India and China’s relationship remains frozen. A few border incursions here, another stapled visa there. Our border issues are wrapped up in geopolitical rivalry and the Tibet question, with incursions catalysing media hype and suspicion. Our past history as trading civilisations, with the Silk Route and Buddhism tying us, lies forgotten. A mature foreign policy, distanced from adhoc initiatives, paranoia and idealism, is lacking. With a creaking economy, India needs sustained border peace. China faces prolonged tensions in the east and South China seas. A booming economy, coupled with complementary trade and a wary and strong defence should be our ideal policy. Cooperation, with mutual benefit, in certain opportunities is plausible. The NDA’s China policy has always been one of trade outreach, tempered with caution and enhanced defence spending. With Prime Minister Narendra Modi’s pragmatic foreign policy, based on realpolitik and the national interest, we could see the beginning of a beautiful friendship.
There are few physical ties between India and China. China’s current geopolitical strategy is to create dense economic webs, which can be leveraged to tilt regional balance. With a northern Silk Route tying up Central Asia, the new Maritime Silk Route seeks to create influence in South Asia. China is building the UN-sponsored Trans-Asian Railway Link, a new Silk Route between Asia and Europe, with cargo shipments from Guangdong sent regularly to Frankfurt. Rail connectivity and increasing containerisation will increase trade manifold, with an initial 350-km link between India, Burma and China likely to cost about $400m, a pittance, potentially opening up the Northeast. Greater air connectivity with China will help us build links to East Asia, tying us into the manufacturing supply chain. We can be Asian again.
Urbanisation bedevils us. Prefabrication and modular techniques, utilised to build skyscrapers and low-cost housing in China are eminently adaptable to the Indian urban setting. An industrial corridor spanning Delhi and Kolkata can be opened up to Chinese firms, particularly in electronics and chemicals. Chinese firms, especially from the engineering, procurement and construction sectors are keen to participate in building our trillion-dollar infrastructure outlay over the next five years. Low-interest loans from Chinese banks could help kick-start our municipal development and 100 City Program. With the upcoming Brics summit, a partnership with China, particularly in infrastructure, should be explored.
We are in the midst of an energy crisis. With LNG imports at $14/mmBtu, firms like OVL and CNPC producing oil and gas assets at prices greater than $80/bbl. Renewables, on the other hand, offer the most potent prospect of an alliance, with cheap Chinese solar and wind panels potentially utilised for the expansion of India’s National Solar Mission (from 1,000 MW to 20,000 MW by 2022). With Chinese firms like LDK Solar and JA Solar facing bankruptcy, overcapacity in the global solar panel market has led to the cost of such panels dropping sharply ($0.74/watt from $80/watt in 30 years), with prices below production cost and grid parity approaching. Incentivising Chinese firms to set up plants in India to supply our burgeoning demand is a win-win.
Water security remains critical. Dam-building in Tibet has been stepped up. India is very dependent on water flowing down from Tibet (about 30 per cent of our annual supply). Cooperation over hydrological data and perhaps electricity production must be stepped up to safeguard against flash floods and landslides. A tripartite riparian pact between India, Bangladesh and China, like the Indus Waters Treaty, is feasible. Commercial exploitation of the Brahmaputra Basin with an average annual freshwater discharge of 4,160 m3/s and a hydropower potential of 296.8 terawatt-hour per year (+50 gigawatt from Arunachal) would garner benefits to both sides. A Brahmaputra Treaty will save millions from poverty and conflict.
Our neighbourhood has been destabilised. With Iraq increasingly a failed state, Afghanistan burdened with a civil war and Pakistan negotiating with the Taliban, portents gather. For China, Pakistan’s utility to balance India is now suspect. With a failing economy, high fiscal deficits and little investment in providing public goods of education or local security, Islamic radicalism is growing. The high hopes invested in building an energy corridor through the Karakoram and Gwadar lie forlorn, wracked by rebellion. Close ties between Uighur militants and Pakistani terrorists appear to be blooming, with brutal bombings in Urumqi perhaps a new chapter. A stable Pakistani democracy is in both our interests, with a rapid expansion in trade through linkages such as the Iran-Pakistan Pipeline or TAPI binding us closer.
China’s String of Pearls, newly re-christened Maritime Silk Route, continues to expand. Its rapidly modernising Navy, with the Liaoning, a refurbished Soviet aircraft carrier, is breaching the Inner Island Chain, claiming vast swathes of the South China Sea. With the Malacca Dilemma its primary concern, nuclear submarines increasingly patrol the Indian Ocean. China’s rise in the South East Asia requires a balancing act. India’s rapid naval expansion will be gladly welcomed. With Vikramaditya’s induction, India can maintain regional stability and help promote free passage in the Malacca Straits. China’s rise will open doors for India’s Navy.
The Dalai Lama is ageing. His successor will be found outside of China — quite likely in India. The influx of ethnic Han migrants crowds out local Tibetans, pushing refugees to India and bolstering support for Dharamsala. Our asylum policy must continue, whilst drawing flak from the Chinese. We must make life easier for the refugees, relieving them from renewing residence permits yearly. China needs to reconcile with the Tibetans, recognising their uniqueness. Trade between India and Tibet does not have to be confined to through Nathu La pass.
India and China will not be “bhai-bhai” anytime soon. We will not be allies or “natural partners”. But once we were the greatest of trading neighbours. Reviving that sentiment is eminently desirable. Global issues like climate change and multilateral trade position us on the same side. Representation on the IMF and World Bank and open markets drive us. We can tie ourselves on to a new Silk Route.