The world is in a state of continuing flux. The economies of the major powers are still fragile and vulnerabilities exist in those of the bigger emerging powers in the Asia-Pacific like China and India. The balance of power is concurrently undergoing a shift with competing focal points of power surfacing in the East. The fragile nature has been accentuated in the past few years with Beijing’s accelerated push for recognition as the dominant power in the Asia-Pacific. This is resisted by the US, Japan and India and has made South East Asian countries nervous.

China’s sudden assertiveness since the end of 2007 was prompted by a combination of factors, but mainly by: the global economic downturn; China’s considerably enhanced economic and military strength; and Beijing’s perception that the US as a global power is on the decline and this is now the opportune moment for China to regain its self-perceived rightful position on the world stage and alter the status quo in Asia. The Chinese Communist Party (CCP) leadership is divided on the issue of whether to write off the US as the sole world power. One view is that the US is a power irreparably on the decline while the other, which seems to be gaining ground, argues that the intrinsic strength and resilience of the US will ensure its return on to the world stage as a stronger, more effective power. There is consensus, however, that the US ability to project power simultaneously in different theatres is presently constrained, thus offering China a window of opportunity that would last at most between 5-10 years.

China’s impetuousness and decision to ‘take on’ the US anticipatedly triggered a response signalling quite clearly that the US is not about to cede either power or influence in the Asia-Pacific. The US encouraged particularly Japan and the Philippines, to react to China’s aggressiveness. It additionally unveiled the seemingly short-lived ‘Asian Pivot’ with its definite military content. The US has now shifted emphasis though, to the Trans-Pacific Partnership (TPP) and Trans-Pacific Intellectual Property Rights (TPIP), which are economic equivalents of the ‘Asian Pivot’. China is now leaning towards joining the TPP/TPIP.

China, however, has not been deterred and continues to press ahead with achieving its global and regional ambitions. The continuing tense stand-off with US ally and East Asia’s strongest power, namely Japan, amidst steady escalation in tensions in the South China Sea, underlines Beijing’s willingness to push the envelope in the apparent confidence that the US will stop shy of confronting it and so will Japan and Vietnam. China reasserted the role it desires in the Asia-Pacific in a statement in Washington DC by its Ambassador to the US, Cui Tiankai, in February 2014. There is little doubt that US credibility as a reliable ally willing to back its partners in the region has been dented in the past 5-odd years.

In the South China Sea, after a series of confrontations with Vietnam and the Philippines where China seized some maritime territories, Beijing has begun to assert its claims over a larger area. It has revived its claims on St. James’ Shoal off Thailand and South Korea’s Ieodo Rock and recently began building airports on some islands and extending others. On May 24, 2014, China’s largest US $ 1 billion oil rig the ‘Haiyang Shi You 981’ sailed into Vietnamese-claimed waters escorted by 86 armed ships and Beijing has now sent four more rigs. Simultaneously, tension with Japan over the Senkaku Islands (called Diaoyu in Chinese) rose in recent weeks with the increased frequency of patrols by Chinese Navy ships and People’s Liberation Army Air Force (PLAAF) aircraft flying very close to Japanese Self Defence Force (SDF) aircraft and at times coming near collision range.

Meanwhile, modernisation of the 2.3 million-strong People’s Liberation Army (PLA), which coincides with China’s continuing assertiveness that has unsettled its neighbours, has entered the final stage of its current phase. The Chinese Communist Party (CCP)’s Third Plenum, which was held in November 2013, provided it a substantive push. On January 18, 2014, the Party Secretary of Liaoning province disclosed that the second domestically-produced aircraft carrier being built at Dalian would be ready in six years. China also allocated US$ 1.6 billion for the first phase of indigenous design, development and production of jet engines.

The Third Plenum approved organisational reforms in the PLA’s command structure and the PLA Navy (PLAN), PLAAF and China’s strategic missile strike force, namely the Second Artillery, have been allotted enhanced operational roles and will receive priority in allocation of budgets and manpower. The PLA is to be downsized by 800,000 personnel including a large number of non-combatants. Reports filtering out of Beijing disclose that plans have been finalised to merge the seven military regions into five “combat zones”. This reorganisation will give the PLA a definite “outward orientation” and implies that “recovery” of territories claimed by Beijing will be a central feature of China’s strategic agenda and the PLA will reinforce diplomacy aimed at realising “China’s Dream”.

All this is relevant to India-China relations as is Beijing’s stance on ‘core national issues’ in bilateral relations. Beijing has made it explicitly clear in two despatches of China’s official news agency ‘Xinhua’ in August 2011, addressed to Japan and the Philippines, that ‘burgeoning economic ties do not mean good bilateral relations’ which depend entirely on the recognition and acceptance of China’s ‘core national interests’. The despatches are important because ‘Xinhua’ is China’s authoritative official news agency and even the CCP Central Committee (CC)’s powerful Propaganda Department instructs all Chinese journalists reporting on sensitive topics to adhere strictly to the text of ‘Xinhua’ reports.

