Likely Issues Before First India-China Strategic Dialogue – Analysis

By Ashok Sajjanhar

India’s Foreign Secretary Dr S. Jaishankar will be heading to Beijing for the first Strategic Dialogue with his Chinese counterpart Executive Vice Foreign Minister Zhang Yesui on  Wednesday, February 22.  The decision to hold this Dialogue was taken by External Affairs Minister Sushma Swaraj and Chinese Foreign Minister Wang Yi during the latter’s visit to India in August last year. Wang Yi was in India to prepare for Prime Minster Narendra Modi’s visit to Hangzhou, China, for the G 20 Summit in September, 2016 and for President Xi Jinping’s visit to Goa for the BRICS Summit a month later.

According to the Ministry of External Affairs, the two sides will ‘’take a holistic view of India-China relations and see to what extent they can accommodate each other’s concerns and interests.’’ They are expected to discuss key issues of mutual “concern and interest” including “friction points.”

The two sides started out well when the Modi government came to power in May, 2014. Chinese President Xi Jinping’s visit to India in September, 2014 started off well when he landed in Gujarat but its anticipated beneficial outcome was rapidly dissipated by the cross-border incursion by Chinese troops. It was however expected that the firm stand taken by PM Modi on this issue and the promise of US$ 20 billion investment by China in India will help to provide a significant impulse to bilateral ties.

Relations between the two countries have however continued to move downhill. This is notwithstanding the useful visit by Modi to China in May, 2015, and a total of nine meetings between Modi and Xi since the NDA government took office in 2014.

The two major issues that have recently surfaced as principal irritants are of India’s membership of NSG and banning of Jaish-e-Mohammad chief Massod Azhar by UN Security Council (UNSC).

In the case of Masood Azhar, China had initially put a technical hold on discussions in the UNSC. This was subsequently converted into a veto. More recently, when USA, UK and France piloted the proposal to proscribe Massod Azhar, China again vetoed the move. China has demanded that India provide ‘’solid evidence’’ for it to withdraw its veto. All evidence about JeM’s and Azhar’s role in carrying out terrorist attacks against India has been furnished. It is on this basis that JeM was proscribed by UNSC in 2001. Azhar is suspected of having been involved in the Pathankot and Uri attacks on Indian defense assets in 2016. While 14 out of 15 members of UNSC are agreeable to banning Azhar, China has demanded ‘’solid evidence’’ for banning him. It is clear that China is taking a political stand to support its ‘’iron ally’’ Pakistan. It is unfortunate that China is adopting a pernicious stance on the sensitive issue of terrorism. It possibly feels that by supporting Azhar and the Afghan Taliban, it will be able to keep its own backyard in Xinjiang safe. This is a shortsighted approach and exposes its double standards. Its dishonesty became evident when it recently appealed for international protection against terrorist attacks on infrastructure being created by it under its One Belt One Road Initiative!

The other major issue is of India’s membership of the Nuclear Suppliers Group (NSG). It is on the basis of India’s track record as a responsible member of the international community while dealing with nuclear materials and technology that it was provided a unique waiver by the NSG in 2008. India’s behavior and credentials since then have been impeccable. India is keen to get membership of NSG (and other export control agreements – it became a member of MTCR last year) to provide predictability and certainty to the large scale nuclear energy programme it has embarked upon in recent years. China is trying to bring in Pakistan into this consideration and is demanding that uniform procedures be evolved for membership of all non-NPT signatories to NSG. Pakistan’s track record in the nuclear field is dismal. That is why its appeals for a civilian nuclear agreement were rejected by USA. China has been supplying nuclear reactors and technology to Pakistan in flagrant violation of China’s obligations under the NPT. It possibly feels that if India becomes a member of NSG it will act to keep Pakistan out of that body in future. It hence wants simultaneous admission of both Indian and Pakistan to NSG. It is clear that China has adopted this position because it sees any enhancement of India’s economic and political heft as being counter to its own interests.

Some Indian analysts have suggested that India should convince China how its membership of NSG will be beneficial for China. They contend that India should incentivise China to support India’s NSG membership. India has clearly stated that its membership of NSG will help it to invest more in the clean and affordable nuclear energy which will be beneficial for combating climate change and protecting international environment. India cannot be expected to reach out to each of the 48 members of NSG and explain how India’s membership will individually benefit them. China as a large country with the highest greenhouse gas emissions and second largest economy needs to conduct itself as a responsible member of the international community and not expect direct quid pro quo for every action it takes on the international stage.

Several other issues have surfaced which are acting as bones of contention between the two sides. An important one amongst these is the China-Pakistan Economic Corridor which passes through Pakistan Occupied Kashmir, Gilgit and Baltistan, all of which belong to India. China is very sensitive about its own sovereignty whether it pertains to Taiwan or to Tibet. It is incumbent on it to be equally sensitive to India’s concerns on this subject.

China has recently objected to the visit of a Taiwanese parliamentary delegation to India. India has stated that it is an informal visit the likes of which regularly take place to China also. India’s recent contacts with His Holiness the Dalia Lama including President Pranab Mukherjee’s meeting with him as also his proposed visit to Tawang next month are also likely to be raised by the Chinese side. India has stated that HHDL’s interaction with President Mukherjee was purely cultural and took place in the context of the President’s meeting with a number of Nobel Laureates. Also it is clear that HHDL will visit Tawang as an honoured and revered spiritual leader and not for any political activity.

The subject of persistent and unsustainable trade imbalance between the two countries is expected to figure prominently in the Talks. Trade deficit in favour of China has been getting steeper with every passing year. In 2015-16, out of a total trade turnover of US$ 70 billion, India suffered an adverse trade balance of US$ 53 billion.  India’s exports were less than US$ 9 billion while imports were more than US$ 61 billion. China has kept its markets closed to manufactured products and services in which India enjoys a comparative advantage like IT, pharmaceuticals, agricultural products, chemicals etc. In addition, China has failed to bring in investments as it had committed to during Xi Jinping’s visit to India in Sept, 2014.

Some Indian experts suggest that when India discusses issues of concern with China, it should keep in mind that it does not figure in China’s league. The purpose of this statement is not clear. Such diffidence and timidity is incomprehensible. Surely it is not their contention that India should not argue to promote its interests because it has a smaller economy. A country of 1.3 billion people with the fastest growing economy in the world cannot behave in an abject manner when its fundamental interests are at stake. It also needs to be noted that in PPP terms, India’s GDP is US$ 8.7 trillion while China is US$ 20.4 trillion. This would make China’s economy two and a half times larger than India’s in PPP terms. With India’s higher rate of growth compared to China, it is quite possible that the difference between India and China in another 15-20 years will be much less than it is today. India hence needs to safeguard and advance its interests in a vigorous manner.

It is clear that China will present the most formidable foreign policy challenge for India in the coming years. China’s hegemonistic tendencies will try to keep India down. However, China’s rise can also serve as an opportunity. India will need to cooperate and collaborate with China in bilateral, regional and international fora to the extent possible while at the same time making certain that its fundamental interests relating to territorial sovereignty and economic growth are advanced. To achieve maximum benefit of this engagement, India will need to focus on expanding its domestic economic strength. For this, the success of several flagship initiatives of the government like Make in India, Skill India, Startup India, Digital India, Beti Bachao Beti Padhao and others will be decisive.


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ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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