China’s India Policy: The Importance of Bilateralism— An Appraisal

India and China have significant connections that go back to ancient times. Both civilisations have in the past learnt from each other through an extensive exchange of ideas, knowledge, culture, religion, commerce and scientific developments. It can arguably be stated that the linkages and exchanges before the respective Independence of our two countries in 1947 and 1949 were essentially positive. These linkages included very substantial exchanges through and with Tibet and through and with modern day Xinjiang. The Himalayas and the Hindu Kush were not real barriers to what was essentially a very beneficial cross-fertilisation of ideas, knowledge and commerce.

One of the most important points of contact in the past between our two countries was the journey of Buddhism from India to China. There is public recognition of this including at the highest political levels in China and of course at the people’s level. It has though been sinicised. Interestingly, this has once again become a linkage that can contribute to greater understanding between the two countries.

The Encyclopaedia of India China Cultural Contacts (Government of India, 2014) put together under the joint auspices of the two governments in June 2014 very extensively, but in brief, brings together the wide ranging cultural and other exchanges between our two countries over the past centuries. This work was the outcome of a decision taken by then PM Manmohan Singh and Premier Wen Jiabao in December 2010. In the Preface to this two-volume publication, the Joint Compilation Committee states: ‘This Encyclopaedia reinforces the approach of ‘connected histories’ and seeks to clarify encounters and linkages that have facilitated the mutual enrichment and growth of our two cultures and societies.’ It further adds, ‘In the context of the present, the backdrop of this shared experience will help us to fully understand and appreciate the truly boundless possibilities of continuing this journey together in today’s world.’ It can be seen that the emphasis on beneficial bilateralism stands out quite clearly.

Given the above background, China’s world view and the fact of geographical contiguity, it is not surprising that the essential approach that China follows vis-à-vis India post 1949 is based on bilateralism. This is further underscored by the fact that India and China are direct neighbours, the two most populous countries in the world and countries that face socio-economic challenges and threats that are to a large extent very similar not only in substance but also in terms of the magnitude of the challenge.

The fundamental difference of course is the radically different political paths chosen by the two countries in their modern incarnations—India since August 1947 and China since October 1949. This though did not alter the basic Chinese approach, namely, to focus on bilateralism in its relations with India. An important part of the latter approach was for China to consolidate its historically maximum geographical expanse post the CPC announcing the establishment of The Peoples’ Republic of China on 1 October 1949. An essential part of this involved the need to effectively control Tibet. The importance of India in this process was made clear and obvious by the Central Committee of the Communist Party of China in an Inner-Party directive issued on 6 April 1952 (this is reproduced in Volume V of the Selected Works of Mao Tse-Tung). That directive highlights that for China to successfully take over Tibet,

We depend solely on two basic policies to win over the masses and put ourselves in an invulnerable position. The first is strict budgeting coupled with production for the army’s own needs, and thus the exertion of influence on the masses; this is the key link. Even when highways are built, we cannot count on moving large quantities of grain over them. India will probably agree to send grain and other goods to Tibet on the basis of exchange, but the stand we must take is that our army should be able to carry on even if India stops sending them some day. (Tse-Tung, 1977)

The directive goes on to state that:

The second policy, which can and must be put into effect, is to establish trade relations with India and with the heartland of our country and to attain a general balance in supplies to and from Tibet so that the standard of living of the Tibetan people will in no way fall because of our army’s presence but will improve through our efforts. (Tse-Tung, 1977)

It can justifiably be argued that one of the principal reasons why China was so keen to enter into a trade agreement with India for Tibet was the need to use India to consolidate its own garrisons and position in Tibet. The short sightedness of India having entered into such an agreement with China in April 1954 in which we virtually gave up all our traditional rights in Tibet is very clear from hindsight. Arguably, it should have been clear even when we were negotiating that agreement. But it serves no purpose to look back in vain. The irony is that China’s actions vis-à-vis India post the 1954 agreement were such that that agreement lapsed in June 1962. But it gave China enough time to consolidate itself in Tibet. The double irony is that China has still not been able to sustain its control in Tibet. The drive to build infrastructure connecting Tibet to Han China and attempts to build roads and railways into Nepal are indicative of the need to ensure that Tibet can continue to be effectively garrisoned and controlled by Beijing.

