Distinguished Lectures Distinguished Lectures

India-China Relations: post Wuhan

  • Amb (Retd) Nalin Surie

    By: Amb (Retd) Nalin Surie
    Venue: Indian Institute of Technology (IIT), Roorkee
    Date: November 28, 2019

Delighted to be here – reportedly the oldest technical institution in Asia established in 1847. An IIT since 2001. Thank Ministry of External Affairs (XP Division) for providing me this opportunity.

Your interest in India-China relations is heartening. China is our biggest neighbour and we need to understand the relationship from several angles and aspects. We have both serious problems to resolve such as the border, water sharing, regional cooperation issues etc but, given our respective sizes and potential, it is also a country along with which India can define the future destiny and direction of Asia and the world beyond.

Roorkee is located in a border state. As the crow flies, it is not far from here to the border with Tibet/China. Fortunately, Uttarakhand is so located that the border differences with China are relatively small in this sector.

China is today the second largest economy in the world; the second largest trading power and a country whose military strength is growing by leaps and bounds even though it calls for the establishment of a world community with a shared future for mankind. Perhaps this is because they wish to achieve their objectives from a position of strength. But more on that later in my presentation.

China believes it has acquired ‘Great Power’ status and seeks parity with the US. India too is rising and is counted among the ‘Major Powers’. Both China and India though remain "developed” developing countries. China, in spite of its achievements and future plans, visualizes India as a serious potential competitor.

There is thus need to study and understand China in greater depth and not be dependent on third country scholars and the media, both national and international, for information and views on China. India must have its distinct perspective and approach to China based on an objective and hard headed understanding of its own national, developmental and security interests and requirements.

*[former Ambassador to China, etc. Currently Distinguished Fellow, Delhi Policy Group. Views expressed are personal.]

While we derive strength from our roots and system, we also need to understand the rest of the world better.

How does China see its future? The Communist Party of China (CPC) has defined for itself and for the country, so far, two centenary goals. The first, in 2021 to mark 100 years of the foundation of the CPC. That by 2021, China would be a moderately well-off society. In effect, there would be no poverty. The second centenary goal is to mark the 100 years of Chinese independence as a modern nation and falls due in 2049. The idea is for China to become by then a fully developed nation and the People’ Liberation Army (PLA) a world class force. Both these goals have been enunciated clearly by Xi Jinping and are part of the Party’s Bhagvad Gita/Quran/Bible.

There is a third goal viz. an environmental one, to make China Beautiful by 2035.

China is well on course to meet the 2021 goal. The 2035 goal is attainable. It is too early though to assess what will happen by 2049 – the situation in the world is simply too fluid to conjecture that far ahead.

More specifically, from our perspective, China’s future world view can be clearly observed from its official pronouncements including the 29th September 2019 White Paper of the State Council entitled "China and the World in the New Era”. This White Paper was issued to mark 70 years of the PRCs independence in October 1949.

China’s projection of itself in its official pronouncements and documents is one of great confidence; that the time has now come for China to assert its place in the world and, as Xi Jinping puts it, demonstrate to the world that the Chinese people are well on the road to National Rejuvenation and fulfilling the China Dream.

The claims made for China’s achievements over the past 70 years include that:

a) over the past 70 years China has achieved a miracle of development unprecedented in human history.

b) the Chinese people today enjoy dignity and rights previously unknown to them.

c) China has entered a new era of development and has an impact on the world that is even more comprehensive, profound and long lasting than in the past and the world is paying ever greater attention to China.

d) China has contributed solutions to world peace and development and has played a constructive role in settling major international and regional issues. [Details not spelt out.]

e) China is the main stabilising force and power source of the world economy. Its scientific and technological innovations have injected new momentum to world economic growth.

Looking ahead, it is the official Chinese stance that:-

i) In the future, China will become more prominent in its role as a stabilizing force regionally and globally and a power source.

ii) China offers a huge market for the world economy and is also a most attractive investment destination.

iii) Modernisation is not equal to Westernization and cannot be mechanically carried out. There is no such single model of development that is universally applicable. In effect the Beijing model is worthy of emulation by others.

iv) China has the right to development and its people have the right to pursue a better life. China will naturally develop and become stronger but does not want to threaten, challenge or replace any other country.

v) China will never give up its legitimate rights and interests and no foreign country should expect China to trade its core interests or anything that is damaging to its own sovereignty.

China acknowledges, however, that it faces a series of severe challenges, both internal and external. It needs a peaceful environment and stability (internally & externally) that would enable it to focus on development and for this purpose, it is critical for China to continue its policy of opening up the economy to the world.