To digress slightly, Chinese Premier Li Keqiang’s 2-day visit (June 17-18, 2014) to UK is pertinent. Apart from the fact that Beijing was particular about the minutiae of protocol, the 30-Article Joint Statement issued after the visit revealed UK’s capitulation to China. Article 23 stated that Britain recognises Tibet as an integral part of China and does not recognise Tibetan independence. The English-language ‘Global Times’, a subsidiary of the CCP’s official newspaper ‘People’s Daily’, gloated that Britain was finding it difficult to accept that it was now a “poor power compared to China”. A major inducement were the over US$ 40 billion trade deals signed during the visit and establishment last year of a Yuan swap centre in London.

While assessing a country’s foreign and strategic policies, and particularly in the context of India- China relations where there are major stakes and we are directly affected, it is important to understand the nature of the State and its internal leadership dynamics.

There has been a major change in China’s politics and leadership style since 2011 and particularly with the ouster of former Politburo (PB) member Bo Xilai in 2012. That was a major event in China’s politics, perhaps the first major political upheaval since the Tiananmen Event of 1989, and has seen a visible ‘hardening’ of the Chinese State. Details revealed during the events leading to Bo Xilai’s ouster reinforced the conviction of the CCP’s nomenklatura that the US remains intent on its strategy of ‘peaceful evolution’ -- China’s short-hand for US efforts to dismantle the CCP; deprive the CCP of its monopoly rule and introduce multi-Party democracy; and replace the ‘socialist economy’ with a ‘free-market capitalist economy’. Factional differences were subordinated to protecting the Party Centre and ensuring the CCP’s monopoly on power. All senior veteran cadres backed Xi Jinping and supported him as ‘leader’ of the Politburo Standing Committee (PBSC). As a consequence, in addition to the three all important posts of CCP CC General Secretary, Chairman of the CMC and President of China, Xi Jinping now additionally heads seven of the Party’s Central Leading Small Groups, which are the most important and highest decision making bodies. The Party has, in effect, asserted itself and further tightened its grip over key levers of the State.

Doctrinaire policies have also gained ascendance in the Party in the past few years with renewed emphasis on Marxist and Maoist ideology and Party discipline. The Party’s guiding narrative is being enforced by the CCP CC’s powerful Propaganda Department which has been steadily tightening restrictions on the media, social media and journalists (including most recently last week), since Xi Jinping took over. The elevation of Liu Yunshan, former Director of the CCP CC Propaganda Department, as Member of the PBSC and the country’s Propaganda and Ideology Czar is demonstration that the ‘hardening’ of the State is the decision of the Party Centre.

Particularly relevant in this context is Xi Jinping’s ‘China Dream’ which envisages: making the Chinese people wealthy; making China a strong nation; and the rejuvenation of China. This muscular aspiration for China spelt out by Xi Jinping at the 18th Party Congress has been adopted by the entire Party and has already entered the lexicon of the CCP. It is particularly pertinent to India-China relations as ‘rejuvenation’ implies the restoration of China to its self-perceived rightful international status and recovery of all its territories. The new passports published by China depict its claimed territories, as do its actions in the South China Sea and East China Sea and the increased assertiveness and expanding claims over Arunachal Pradesh and Jammu and Kashmir.

The Party has concretised Xi Jinping’s status in the CCP hierarchy, thus legitimising his status in China. The Party theoretical fortnightly journal ‘Qiu Shi’ in its latest issue (June 2014) described Xi Jinping as “one of China’s greatest Communist leaders”. Xi Jinping is today China’s most powerful leader since Mao Zedong.

In India too, there has been a radical change with a new leader emerging after a resounding democratic electoral victory. New Prime Minister Narendra Modi has a reputation as a strong, decisive leader and the BJP as a ‘right wing’ Party and they have a majority in Parliament unprecedented for thirty years. Modi very quickly used his swearing-in ceremony as an opportunity to outline India’s view of its strategic neighbourhood and where Indian interest will focus. The visit to Bhutan and planned visit to Japan reinforces this. The current government can shape and implement medium to long-term policies. In other words, India and China both have strong leaders and this itself offers an opportunity for engagement on fresh and revised terms.

Chinese Foreign Minister Wang Yi’s visit was intended to show China’s eagerness in engaging with India’s new right-wing Government and is part of its strategy of ‘Peripheral Diplomacy’. It sought to project that China desires good relations with India and prevent India from moving close to Japan or towards a US-led anti-China grouping. A Chinese-language official ‘Xinhua’ despatch of May 29, 2014, is, however, pertinent. Its tone differed noticeably from that of other Chinese media reports which assessed that India’s policies towards China would not change and that economic relations would receive a boost. This Xinhua despatch asserted that Modi has no option other than economic cooperation with China as India perforce has to recognise China’s economic and military superiority in Asia. It stressed that Modi would have to accommodate China, not out of choice or inclination, but out of necessity. While this is arguable, but the Xinhua despatch exhibits China’s self-confidence and at the same time implies there is potential for cooperation.

