China responds to India's Foreign Minister's proposal, and a reality check on India China growth comparisons

Welcome to today's The India China Newsletter.

The Ministry of Foreign Affairs in Beijing responded somewhat guardedly today to External Affairs Minister S. Jaishankar’s speech on China and his ‘three mutuals and eight propositions’ blueprint for the relationship, which this newsletter discussed yesterday.

The question on the speech was posed to the spokesperson at today’s briefing by China Radio International. To me, that suggests a high chance that the MFA wanted to respond to the speech and had that question put there, as it often does. Here’s the full exchange:

CRI: India's External Affairs Minister Jaishankar delivered an address on India-China relations on January 28. He said that cooperation and competition co-exist in this pair of relations. Bilateral exchanges in trade and tourism have been increasing rapidly and the two sides agree on many multilateral topics. Meanwhile, there are also clear discrepancies in the interests and expectations the two countries hold. The two countries are truly at a crossroads. He also outlined three "mutuals" and eight broad principles to develop ties between India and China. What is your response?

Zhao Lijian: I have noted his remarks. External Affairs Minister Jaishankar's stress on the significance of China-India relations showcases the importance the Indian side attaches to its ties with China. We approve of that. Meanwhile I need to stress that the border issue shall not be linked with bilateral relations. This is also an important lesson learned through the two countries' efforts over the past decades to keep our ties moving forward. We hope the Indian side will work with us to properly manage differences, promote practical cooperation, and get the bilateral relations back on the right track.

Comment: The insistence on ‘delinking’ the border is one of the main sticking points now. Both sides are accusing the other of breaking a key principle that has governed relations: India says China last summer violated numerous boundary agreements, a system that’s been in place for at least 27 years to manage the undefined Line of Actual Control, and maintaining peace and tranquility on the border as a foundation for ties; China says by linking the border to the rest of the relationship and by taking economic measures like banning Chinese apps, India is breaking the compartmentalisation that was one feature of the model in recent years that allowed trade and investment to grow despite other unresolved problems. A chicken and egg and some mirror imaging, but hard to draw equivalence between the two considering we wouldn’t be here in the first place without last year’s border crisis triggered by the PLA’s moves.

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An increasingly common theme in Chinese explanations of the current problems in relations is growing India-U.S. closeness and a perceived move away from non-alignment (whether accurate or not, that’s the perception, and perceptions matter).

Zhao Gancheng, a veteran India watcher in Shanghai, had this to say today:

The non-alignment policy was once the cornerstone and core of India's diplomacy. But it was basically abandoned after Modi became prime minister in 2014. During the Cold War, India wanted to take a neutral path between the US and the former Soviet Union. Clearly, India is tossing its non-alignment policy aside, no longer taking it seriously at all.

Though India hasn't publicly announced that it has abandoned the non-alignment policy, as a spirit and principle, this former diplomatic stance now only exists in name.

While the new US administration is reaching out to Modi, this doesn't mean New Delhi will align with Washington. After all, India has to weigh the obligations it has to fulfill in a military alliance. For example, if the US sends troops to countries such as Afghanistan, India will have to do so, just as some US allies in NATO are committed to. This is not what India wants. So for now, New Delhi will be reluctant to join any formal military accord that requires it to send in combat forces to engage hostiles for US-led missions.

Today, India is facing a variety of serious domestic problems with the raging COVID-19 virus and collapsing economy. Since last summer, the Modi administration has shifted domestic attention away from its mismanagement by taking advantage of the chaotic pandemic and border disputes with China to incite nationalist sentiments. But as these internal problems worsen, it is questionable how much longer such tricks will still work on their people.

Modi's reluctance to properly address the root causes of its domestic problems while flexing muscles at the China border will only increase India's instability. Seeking assistance from the US won't help either. These cannot pull India out of quagmire.

This was also the theme of another scholar Liu Zongyi’s widely circulated interview that he gave to Guancha last year after visiting border areas, when he said:

There are many practical ways to deal with this situation. However, the key lies in the fact that we have to determine our stance. Presently, India and the United States have signed several military agreements and formed a de facto military alliance. Under the current situation, we must re-assess our understanding of the US-India alliance and reset our India strategy.

It is of great import to remember India has violated and disregarded several understandings in China-India relations. For example, the two countries had the tacit understanding that territorial and border dispute between our two countries cannot affect bilateral economic cooperation, but India has naturally broken this consensus. Then, India’s withdrawal from the RCEP in 2019 obviously makes it very clear that India had already made up its mind long ago. India’s current strategy is to avoid war with China, but continue to break consensus with China in various arenas, namely diplomacy, economic cooperation, people-to-people exchanges etc and adopt ubiquitous means to continue to put China under pressure. Among the provocations against China by the anti-China international forces, India is often seen at the forefront.

We may still continue to pursue the line of thinking that the main pressure we are facing is from the United States and not India. But the fact is, India and the United States today have become a single entity. In some respects, it is India which is leading the US and is becoming leading anti-China force. 

