The Chinese conundrum poses the biggest challenge to India’s foreign policy

by Dr Ajay Dua

The Middle Kingdom, with over three thousand kilometers of borders with India, is no longer a nation struggling to survive with huge chunks of its large population underfed, underemployed, and under armed. Over the last forty years, China stands transformed into a global economic and military superpower with a per capita income five times that of India. It has the world’s largest manufacturing hubs, extensive international trade, and an armed force capable of making a dent on anyone it wishes to.

With its recently acquired might, China has made its presence felt with a bang (and with bucks) around the globe. It has unambiguously pushed forward, with a notable degree of success, the age-old urge to expand its territorial borders and areas of influence; while ruthlessly subjugating its own citizens to achieve its undemocratically set short-term missions, as well as more strategic longer- term goals.

For India, coping with the Dragon Country with such characteristics is no easy task. Already, it finds itself wearing a necklace with Chinese-made pearls. It is surrounded by pro-China elements in Pakistan, Nepal, Myanmar, Sri Lanka, and the Maldives. In both Bhutan and Bangladesh, its two other neighbours, the Chinese continue to remain at work to wean them away from India.

In South and Central Asia, Africa, and more recently the Middle East, India stands checked to varying degrees. At the UN Security Council, China has unhesitatingly been using its veto power against India. The convergence of stands between the two neighbours at other international fora and multilateral bodies is shrinking rapidly as India cosies up to Western nations, particularly the US, and expands its role in the Quad setup with Australia, Japan, and the US. Apart from carrying on its own long-persisting land border dispute with India, and undertaking periodic military incursions by the People’s Liberation Army (PLA), China has let it be known that it aspires to be the sole regional power in South Asia, with India playing second fiddle.

An India equal to or surpassing it in might or influence is not acceptable to China. After a year-long strong recovery since the Covid-19 pandemic, however, China has been steadily faced with some serious challenges. Economically, lower GDP growth rates accompanied by discouraging outcomes almost across the board are coming to the fore—declining exports, defaulting property giants, a faltering banking system, and emerging deflation. Though authorities prefer to sweep it all under the carpet by saying these headwinds are inevitable, the Chinese economy does in fact seem to be losing steam.

The aspiration to go past the US economy is becoming more distant. Foreign investment into the country with a huge unsatiated consumer market has dwindled sharply. Investments made in the past, as well as those contemplated in the future, now seem at risk and capital pullouts have begun. Such developments are taking place at a time when the active workforce between the ages of 15 and 64 years is shrinking due to a declining population. The advantages of young and cheap labour, which had been the keystone of China’s notable economic growth hitherto, are fast disappearing.

A concerned government has ceased publishing data on youth employment, and its propaganda machinery is actively crafting positive narratives about the bright prospects of the Chinese economy. State security is gearing up to label any expression of negativity about the economy as a serious political sin. The recent display of collective political dissent through protests in several major cities, a few days before the withdrawal of the zero-Covid policy in late 2022, has unsettled the establishment led by the authoritarian Xi Jinping.

This marked the first instance of discontent since the Tiananmen Square massacre of 1989. Consequently, in late December 2023, while instructing the police to tighten political security and intensify proactive efforts to protect China’s political system and its ideological sanctity, the groundwork for further deepening cuts in personal and political liberties already seems to be in place. A new law on “patriotic education,” aiming to enforce the sharing of the government’s point of view, has come into force from 1 January.

Apparently, the effort aims to snuff out any belief, no matter how harmless, that might divide subjects’ loyalties, as the Economist noted in an article on 23 December titled “China’s rulers fear Genghis Khan.” At least for the time being, internal dissension may not pose too serious a problem for China—all forms of it will be put down with a heavy hand. However, a sustained economic slowdown will undoubtedly force China to scale back, and possibly abandon, some of its global and domestic ambitions.

The disruption in hundreds of China-based global supply chains points in that direction. International pressure on China to play a more responsible role in the collective drive to address factors affecting global climate change will further moderate the economic process. Such moderation will impact the purchasing power in the hands of the average citizen, as well as aggregate domestic demand, something that Chinese authorities have been wanting to grow for years. Without it, the country’s well-being would continue to be dependent on its exports.

Sustaining the previously achieved level of exports, let alone growing it, is no longer an easy task. Several nations are cutting down on trade with China. The USA and other advanced countries are already working on reducing their vulnerability in critical imports from China. To complicate matters further, global trade on the whole is no longer robust. With such a macroeconomic position as the backdrop, the million-dollar question now is whether India stands to be notably better off and finds itself in a better position today to exert greater leverage in Sino-India ties.

In matters of trade, it is not likely to gain any fresh advantage given its high dependence on China for consumer goods, various components, and capital goods. Additionally, for a variety of raw materials like rare earths, components, APIs for generic pharmaceuticals, solar cells and panels, and semiconductors for various usages, China remains the preferred source. Although campaigns like “Made in India” and schemes like PLI are desirable, they would only gradually reduce this dependence.