Insofar as Xinjiang is concerned, it can be seen from the April 1952 directive of the Central Committee that the CPC approach to that region of China was not dissimilar but that, according to the party, the ground realities in Xinjiang whether politically or economically or in terms of infrastructure were better for China to exercise control. Further, the fact that Pakistan became part of the game, vis-à-vis the Xinjiang region because of its occupation of POK, also meant that the need for a bilateral arrangement with India pertaining to that geographical region of China was not required. Chinese occupation of Aksai Chin and of an additional 5,000 sq. km plus in J&K through an illegal transfer by Pakistan have reduced the geographical bilateral importance of India for Xinjiang very substantially. On the other hand, it has added to the importance of Pakistan for China.

The importance of bilateralism with India for China was clearly manifest in the April 1954 Agreement between India and China on trade and intercourse with the Tibet region of China and can be clearly seen in the Panchsheel principles enunciated in the Preamble of the April 1954 agreement on Tibet. These principles are:-

Mutual respect for each other’s territorial integrity and sovereignty

The stress on the bilateral is extremely clear. These principles of course were made irrelevant by China’s unprovoked aggression against India in October 1962 and while lip service continues to be paid to them in bilateral relations, the fact is that both countries have moved on. But the principles of Panchsheel continue to remain relevant for China for it projects them, as per its own convenience, in its diplomatic practice with other countries and on specific issues.

Insofar as China and India are concerned, the principles of Panchsheel were for all practical purposes replaced in June 2003 by the principles enunciated in the comprehensive Declaration on Principles for Relations and Comprehensive Cooperation between India and China during Prime Minister Atal Bihari Vajpayee’s visit to China. Lip service though continues to be paid to the Panchsheel in bilateral statements. The new principles for relations highlighted in June 2003 and subsequent high-level declarations in this century include the following:

That both sides shall develop their partnership based on mutual respect and sensitivity for each others’ concerns, (core) interests and aspirations.

It is clear from the above that the fundamental building block not only for China, but also for India remains bilateral (though these declarations and joint statements also speak of agreement on and the need to cooperate in regional and multilateral fora and issues). This is not surprising because the fact is that since our respective Independence, our relations have really not evolved or developed in the manner that they could have. The single most important reason for this was the unprovoked and unwarranted Chinese aggression against India in October–November 1962. This was preceded by several years of deterioration in bilateral ties post the short lived bhai-bhai days. As China consolidated itself domestically and sought to play a greater role internationally, it found itself at odds with India. Its rivalry with the then USSR post Stalin and Mao’s disasterous domestic experiments that impoverished the country were among the several reasons that have been adduced by scholars for this deterioration. Irrespective, the result is that bilateral relations went into a virtual deep freeze since the late 1950s.

Things began to change as the Cultural Revolution in China wound down and efforts at restoring a semblance of normalcy were attempted. The then Indian PM, Indira Gandhi, decided to send back an Indian Ambassador in July 1976 (The Indian Ambassador had been withdrawn in July 1961 but diplomatic representation at CDA en pied level remained). The wheels of the bilateral relationship began once again to churn, albeit slowly.

Deng Xiaoping effectively assumed power in 1977–1978. After that, he began to consolidate himself and set processes of reform underway in China. In his thinking on the Asian century and China’s position in it, he appeared to believe that India would have to play an essential role if that were to fructify. His reasons were not altruistic but he undoubtedly did not want an enemy on China’s weak southern flank. His efforts were reciprocated by successive governments in India and the first critical step was to ensure peace and tranquillity in the border areas between China and India. This was facilitated by a set of bilateral initiatives including the return of an Indian Ambassador to China and was followed by Foreign Minister Vajpayee’s visit to China in February 1979. A process of discussions on the boundary question was initiated following the visit of Foreign Minister Huang Hua to India in 1981. These processes enabled the important visit of then Prime Minister Rajiv Gandhi to China in 1988 at which time it was essentially agreed that the two countries would set aside their differences on the boundary question and begin the process of developing their bilateral relations while at the same time, finding ways and means of working together on a boundary agreement that was fair, reasonable and mutually acceptable.

In recognition of the fact that the settlement of the boundary question was complicated and may take time, the first step was to ensure peace and tranquillity along the Line of Actual Control on the India–China border. This needed to be supplemented by actual military and other confidence-building measures along the LAC. This important process found fructification in the agreements of 1993, 1996, 2005, 2010 and 2013. Another critical agreement was the one negotiated by the Special Representatives on the Boundary Question (appointed by the two sides after PM Vajpayee’s visit in June 2003) and signed in April 2005, namely, on the Political Parameters and Guiding Principles for settlement of the India–China boundary question. A final settlement will need to be based on these and negotiations on the remaining two stages continue between the Special Representatives.

