ICC Mar-Apr 2019 by India China Chronicle

An India-China Economic and Cultural Council publication

March-April 2019 • ` 100

BRI BOYCOTT

INDIA’S FOREIGN POLICY RISK?

Arvind Gupta

Mao Keji

Kuldeep Khoda

Gautam Bambawale

CPEC core reason of dispute between India and China in BRI

How the Dragon and the Elephant can tango together

Concerns, unanswered questions prevent India’s participation in BRI

Strong Relations With China: The Roadmap For India’s Next Government

David Devadas

Dr. Faisal Ahmed

China must address concerns about BRI impact

Sino-India Engagement: Not Symbolism but Strategic Depth Needed

Dipankar Sengupta

China’s Belt and Road Initiative, and India: To Get In or Not Get In?

www.icec-council.org

Vol 6, Issue 3, Mar-Apr 2019 EDITOR-IN-CHIEF Mohammed Saqib EXECUTIVE EDITOR Rajni Shaleen Chopra EDITORIAL BOARD Mani Shankar Aiyar PS Deodhar Prof Haixiao Song Dilip Cherian Shaodong Wang Amir Ullah Khan EDITORIAL TEAM Irfan Alam Audrey Tso Aishita Shukla DESIGN Manoj Raikwar OWNED, PRINTED AND PUBLISHED BY Mohammed Saqib Registered with the Registrar of Newspapers of India under RNI No: DELENG/2011/43423 PUBLISHED FROM A-82, Zakir Bagh, New Delhi - 110025 ADDRESS FOR ALL CORRESPONDENCE India-China Chronicle B-59 (GF), South Extension - II, New Delhi - 110049 Telefax: 011-46550348 PRINTED AT Thinkink Creation Patparganj Industrial Area, New Delhi Mobile:+91-9818717456 E-mail : thinkink.creation@gmail.com All Rights Reserved. Reproduction in whole or in part without written permission is prohibited.

All advertising enquiries, comments and feedback are welcome at info@icec-council.org The information contained in this magazine has been reviewed for accuracy and is deemed reliable but is not necessarily complete or guaranteed by the Editor. The views expressed in this digest are solely that of the writers and do not necessarily reflect the views of India China Economic and Cultural Council (ICEC).

BeiDou, China’s Space Silk Road, is an important dimension of BRI

eidou, China’s home-developed satellite navigation system, has been described by the The Wall Street Journal as the digital glue that will hold the Belt and Road Initiative together. BeiDou challenges the dominance of America’s Global Positioning System (GPS). In December 2018, the China Satellite Navigation Office announced the completion of the global coverage of the third-generation positioning system, ahead of the previous roll-out target of 2020. BeiDou is named after the seven stars that make up the Big Dipper. It offers worldwide location service with an accuracy of five meters within the Asia-Pacific region and ten meters in other parts of the world. With this, BeiDou joins the select club of the global navigation satellite systems, including America’s Global Positioning System, Russia’s Glonass and Europe’s Galileo. China is proud that BeiDou is part of the country’s wider efforts to become a world leader in space and related technologies under its ‘Made in China 2025’ program. China has stated that countries that have partnered with it for BRI will have easy access to the space corridor. The access commenced in 2018. Full coverage is anticipated to be rolled out by 2020. China Satellite Navigation Office announced in December that the country had China had shipped more than 70 million Beidou systems domestically and to over 90 countries. It stated that the BeiDou systems, which include microchips and modules, were well-received in Russia, Pakistan, Thailand, Indonesia and Kuwait. Beidou is expected to generate a services market worth over 2 trillion yuan (US$298 billion) by 2020, according to an industry group representative. China has stated that Beidou will have wide applications in areas such as logistics, precision farming, marine monitoring, comprehensive urban security and smart cities. The expected rapid expansion comes as China challenges the dominance of the US-led GPS amid wider efforts by the world’s second largest economy to become a global leader in space and related technologies under its Made in China 2025 program. The multiple ways in which western media has dominated international discourse over science and technology is sharply evident with BeiDou. Even in these times of information deluge, the western media continues to define the way in which information is disseminated and acquired. India has a flourishing IT industry. But even top IT executives in India are unaware of BeiDou, or its significance as a space silk road. This ignorance about BeiDou was removed to some degree during the news coverage of the second Belt and Road Forum in Beijing. As the Indian media devoted space to the Belt and Road Initiative, news about BeiDou, China’s highly integrated and sophisticated space silk road reached a higher number of Indians. China foresees its Beidou satellites influencing all aspects of people’s lives and production in tandem with the infrastructure push. It is also banking that Beidou will stimulate the economies that use the system, boosting trade along its new Silk Road. On April 23, ace Indian think tanker C. Raja Mohan wrote in The Indian Express that even though it shunned the BRI, India was recognizing that the corridors spreading out from China have connectivity in space and digital domain. “Unlike the land and sea corridors, for India, it is not just a question of supporting or rejecting the space and digital silk roads. Delhi finds itself already tied into these initiatives, one way or another. India’s deep dependence on Chinese telecom giants is now a reality. So is the growing reliance of India’s neighbours — including Pakistan, Nepal and Sri Lanka — on China’s space services,” he noted.

