China’s Influence in India’s Neighbourhood

China’s Influence in India’s Neighbourhood

Col R Hariharan (Retd.)

[Extracts of this paper were presented by the author at the India-Taiwan interaction jointly organised by the Chennai Centre for China Studies and the Federation of Chambers of Commerce & Industry-Tamil Nadu Chapter at Chennai on August 1, 2008.]

China is aiming to quadruple its per capita GDP to $ 3200 by 2020 from $ 800 per capita attained in 2000. This would imply an average annual economic growth of 7.2% till 2020. In order to attain this, China will have to keep meeting the enormous appetite of its manufacturing economy for raw material and energy resources. On the other hand, it has to open up new markets for Chinese products while keeping the competitive economies of Asia and Americas at bay. Though this might be viewed as an exercise in international trade, it has to be driven by international relations backed by strategic defence capability.

Conscious of these imperatives, China’s international relations are developing on twin tracks: gaining sources of raw material across the globe, and increasing its strategic power projection. It is on a fast track development of missile capability and submarine fleet. According to some analysts China would be able to match the defence capability to of the U.S. by 2050. This is evident from the progress of the military modernisation programme of China which is making forays into space warfare, enhancing nuclear deterrence, naval expansion and acquiring rapid reaction and deployment capability.

China’s single minded pursuit for accessing resources has increased its visibility in Asia, Africa and South America. This has also made China support some of the most notorious regimes shunned by the rest of the world including Myanmar, Sudan, and Zimbabwe. At the same time it has embarked upon strategic infrastructure development in friendly countries that would improve China’s strategic reach.

This is reflected in China’s growing influence in South Asia where its presence is being firmed up in Pakistan, Bangladesh, Afghanistan and Sri Lanka, and possibly in Nepal at a future date. This has been a cause of security concern not only for India but also for the U.S.

China’s interest in South Asia

South Asia’s geographic location, midway between the oil rich Middle East and the South East Asian regions, lends it strategic importance. South Asia borders most of China’s sensitive southern boundary. This gives China the strategic option of opening direct access through South Asia to the international sea lanes of Indian Ocean. The Indian Ocean region has always been the scene of power play between Russia, the US and the West, and the theocratic Islamic states because 75 % of global merchant shipping passes through it.

In recent times, South Asia has also become a source of inspiration for Jihadi terrorism and separatism in China. Western parts of South Asia bordering China had been the fountainhead of Jihadi terrorism inspiring fellow Muslims across the borders in Xinjiang province. Similarly, the presence of large number of Tibetan refugees in India and Nepal with strong anti-Chinese sentiments had always been a source of potential trouble for China.

On the other hand, South Asia holds a number of attractions for China. The region has a growing economy of over 1.5 billion people in different stages of economic and social development. Its huge, young population represent an enormous and untapped market for Chinese goods. Major political, economic and social problems within and between South Asian nations offer fertile ground for increasing China’s influence through political, military and economic means. The region has considerable natural resources including coal, iron ore, natural gas and oil waiting to be fully exploited.

The India factor

In developing its relations with South Asian nations China has to contend with Indian sensitivities. India borders seven of the eight South Asian nations and dwarfs them both geographically and population wise. This makes it easy for India to physically influence, if not intervene, its neighbouring countries. India’s huge population forms the bulk of South Asia’s teeming millions. Historically, strong Indian influence has been permeating the social, cultural and religious life of its neighbours. As a result India wields a strong political clout unmatched by any other county in this region.

India nearly a decade long economic boom ago is pushing it into the realms of becoming a global economic power by 2050. India’s technology training institutions, churning out large number of engineers and professionals, are making India a reservoir of qualified technology professionals. This has also enabled India to become a world leader in software development. India’s traditional entrepreneurial skill, coupled with sizeable natural resources, gives it a strong economic clout in the region. As India’s share of global trade increases, Indian industrial houses are nursing ambitions to become global players. India is also striving to expand its manufacturing base. It is also in the quest for oil and gas resources all over the world, though on a much smaller scale than China.

The Indian growth model, despite operating within the constraints of being the largest functional democracy in the world, offers a strong contrast to the Chinese single-party model of monolithic development. India’s democratic polity has given it political stability unmatched by most of the other South Asian nations. Its large and modern armed forces serve as guardians of democracy. This is in stark contrast to some other countries of the region i.e., Pakistan and Bangladesh where armed forces had usurped power and throttled democracy.

