India seeks China’s friendship with caution as terrorism, protectionism cast shadow

By Li Qian Source:Global Times Published: 2017/2/21 19:17:00

Indians feel strongly about China's stance on Masood Azhar

Indian scholars are interested in how ordinary Chinese people think about India

The fact that Chinese overseas projects typically send workers to accompany investment has met with protectionist concerns in India

The Indian Gate looms from afar in central New Delhi. Photo: Li Qian/GT

More than 20 world leaders are set to congregate in Beijing in May for the first One Belt and One Road summit, though one of China's most important neighbors will likely be conspicuous in its absence - India.

In fact, officials and experts in both countries doubt that India will be officially involved in the One Belt and One Road initiative in any way. One major problem, Indian external affairs officials say, is that the initiative includes the China-Pakistan Economic Corridor, a key cooperation project between China and Pakistan which passes through Kashmir, a region claimed by both Islamabad and New Delhi.

"For us, there are questions of sovereignty which need to be addressed first," said Indian Foreign Secretary Subrahmanyam Jaishankar during the Global Times' visit in India in mid-February.

However, India has been enthusiastically pushing for greater trade with China and attracting huge volumes of Chinese investment, pushing economic cooperation between the two countries to unprecedented levels.

Many Indian experts agree that bilateral relations with China, in both geopolitical and economic terms, are more important than ever before at a time of unprecedented economic challenges and uncertainties brought about by the protectionist-leaning new US president.

But how to efficiently work together for mutual benefits and how to manage disputes between the world's two largest developing countries requires wisdom and patience.

A logo of Chinese smartphone manufacturer Oppo hangs on a street in Bangalore. Photo: Li Qian/GT

Mutual mistrust

Stepping out of New Delhi's Indira Gandhi International Airport, one cannot miss the giant posters advertising Chinese electronics firms Oppo and Gionee, which are clear indicators of a strong Chinese presence in the economic life of the South Asian nation; the downtown Chinese embassy, which local Indian officials claim is the biggest embassy compound in the world, is proof of the diplomatic importance Beijing has placed on New Delhi.

Indian officials from the Ministry of External Affairs and the Ministry of Finance that met with the Global Times unanimously stressed the importance of bilateral relations and expressed their willingness to boost ties. Relations between China and India have been moving in a friendlier direction in the past two to three decades, though obstacles have come up from time to time.

Counter-terrorism is one area in which China and India should make special efforts together, according to Foreign Secretary Jaishankar.

Bilateral ties have been highlighted in recent months after India criticized China for blocking the United Nations from listing Pakistani national Masood Azhar as a terrorist and obstructing India from becoming a member of the Nuclear Suppliers Group.

The Chinese foreign ministry has said more proof of Azhar's terrorist deeds needs to be provided by India and that India should do sufficient diplomatic groundwork with non-proliferation treaty signatories before the UN passes the motions.

India is on high alert for potential terrorist attacks, as seen from the strict security checks at hotels in its capital and major cities. Azhar's militant group is suspected of attacking Indian military facilities near the Pakistan border and conducting other terrorist attacks.

Sincere communications are needed between China and India to solve disagreements on this issue, said Sun Shihai, deputy director of the Institute of Asia-Pacific Studies at the Chinese Academy of Social Sciences. China is also a victim of terrorism and shares common interests with India on this issue.

"China has a very strong, principled position on counter-terrorism. We hope the position China already has will be further implemented," said Jaishankar, saying that discussions with China over the matter are still going on. Jaishankar will co-chair the China-India Strategic Dialogue in Beijing starting Wednesday, at which bilateral ties and disputes are expected to be discussed.

Scholars in India, on the other hand, are eager to know more about ordinary Chinese people's view of India. During meetings between the Global Times and Indian think tanks, at least two Indian scholars expressed concern that the Chinese public does not pay as much attention to India as Indians do to China.

"What do educated young Chinese think about India, what do they know of India, as a peaceful country? A good neighbor or bad neighbor?" asked Gurmeet Kanwal, Distinguished Fellow of the Institute for Defence Studies and Analyses (IDSA), while Jagannath Panda, an East Asia research fellow at IDSA who authored the book India-China Relations, wanted to know "why is Chinese media coverage on India so minor?"

One other question repeatedly raised during the exchanges included "How will relations between China and the US change with Donald Trump as president?"

