology but suspects Chinese intent and practices. The trade deficit has mushroomed in China’s favour from $36.2 billion in 2013-14 to $63 billion in 2017-18. China naturally eyes the Indian market as the US pulls its shutters down. It wants India in the Regional Comprehensive Economic Partnership (RCEP), consisting of 10 Asean  members and South Korea, Japan and China, besides Australia, New Zealand and India. Generally, after free trade agreements with the Asean bloc, India’s trade deficit with many nations has worsened. Joining a free trade area centred on China, Japan and South Korea could turn India into a dumping ground, unless there are safeguards and their markets are opened for Indian services, pharmaceuticals, agricultural products, etc. The 5G and Huawei question lies at its heart. The US vehemently opposes Chinese dominance of this technology and its carrier. India is a market that both covet. But the trust deficit between India and China works against Chinese entry.

India will continue to resist Chinese attempts to dominate Asia, if not the world, by China creating a Sino-centric power structure, of which the Belt and Road Initiative is the skeleton. Two US Presidents preceding Donald Trump shared with India this vision to balance China. While Mr Trump may have skewed notions about global trade and US power, his trade war with China is slowing the Chinese economic juggernaut. Consequently, China may be both becoming more nationalistic and aggressive, but also more willing to cut smaller deals with nations like India or the Asean bloc to limit the skirmishes as it manages relations with America.

The next few months will show if indeed the “Wuhan Spirit”, as the Indian statement claims, has transmuted into the “Chennai Connect”. Hopefully, India has not, like Shah Rukh Khan, boarded “Chennai Express”, a wrong train. But a few concrete outcomes have emerged. Sister-state relations are to be established between Tamil Nadu and Fujian province. To boost people-to-people contacts, 2020 shall be the Year of India-China Cultural and People to People Exchanges. A High-Level Economic and Trade Dialogue mechanism was announced. The need to maintain tranquillity along the Line of Actual Control was reiterated. On the boundary question, the special representatives have been enjoined to craft a “fair, reasonable and mutually acceptable settlement”. The re-invocation of Political Parameters and Guiding Principles of the 2005 agreement is welcome as Chinese had been shunning them in recent times.

Lyrical phrases aside, the Chennai summit has “reset” relations to move beyond the Kashmir hurdle. But Prime Minister Naendra Modi and President Xi Jinping are domestically riding dangerous populist-nationalist moods, now undercut by slowing economies. If Mr Modi has Kashmir to contend with, Mr Xi has Hong Kong, Xinjiang and Tibet. Both leaders are airbrushing past history to resurrect reimagined past glory based on a selective reading of history. Hyphenating his India and Nepal visits and prefacing it with hosting Imran Khan are signals that Sino-Indian relations will simultaneously have cooperation, competition and even friction.

Informal summits so far have handled crises and restored some normality to relations. However, fundamental differences persist over the future Asian order — Sino-centric and China-dominated, or multipolar and balanced. The coming decade will determine the outcome as the Chinese growth levels off and Indian growth gathers pace and starts narrowing the gap in comprehensive power. Till then, India needs to follow Deng Xiaoping’s “24-Character Strategy” of restraint and patience. But electoral needs, the core ideology of the RSS-BJP and leadership megalomania may preclude it, just as China under Mr Xi prematurely ignored it. There lies the risk for Asia and the world.