As China moves forward, the CPC, to ensure its credibility and control, will continue to focus on the principal contradiction outlined by Xi Jinping, namely, that between unbalanced and inadequate development and the Chinese people’s growing needs for a better life. This may sound strange in the light of China’s phenomenal growth over the last forty years. Amongst the many issues that are required to be addressed to mitigate this contradiction is to ensure social stability within the country and to move from "high speed to high quality” development. It also requires an enormous stress on the application of new technologies, a continued focus on research and scientific and technological development. The latter also demands continued opening to the outside world.

To achieve its long-term goals, and given the requirements I have referred to, China argues for the need to establish a new model of international relations, a new model of economic globalization and systems for enabling optimal utilization of the technological revolution. Possible denial of access to developing high technologies and new R&D are of particular concern to China since its rapid development over the last 40 years has largely been premised on availability and access to them from the West and Japan. [ It is ironic that India, a democracy, was denied access by these very countries to high technology, especially dual use, following our nuclear tests in 1974.]

In the above context, the problem that China today faces is that many of the developed countries, which positively enabled its massive and rapid economic modernization and the concomitant military modernization, now openly consider China a principal threat or are at the very least vary of Chinese partnerships. Several of China's major western partners are reviewing their approaches towards collaborating with China in emerging technologies. You are all aware of the controversies around 5G technology and China’s Huawei company.

Chinese desire to work towards new structures in which they are dominant, also arises from their assessment that the world is facing grave and complex security challenges; the strategic competition (to China) is becoming more acute; the regional security situation remains tense and the combined effect of traditional and non-traditional threats requires appropriate responses. They also fear that the cold war mentality of encirclement, constraint, confrontation and threat is resurfacing.

It is to meet this complex set of internal and external challenges that China ostensibly seeks to establish a new model of international relations.

Insofar as the new model of economic globalization is concerned, the Chinese would like to make innovations and improvements based on those rules and institutions that have proven effective in practice, such as trade liberalization and multilateral trade. Further, to take on board the ongoing IR 4.0, China believes there is need to establish relevant rules and standards that facilitate technological innovations and development while ensuring the bottom line of human security and not enabling any country to seek technological hegemony, etc.

Not surprisingly, given their status as a permanent member of the UN Security Council, (an accident of history) China would like any future international system to have the United Nations at its core.

The so-called new international arrangements that China seeks to put in place require adjustments to the status quo to take into account Chinese interests and the threats that China faces. The latter include Chinese fear of encirclement, regime change, territorial adjustments and factors and policies that may inhibit China’s continued and sustained development.

For a variety of reasons which are self-evident, the Belt and Road Initiative [BRI], plays an integral role in China’s world view in the foreseeable future. More on this later.

I have given you this relatively detailed background so that I can better address the main subject that I have been asked to speak on, namely, India – China relations post Wuhan. But before that, I need to also very briefly recall the history of India-China relations. It is not a history that is particularly fulsome since our two countries regained their independence in the 1940s.

Historically, India and China have impacted each other significantly both civilizationally and in practical terms. Both civilizations evolved in a fairly similar manner, even though their contacts dimmed arguably since the eleventh century.

Their single most important point of contact, historically, was the journey of Buddhism from India to China. [e.g. Dharam Ratna, Kashyap Matunga, Bodhi Dharma and Kung Fu, Kumarajiva; images of Shiva etc.] Buddhism flourished in that country even as it declined rapidly in India. The practice of Buddhism has been revived in recent years in a major way in the People’s Republic of China, its belief in Communism notwithstanding.

Details of the many other ways in which the two countries interacted in the past are well established and known, be it the exchange of ideas, travels by monks, transmission of knowledge, products, etc. The use of Chinese fishing nets in Cochin is, for example, very well know. Tanchoi is of Chinese origin.

It is pertinent to note in the context of India-China relations a few inescapable facts: the two are neighbours, with large populations; they are the two most populous countries in the world; and both are developing countries albeit with very different systems of governance and development. Current difficulties nothwithstanding, they are amongst the fastest growing economies in the world. Their usefulness to the global economic system, especially in the midst of the ongoing impact of the financial and economic crisis of 2008, is of particular significance.

I do not wish to spend too much time on the background of relations since our respective independence except to recall the wholly unjustified Chinese aggression against India in 1962 which created a major rift and left behind a significant trust deficit that continues to dog our bilateral relations even today.

