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India’s China policy needs new thinking, say experts

‘A deep engagement with globalisation is good for India’s strength,’ say the authors of a paper published by the Pune International Centre.

The border crisis of 2020 has brought India’s relations with China to a crossroads. A new paper, authored by a group of former diplomats, economists and scientists and published by the Pune International Centre, outlines the way forward for the relationship, both in the short-term, where India faces a stark asymmetry in power with respect to China, and in the long-term, which will decide the fate of the relationship.

Excerpts from an interview with two of the authors, Gautam Bambawale, a former diplomat who served as Indian Ambassador to China, Pakistan and Bhutan; and Ajay Shah, Research Professor of Business, Jindal Global University.

What prompted you to undertake this reassessment of India-China relations?

Gautam Bambawale: Thank you for posing that question. The Chinese military aggression in Ladakh, which commenced in early May of 2020, continues even until today. Even though there has been a bit of disengagement of forces in one sub-sector of Ladakh, other sub-sectors have not seen this. The starting point for our paper is what I can term as Chinese hostility towards India. That has become very, very apparent now with what the Chinese have attempted to do through their military aggression in Ladakh, where they have attempted military coercion on our borders. This clearly points to the fact that China doesn’t want a balanced sort of relationship with India, and that it is happy with an unbalanced, conflictual kind of relationship. That is the starting point for our paper.

Now, in the short-run, India has a bad hand of cards because of this great asymmetry, which our paper spells out. So in the short-run, the only thing India can do is to build balancing coalitions with groups of countries. We suggest there are three groups of countries with which India can build such balancing coalitions. One is, of course, the major democracies of the world. Second are those countries which are neighbouring to China. So a country like Russia, for example, is a very good country to have such a coalition with. Lastly, of course, countries in India’s neighbourhood like Bangladesh and Sri Lanka. There is a group of about 20-odd countries with which India can build very strong, deep partnerships. And by deep partnerships, we mean partnerships which go beyond just government-to-government interaction. With Russia, for example, we need to have people-to-people ties, institutional arrangements across a range of subject matters. In the short-run, that is one of the ways that India can maintain not only its territorial integrity and national sovereignty, but also maintain its strategic autonomy. We are arguing that India needs to go beyond narrow definitions of strategic autonomy in the short-term.

You point out that in 2047, when India will be at 100 years of Independence, if China grows at 5%, it will be an $86 trillion economy in PPP terms. For the next 26 years, if India is able to grow at 6% we will be at $39 trillion, if we grow at 8% we will be at $64 trillion, such is the gulf. You argue that unless India sorts out its domestic problems, forget about long-term challenges from China…

Ajay Shah: What we need to do is focus on private investment. It is the heart and soul of economic growth. It is also the heart of our economic malaise. We need to go deeper and understand what went wrong. We are told a fable that in 1991, India stepped out of socialism and became a market economy. That’s really not true. There is a very, very extensive and intrusive government apparatus operating all over the country, telling firms how to do things. This creates a loss of confidence; you say, maybe I should not be committing all my resources into building an organisation in India. We need to understand why there was a peak of investment in 2007, and why we’re standing here 14 years later, with sluggish private investment.

You also caution against India turning inward.

Gautam Bambawale: In the long run, it would not be correct to turn inward. I don’t think that the current policies are aiming at autarky. But that kind of thing would be absolutely wrong. We need to stay competitive internationally, and we need to make our own domestic industry competitive internationally.

Ajay Shah: We argue that a deep engagement with globalisation is good for India’s strength. That is something that is amply well understood from the experience of the last 100 years. This is the first time in India’s history that we are facing a geo-strategic conflict with a much stronger nation. That has not been the case with Pakistan. In 1962, when India fought a war with China, at that time the Chinese GDP was of the order of Indian GDP. We are in a new terrain. We have never been in this situation before.

On economic relations with China, you argue that we need to be guided by realism more than sentiment…

Ajay Shah: China wants to preserve the economic status quo ante. It is extremely important for India to say that is not on the table. The good old days of pursuing a deeper economic and commercial engagement is not feasible as long as the border is under attack. But at the same time, there is a certain hawkish perspective in India, where the thought is now let’s go shut down every aspect of engagement with China. We need to pause in that instinct, because some of this can be self-defeating. We need to put India first. Our focus should be, how do we become strong, and we should judge every action by what it does for India’s prosperity and strength. We should remember that the other side is an economy that is five times larger, so many times what we might think of as a hostile move that may damage China, in practice it may be a mere pinprick.

We think that there is a role for careful thinking and finding that middle road that plays optimally for India. How do we build India’s strength? How do we create conditions in international relations and diplomacy where India is able to attract more partners and achieve a coalition that is conducive towards India’s objectives? That should be our primary objective.

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