The importance of the agreements referred to above cannot be understated. The underlying approach to settling the boundary question which is accepted by both countries is bilateralism. Without a concrete settlement on the boundary, there are inherent glass ceilings beyond which the relationship cannot develop, deepen and diversify, although the processes have started and are reflected in the fact that India and China have a series of high-level bilateral dialogue mechanisms, including on the boundary question, on economic issues, on defence and security matters, on financial issues and between provincial leaders. In addition, there are a very large number of joint committees/joint working groups covering a range of issues spread over agriculture and fisheries, space and remote sensing, medicine, biotechnology, electronics, earth sciences, natural disaster mitigation, trade, skill development, energy, science and technology, etc. These high-level dialogue mechanisms and working groups are indicative of the very wide array of areas in which the two countries can collaborate to mutual benefit. While trade has grown very substantially, albeit in a one-sided manner, regrettably, the scope and depth of collaboration remains limited.

China is today India’s second largest trade partner but its approach towards bilateral trade does not reflect mutual benefit but is more akin to mercantilism. It has denied entry to goods, products and services where India has comparative advantage; its interest in India has essentially been to undertake infrastructure projects that more often than not are based on dated technologies and do not necessarily meet appropriate environmental standards. There is an effort to gain further concessions on the trade front through the guise of the RCEP trade negotiations. An exception to this has been the more recent Chinese investment in the financial, fin-tech and mobile phone sectors. Major greenfield investments that involve transfer of quality technology or job creation are still relatively insignificant. China’s effort to make inroads in 5G and other such technology sectors are fraught with national security risks.

Constant pressure by India over the years to ensure that China meets its bilateral WTO commitments made prior to its entry into the WTO have essentially fallen on deaf ears and it can justifiably be argued that bilateral trade between India and China in recent years has hardly been mutually beneficial in systemic terms. There are indications that this may change but the proof of the pudding is not yet clearly visible. For instance, at the Wuhan Informal Summit in April 2018, both sides referred to the commitment to strengthen the (bilateral) closer development partnership. The critical focus is to be on mutual benefit, sustainability and pursuit of national modernisation. The Chinese side added the rider that the CDP be strengthened in an ‘equal footed’ way (Kumar & Singh, 2018)! Considering that India’s trade deficit with China in 2017–2018 was USD 63 billion, this gives reason for doubt regarding intentions.

The very large number of bilateral joint committees and working groups covering a very vast area notwithstanding, progress on the ground in terms of actual cooperation appears to be rather limited. Here again, the signs of ‘beneficial bilateralism’ are not really visible. One cannot but help having the suspicion that China pursues its trade and economic partnership with India essentially for its unilateral benefit and to create a market for itself.

The Chinese provoked Doklam military stand-off (June–August 2017) brought about a qualitative change in the approach to bilateralism followed ever since the process of normalisation began over the last 30 years. It was an extremely serious situation that fortunately was handled with maturity and in the spirit of the bilateral agreements on maintaining peace and tranquillity in the border regions. The matter was particularly complicated since a third country, namely, Bhutan was involved. In that sense, the decisions taken by Prime Minister Modi and President Xi Jinping at Wuhan are of considerable importance. The two sides have spoken of the Wuhan Summit as a ‘new milestone’/‘new starting point’ (Kumar, 2018a) in relations between the two countries that were referred to at Wuhan as major countries/major powers. The implications of the latter will become clearer in the following paragraphs.

More important is to assess whether the Wuhan summit again underlined the essentiality of bilateralism in the Chinese approach to India. The Wuhan Summit, among other features, highlighted the commonalities and benefits that would emerge from the two sides ensuring mutual trust and through strategic communications and greater cooperation. For example, it was the Chinese argument that: a ‘peaceful, stable and balanced relationship between China and India is an important positive factor for the stability of the world’; their working together would ‘enhance stable and balanced development of major country relations, advance stability and prosperity of Asia in the 21st Century, promote the rejuvenation of the oriental civilization’; ‘as two major countries in Asia, China and India, will use their political influence and economic power to reinvigorate regional economic development’ and that ‘both counties are forces for promoting multipolarisation and economic globalisation’ (Kumar & Singh, 2018).

