The Red Alert?
A little more than one-third of humanity is going about its way of life and their leaders across borders are engaged in making sense of the dynamics of modern times and their varied complexity. Challenges are so huge across borders that one cannot provide solutions in isolation. After all, we are truly in the globalised world characterised by interconnectedness, and are so entwined not only in terms of trade and capital movement but also in flow of the culture, ideas and so on. And yet, the problem is the inevitability of conflicts between nations that threaten to destroy the very narrative.
The Doklam standoff is just the latest of many irritants dogging relations between the world’s two most populous nations — India and China. As Sanjay Baru, Senior fellow at the Centre of Policy Research, puts it, “China has not made a secret of seeking Asian hegemony”.
Fractured Chinese Jingoism
Doka La is the Indian name for the region, which Bhutan recognises as Doklam, while China claims it as part of its Donglang region. Of the 3,488 km India-China border from Jammu & Kashmir to Arunachal Pradesh, a 220-km section falls in Sikkim, situated across Dokalam. The land they are currently arguing over spans 269 sq. km on a sparsely populated plateau in western Bhutan, which has no diplomatic ties with China and coordinates its relations with Beijing through New Delhi.
It was the tiny Himalayan kingdom of Bhutan that sounded the alarm — Chinese soldiers had arrived with bulldozers and excavators, and were building a high-mountain road near India’s border in an area the two nuclear-armed giants have disputed over for decades. India responded to the call by sending troops in July to evict the Chinese army construction party from the Doklam plateau.
The tri-border overlooking the Chinese-held Chumbi valley is one of the few areas where India still holds a distinct advantage, with Chinese forces within Indian observation and artillery range. If China were to capture Bhutan’s high-altitude Doklam plateau, it would not only mitigate that vulnerability but also hold a knife to India’s jugular vein, the Siliguri Corridor (100 km from the Chumbi Valley), through which Bhutan’s communications and transportation arteries also pass. For India, securing the Doklam Plateau is seen as essential to maintaining its control over a land corridor that connects India’s mainland with its remote northeastern States.
While existential stakes drove India to halt China’s construction of a strategic highway through Doklam, Beijing made a serious miscalculation by intruding there: it anticipated Bhutan’s diplomatic protest but not India’s swift, stealthy military intervention.
On 30 July, the 90th anniversary of the PLA (People’s Liberation Army) was celebrated with hype in China, where for the first time a grand parade was organised at the remote Zhurihe base in Inner Mongolia. The Chinese president and PLA commander-in-chief Xi Jinping was seen in an army uniform for the first time ever. It is to credit President Xi that his initiatives to bring about changes through series of sweeping reforms have envisioned PLA to take steps towards the hegemonic ambitions of China. Now, President Xi heads the Central Military Commission (CMC), which is unified command enabling greater integration and control.
Here, it is important to note that the Doklam’s crisis also goes hand-in-hand with the overhaul of the PLA. The issue is fast becoming a domestic political problem for China’s leaders who need to deal with a section of Communist Party members demanding action to “push back” Indian troops. And this is happening ahead of a crucial party congress that will elect leaders to top positions later this year.
Beyond India, Beijing’s moves to change geography in the South China Sea (SCS) region have had major economic and strategic implications for Vietnam and other Southeast Asian nations besides India and Japan, as any future move to choke movement of cargo through SCS will have a major impact on international trade.
Economics of Politics
Amidst the heat of threat and conflict, economy and trade suffer. This is because, two giant economies are intertwined in massive trade exchanges worth $70 billion. Will the conflict damage the bilateral trade relations?
Economic ties between China and India are set to play a large role in one of the most important bilateral relationships in the world by 2020. Bilateral trade has already surged from under $3 billion in 2000 to nearly $70 billion in 2016. China is the 18th largest investor in India now.
Despite their disagreements, India and China entered a trade agreement in 1985 and have stepped up cooperation in agriculture, science and cultural exchange. But a $46.6 billion trade deficit favouring China has irked Indian Members of Parliament, who seek more balance.
“There may be some negative consumer response in India to ‘Made in China’ stuff, but both countries have stated that they do not want their economic relations to be disrupted by their differences on border and other political issues,” says Baru. “I do not expect any ‘escalation of conflict’. In fact, there is no ‘conflict’. Only a stand-off. This will be managed,” he says.
Until the standoff subsides, the bilateral trade relations are bound to suffer. Srikanth Kondapalli, senior professor of Chinese Studies in JNU, believes that India-China economic relations are not very tense. So, the political differences will not have major impact on our bilateral relations as far as trade is concerned.
Hidden Dragon
In the last decade, India lost over $350 billion in the trade deficits to China. This is alarming. Since 2010, after (then) Indian President Pratibha Patil’s visit to China, India insisted on resolving the trade deficits gap through China opening its market for Indian goods — specifically pharma and software services. Besides, China needs to invest in infrastructure or manufacturing sector in India to fix the gap. “This has not happened despite the promises made by Chinese trade representatives,” says Kondapalli.
Another important factor for the trade deficit gap is the complete lack of transparency among the Chinese companies who invest overseas. Their shareholder patterns are entwined with huge influx of people from military or high ranking government officials. The case of Chinese company Fosun (Fuxing Yaoye) tells the story. Fosun intended to take over an Indian company but lacked transparency in terms of investments and shareholding, and created an environment of distrust. Huawei, another Chinese telecom giant, was long embroiled with accusation from the US, Australia and India, about their dubious role and ties with military officials. India even banned Huawei amid reports that the telecom gears that are brought from China are laced with technology that could send critical or security related messages to the server based in Shenzhen, China.
“As of now nothing, no solutions! The tension, if there is any, was created by China breaking away with the stand of resolving through mutual and peaceful discourse, and must resort to status quo,” sums up Kondapalli. For India is sticking to the agreement based on 1988, 1998 or 2012. “I agree with Indian view that both sides must restore status quo ante — that is, China must get out of Bhutanese territory and then India can withdraw from Chinese,” affirms Baru.
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