Round Table Discussion on ‘China’s Policy Towards South Asia: Implications for India’

Chair: Amb. Sujan R. Chinoy, Director General, IDSA

Venue: Room No. 005, Ground Floor

Concept Note

The South Asian region has been central to India’s security and foreign policy. Since independence, India’s natural pre-eminence has been subjected to contestation because of growing presence of extra-regional powers, including China, in the region. China’s presence in Tibet, bordering India, has made China an important part of India’s strategic calculus; more so, because China shares borders with many of India’s neighbours. Though India recognised China’s sovereignty over Tibet and tried to engage and befriend China, the 1962 war not only altered the India-China equation but substantially reshaped the perception of India’s neighbours towards both China and India. To some countries in the region, China gradually emerged as a reliable security partner, while India was perceived as a ‘hegemon’.

Over the years, China’s approach towards South Asia has been a work in progress. At the moment, a pragmatic mode of engagement is evident between China and South Asia which throws up a challenge for India’s neighbourhood policy wherein each of India’s neighbours is eager to play the China card against India. In the past, China not only supported insurgent groups fighting against the Indian State, but also supported anti-India policies of various undemocratic regimes in neighbourhood, who faced popular opposition from constituencies seeking to bring about representative governance in these countries influenced by the successful democratic experiment in India. While following the 1988 Sino-Indian rapprochement, China advised India’s neighbours to resolve their disputes with India bilaterally, it continued to balance India and stay relevant in the region by extending military and strategic cooperation to Pakistan. China has also made multiple inroads into South Asia, often cultivating political parties, highlighting cultural affinity with South Asia, diligently spreading its soft power through Confucius Institutes and building close ties with militaries in different countries by providing defence equipment at cheaper rates. It has forged close relationships with political parties, often inviting delegations belonging to different political parties to visit China and engage the Communist Party of China. It shares close relations with the Nepal Communist Party, the Bangladesh Nationalist Party, the Sri Lanka Freedom Party and the Progressive Party of Maldives headed by former President Yameen. In Pakistan, China’s greatest support base has been the Pakistan Army, which wields real power in Pakistan. Apart from these parties which may favour China, through grants, loans and aid, it has made the ruling regimes stakeholders in its strategic calculus, while pursuing its interests in South Asia. It provides generous fellowships to students in the South Asian region to learn the language or pursue higher degrees in leading Chinese universities. It is the largest supplier of weapons to Pakistan, followed by Bangladesh. It has strategic defence and nuclear collaboration with Pakistan; it has signed a Defence Cooperation Agreement with Bangladesh and has recently supplied submarines to the Bangladesh Navy. Its supply of arms during Sri Lanka’s fight against the LTTE is often cited as being critical to its success by the Sri Lankan Army.

China’s ability to provide loans on attractive terms as part of its flagship Belt and Road Initiative (BRI) announced in 2013, has been seen as a success by many countries in the region, especially for the regimes that wish to showcase economic development for their continuation in power and are unwilling to adhere to the terms and conditions of The World Bank and the IMF. Not withstanding the fear of debts, China is able to provide an alternative politically and economically and a choice that these countries can exercise. As a result, China’s strategic entrenchment in the region has been facilitated by its involvement in building ports and infrastructure in South Asia. The deep sea port at Kyaukpyu in Myanmar, the Hambantota Port in Sri Lanka and the Gwadar Port in Pakistan certainly enhance its presence in the Indian Ocean. It is continuing to eye the Sonadia Port in Bangladesh, work on which is currently shelved.

The strategic underpinnings of China’s involvement in these deep sea ports are apparent. It helps China to expand its presence into the Indian Ocean ostensibly to protect its Sea Lanes of Communication (SLOC), and there are several implications for India. It already controls the Hambantota Port on a 99-year lease; 91 per cent of the revenue generated by the Gwadar Port goes to the China Overseas Ports Holding Company while only 9 per cent is earned by the Gwadar Port Authority. Many in Pakistan often refer to their country as China’s colony. Its presence in Gilgit-Baltistan in Pakistan Occupied Kashmir (PoK) through the CPEC project and its unrelenting effort to bring Bhutan to its side by offering to swap territory and settle the border dispute with Thimpu, are some examples of China’s attempts to make further strategic inroads into the region. This also reflects China’s strategy to control ports and to have a strategic presence around India through BRI, in the name of bringing growth and prosperity to the host country. Connectivity has emerged as an important yardstick to measure ‘influence’.

China has substantial defence cooperation with the countries in the South Asia region. It has signed a defence cooperation agreement with Bangladesh in 2001 and the two countries are now strategic partners. According to a media report published in 2018, around 35 per cent of China’s arms supplies went to Pakistan between 2013 and 2017, followed by 19 per cent to Bangladesh. Dhaka procured 71 per cent of its arms from China over the five-year period, and Myanmar sourced 68 per cent of its arms during the same period. Due to India’s inability to assist in supplying arms to Nepal in 2005 because of the takeover of power by the Monarchy, and its difficulties in supplying weapons to Sri Lanka during its war with the LTTE due to opposition from Tamil Nadu, China filled the gap and supplied arms and provided military aid to Nepal and Sri Lanka. This substantially undermined India’s position in the conflicts in these two countries. Later, China provided $32.3mn as grant to the Nepal Army and built an armed police force training academy at the cost of US $350 million. Following the suicide bombings on April 21, 2019 in Colombo on Easter, China has offered Sri Lanka counter-insurgency weapons worth US$14 million.

As regards Beijing’s trade with South Asia, it is heavily skewed in favour of China. Beijing enjoys a surplus in trade with all South Asian countries. However, the pattern of China’s trade does not represent a similar trend for all of South Asia. For instance, while China’s trade with countries like India and Bangladesh shows an average increase in both exports and imports (with exports significantly outweighing imports, as with all other South Asian countries), in the case of Pakistan and Afghanistan, China’s imports have declined drastically; while exports continued to rise: Chinese imports from Pakistan fell from roughly US$ 2.7 billion in 2014 to US$ 1.8 billion in 2017, while imports from Afghanistan reduced from US$ 17 million in 2014 to US$ 3 million in 2017. At the same time, Chinese exports to Pakistan and Afghanistan increased from
US$ 13 billion and US$ 393 million respectively in 2014 to US$ 18 billion and US$ 541 million respectively in 2017. Another noticeable trend in China’s trade with the South Asian region pertains to its economic relations with Nepal and Bhutan. Since 2014, China’s exports to the two landlocked states have declined significantly. While occasionally year-on-year exports have increased – for instance, in 2016 and 2017 with Nepal and in 2017 with Bhutan – it has however, not been able to reach the level of 2014. The trade patterns indicate that the overall nature of China-South Asia trade is unfavourable and unsustainable for the South Asian region.

The question is, what will all this mean for India? To what extent would it affect India’s regional primacy and its vital security interests in times to come, as India would not be able to match China’s capacity to invest? This Roundtable will broadly examine four aspects:

1. Contours of China’s policies towards South Asia since its presence in Tibet;
2. The strategic and economic component of its foreign policy and response of countries in the region to China’s strategic overtures;
3. The BRI and its implications for the South Asian region;
4. India’s policy response to China’s strategy in the South Asian neighbourhood.

(Concept Note is prepared by South Asia Centre. Inputs provided by East Asia Centre)

Programme