Since the late 1970s, dialogue between our two countries resumed at the political level. The border question was also discussed amongst officials following the visit of then Foreign Minister Vajpayee in February 1979. That process culminated in the visit of then PM Rajiv Gandhi’s visit to China in October 1988. Thereafter, during the rest of the 20th Century, high level political dialogue continued in the attempt to build on the approach that differences on the boundary should not prevent simultaneous development of bilateral relations in other areas and to especially ensure that peace and tranquility is maintained in the India – China border regions. For the latter purpose, very significant agreements were arrived at in 1993 and 1996 during high level state visits on CBMs to maintain peace and tranquility along the Line of Actual Control [L.A.C.]. The process of building on the CBMs has continued and follow up agreements have been signed in 2005 & 2013 and further examined in 2014 and 2018. The CBMs, and prior to that political consultations, have worked and the India – China border has remained peaceful since 1978 though there have been intrusions and serious face-offs. This compares with the situation along the border and the Line of Control [LOC] with Pakistan which more often than not sees live firing on a regular basis.

While peace and tranquility were maintained along the LAC, the trade, economic and other aspects of the relationship did not really evolve till the 21st Century. But the atmospherics remained congenial, including at the UN except when it came for Pakistan.

India’s nuclear weapon tests in 1998 halted the growing momentum in the evolution of the relationship. China saw itself as a major target of this decision of the Government of India and reacted angrily, not dis-similar to its reaction to the recent abrogation of Article 370. However, both sides decided that it was in their interest to quickly restore normalcy and this happened with the visit of then President K R Narayanan to China in May 2000.

Interestingly, you will recall that the Chennai Informal Summit of October 2019 happened soon after Govt of India had initiated major changes in the constitutional status of Jammu & Kashmir. This happened essentially because the critical reset in bilateral relations following the Wuhan Informal Summit of April 2018 could not be wished away. Both China and India realize that it is in their mutual interest to continue to try and work together in an effort to improve their bilateral relations while at the same time preserving their core interests.

Before I attempt to answer the question of why India and China need to work together and indeed need each other, it is important to take cognizance of the fact that especially since the beginning of this century and China’s entry into the WTO, the trade and economic partnership between our two countries has grown very substantially, albeit in China’s favour. China is today India’s second largest trading partner and is beginning to invest in India. It has also undertaken a large number of infrastructure projects on a turn key basis. The irony is that the economic pillar of the relationship, which was intended to help provide serious ballast to the relationship, has now become a major irritant and indeed an inhibiting feature in developing the relationship.

India’s trade deficit with China has grown beyond control and has become a major impediment in the evolution of the Closer Development Partnership (CDP) announced during President Xi Jinping’s visit to India in September 2014. That partnership was announced in recognition of the interlinked nature of our developmental goals which could be pursued in a mutually supportive manner. India’s cumulative merchandise trade deficit with China over the period 2014-15 to 2018-19 (the last five years) amounted to a staggering USD 268.91 billion. This was about 38% of India’s cumulative global merchandise trade deficit during this period. This compares with the fact that India’s total trade with China in this period ranged from a low of 9.54% in 2014-15 to a high of 11.66% in 2017-18 of its overall global trade. {The deficit during the last financial year was USD 53.57 billion.} [ Data from India’s Ministry of Commerce.]

Trade deficits are not necessarily bad but when they do not reflect comparative advantages and are the result of unfair trading practices and NTBs they are not acceptable. They cannot be the outcome of recourse to lopsided/one sided benefit.

In addition to the trade and economic partnership that has evolved since the beginning of this century, our two countries have entered into a very large number of agreements ranging from agriculture, to dairy, to science and technology, to education, to culture to youth exchanges to collaboration in the railways, to collaboration against terrorism, etc. We also have regular dialogues between our trade and finance ministries as also our Niti Aayog. Regrettably, the intent to diversify and deepen the relationship notwithstanding, movement on the ground remains inadequate, in spite of the potential and opportunities.

India and China are also committed, following agreements at the highest political levels, to not only cooperate on bilateral issues but also in regional and international affairs. Here too, the experience has been that China seeks to draw unilateral advantage vis-à-vis India wherever it can while making it as difficult as possible for India to become part of evolving sub-regional and regional arrangements. Examples that come to mind include Chinese opposition to India’s membership of the East Asia Summit, its reluctance over India’s membership of the Shanghai Cooperation Organization, its lack of support for India’s membership of APEC, for permanent membership on an expanded United Nations Security Council & NSG. In spite of this, India has become a member of the EAS and SCO.