When elaborating on India's diplomatic relations with other countries, Indian officials and scholars often stressed that India developing its relations with the US doesn't mean it is acting against any other country.

Indian Foreign Secretary Subrahmanyam Jaishankar speaks to the Global Times during an interview in New Delhi. Photo: Li Qian/GT

Uneven trade and investment

Besides Oppo, Xiaomi and Huawei, a number of Chinese smartphone and tablet manufacturers have permeated the fast-growing Indian market and become household names. As the Chinese smartphone market nears saturation, India has proved to be a continent that no ambitious company can afford to ignore. India currently has more than 1 billion mobile phone users, among whom only 250 million are smartphone users, demonstrating huge market potential for the years to come.

This potential is not just in the phone sector, experts say, explaining it lies in many industries.

On the other side, India is also looking for greater ties with China and the economic opportunities this may bring. Jaishankar stressed that India is a founding member of the China-initiated Asia Infrastructure Investment Bank and is the second largest shareholder after China, and said India advocates connecting closely with China.

The eagerness of Indian political and economic elites to improve relations with China and boost economic ties is evident.

Under Prime Minister Narendra Modi's "Make in India" strategy, India is thirsty for foreign investment to industrialize the country, for which China is a natural partner.

Right now China is the fastest-growing source of foreign direct investment to India. Direct investment from China to India topped $1.063 billion in 2016, according to figures from the Chinese embassy in New Delhi, six times what it was 2015.

At least seven Chinese smartphone manufacturers have established or plan to establish factories in India.

But India wants more than just investment, and is in return eying the Chinese market. China is more interested in investing in India than buying Indian-produced products, complained Shaktikanta Das, head of the Department of Economic Affairs, Ministry of Finance. Bilateral trade between China and India has been hugely uneven, with China enjoying a huge surplus. Figures from China's General Administration of Customs show that Indian exports to China contracted 18 percent in 2016 compared with the previous year, contributing to the rise of its trade deficit with China from $45 billion to more than $46.5 billion.

This was one of the reasons behind calls to "boycott Chinese products" in India in the second half of last year.

Brushing off the impact of such campaigns, Das said businesspeople who think their business is affected by Chinese imports are free to express themselves, but reaffirmed that "India wants develop very, very good economic relations with China."

"India wants to export more to China. We want to have more market access in China," said Das, urging China to further open up sectors like IT software and agricultural products.

Indian-made products are not competitive in the Chinese market, therefore India should focus on sectors it has advantages in, like further improving the "soft environment" for foreign investment as well as infrastructure, a long-time headache for investors, Sun Shihai told the Global Times.

For Gagan Sabharwal, global trade development director of the National Association of Software and Service Companies (NASSCOM) in India, the biggest potential of Sino-Indian economic cooperation lies in Indian IT enterprises providing software services to Chinese manufacturers.

India took the route of prioritizing service industries like information technology over manufacturing. That led to the IT industry, and especially software services, to develop into a state-of-art sector. A number of Indian companies dedicated to software services for foreign companies are world leaders in the sector. There is thus huge potential for cooperation with Chinese enterprises which excel in hardware manufacturing but are in need of software services.

NASSCOM, with more than 1,100 member firms, has been actively seeking opportunities to partner Chinese manufacturers and Indian software providers.

One of its members, Infosys, currently has 60 percent of its business in the US, followed by the European market. China is new on its business map and it is hoping for a huge increase in business.

However, bilateral economic relations are still far from achieving harmony. The model of Chinese overseas projects typically sending workers to accompany investment has met with protectionist concerns.

"Please do visit the metro rail here [in Delhi]. It's fully Japanese financed," said Shekhar Sinha, former Chief of Integrated Defence Staff with the Western Naval Command. "We do not like too many foreigners in our country. We manage the Japanese [project] with everybody including the supervising staff being Indian. We are not Africa. We have access to Japanese money, we have access to American money. We have access to World Bank money … We have foreign exchange savings, which is one of the highest in the world, that's why we achieve the 7 percent-rate growth."

"You cannot deal with India the way you deal with Mozambique," he warned.

However, like it or not, China and India must find a way to coexist for the unprecedented "simultaneous reemergence of the two great civilizations," said Alok Bansal, director of India Foundation, a top think tank in the country.

Newspaper headline: Rise and coexist

Posted in: IN-DEPTH

blog comments powered by Disqus