Editor-in-Chief Mohammed Saqib

From Gyaser-inspired saris to stolen bhaturas, much in the India-China space

ce analysts in the India-China space are writing that the two nations are looking to cooperate despite disagreement over BRI, and have moved to stabilize their relationship. This aspect of the India-China equation engages world attention. In the political din around BRI, the strong threads of India and China’s civilizational and cultural linkages have got clouded. The strength of our shared bonds is that despite the many contemporary challenges, they have stayed strong. Indians and Chinese are exploring these connects in unique ways. In Kolkata, a bustling metropolis and one of India’s major cultural centers, sari designers Swati Agarwal and Sunaina Jalan became part of the diverse India-China linkages. They explored the unique Gyaser brocade textiles that weave together the trade, handloom and aesthetic links between the Buddhist Himalayas, China and Banaras. According to a report in The Indian Express, Swati and Sunaina were enamoured by the colours, heft, vibrancy, luminous quality and even richer history behind the Gyaser weave — a silk brocade fabric patterned with auspicious Buddhist and Chinese symbols, largely used for ceremonial and devotional purposes. The duo wanted to innovate with the thick Gyaser fabric and create something that could be draped as a sari. In its pre-existing thickness and traditional 25-inch width format, it was too stiff and could only be used for apparel and ceremonial drapes. What started as an academic exploration in late 2017 took several months of research and development. Swati and Sunaina reduced the weight of the weave and changed its construction in order to make it supple. The important thing was to retain the inherent look of the fabric, which has the rich sheen of satin. Swati and Sunaina drew from the rich smorgasbord of Gyaser motifs and colours. For the sari, they avoided the traditional Gyaser motifs of traditional dragons, clouds and thunderbolts, and opted for flowers like chrysanthemums, lotus and roses. It took three to five months to weave one sari. The craft and labour-intensive process have made the Gyaser saris heirloom pieces for textile connoisseurs, almost the “the other silk route” between India and China. Far from the world of politics and economy, these bonds of civilization and culture continue to thrive between India and China, even in foreign lands. In Chinatown, Vancouver, the media recently profiled Pat Singh Cheung, a Chinese man who turned to Sikhism, an Indian religion. Sikhism’s tradition of serving the community selflessly and wholeheartedly drew him to this religion. According to CBC, Cheung has written and published a pamphlet called “3 Facts about Sikhi” in Cantonese to spread the world of equality and the tenets of Sikihism among Chinese people. And sometimes the culinary adventurism in the India-China space can have the most heated repercussions. Indians – diaspora and desis alike – lost their cool after Peter Chang, a Chinese chef in Maryland, USA, served the popular Indian bhaturas at his restaurant Q. He called the bhaturas scallion bubble pancakes and claimed that this was his own innovation. A video showing these ‘pancakes’ being prepared was shared by popular food website Tastemade. Indians were furious and created a storm on social media. Generations of Indians have grown up loving bhatura with the spicy chick-peas cooked in thick gravy. The Times of India, a popular newspaper, said our restaurant menus have a whole section devoted to Chinese dishes, never claiming them as our own. And Indians are so ‘honest’ that anything which has tomato ketchup, chilli and soya sauce is considered a Chinese dish here!