Jayadeva Ranade, one of India’s sharpest China watchers for decades with a long career in intelligence, writes on two recent articles by Hu Shisheng, a prominent scholar at CICIR in Beijing who works on South Asia, and what the articles tell about how the Chinese strategic community is looking at India right now:

Important for understanding the official Chinese thinking are two recent articles by Hu Shisheng, Director of the Institute for South Asian Studies at the China Institutes of Contemporary International Relations (CICIR). The CICIR is one of China’s most influential institutes and is directly under the Ministry of State Security, China’s external intelligence establishment. Its close ties with China’s foreign intelligence arm were underscored in 2007, when CICIR president Geng Huichang was appointed the Minister of State Security. Hu Shisheng is CICIR’s leading expert on South Asian affairs, especially India and Pakistan.

In a 33-page article titled ‘The behavioural logic behind India’s tough foreign policy toward China’, in the latest issue of CICIR’s official publication, Hu Shisheng asserted the conflict in Ladakh was “inevitable” and a result of the “high-risk, high-yield” policy followed by the Modi government. He identified the main reasons for rivalry as “India’s long-term pursuit of absolute security and dominance in the regional order” and the Modi government’s ambition to “overtake China by taking advantage of India’s favourable external strategic environment”. Acknowledging that India’s international stature has risen to its highest since independence after Prime Minister Modi came to power, he attributed this to the intensifying China-US confrontation and efforts of the US and West to contain China. He claimed this has given Modi’s government “more courage and confidence to be tough on China”.

Painting a pessimistic outlook for China-India relations, Hu Shisheng said conservatives in India had a “deep strategic mistrust and apprehension about China due to the structural problems existing between the two countries.”

Relevant for the future of India-China ties is Hu Shisheng’s assertion that the two “were doomed to have a serious collision of interests or even military conflict from the very beginning of their independence and since establishing frontier and regional order”. Equally frank was his observation that more complicated than border issues are the contention for influence and dominance and “order in the region involving relations among China, India and their neighbours”. He anticipated that as they grow in strength, “the two major regional powers would have an increasing overlap of interests in the same area”. Avoiding any mention of friendly ties, he said they nevertheless need “to design a stable and far-reaching path for the future development of relations”.

Stating that China-India relations have each year “witnessed a benign beginning and a sad ending”, he described the conflict at the Galwan Valley as “anything but the end”. Hu Shisheng assessed that the contest over the border will move from “reconciliation through dialogues” to a new stage featuring “contention for control with real power”, which will inevitably lead to border clashes. Interesting is his observation that over time, “the bottomline of tolerance will become a redline lying between the border troops of both countries” — hinting this could eventually result in a defined line of actual control.

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China launched the second Type 054A/P frigate for Pakistan on Friday in Shanghai, reports Global Times:

The launch of the second Type 054A/P frigate was held at Hudong-Zhonghua Shipyard in Shanghai on Friday, reads a statement the Pakistan Navy sent to the Global Times on the same day.

The occasion coincides with the completion of 70 years of Pakistan-China diplomatic relations built upon historic bonds of friendship and mutual trust, the statement said.

The Pakistan Navy has contracted the construction of four Type 054A/P frigates from China since 2017, and the first ship was launched in August 2020, media reported.

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And finally…

The news that India is projected to be the world’s fastest growing economy in 2021 has made headlines in the Indian media. Vivek Kaul has a much-needed reality check on his website, which is worth reading in full:

Before saying stuff like India will grow faster than China in 2021, please keep in mind the fact that the Chinese GDP in 2019 was $11.54 trillion (World Bank data), which is much more than India’s GDP. In 2020, the Chinese economy was expected to grow by 2.3%. This means that the Chinese GDP in 2020 would have grown to $11.81 trillion. In 2021, the Chinese GDP is expected to grow by 8.1% to $12.76 trillion. This means an increase in GDP of $0.95 trillion in just one year.

If we compare this increase with the expected Indian GDP of $3.01 trillion in 2021, what it means is that China will end up adding 31.6% of the India’s economy in just one year. Or to put it simply, China will add a third of India’s economy in just one year. It also means that between 2019 and 2021, the Chinese economy is expected to grow by $1.22 trillion ($12.76 minus $11.54 trillion). During the same period, the Indian economy is expected to grow by $ 0.07 trillion ($3.01 trillion minus $2.94 trillion). Please keep these facts in mind before saying that in 2021 India will grow faster than China.

Between 2019 and 2021, the gap between India and China has grown even bigger and that is a fact that needs to be kept in mind. All numbers and figures need some context, otherwise they are useless and as good as propaganda, which I think will happen quite a lot during the course of the day today. If you have already read the newspapers and the websites on this issue, you might have seen that almost all of them say that India will grow faster than China in 2021. But almost  no one bothers to mention the fact that China grew faster than India both in 2019 and 2020. Or the fact that China is growing on a significantly larger base (the most important point when we are talking percentages).

Thank you for reading. Have a great weekend, and the newsletter will be back on Monday.