There is no doubt that the China–India relationship cannot be limited to bilateralism. India’s rise and development cannot be ignored any more. It has a substantive regional and global impact. This is reflected in the Wuhan enunciations and also in earlier high-level documentation jointly issued by the two countries since the turn of this century. However, in actual practice, the Chinese effort has been to focus on the bilateral and to try and keep India restricted to the sub-regional. This is reflected, for instance, in their approach over the years to India’s membership of APEC, EAS and SCO. However, the fact is that India’s size and rapid economic growth and globally accepted and identified potential cannot be ignored even by the Chinese. Besides, India’s rise is not seen as threatening. They have thus been compelled to collaborate with India but they do so in a manner that restricts India’s scope for leadership. This is feasible partly because of China’s rapid economic growth and militarisation over the last 40 years and its stature as the world’s second largest economy and second largest trading power.

An even more important factor is the fact that China is a permanent member of the UN Security Council. This was the result of an accident of history and political opportunism by the victors of the Second World War. Irrespective of why this happened, the reality is that this gives China an unequal advantage vis-à-vis India in multilateral and regional issues. China’s rapid economic growth and current stature has considerably accentuated the power difference between the two countries multilaterally, including in international financial and developmental institutions.

The Chinese approach to using its growing economic clout and its status as a Permanent Member of the UN Security Council has gradually evolved in this century and has taken on a more ambitious and aggressive posture particularly over the last 10 years. This is visible in virtually all multilateral institutions including the United Nations. Paradoxically, this has not necessarily reduced India’s importance in these institutions though it does necessarily mean that India comes to the table with certain inherent disabilities. As the Indian economy continues to grow rapidly and its record as a responsible international power further sustains itself, such disabilities should get reduced if the Government of India and Indian diplomacy play their cards sensibly and carefully. In this process, the growing hubris in China would be an advantage for India. In the latter context, it is pertinent to recall what President Xi said in his landmark address on the occasion of the 40th Anniversary of Chinese Reform and Opening up on 18 December 2018 in Beijing. He said, ‘China is increasingly approaching the centre of the world stage and has become a recognised builder of world peace, a contributor to global development and a driver of the international order.’ He went on to say that ‘Chinese development cannot be separated from the world and the prosperity of the world also needs China.’ And finally, he also stated,

[t]he Chinese nation carried out the social exchanges and cultural exchanges of the same region with confidence and generosity with the broad minds of ‘great world’ and ‘concord of countries’. It has written the long song of the vast Silk Road. It has also created the prosperity of the Tang Dynasty in Chang’an. It is this transformation and open spirit which makes Chinese civilization the only splendid civilization in human history that has not been interrupted for more than 5,000 years. ¹

Clearly, China seeks for itself the status of global leadership.

The question that arises is whether the focus of the Chinese approach to India in the coming years will veer away from bilateralism and increasingly recognise India’s inexorably growing role in sub-regional, regional and international affairs. There is already growing recognition of this as reflected in the outcome of the Modi-Xi Wuhan Summit of April 2018 and referred to above. The question is whether the Wuhan reassessment will reflect in ground reality?

An assessment of recent Chinese postures enunciated at the highest level may offer some pointers. In this context, the major address given by President Xi at the Central Conference on Work relating to Foreign Affairs on 22–23 June 2018 is relevant. Based on available information (Kumar, 2018b), it would appear that in his keynote address, Xi highlighted 10 major aspects of thought that would underline diplomacy of socialism with Chinese characteristics for a new era. These include:

Advance ‘major country’ diplomacy to fulfil the mission of realizing national rejuvenation (comment: i.e., bilateralism remains a major building block, including with India).

The foreign policy agenda set out by Xi Jinping continues to stress the bilateral while building on China’s regional and global outreach. The road ahead though is strewn with obstacles. Since last year, that is, 2018, the international economic, political and strategic situation has undertaken several twists and turns not quite to China’s advantage. There is the cross-sectoral pressure that US President Trump has brought to bear in a comprehensive whole of Government fashion on China. What is more this appears to have bipartisan support in the USA. This pressure has been supplemented, certainly on the economy and technological side by Europe. Besides, China’ highly ambitious BRI project is being increasingly questioned by recipients and several international institutions and will need considerable revision. The situation in the world energy market is changing; the global economy is slowing down; the USA has made inroads on Korea that may not necessarily be in Chinese interest; the situation in Xinjiang and Tibet continues to be troublesome; the Chinese economy continues to slow down and as recognised by Xi himself at the 19th Party Congress, the greatest contradiction that needs to be addressed, namely, that between unbalanced and inadequate development and people’s ever growing needs for a better life while retaining the Party’s absolute rule and control in China is gaining critical proportions.