On the other hand, Indian exports to China, consisting largely of iron ores, pharmaceuticals etc., are not likely to grow, as China can import these competitively from Australia and elsewhere in South Asia. The restrictions imposed by India on investments, and the complete prohibition in strategic fields, would impact the quantum of investment. China’s focus on catching up on the technology front has already begun to bear results in defence, automobiles, semiconductors of various complexities and sizes, and robotics.

For instance, China already produces more humanoids than anyone else, a move that could potentially help it overcome the anticipated shortage of the workforce. India’s dependence on China for various technologies, especially electric vehicles, batteries, electrical equipment, and new transmission systems carrying loads of intermittent renewable power, is likely to grow. Putting aside the resolution of the long-pending border dispute, China’s overtures of “normalizing relations” with India are increasing. Take for instance that the prominent state-run English-language media outlet, the Global Times, recently featured an article by Zhang Ziadon of the Centre for South Asian Studies at Fudan University, Shanghai—this piece acknowledged “India’s robust economic growth in the last 4 years under Prime Minister Modi and noted the improvements in urban governance and a shift in attitude towards international relations, notably with China” (Indian Express, 7th January 2024).

It attributed these changes to India’s rapid economic and social development, as it becomes more strategically confident and proactive in crafting a “Bharat narrative.” China’s apparent willingness to bend should be considered against its recent challenges, such as economic slowdown, growing international isolation, and disappointment with India’s ally Pakistan. The mobilization of collective international efforts against Chinese aggression in the Indo-Pacific region could also play a role.

Nevertheless, the lingering question remains whether India should make any effort to respond positively. Hitherto, India’s stance has been that with the “Dragon at its Doorsteps” in Ladakh and certain pockets of the eastern border, it isn’t willing to take any steps towards normalcy. Such a stance cannot be found fault with, given China’s naked aggression, and unwillingness to recognize international borders demarcated by the McMahon and Johnson Lines. Its attempt to seize the Doklam Plateau at the trijunction of Bhutan, China, and India, poses a grave strategic risk.

China’s continued support for the proxy war of Pakistan cannot be tolerated. As Ashok Ganguli states in his book “Dragon at the Doorstep”, clearly, it is engaging in “warfare, which is a combination of proxy, coercion, targeted targets, psychological pressurization, forced succumbing in the economic fronts, use of artificial intelligence, standoff attacks, cyber transgression, subverting the political system of the target country, and maintaining an overbearing looming presence to keep the target country in perpetual fear/apprehensions with its military might.”

In recent years, there has been extensive discourse in India and abroad regarding India countering China’s rise. An impartial evaluation, however, must acknowledge the ongoing reality of India’s economic dependence on China for the foreseeable future. Furthermore, despite significant modernization and augmentation, the Indian armed forces currently lack the capability to effectively counter the Chinese military. Any strategy for checkmating China must be carefully formulated, taking into account thorough strategic and tactical considerations.

This plan should account for the potential behaviour of immediate neighbours, especially Nepal, Myanmar, Pakistan, and Bangladesh on land borders, and Maldives and Sri Lanka in the seas. India’s actions, such as the abrogation of Articles 370 and 35A of the Constitution, and asserting full authority over Jammu & Kashmir, have unsettled both Pakistan and China. India’s closer alliance with the USA, the reactivation of Quad, moving beyond mere economic cooperation, and greater global recognition, along with the country’s success in distancing Pakistan from Western countries, have also elevated its role. India should persist with such strategic moves, as well continue to reinforce its nuclear weapon program, revisit its doctrine of no first use to be an effective deterrence against any aggression from Pakistan and China.

Sun Tzu, the Chinese philosopher, long ago enumerated the “elements of the art of war: first measurement of space, second estimation of qualities, third calculations, fourth comparisons, and fifth is chances of power.” Through strategic moves and theater-by-theater tactics, India can narrow the military differentials with China. India must once again avoid falling for China’s overtures of advocating for peace and friendship at all costs. Ongoing efforts to significantly enhance defence capabilities and umbrella coverage should not be allowed to slow down.

Apart from the 1962 war with China, Indian forces have performed admirably in the four wars with Pakistan over the last 75 years. Historically, China has not been a durable and trustworthy friend to any of its neighbours—unsurprisingly, it has boundary disputes with all of them. It is worth keeping in mind what a crestfallen Pandit Jawaharlal Nehru expressed after being betrayed in 1962: “We see the most aggressive form of imperialism functioning across our borders in India.

China has said often enough that it is anti-imperialist, now we see this so-called anti-imperialist country becoming itself an imperialist of the worst kind and committing aggression and invading a friendly country without rhyme or reason or excuse and justifying it by saying that they are being attacked.” Let us not be taken by surprise again by a nation with such a track record and a clear intent to expand its frontiers.

Dr Ajay Dua is an ex-Union Secretary, Ministry of Commerce and Industry