LAC disengagement and the road ahead, China investment proposals in India begin to move, and the politics behind Alibaba's troubles
Welcome to today's The India China Newsletter.
Reuters reports today that satellite images show disengagement is going forward at speed, north and south of Pangong Lake. Reports say it could be completed as soon as the end of the week - earlier than the two to three week window first mentioned on February 10 - which would mean the Corps Commanders could meet early next week to take forward disengagement in the remaining hotspots Gogra-Hot Springs area, where there are fewer troops:
China has dismantled dozens of structures and moved vehicles to empty entire camps along a disputed Himalayan border where Indian and Chinese troops have been locked in a face-off since last summer, satellite images released on Wednesday show. The nuclear-armed neighbours last week announced a plan to pull back troops, tanks and other equipment from the banks of Pangong Tso, a glacial lake in the Ladakh region, that became a flashpoint in the prolonged border dispute.
Satellite imagery supplied by Maxar Technologies showing some areas on the northern bank of Pangong Tso from Tuesday reveal that several Chinese military camps, which could be seen there in late January, have been removed. “Similar action is happening from our side also,” said an Indian official, who requested anonymity, in New Delhi.
Former Indian NSA Shivshankar Menon, one of India's sharpest China watchers, gave an interesting interview on the disengagement process to Karan Thapar at The Wire, which I recommend watching in full. It’s really worth your time.
Here are selected bits that caught my eye, from The Wire:
Speaking in detail about the withdrawal and disengagement on the two banks of Pangong Lake, Menon differentiated between the north bank and the south bank. On the north bank, he said, both India and China have made matching concessions. India has agreed to restrict itself to finger 3 and not patrol up to finger 8, the farthest limit of its LAC claim. China has agreed to restrict itself to finger 8 and not patrol up to finger 3, which is the farthest limit of its LAC claim. Menon, therefore, agreed that defence minister Rajnath Singh’s statement in parliament that “we have not conceded anything” is not correct. In terms of territory no concession has been made, but in terms of patrolling both sides have made matching concessions.
Speaking about the south bank, Menon said that he could only judge India’s decision to militarily withdraw from the Chushul Heights and Kailash Range once he knows what – or if anything – China has agreed to do in response. Till then, however, he agreed there are question marks about this withdrawal by India on the south bank.
Speaking to The Wire about former defence minister A.K. Antony’s claim that the buffer zone at Pangong Lake is entirely on Indian territory and something similar happened last year at Galwan, Menon said most international observers, relying on satellite and other intelligence, do believe China advanced into territory India previously patrolled or controlled and, therefore, this retreat does suggest this is a classic case of two steps forward one step back, which leaves China with a net gain of one step. Menon said he too believes this to be the case.
Speaking about buffer zones, Menon told The Wire this is a sensible measure which would reduce the risk of mistakes and accidents. Menon said that of the Chinese intrusions where withdrawal is yet to be agreed – Hot Springs and Gogra as well as Depsang – the one at Depsang would be more tricky to negotiate. This is because China is more interested in the Depsang area and has also tried on several earlier occasions to change the status quo. He called the Depsang area sensitive and strategic territory.
Menon said that if over the next few weeks full disengagement happens and the two armies withdraw to the positions they occupied last year there would still need to reset the relationship. He said: “There should be no going back to the old relationship. We can’t ignore what the Chinese did and now say all is normal again.”
COMMENT: One thing that really stood out for me in the interview is the sharp contrast from the certainty with which so many analysts seem to speak about why China intruded and why China is withdrawing. The certainty bemuses me too, when there is no way of knowing. He also cautions patience and against drawing premature conclusions while we are in the middle of this process. I couldn’t agree more.
Sushant Singh has a perceptive piece in The Hindu today which is worth reading in full. I am not going to share much as I wouldn’t be doing my duty of directing you to our website - and urging you to SUBSCRIBE!