The failure of India and China to amicably resolve rival territorial claims along the largely unmarked boundary following China’s occupation of large chunks of territory in Aksai Chin and other border areas resulted in the two countries going to war in 1962. The 1962 war had kindled strong suspicion in India about China’s strategic intentions in the region. It had also generated anti-Chinese feeling in India that persists to this day. Despite many rounds of talks between the two countries, the border dispute remains unresolved and continues to cramp the free articulation of Sino-Indian relations.

A major irritant for China in India is the presence of the Tibetan spiritual leader Dalai Lama and his followers in exile, who are the visible face of Tibetan freedom. The presence of a large Tibetan refugee population in India clamouring for Tibetan independence is major cause of security concern for China. The Tibetan issue continues to be another rider in the development of smooth relations between India and China.

In recent years China’s has been viewing with growing concern India’s emergence as a dominant regional military power with nuclear weapon and missile capability. Its large armed forces are being modernised and the Indian navy is on way to acquire blue water capability. The progressive growth of India-US security synergies, adding strength to the strategic security reach of both the powers, has further fuelled China’s security concerns.

These strategic factors coupled with the growing economic muscle have made India a potential challenger to the growth of China’s influence on the South Asian turf. In tandem with the U.S., India could also become a formidable contender for power in other parts of the world in the coming years.

At the same time, India also holds some positive attractions for China. Its growing economy and very large middle class provide an attractive consumer market for Chinese goods. For the resource hungry China, India’s large coal, manganese and iron ore reserves are useful. India also finds doing business with China an attractive proposition and India-China two-way trade had been booming despite the frosty relations. It is set to reach $ 25 billion by 2010.

China’s South Asia strategy

The Chinese have tried to maintain cordial and correct relations with India despite frequent reiteration of their territorial claims. China has also been expanding the areas of cooperation with India on issues affecting the interest of both the countries. A small beginning has been made in conducting joint training exercise between two armies of the two countries. This strategy has enabled China to keep India’ concerns at bay, even as it increased its influence in India’s neighbourhood. Though the shadow of India continues to loom large over its neighbours, China has succeeded in improving bilateral relations with each one of them.

The very size of India and its seemingly all pervading soft power kindle a sense of disquiet if not fear among some of India’s neighbours. This ‘Indian bogey’ is also used as a pet ploy in the political gamesmanship of countries like Pakistan, Bangladesh, Sri Lanka and Nepal. Though India had taken remedial measures, for historical reasons the ‘bogey’ is likely to continue to hobble Indian articulation in the region. China appears to have leveraged itself as the answer to ward off the Indian enigma in these countries.

For instance, Pakistan and Bangladesh have inherited a historical sense of insecurity about India after Pakistan was created in 1947. This provided a convenient foothold for China to step in. India’s economic domination of its neighbours has invariably resulted in lopsided trade imbalance tilted in India’s favour. Building better trade relations with China offers a way for them to balance this tilt. There is widespread fear of Indian cultural melange submerging the national and ethnic identity of some of the small neighbours. These fears are compounded by the physical threat posed by India’s large armed forces.. In the case of Nepal and Sri Lanka this fear is latent though they have enjoyed friendly ties with India most of the time.

China appears to have prioritised its relationship with Pakistan and Bangladesh occupying the top slot. These two nations have built symbiotic relations with China over the years resulting in the creation of infrastructural and military assets that would come in handy for China, when required. They are followed by Sri Lanka, Afghanistan, Nepal, and Maldives in the Chinese order of priority.

Development of China-Afghanistan relations is hobbled by two factors: China’s multi-faceted relationship with Pakistan, and Kabul’s close relationship with India. Afghanistan has always enjoyed a cordial relationship with India, except perhaps during the period of Taliban rule. Their relationship is driven by historicity as much as their strategic synergies where they see Pakistan ranged against them. India’s liberal development aid to the Karzai government and the involvement of Indian development task force in executing vital infrastructure projects in Afghanistan underline the strong bonds being built between them. Moreover, Afghanistan’s survival preoccupation while combating Jihadi terrorism and the all pervasive American presence there has left limited space for China to develop better relationship.

