24 July 2020, NIICE Commentary 5622
Julia Sofia Kuusela
Strategic ambitions have been fueling the tension between Beijing and Delhi on the political stage lately. Ranging from regional, territorial, border to water-sharing issues, they manifest themselves as major impediments to peaceful bilateral relations and long-awaited rapport established in the wake of development of two countries. Multidimensional confrontation is due to modern events including the 2020 Doklam standoff and the relationship between Narendra Modi and Xi Jinping that define the trajectory of the Indo-Chinese tie-up.
Two-folded Impetus
Although current economic ties are characterized by more intense cooperation and involvement of both parties than the political dialogue is, a range of controversial and problematic disbalances arise from ongoing economic and financial relations. India’s trade deficit with China is perceived considerable with regards to gradual efforts from the Indian side to reduce the share of Chinese imported goods while emphasizing the promotion of domestic substitutes, or “Made in India” campaign. Governmental policies include both lists of products to be produced solely by Indian enterprises and wide-range incentives for local manufacturers. Notably, foreign direct investment (FDI) ratio constitutes a crucial part of bilateral economic engagement and is dominated by the Chinese counterpart with start-ups being one of the key destinations. FDI restrictions issued by Delhi in April 2020, which encompass an obligatory government approval process for Border States’ companies, came off as a response to the threat of opportunistic acquisitions followed by the stock prices drop in the pandemic settings. Increasingly scrutinized approach is being implemented by other nations including several EU member-states proved to be appealing to Chinese capital. Nonetheless, this partnership is of reciprocal interest, with India being a lucrative market for an abundance of goods and China contributing up to 18 percent of national imports in strategic sectors such as raw materials and auto & electronic components.
On the Political Front
Sino-Indian political landscape is shaped by long-standing tensions which have significant impact on foreign policies and national security agendas. Complexity is attributed to the potential of both nations to pave its way for becoming the world power while striving to mobilize all growth drivers and eliminate destabilizing factors. One of the unresolved issues is Beijing’s reluctancy to sign a burdensome river-sharing agreement that would create a regulatory framework for domestic sections of international waters’ management, thus, adhering to the negotiated maximum water intake and respecting downstream neighbors. Another perturbation is China-Pakistan partnership in military, political spheres, and Islamabad’s recent stance on border stand-off to the Beijing’s liking. Given the fact that India has been hesitant to accept the Belt and Road Initiative due to the China-Pakistan Economic Corridor (CPEC) traversing Jammu and Kashmir, the Indian policy of limited engagement is consistently pursued.
Undoubtedly, multidirectional linkages underpin existing bilateral relations where economic interdependence and political confrontation co-exist as pivotal embodiment of yet irreconciled differences. Consequently, security concerns amid constant jeopardy of border clash amplifies money flows allocated for safeguarding borders. Looking back at the Chinese domestic policy towards politically unstable and economically dependent Tibet Autonomous Region (TAR) which shares the 3500 km border with India, it is possible to observe how Beijing sticks to the tactic of its gradual development.
Favoring Strategic Area
In accordance with the specifics of the historical status of Tibet, the Communist Party of China (CPC) has maintained a restrained position on the issue of socio-economic transformation, so as not to provoke an outbreak of national protests. The Seventeen-Point Plan for the Peaceful Liberation of Tibet (1951) unveiled an epoch of Chinese-led social transition and economic upswing. Feudal theocracy, where religion was the underlying basis of one’s identity and cultural life, posed a peril to the purposeful strategy of CPC due to structurally different approach to management, commerce, or outward interactions. It was essential to align applicable practices and bring basic infrastructure such as roads and decent housing to the region.
For instance, in 1950-1960s, in view of the backwardness of TAR’s economy, the agricultural sector stepped in as a beneficiary of considerable investments. As of 1980-1990s, the “Opening of China” reform put an emphasis on the first zones of economic and technical development created for entrepreneurs lured by favorable business concessions and reliefs to instigate the influx of capital. At the present, Beijing supports developmental programs for the sake of modernizing urban facilities, transport and communication networks and making use of renewables’ potential. Although challenging landscape fuels engineering difficulties, it is vital for the CPC to have an extensive rail and road system to be able to transfer troops in a military worst-case scenario backed up by existing security objects located in Tibet AR.
Throughout decades relocated Han Chinese served as predominant actors of TAR’s reformation in its transit to the socialist path. To date, the ethnic balance is being altered due to the immigration of the Han group who accounts for up to 7 percent of local population. The reasoning behind massive resettlement includes the need for skilled and resilient workers responsible for delivering prosperity within the territory as well as the CPC’s willingness to expand its local presence and establish ‘support groups’. Notably, Tibetans has been opposing Chinese leadership imposed since the mid-twentieth century, repeatedly expressing dissatisfaction with unequal rights, demolition of sacred places and the fleeing of Dalai Lama that sparked numerous unrests (as of 2008) and increasing support of separatist trends. Tibetan refugees fled to India and formed massive diaspora under overall Dalai Lama’s priesthood which reinforced the degree of Beijing’s mistrust and complexity in India-China engagements.
Tibet Autonomous Region enjoys special attention in financial terms and the stake of governmental assistance in the local budget reaches up to 90 percent demonstrating high degree of dependency on state support. Beijing is directing substantial money flows into Tibetan economy in order to contain social instability. At the present stage, Chinese media shape the image of the area and outline TAR’s remarkable economic growth (GDP-wise) in conjunction with vast natural resources and competitive advantages. These comprise moderate market competition and touristic attractiveness enhanced by the Himalayan circuits. Nonetheless, numerous improvements brought about modernization in Tibet are to the benefit of Han Chinese as opposed to rural native inhabitants who encounter lack of relevant skills, education and, thus, employment opportunities and wages.
The main point is that successful integration of the area into the Chinese economy and political setup is on the modern agenda in highly turbulent border settings along with the territorial integrity concerns. Moreover, economic (“South–North Water Transfer Project”) and military (deployment of ICBMs) projects in TAR are aimed to reinforce China’s ambitions in Asia and constitute a major part of Sino-Indian ties. Risks related to the loss of political authority in Tibet or incoming foreign support addressed to local separatists are encrypted in a more assertive approach and oppressive attitude towards Tibetan identity. Beijing cannot help but retain full control over area along with introducing developmental policies which cater for government’s interest corresponding to relations with New Delhi, full of upheavals and threats. In turn, Tibet issue has not been acute one among Indian policymakers for the last decade but the recent trend reveals the rising interest in TAR including the possibility of playing ‘The Tibet card’ as a diplomatic push in bilateral talks.