This paragraph, for me, pretty accurately capture the whole debate about disengagement that I discussed in some detail in yesterday’s newsletter:
Even though it does not restore the status quo ante of April 2020 and the details about the south bank are sketchy, the disengagement deal on the two banks of Pangong is a fair deal for India when seen from the limited prism of only these areas. But when considered from the perspective of the whole LAC in Ladakh, it raises questions about the wisdom of giving up the only leverage India had for the sake of disengagement at north bank.
Lt Gen Rana Pratap Kalita, GOC (general officer commanding) of the army’s Dimapur based 3 Corps, on the eve of relinquishing charge spoke to the Times of India on the eastern sector, which many officials are cautioning could see troubles once the spring comes, just as we saw in Ladakh in the western sector last year:
'We are already seeing massive infrastructure development in Tibet opposite the eastern sector, which is an indication of things to come in the future.’
Reuters reports India has begun clearing pending Chinese investment proposals:
India is poised to clear some new investment proposals from China in the coming weeks as frosty relations between the two neighbouring countries thawed amid an easing in border tensions, said three government officials with knowledge of the matter.
Last week, India and China began disengagement from the Pangong Tso area, in the Ladakh region of the western Himalayas, following a nearly nine-month-long standoff after the worst clash between the neighbouring countries since 1962.
At the height of the tensions, India framed various policies targeting China, including blocking the nation from participating in government tenders, compelling any Chinese company investing in India to seek approvals and banning dozens of Chinese apps.
The foreign investment rule change by the Indian government said investments from an entity in a country that shares a land border with India would require government approval, markedly slowing investments flows from China.
The rule change had put in limbo over 150 proposals from China worth more than $2 billion, hurting the plans of Chinese companies in India.
Among the proposals delayed was China’s Great Wall Motors’ acquisition of a General Motors’ plant in India.
“We’ll start giving approvals to some greenfield investment proposals, but we will only clear those sectors which are not sensitive to national security,” one of the officials said.
Amazon India is going to start manufacturing fire tv sticks in India that it was earlier importing for the India market from China:
Amazon India is planning to make its devices in India- a key step at a time when the government has been stressing on the importance of local manufacturing and making India ‘atmanirbhar’ (self-reliant), the e-commerce giant said on February 16.
Amazon will work with contract manufacturer Cloud Network Technology, a subsidiary of Foxconn in Chennai and start production later this year. Taiwan-based Foxconn is one of the world’s largest makers of iPads, iPhones and Xiaomi devices.
“Amazon is committed to partner with the Indian government to advance the vision of an Aatmanirbhar Bharat. We have pledged to invest $1 billion to digitise 10 million small and medium businesses, help Indian businesses sell worldwide thereby enabling $10 billion in cumulative exports, and create an additional 1 million jobs by 2025,” said Amit Agarwal, Global Senior Vice President and Country Leader for Amazon India.
A blockbuster report from Lingling Wei at the Wall Street Journal on the political angle to Jack Ma’s and the Ant Group’s troubles and the investment vehicles tied to ‘Red Families’. It’s worth your time:
One is Boyu Capital, a private-equity firm founded in part by Jiang Zhicheng, the grandson of former Chinese leader Jiang Zemin. Many of Mr. Jiang’s allies have been purged in Mr. Xi’s anticorruption campaign, though he remains a force behind the scenes.
Another stakeholder with ties to Mr. Jiang, part of what is called the “Shanghai faction,” is a group led by the son-in-law of Jia Qinglin, a former member of the Politburo Standing Committee, the top echelon of the Communist Party.
And finally…
The box office in China is roaring back to life. The numbers over the new year holiday week, which ends today, have been quite staggering:
Cinemagoers have also been attracted by the release of movies that had been delayed for long periods due to the pandemic. On Friday, the opening day for several features, China’s total box office exceeded 1.7 billion yuan — the highest one-day take ever recorded for a single market. The most hotly anticipated blockbuster, action-comedy “Detective Chinatown 3,” was originally scheduled to hit theaters during last year’s Lunar New Year holiday. The film made over 1.5 billion yuan on Friday, its first day at the box office.
That’s $ 232 million - or almost Rs. 1,700 crore - in one day.
Thank you for reading this issue!