Three-nation tour: How Narendra Modi can outplay China

Weibo, China’s version of Twitter, gave Prime Minister Narendra Modi a taste of what awaits him on Thursday, May 14: “The southern part of Tibet belongs to China and Kashmir belongs to Pakistan,” wrote a user. (Southern Tibet is China’s official name for Arunachal Pradesh.) 

Modi joined Weibo, the leading Chinese social media platform with 500 million users (Twitter is blocked in China), on May 4. He quickly gathered followers (over 50,000 at last count) and tart comments. 

One Weibo user said coldly: “India’s prime minister, hope during your administration we can push to solve the (border) problem.” 

Another was friendlier: “China and India are the countries that have the biggest influence in Asia and are fast developing nations. There is no reason why we can’t advance together.” 

When the prime minister meets Chinese President Xi Jinping in Xian, the president’s home town, on Thursday, before travelling to Beijing and Shanghai, the odds are that they’ll exchange greetings in Mandarin before they get down to business and the translators step in. 

Modi-Xi chemistry

Modi and Xi are comfortable in each other’s company. They’ve met several times at international summits, beginning with the BRICS summit in Brazil last July. Xi made a high-profile visit to India in September, slightly marred by the incursion of Chinese troops into Arunachal Pradesh.

Since then the two countries have tried hard to narrow down the differences between them. Those differences, though, have a long history. The key point of friction is the boundary dispute. Despite dozens of meetings between working groups from both sides since the late-1980s, little progress has been made. 

The Chinese believe that the Modi-Xi chemistry will break the deadlock. Both are strong leaders. Each has unchallenged primacy in his party. Xi is the most powerful Chinese leader since Deng Xiaoping, Modi the most proactive prime minister since Rajiv Gandhi. 

In his interview to Time magazine last week, Modi said the Indo-Chinese border was, by and large, peaceful and tranquil: “It is not a volatile border. Not a single bullet has been fired for over a quarter of a century now. This goes to prove that both countries have learnt from history.” 

Grasping Chinese realpolitik

But hope can outrun reality. The Chinese remain masters of realpolitik. For every concession Beijing makes, it will extract two from India. It has been ambivalent on the controversial issue of stapled visas for Indians from Arunachal Pradesh while seeking online visas on arrival for Chinese visitors to India. 

It is pouring $50-billion into the China-Pakistan economic corridor from Gwadar port to Xinjiang, cutting a swathe through Pakistan Occupied Kashmir (PoK). Beijing has shrugged, inscrutably, at India’s protests over these and other Chinese infrastructure projects in Pakistan as well as the generous military weapons it supplies to Islamabad.

India must tackle such challenges like a grown-up country, not a supplicant. A Chinese commentator last week said Beijing regards Indians as a “docile people” who will do “the bidding of others.” 

India was subdued by the Turko-Mughals and the British while China revelled in its role as the Middle Kingdom. It dismissed colonial “barbarians”, as it described seventeenth-century envoys and traders from Britain and the Netherlands, with barely-concealed disdain. 

China had the world’s largest economy in the 1500s. Over the next few centuries it fell into decline and by the early-1800s was overtaken by the West. The barbarians had arrived at the gates. But in the end, even the British empire, despite inflicting the opium wars on the Chinese, could only colonise a tiny button on its southern coastal belly: Hong Kong. China, apart from the humiliation it suffered at the hands of the Japanese a century ago, remained unconquered. This history informs much of Beijing’s geopolitics today. China is set, once again, to be the world’s largest economy, overtaking the United States within the next decade.  

Both irritant and foil

For China, India is a strategic irritant – but also a strategic foil. Let me explain. China’s newfound status as a superpower has unnerved most of its neighbours: Japan, Vietnam, South Korea and several smaller littoral states in the South China Sea. India’s growing military ties with Vietnam and economic partnership with Japan worry Beijing. It frets even more about India’s expanding diplomatic ties with Washington. 

Despite all of these having an irritant value for China geopolitically, Beijing sees India’s rise in the region not so much as a threat but as an opportunity. In Beijing’s worldview, India’s ambitions must be contained to the Indian Ocean; it must be kept out of the South China Sea where Beijing has far too many hostile neighbours who seek India’s support in their battle against Chinese hegemony.  