But despite this setting, Afghanistan remains a vital part of China’s energy infrastructure linking China with Pakistan, Iran and the oil rich Central Asian nations. So it came as no surprise when China secured in May 2008 the $3.5 billion Aynak copper field project in the remote Logar Province, making it the largest foreign direct investment project in the Afghan history. The Aynak copper field probably contains ore worth up to $88 billion. Significantly, the Chinese bid included the cost of building a 400 MW coal based power plant and a railway line from western China through Tajikistan and Afghanistan to Pakistan. China’s readiness to make such a large investment in a troubled region underscores its strategic significance for her, apart from its value in developing Western China.

Bhutan has always enjoyed cordial relations with India. China has territorial claims in Bhutan which would probably be settled only when India and China resolve their border dispute. This ‘India factor’ and Bhutan’s strong religious and cultural affinity with Tibet appear to be in the way of China’s efforts to enhance its influence. However, in the coming years this could change when Bhutan from royalty ushers in multiparty democracy.

China’s effort to increase its influence has three facets – economic, military, and political. The emphasis and combinations vary from country to country conditioned by situational priorities. Both Pakistan and Bangladesh are visible examples of China building a win-win relationship using political, economic and military leverages.

The economic aspects include extending loans on low interest and commercial terms, aid, project financing, infrastructure financing etc. Chinese aided projects invariably have visible national impact. Some of these projects include the Gwadar port complex in Pakistan and the proposed port project at Hambantota in Sri Lanka, and the construction of six vital bridges across major rivers in Bangladesh.

Most of these projects have the potential to add to China’s strategic access and mobility in the region. For example the new extension of the Xinjiang railway up to Kashgar about 500 kilometers (via the Karakoram highway) from the China-Pakistan border is complimentary to the project to widen the Karakoram highway. It is significant that China is also involved in the construction of a rail line to link Gwadar with Pakistan-Iran railway line. Similarly, the extension of railway line in Tibet from Lhasa to Indian border region has strategic connotations to the Chinese assistance in developing lateral communications in Bangladesh.

China’s military initiatives in the region are quite a few. Briefly, it comes in three forms: weapons sale, military training, and providing access to weapon technology. Of course military relationship between Pakistan and China goes much beyond these limitations and include sharing of nuclear and missile technology. These are well documented. China used Pakistan’s urge to develop nuclear capability to build enormous strategic bonds that have grown over the years.

India’s military intervention was the key factor that enabled Bangladesh gain independence in 1971. When Bangladeshis were fighting for independence China had supported Pakistan. But it had no hesitation in changing its stance when the independent Bangladesh came into being. When a military coup overthrew the Sheikh Mujibur Rahman’s regime, China got cosy with the military dictatorship. With the Bangladesh armed forces equipped now mostly with weapons and armament of Chinese origin, China is firmly established in the country’s strategic security initiatives.

As a result India finds it difficult to involve Bangladesh even in projects that are useful to both the countries and the region. Large scale Indian investments in Bangladesh have been discouraged while China has been awarded a project connected with the development of Chittagong port. The key to China’s success in Bangladesh is the fear of Indian domination (‘hegemony’ to use the ideologically correct term).

We see this happening all over in Sri Lanka. China is using the space provided by India’s reluctance to sell weapons to Sri Lanka for political reasons to increase its influence in Sri Lanka’s strategic spectrum. So the possibility of the Hambantota project ending up as a remake of the Gwadar episode in Pakistan is very much there.

China’s strategy in Nepal has probably been reworked to handle the Maoist dominated democratic regime now in power. China had supported King Gyanendra of Nepal when he was fighting the Maoists. When the Maoists overthrew him, China changed sides overnight. It increased the aid to the Maoist regime by 50 percent to 120 million Yuan over the 80 million Yuan given to the Gyanendra regime. The democratic regime’s readiness to suppress the peaceful protest of Tibetan refugees in Kathmandu recently when the Olympic flame was brought in showed its readiness to please the Chinese. If China’s influence expands rapidly in Nepal, it holds serious portends for New Delhi’s strategic security calculations.

Having gained a strong foothold in India’s neighbourhood, China is poised to increase its strategic clout enormously in this region. This is likely to haunt India’s strategic security planners in the coming years.

(Col. R Hariharan, a retired Military Intelligence specialist on South Asia, is associated with the South Asia Analysis Group, and the Chennai Centre for China Studies. E-mail:colhari@yahoo.com)