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SCO Summit: India’s Entry Opens New Chapter To Rewrite Sino-India Relation, Albeit Modi’s Refusal To BRI – Analysis

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Chinese media were euphoric with the success of 18th summit of Shanghai Cooperation Organization (SCO) , held in Qingdao, China, considering that it would write a new chapter for India-China relation. India and Pakistan participated as new members of the organization in the summit. Global Times , the noted Chinese media, extolled the summit, saying “ China, India ready to deepen their economic ties”.

Chinese hailing surprised many against the backdrop that Indian Prime Minister escalated trust deficit in the wake of supporting China’s BRI ( Belt and Road Initiative). The summit was a great chance for China to enhance multilateral cooperation among BRI member countries, according to the Chinese media. None other than India out of eight members was against BRI. Other member countries reaffirmed their support to the initiative for a greater work to expand the economic connectivity. Instead, Mr Modi was emphatic to built up trust before the BRI takes place.

Contrary to Chinese heightening of hope, Indian media remained reticent. They wondered how the hopes would brighten for better economic connectivity through BRI, without dwarfing the trust deficit. Since past two years, India and China wades into a tumultuous phase. A series of disputes erupted during these periods. Of these , Doklam stand- off was the worst, which deepened the trust deficit.

Nevertheless, though Doklam stand-off cast a deep shadow on bilateral relation, the events in the subsequent periods rejigged the hopes for rapprochement of the relation. BRICS summit in September 2017, visit of India’s new foreign Secretary Vijay Gokhle to China – instrumental to mitigate Doklam ire, and Modi’s informal summit with Xi Jinping added some fresh air to rework for better relation between the two countries. Even then, the trust deficit reeled underneath.

The volte- face of Chinese media for re-energizing the relation is laudable, despite a big disparity exists between the two countries in terms of economic size. Chinese economy is five times bigger than India.

By virtue of faster growth, China emerged the biggest trading partner of India. The growth in the trade did not confine to only trading activities. It extended further , when China has become the new game changer of India’s manufacturing activities

Till 2015, a few were engaged in manufacturing of mobile phones in the country after Nokia pulled down its India shutter. Today, more than half of mobile phone demand is met by domestically manufactured products. Chinese makers were instrumental to this manufacturing growth. Chinese brands like Gionee, Huawee, Oppo, Vivo, One Plus, Coolpad – have established their manufacturing facilities in India.

These changes in the bilateral relation – from trading to manufacturing activities – exhibit a new era of relation, amidst a long political bitterness between the two countries. China emerged the architect in transforming manufacturing landscape of India from resource base to technology oriented component base industry. China emerged the second pioneer , after Japan, in bringing the structural changes in the manufacturing dynamism in the country . In this context, China should have a pat on the back its contribution to the Indian economy. Japan was the pioneer in development of automobile industry in the country.

However, the other side of the Chinese cooperation cannot be overlooked. It is apathetic that China dragged India into a big trade deficit. Nearly, 39 percent of the trade deficit in 2017-18 was due to Chinese export to India.

To this end, the analysts were agog with the ideas as how best India can counter-balance the trade deficit by exporting more or work together with China. In this context, Chinese think tanks were upbeat for a new pattern of economic cooperation, while relegating the factor of wide disparity between the two countries’ size of economy.

According to Pangol Institution –a public policy think tank in China – there are three similarities in the advantages of India and China. They are : a large and low cost labour force, a big domestic market and a large pool of human capital for supply of science and engineering talents. The think tank is of the opinion that while China has properly utilized these three assets to develop its industry from labour intensive and export oriented base to cutting –age high valued technology oriented industries like integrated circuits, pharmaceuticals and aviation, India utilized them for development of highly competitive technology and capital intensive industries like pharmaceuticals and IT industries. As a result, even though progress was made for intermediate level component base industries, like cellphones and automobiles, they lag behind in terms of international competitiveness and industrial eco-system. At this point, China can be a role player in improving the Indian industrialization, the think tank urged. In this process, a platform for new trust can be built up, it asserted.

Further, the recent Sino-USA trade war may turn boon to enhance business relation between India and China. Scope enlarged for India to export more products , such as cotton, soybean meal and maize, according to Indian exporters. The huge market for cotton in China can be tapped by India after Chinese retaliation to USA by imposing high tariff. Of the 5 million bales of cotton imported yearly by China, 40 percent are imported from USA. There is no import duty on cotton import into China from India.

In the race of retaliation, China is more weak. USA is more important to China than China to USA. China is an export base economy and not vice versa. Given this and China’s arrogance for the tit-for-tat actions, the current US- China trade tiff is unlikely to be sorted out in near term. To this end, chances for reworking for a better India-China relation resurrect after India enters SCO. The two multilateral institutions – BRICS and SCO – can act palatable grounds for misgivings and distrust to be sorted out through negotiation, instead of military tussles. Besides, Mr Modi’s aggressive attempt for informal meeting with Mr Xi Jinping supposedly unveiled both sides’ intents for betterment of the relation.

Views expressed are personal.


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Subrata Majumder

Subrata Majumder

Subrata Majumder is an adviser to Japan External Trade Organization (JETRO), New Delhi, and the author of “Exporting to Japan,” as well as various articles in Indian media, including Business Line, Echo of India, Indian Press Agency, and foreign media, such as Asia Times online and Eurasia Review .

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