Most crucially, Beijing wants to ensure India doesn’t get sucked into Washington’s orbit. What China fears most is India playing the role Britain did in the twentieth century Cold War against the Soviet Union – that of a strategic ally, albeit in a different geography, to Washington. This is why Beijing continues to arm Pakistan while humouring India: it pays to keep New Delhi guessing and wary of accepting Washington’s geopolitical embrace. This is the Chinese version of the Great Game, played out between Britain and Russia in south-central Asia in the 1800s. 

What Modi must do

Modi has three weapons to counter this strategy. He must use each at the right time – but make Xi acutely aware of India’s intent. 

First, reciprocity. 

Just as Beijing toys with India over PoK, Gwadar and Arunachal Pradesh, India must quietly reopen the Tibet issue. Past Indian governments have appeased China over Tibet. The Dalai Lama has also largely accepted as a fait accompli that his successor will be a Chinese proxy. But the Free Tibet movement, centred in India, remains a potent force. India must keep that option open as a pressure point just as Beijing uses Pakistan as a tactic to unsettle India. Though Amit Shah’s meeting with the Dalai Lama in Dharamshala on May 2 was cancelled because India did not want to upset the Chinese before Modi’s visit, the prime minister is scheduled to meet the Dalai Lama on his return, signalling a robust policy on Tibet.   

Second, trade. 

As Chinese companies invest in India, Beijing will be more sensitive to Indian concerns over infrastructure projects in PoK and in areas abutting Arunachal Pradesh. China’s exports fell 6 per cent year-on-year in April 2015, while imports plunged over 15 per cent. The Chinese growth story may not be over but it has hit pause. This gives India a window of opportunity. The International Monetary Fund (IMF) and the World Bank (WB) have projected that India’s GDP in 2015-16 will, for the first time, outpace China’s. India has entered a 20-year demographic sweet spot. The number of working-age people in India will peak between 2015 and 2035 even as China’s population ages: Mao Zedong’s one-child policy diktat of the 1960s is coming home to roost. 

China is India’s largest trading partner but the equation is loaded in Beijing’s favour: in the 11-month period between April 2014 and February 2015 (figures for March 2015 are not yet available), India ran a trade deficit of $44-billion with China. As manufacturing picks up in India, that gap must narrow. It won’t be easy: on Sunday, May 10, China’s central bank cut interest rates by 0.25 per cent to 5.10 per cent, its third cut in six months. Lower interest rates will spur private Chinese companies to borrow more from commercial banks and give an impetus to growth while making the financial system more market-friendly.

India’s recent agreement with Iran to develop the Chabahar port, just 70km from Gwadar, will, meanwhile, give India access to Afghanistan bypassing Pakistan (which does not allow Indian goods to cross its borders on the way to Afghanistan) and keep a watchful eye on Chinese investments in Gwadar.      

As India’s economic heft grows, the US, the European Union (EU) and the Association of Southeast Asian Nations (ASEAN) will all seek its huge market. Apart from Africa, India represents the only large underdeveloped region in the world. It is a magnet for infrastructure, investment and consumer goods and services. By keeping India in abject poverty and underdevelopment, past governments have presented the developed world – where surplus investment funds earn just 0.5 per cent a year in treasury bonds – the opportunity to prospect in a virgin market. 

India, China: Not natural enemies

The third point Modi must remember as he meets Xi is that India and China are not natural enemies. Apart from the 1962 war, provoked largely by former Prime Minister Jawaharlal Nehru’s “forward policy”, the two giant neighbours have exchanged monks not fire over the past two thousand years. That cannot be said for neighbours, small or large, in any other part of the world.  

And yet, the mistrust between the two countries runs deep. The scars of 1962 are fresh. The provocations over PoK and Arunachal Pradesh continue to sour relations. The prime minister has bracketed his three-day China trip with visits to South Korea and Mongolia, countries that share fraught relations with Beijing. That is the first step in India’s strategy to keep China too guessing. 

Sun Tzu, China’s legendary military general, wrote in his Art of War:  “The supreme art of war is to subdue the enemy without fighting.”

The prime minister should keep those words firmly in mind as he lands in China this Thursday.