With China making moves all across South Asia, India’s future does not look too bright
With a strong economy, determined leadership, and a world in disarray, China is raising its posture and reclaiming its hegemony over Asia.
Long-term objectives to establish hegemony
Major steps taken last year
Economic penetration of India
The past decade has seen the Chinese increase their economic relations, both trade and investment, with India. China has become India’s most important economic partner. Indian trade with China during 2019 was $93 billion.
India exports raw materials, chemicals, and ores to China; India purchases telecommunication equipment, medicine inputs, and all kinds of machinery from China.
FDI from China to India is recorded as about $4bn per annum; however, most Chinese investment goes through Singapore or Mauritius. Total Chinese FDI to India is of the order of $10-14bn per annum. Most Chinese FDI is in telecommunications or IT industries.
In retaliation for a recent small skirmish on the Indian-Chinese border, India made some rather silly moves: the Indian government is delaying clearance of some imports from China but this will only annoy Indian importers who will have to pay the bills anyway.
The registrations of 49 Chinese-owned apps, including the delightful Tik Tok, were cancelled. This successfully reduced the quality of life of Indian teenagers, a strange objective of the Modi government.
Economic and political penetration of South Asian countries
An important instrument of Chinese policy towards India is the economic and political penetration of the six countries that surround India -- Nepal, Bangladesh, Myanmar, Sri Lanka, Pakistan, and Afghanistan.
In the past five years, Chinese diplomacy has improved the extent and quality of its links with these countries. What is now dawning on the Chinese is that its power in South Asia will grow with their willingness to accept exports from these countries.
American power in Asia arose directly from the willingness to accept the balance of payment deficits with most Asian countries. As China accepts a greater volume of exports from the six South Asian countries, its influence will increase. India is unable to match this action.
America’s -- and its agents of the Western way (IMF, World Bank, ADB) -- shrill demands for principled governance fall on deaf ears. The small South Asian countries have heard enough about human rights, free speech, corruption, and the rule of law.
The US Department of State may believe they are achieving something with all of these lessons. South Asian states listen and say “thank you” for this wisdom and go about their business.
Resources available from the West are significantly less than what China has to offer. Western warnings of the dangers of involvement with China, suggesting these countries are naive and need guidance, are not well received.
Changing military balance
Although India has been expanding its military forces, it remains far weaker than China. The Chinese objectives are clear enough: Shift Pakistan into a closer military alliance, reducing the traditional role of the US. Ultimately, this will lead to Chinese use of Pakistani airfields with pre-positioned equipment and supplies, making Indian air defense much more difficult.
This year, China has skillfully manipulated India and Pakistan into increasing antagonism over Kashmir; India’s changing the legal status of the disputed Kashmir is driving Pakistan into the arms of the Chinese, as the US watches in bewilderment.
With Afghanistan soon falling under the control of the Taliban, Pakistan’s puppet, the northwest corner of India will be increasingly threatened by the growing Chinese-Pakistani alliance. Modi sold his nation’s strategic position for a few rounds of applause.
Battles on the border
Over the past few weeks, China and India have engaged in a low-intensity battle, apparently without firearms, following the People’s Liberation Army’s occupation of areas that were disputed and, according to the Indian authorities, violated an agreement to leave empty.
Such incidents have taken place from time to time over the past few years. This recent fracas has followed a steady buildup of forces and development of access roads and airfields by both sides along the border.
No one really knows what is agreed and not agreed and the fog of conflict envelopes all. The Chinese seem prepared to create a climate of instability and fear in the mind of the Indian government. The Indians are ready to match the Chinese in moving forces to the border.
The Indians are particularly sensitive, since in 1962 the Indian army was overwhelmed by the Chinese army. This October war is the one incident of military conflict between the two countries.
After this defeat, India found its eastern half undefended; the Chinese chose not to go further into India. America and Britain desperately air-lifted infantry weapons and ammunition in support of the Indian army but to no avail. Because of this disaster, the current Indian objective is to convince the Indian people that their army is up to the task of defending themselves.
The future does not look bright for India. Caught in a ferocious Covid-19 storm and a slowing economy, Modi does not have the resources to match the growing Chinese political and economic power and influence. Politically, all six of the small South Asian countries are drifting away from India. And all have greater economic links to China than India.
Forrest Cookson is an economist who has served as the first president of AmCham and has been a consultant for the Bangladesh Bureau of Statistics.