Empty talk by the Chinese ambassador
- What global finance chiefs are saying about the global economy
- Walmart sees Flipkart as key to atone for missteps in China
- Infosys to renew focus on digital services
- Market LIVE: Sensex, Nifty trade higher, Bharti Airtel, metal stocks fall
- Airtel Q4 results today: Investors to look out for comments on tariff war
Speaking last Friday at the United Service Institution, the Chinese ambassador to India, Luo Zhaohui, highlighted four main points in the road map envisaged for improving Sino-Indian relations. The ambassador proposed: (a) a China-India Treaty of Good Neighbourliness and Friendly Cooperation, (b) a Free Trade Agreement, (c) aligning China’s proposed “One Belt, One Road” (Obor) with India’s Act East Policy (AEP), and (d) striving for an early harvest on the border issue. The question is, how should India react?
Let us take the first proposal.
The first point to underscore is that there exists in the Chinese mind the belief that Indians are by nature rather fond of “vision statements”, “joint declarations”, “guiding principles”, “five principles of peaceful coexistence”, etc. Therefore, offering a “treaty of friendship and cooperation” to India, at present, would be in line with Chinese thinking about the nature of the Indian mind and trust in such high-sounding joint statements.
Secondly, in the Chinese mind, such “lofty statements/declarations” count little when placed in the context of the real politics that its leadership practises. These can be easily ignored or subverted should the need arise. Take, for example, the Sino-Indian agreement of 11 April 2005 that set out the “political parameters and guiding principles” for the settlement of boundary issues. In Article VII it was agreed that, “In reaching a border settlement the two sides shall safeguard the due interests of their settled populations in border areas.” Any unbiased observer would read this to mean that in the eastern sector of the Sino-Indian boundary, the two sides had agreed to settle the border on the existing status quo, since settled populations exist right up to the boundary. And yet when the political situation turned, in May 2007, the then Chinese foreign minister told his Indian counterpart that “the mere presence of populated areas would not affect Chinese claims on the boundary”. In other words, the Chinese were reneging on Article VII. Thus, if there is no longer any validity to Article VII, then it becomes wholly untenable.
Let us take the second proposal.
Sino-Indian bilateral trade in 1991 was a paltry $265 million that mushroomed exponentially to $70.73 billion by 2015-16. Of interest is the fact that India’s current bilateral trade with China is larger than India’s combined bilateral trade with Britain, Germany and Japan. But the main problem area is that India’s trade deficit with China is unusually high and in 2015-16 it stood at a staggering $52.69 billion. This by itself should not be a cause for worry, as India runs deficits with 16 out of its top 25 trade partners.
Therefore, what would a free trade agreement (FTA) with China entail and what would be its implications? Empirical studies show that for India any such agreement would be a non-starter, for India is not competitive. An FTA would not have any major impact on increasing Indian exports to China, for the tariffs that China levies on most items in the Indian export basket are already near zero. Indian manufacturing industry, as presently constituted, would be badly hit. Although overall trade between the two countries might grow at a healthy pace, yet it would be mostly to the advantage of the Chinese. If, for example, tariffs levied were to be reduced, say, by 5% across the board, then the increase in India’s exports would be negligible, whereas those of China would increase by an estimated 18%. From the Indian point of view, therefore, this proposal is a non-starter.
Now, the third proposal.
The assumption in India is that the China-Pakistan Economic Corridor (CPEC), in which China is reportedly investing $46 billion, is an important component of Obor. If the past is any guide, then in 1966 at Tashkent, India agreed to restore the 1949 ceasefire line and withdrew from areas it occupied across the line. Similarly, the whole ethos of the Simla Agreement in 1972, as was the case with the Swaran Singh-Zulfikar Ali Bhutto talks in 1962-63, was that Pakistan would accept and at an appropriate time convert the ceasefire line (now called the Line of Control, LoC) into an international border. In 1999 as well, India maintained the sanctity of the LoC, never crossed the line militarily, but used force to oust Pakistani troops beyond the LoC. Thus, it seems that India was quite prepared to give up its claims to Pakistan-occupied Kashmir (PoK), if Pakistan accepted the LoC as an international border. It is not in the public domain if any such concrete offer was ever made in writing to Pakistan.
Thus, if CPEC is indeed a vital component of Obor, then it violates Indian territory, but Indian policy needs strategic clarity.
Therefore, if India cannot join OBOR then the Chinese ambassador’s proposal of joining Obor with India’s AEP clearly becomes a non-starter. In such circumstances, would it be plausible to prudently study those components of Obor that may improve India’s own connectivity to major Central Asian markets, just as India has chosen to join the Chinese-sponsored Asian Infrastructure and Investment Bank (AIIB) and the New Development Bank (NDB)?
Lastly, let us take the fourth proposal.
It is not entirely clear what the Chinese ambassador means by the early harvest of border issues but he did refer to early demarcation of the Sikkim-Tibet boundary. If that is what he meant, then this is indeed the strangest of the four proposals. The Sikkim-Tibet sector of the boundary has already been negotiated under the Anglo-Chinese Convention of 1890 and demarcated in 1895. The Chinese ministry of foreign affairs, in its note of 26 December 1959 addressed to the embassy of India, confirmed the position by stating that “the boundary between China and Sikkim has long been formally delimited and there is neither any discrepancy between the maps nor any disputes in practice”.
So what was the Chinese ambassador trying to convey?
Ranjit Singh Kalha is India’s former ambassador to Iran and Indonesia and a former secretary in the ministry of external affairs.