At the same time, China announced in 2013 its major strategic program to create its own geo-strategic cosmos which is known as the BRI. This was done without any consultation with India. What is worse, subsequently the China Pakistan Economic Corridor [CPEC] was brought in under the rubric of the BRI. The CPEC involves serious violation of India’s sovereignty and territorial integrity and has been rejected. The other prongs of the BRI also, willy-nilly isolate India. India’s principled opposition to the BRI from its very inception has gained very substantial international salience and this causes concern in Beijing which has of late been compelled, because of this and actual implementation outcomes, to reorient some of its approaches to the BRI in an attempt to demonstrate transparency and mutual benefit. Similarly, India’s forthright support for the budding Indo-Pacific architecture rankles with China for it sees the latter as an attempt not only to neutralize APEC but also to contain China.

The negatives notwithstanding, India and China have successfully worked together at the UN on issues such as Sustainable Development, Climate Change and also at the WTO and in the G-20. The potential for cooperation against terrorism is very substantial but China consistently holds back because of its support for Pakistan described as its eternal all weather friend, etc. China worries about India’s position on Tibet and HHDL.

China’s comprehensive national strength has grown. It has become the second largest economy in the world. It is on its way to becoming a very potent military power. China has, as a result, increasingly begun to shed its inhibitions and seeks for itself both equality with and a role similar to that of United States, not only in its region but also in the Indian Ocean, in Africa and in Latin America. It has also spread its economic tentacles in Australia and Western Europe. Given western hostility to Russia, the Russia-China partnership under Xi Jinping and Putin has acquired a serious strategic dimension that adds to China’s heft.

As if life was not complicated enough, policies enunciated under the current US Administration have brought into question the entire structure of international political, geo-strategic, economic and trade relations that has evolved since the end of World War II. It is on the basis of this structure that China has achieved what it has in terms of the development of its comprehensive national strength ever since the reintroduction of the four Modernizations Program by Chinese leader Deng Xiaoping in 1978. These US policy changes are a matter of critical concern for China since its further development and the fulfillment of its ambition of achieving National Rejuvenation and the China Dream require it to have access to international markets, resources and technology in addition to geo-political and geo-strategic balance and cooperation. The West’s reassessment of China as a threat and no longer a responsible stakeholder no doubt causes serious concern in Beijing.

The Chinese economy is several times larger than India’s economy but there is no reason why India cannot catch up. If India follows the appropriate policies it can guarantee for itself a sustainable high growth rate over the next 2 to 3 decades and exceed the size of China’s economy. If China can aspire to exceed the size of the US economy, India too can have similar aspirations that are realizable.

There are many other problems that beset India-China relations which appear as pinpricks on a regular basis. These include China’s constant carping when any Indian leader visits Arunachal Pradesh for instance! So hung up is China on its so-called territorial claims that it leaves no opportunity to lodge solemn protests when it sees that its interests are being denuded.

China does not cooperate with India on shared river water resources. Its unflinching and blind support for Pakistan since the early 1960s, including in military and nuclear matters, is intended to neutralize India. It interferes in South Asia and in the Indian Ocean region to compete with Indian interests. It makes threatening moves on the border from time to time. The list can go on!

If the situation is so difficult between India and China, you will justifiably ask the question why need both China and India be interested in improving their relations with each other and why should there be summits like Wuhan and Chennai? I have no doubt that most, if not all of you, have thought about this. Let me share my thoughts with you on why India and China need each other; should find ways of settling their differences including on the boundary question and continue to focus on eliminating poverty from their countries; put in place systems that ensure sustainable development in their countries; ensure peace and tranquility in Asia and collaborate to restructure the international political, economic, financial and strategic architecture and make it compatible with contemporary and evolving realities.

India and China are neighbours. Our economies are, to a significant extent, complementary. Our problems are almost identical and the scale of these problems is so large that they are unique to our two countries. There can be no 21st Century of Asia without serious and positive collaboration between our two countries. Our civilizational contact of the past has been fruitful and benefited both sides. There is no reason that this should not happen in the coming decades.

It is true that China has, as of now, forged far ahead of India in economic terms. Yet, the Indian experience in political and ideological terms is far more attractive and sustainable. The Chinese realize this and see this as a major challenge to their own system of political governance. Simply because China is presently economically much larger than India represents a certain degree of inequality that favors China but, does not automatically mean that we are potentially or permanently destined to lag behind. India’s advances in science and technology are understated but are very substantial. This audience will be particularly aware of this and going forward will have an important role in propelling India’s development. So is the strength of our economy in which growth will surge as fresh reform processes kick in. This will be critical as we move ahead in the 21st Century. A combination of Indian and Chinese economic, scientific and technological collaboration would be to great mutual benefit.

