A game changer for India-China relations

The National Security Advisor Ajit Doval is heading for China for the Special Representatives talks on November 23-25 with the Chinese  State Councilor and Foreign Minister Wang Yi. This will be the last round of talks in that format during the Modi government’s remaining term in office. The format provided a unique opportunity to cover all aspects of bilateral relations, apart from making efforts to resolve the border dispute. But it was underutilized in recent years.

However, there is added significance to the upcoming SRs’ talks insofar as hardly a week later, Modi will be meeting Xi in Argentina on the sidelines of the G20 summit and soon after that, Wang is also due to visit India in December.

These high level exchanges are taking place in a favorable backdrop. Since the Wuhan informal summit between PM Modi and President Xi in April, the climate of Sino-Indian relations has markedly improved in virtually all spheres – military-to-military relations, in particular. Suffice to say, a window of opportunity is opening for taking India-China relations to a qualitatively new level.

The challenge lies in boosting the economic content in the relationship. On India’s part, this requires a leap of faith to move away from the Manichean fears that any economic interdependency with China may only work to our disadvantage.

Whereas, interdependency can be mutually beneficial and can make any relationship more stable and predictable. That is also the lesson we can draw from the recent US-China tariff war. To be sure, the economic interdependence between the two big powers has ensured that there isn’t going to be a New Cold War between them.

Trump has openly begun speaking about a “deal” with China that is round the corner. He said at a press conference at the White House on Wednesday: “We’ll (he and Chinese president Xi Jinping) have a good meeting (on the sidelines of the G20 in Argentina) and we’re going to see what we can do. But I have to say this: Billions of dollars will soon be pouring into our Treasury from taxes that China is paying for us… But we’re going to try and make a deal with China because I want to have great relationships with President Xi, as I do, and also with China.”

Evidently, Trump senses that America First stands to gain from cooperation with China and in the process he could also get political mileage out of it in his re-election bid in 2020.

In a historical perspective, Modi’s legacy too lies in seeking rapprochement with China. But much time has been lost — almost 80 percent of his five-year term. To be sure, going beyond new cooperative gestures, the time has come to give serious consideration to India joining China’s Belt and Road Initiative (BRI). The BRI holds the potential to be a game changer to transform the relationship. It carries the imprimatur of Xi.

(Yunnan as planned hub for BRI in South & Southeast Asia)

India’s stance against the BRI was highly propagandistic and needlessly provocative. On the contrary, what we are witnessing today is that the BRI norms are steadily evolving and Beijing is finessing them to inject market forces and bring them on par with world standards.  China’s plan to engage the World Bank as consultants for China-Pakistan Economic Corridor and the opening up of the CPEC for third country participation are evidence of it.

Meanwhile, India watches with interest that China has sent out a very clear signal prioritizing the advancement of the BRI jointly with Japan in the overall interest of the high-quality development of the project. Since last year, there has been a dramatic reversal of Japan’s stance toward the BRI, which earlier on used to be ambivalent and full of misgivings.

Japan estimates that working with China and jointly promoting BRI will give new impetus to enhance Japan’s position in Asia and in the global geopolitical and geo-economic landscape, and increase opportunities for Japanese companies to extend their business. A recent commentary in the East Asia Forum noted,

“For Japan it’s a pragmatic way to engage China. As Chinese policymakers search for ways to better deploy the country’s vast sums of capital abroad, Japan has experience of doing just that dating back to the 1970s — including of geopolitical pushback. Understanding that the Belt and Road is here to stay, Japanese engagement can shape the massive investments and get more business for its companies. It’s also a part of a broader hedge against an increasingly uncertain Japan–US relationship.”

During his visit to Beijing in October, Japanese PM Shinzo Abe joined the first China-Japan Third-Party Market Cooperation Forum. India is ideally placed to provide the stage for Beijing and Tokyo to initiate their third-party market cooperation. Being the three largest economies in Asia, China, Japan and India all have their advantages and needs. The three countries can achieve positive synergy. Recent Chinese writings have flagged that Beijing is open to the idea.