China’s focus is on economic cooperation with India: Xi Jinping and PM Modi’s meeting on the sidelines of BRICS Summit also pointed towards the same though differences on some of the strategic issues remained. Chinese President Xi Jinping’s forthcoming visit to India has the economy as its focus and he is reportedly being accompanied by 350 Chinese Chief Executives (CEOs) amidst much talk of investing in India’s infrastructure, high-speed railways and the Bullet Train. Chinese diplomatic missions in India have already begun selecting locations for the ‘Special Industrial Parks’ and, at least in Maharashtra, Rajasthan and Bengal, have identified middle-men for ‘benami’ purchases of land. China is anxious to find a new market for its huge reserves of surplus cash and as another avenue for investment, and India is an attractive vast market. Undoubtedly it will benefit if China invests in India’s infrastructure, but India will need to carefully decide the direction in which to steer Chinese business as otherwise, in a democratic set up such as India’s, China will soon acquire a powerful business lobby capable of adversely influencing national strategic decisions. Roads, flyovers, railways, hydro-electric projects, multi-storey office and residential buildings, are sectors that can benefit from Chinese investment. In order to ensure strategic flexibility and increased investment, however, these must be balanced by offering similar competitive opportunities to other countries like Japan, Taiwan and Singapore. India can particularly benefit in the hi-tech, advanced electronics and defence sectors by encouraging investments from Japan and Taiwan on very preferential terms.

Nevertheless, two events are worthy of note in this context. First is the protracted 20-day incursion by Chinese troops in Apr/May 2013 in the Depsang Plains of Ladakh that cast a cloud over the bilateral relationship and Chinese Premier Li Keqiang’s visit. The intrusion was apparently planned and deliberate. It was proposed by the PLA and approved by the Politburo which, after discussions, assessed that India would not cancel Li Keqiang’s visit for fear of offending China. It was certainly not, as sought to be made out, a local action by a local PLA Commander. On May 14, 2013, the influential, official ‘Zhongguo Qingnian Bao’ (China Youth Daily) published an article implicitly laying claim to Ladakh and describing it as part of Tibet.

Second is the visit (June 8 -9, 2014) of Chinese Foreign Minister Wang Yi to New Delhi. In keeping with past practice, just two days before Wang Yi’s arrival China alluded to the outstanding border issue and the Dalai Lama’s presence by officially protesting the presence of Lobsang Sangay, head of the Central Tibetan Administration, at Prime Minister Modi’s swearing-in ceremony. Wang Yi too, at his press conference in New Delhi, asserted China’s territorial claims by brushing aside questions on border intrusions and made a carefully worded remark that the issue of stapled visas by China were a “unilateral” “flexible” “goodwill gesture” or, in other words, that the status of Arunachal Pradesh and Jammu and Kashmir remain disputed.

On the vexed border issue, little progress can be anticipated unless both leaders and, especially Xi Jinping, decide to use their strength and push for a mutually acceptable settlement. China’s recent utterances on issues of sovereignty and territorial integrity, however, make this a distant possibility. China can, in fact, be expected to be insistent and expand its claims on Arunachal Pradesh and J&K and may test the resolve of the BJP government on the territorial issue. The status quo in negotiations will not change till India acquires the capability, through asymmetrical power, to impose unacceptable costs on China’s ‘Han heartland’, including Beijing and Shanghai. This will take a couple of years as the Agni V series of missiles become operational and are deployed.

China will continue to deepen relations with Pakistan, Nepal and Sri Lanka and exert to establish a formal diplomatic presence in Thimpu, which is only a matter of time. A new and worrying feature is China’s focus on Lumbini in Nepal. Not only will construction of a modern airport in Lumbini built by the PLA pose a proximate military threat to India, but more insidious is Beijing’s effort to undermine the influence and the authority of the Dalai Lama amongst Tibetan Buddhist monks and lay the ground work for potentially triggering instability and secessionism across the vulnerable Indo-Tibetan Himalayan border belt. Plans of China’s so-called NGOs to build and operate a monastery-cum-seminary points to this.

Finally, it is pertinent to briefly mention China’s strategy of ‘Peripheral Diplomacy’ formulated in October last year. The ‘Peripheral Diplomacy’ strategy for the first time in the history of communist China designates neighbouring countries as ‘friend’ and ‘enemy’ and promises huge benefits and economic largesse for countries that accept and assist China’s regional ambitions. These three initiatives aim at obtaining new sources of natural resources and new markets for China and will be secured by China’s expanding military might and strategic reach including in the Indian Ocean.

Jayadeva Ranade
19 August 2014
(The author is Member of the National Security Advisory Board and President of the Centre for China Analysis and Strategy, New Delhi. He is a former Additional Secretary, Cabinet Secretariat, Government of India)