There can be no serious reform of the international political, economic and security architecture without both India and China. If you are a conspiracy theorist, you can well argue that there are many forces and powers in the world that would not want China and India to settle their differences and cooperate across the board. It appears recalling in this context that historically China and India were the two largest economies in the world.

The list of why China and India should work together is actually much longer. The need to do so has been recognized at the highest political levels between our two countries since normalcy was restored in our relations beginning in the late 1970s. This process gathered momentum in the early 21st Century but the global financial and economic crisis, that began in 2008 and the after effects of which actually still persist, has to a considerable extent derailed the process. The continued impact on the world economy and international polity of this crisis in different dimensions and manifestations, not simply economic, has given rise to a belief in China that the time has come for it to essentially use the opportunity to seek for itself de facto super power status. It may well be asked whether the Doklam move by China was part of that effort? Whether or not it was, the fact is that the informal summit process in Wuhan began after that issue was peacefully settled between India and China and to Bhutan’s satisfaction. PM Modi proposed Wuhan and Xi Jinping concurred. The second summit in that process has been held and the third will be held sometime next year. The need to resolve differences and develop the partnership has been acknowledged again at the highest levels at Wuhan & Chennai and the two leaders, given their respective dominant positions in their countries, have the next four years or more to convert that vision into reality.

Chinese Foreign Minister Wang Yi described the Wuhan Informal Summit as a significant political decision to enable deep strategic communication. The process, he argued, helped increase trust and understanding and led China – India relations onto a track of healthy and steady growth. The Indian assessment was that the Wuhan Summit reflected a new confidence and stability in India-China relations.

Following the Chennai Informal Summit last month, Chinese President Xi Jinping spelt out four parameters of Chinese policy towards India, namely.

1. Maintaining and developing good relations between the two countries is China’s unwavering policy.

2. Under the current international circumstances, the two countries shoulder increasingly important responsibilities in safeguarding global stability and promoting development.

3. The next few years will be a crucial period for both China and India to realize national rejuvenation and also will be a crucial period for the development of China-India relations and

4. There is need to inject a strong endogenous impetus to bilateral relations i.e. to insulate it from third country interference.

The significance of what Xi said about relations with India is in the messaging that it conveys, not simply to the party, government and people in China but also to the international community and to India’s regional partners. He wants India to believe that China can be a genuine bilateral partner that will benefit India.

In so far as India is concerned, a statement issued by the Ministry of External Affairs after the Chennai Summit conveyed that the two leaders agreed that the simultaneous development of India and China presents mutually beneficial opportunities and the two sides will continue to adopt a positive, pragmatic and open attitude and to enhance appreciation of each other’s policies and actions in line with the general direction of their partnership and cooperation. It also clarified that Xi and Modi had agreed that both sides will prudently manage their differences and not allow differences on an issue to become disputes. They also agreed that an open, inclusive, prosperous and stable environment in the region is important to ensure its prosperity and stability.

Both at Wuhan and Chennai no attempt was made by either side to conceal the fact that there are serious differences between our two countries. The effort is to ensure that differences do not become disputes and should be handled by maintaining regular engagement at the highest levels while continuing to strengthen the building of trust and understanding and cooperation between the two countries. It goes without saying that maintaining peace and tranquility in the border areas is the fundamental pre-requisite for the India – China partnership to develop and sustain itself.

Where do we go from here? Can we, should we trust China when it says it seeks a genuine, mutually beneficial partnership with India? What does it seek in return? Are the informal summits meant to lull India into a sense of complacency? Do Chinese actions and words match each other?

Neither India nor China can escape from the compulsions of geography, of their size, their needs and aspirations. Should we again become pawns in the games of others?

The options for India are clear: We will cooperate with China as long as it respects India’s sovereignty, territorial integrity, core interests and aspirations. Cooperation will have to be based on mutual benefit, equality and equal security. India is a rising power and will not allow its freedom of choice, action and decision making to be constrained by China or for that matter by any other country.

India will not close its options. It is a country that is trusted; whose rise is not seen by the region and world as threatening. Its success as a hugely populous developing country democracy that can sustain high growth rates in spite of its domestic complexities and size means that it represents a force for development, stability and peace. We must though live up to our potential and continue to share our experiences and growing capabilities with our partners in the region and across the globe.