What is clear from recent developments is that there is recognition, at least tactically, if not strategically, at the higher levels of leadership in China, that there is benefit in pursuing better relations with India in the short and medium term. Apart from economic benefit, there is benefit in the two countries collaborating in regional matters and on multilateral issues such as climate change, WTO, globalisation, food security, the role of international institutions (excluding, of course, the UN Security Council). Interestingly, it does not really seek cooperation in matters of hydrocarbon security though India and China are among the four largest importers of these.

The growing interest in the need to define a new Indo-Pacific architecture is an added motivation for China to secure better bilateral relations with India. The Chinese quite clearly look upon the evolution of the Indo-Pacific as nothing but an effort to contain them. India’s approach is appealing to them in theory but they do not appear to be quite convinced. Beneficial bilateralism with India could therefore well be a useful strategy to at least keep India neutral in the matter.

At the same time, China will also try to continue to limit India in South Asia and reduce its growing influence in the Indian Ocean. China sees itself as a neighbour of South Asia and is not willing to cede ground to India. While it would appear that China cannot really supplant India in South Asia, it can certainly increase the cost of India retaining substantial influence in the region. This is something that it has been doing over the years and has found increasing resistance from India. The success of India’s recent efforts in Sri Lanka, Maldives, Myanmar, Nepal and Bangladesh would not be lost on China.

China is a raw material deficient country and needs the world not only for energy, raw materials and technology but also for markets for its finished products. Had China been playing by the rules of the game, it may not have faced a problem. However, this has not been the case and it is its one-sided approach to seek and obtain unilateral advantage that is now drawing reactions from other economic partners. India fits into the Chinese scheme of things in several respects, especially in respect of having a huge market for Chinese products, infrastructure projects and investments. In the light of China’s slowing economy, this could come to play an important role in China’s approach to India in the coming years especially if the result of the ongoing pressure by the United States and Europe leads to China making major concessions.

China is aware of the fact that India is its largest neighbour (population wise) and offers a huge market. But there are unresolved problems that are seriously impinging on both countries. These include an unsettled border, China’s massive military modernisation and deployments in the India–China boundary areas, the unrest in Tibet, the issue of sharing of river waters, the question of support for insurgencies in India’s northeast, India’s opposition to and non-participation in China’s BRI Project and China’s relentless pursuit of the CPEC projects that adversely affect India’s sovereignty and territorial integrity. China’ constant protests when Indian leaders visit Arunachal Pradesh (including the very recent visit by PM Modi) also give rise to doubts about the Wuhan spirit and the agreement to strengthen strategic communication and building trust.

Does China have cards to play vis-à-vis India to ensure that while professing bilateralism, India does not concurrently work against China’s interest? The one major card that the Chinese have been exercising since the early 1960s is the Pakistan card. Keeping India out of permanent membership on an expanded UNSC and out of the NSG also serves this purpose and other Chinese objectives. The CPEC is the most recent and most substantial commitment to Pakistan. But it is necessary to remember that the entire planned Chinese investment in CPEC is about the same as its annual trade surplus with India! It is also questionable how long China can and should continue to provide ballast to Pakistan’s listing ship. The answer will depend on how seriously China views its partnership with India.

China is unwilling to take into account India’s concerns in Kashmir. China is as much part of the problem in Kashmir as is Pakistan. This issue will have to be addressed in the boundary talks between India and China.

As India’s rise continues, the challenge to China will continue to grow. India and China are not equal but nothing prevents the Indian economy from growing bigger than that of China over the next few decades. The Indian model is superior and the limitations are essentially domestic and inherent in a democratic set up in a country as complicated as India. But there is recognition of the limitations and the need to mitigate them. There is also the national aspiration to fulfil India’s potential. In effect, the Indian challenge to China should continue to grow and the comparison between the Indian and Chinese models will continue to gain in salience internationally. Yet both countries can gain significantly by deepening and diversifying collaboration across the board. Such mitigation of competition will be to mutual benefit. The Chinese policy of bilateralism will thus need to be broadened to ensure mutual benefit—not just one-sided benefit. It will also need to ensure that bilateralism must extend to genuine collaboration in regional affairs, international issues, reform of international institutions, military restraint and a genuine belief in multi-polarity and multilateralism.

For two neighbouring countries as large and growing as China and India, bilateralism will continue to underline their policies towards each other in matters of common development, regional development or the building of a community with a shared future for humanity. China will therefore, need to redefine its approach to bilateralism with India; broaden and deepen it by strengthening strategic trust and cooperation. China’s core interests and aspirations cannot dominate.