Executive Editor Rajni Shaleen Chopra

CONTENTS COVER STORY

CPEC core reason of dispute

Arvind Gupta

10 How the Dragon and the

Elephant can tango together Mao Keji

40 Strong Relations With China: The Roadmap For India’s Next Government Gautam Bambawale

Concerns, unanswered

14 questions prevent India’s

44 A tech upgrade for

India-China relations Dev Lewis

participation in BRI Kuldeep Khoda

48 Blockchain Benefits Binod Singh Ajatshatru

Sino-India Engagement: Not

22 Symbolism but Strategic Depth Needed Faisal Ahmed

50 The China-India Advantage Li Jian

28 BRI is an instrument for

China’s global dominance David Devadas

54 Different Strokes Hannah

56 Opium Tales China’s Belt and Road

34 Initiative, and India: To Get In or Not Get In? Dipankar Sengupta

58 Gupshup 61 Recent ICEC events March-April 2019 ▪

BRI SERVES CHINA INTERESTS

World leaders at the Belt and Road Forum for International Cooperation

Photo courtesy: cgtn.com

BRI BOYCOTT

CPEC core reason of dispute  Arvind Gupta

n April 26-27, China hosted the second Belt and Road Forum for International Cooperation at Beijing. India announced that it would boycott the Belt and Road Forum for the second time. The Indian government categorically stated that no country can participate in an initiative that ignores its core concerns on sovereignty and territorial integrity. India had boycotted the first Belt

▪ March-April 2019

and Road Forum (BRF) in 2017 after protesting to Beijing over the controversial China-Pakistan Economic Corridor (CPEC). India views CPEC as a violation of its sovereignty since it is being laid through Pakistan-occupied Kashmir (PoK), overriding New Delhi’s sovereignty concerns. At the BRI forum meeting in Beijing in April, President Xi sought to address the criticism of the BRI from several quarters. He tried to show that China is sensitive to the concern regarding opacity of the BRI decision making, debt traps, lack of

consultations etc. However, that does not take away from the criticism that BRI is guided by Chinese geopolitical ambition and it does violate sovereignty in many cases. India cannot be fully satisfied by the outcome of the latest meeting of the Belt and Road Initiative forum. Since the time China started working on the CPEC, it has sought to coax India into joining the Belt and Road Initiative (BRI). India’s boycott of the first BRI forum and also the second forum indicates that New Delhi’s opposition to the BRI has not changed.

India cannot be part of any initiative that violates its national sovereignty and territorial integrity. The ChinaPakistan Economic Corridor (CPEC) is a major part of the Belt and Road Initiative. Nothing has changed at ground level where CPEC is concerned. It continues to pass through Pakistanoccupied Kashmir. China has deepened its commitment to expand the USD 60 billion CPEC. The road aims to connect China’s Xinjiang province with Pakistan’s Gwadar port with a host of road, rail, gas and oil pipelines. Chinese troops have repeatedly been stationed at diverse points along the CPEC for security. The same reasons that applied in 2017 are applicable today too. The ground position remains the same. Connectivity is an integral part of India’s economic and

diplomatic initiatives. But commercial interest or connectivity cannot override our sovereignty concerns. Questions have been raised in some quarters on whether India should reconsider its position on BRI because of the economic benefits that may accrue to it. BRI is a Chinese initiative. China has decided unilaterally about its geographical positioning, and the destinations it seeks to access. With the BRI, China wants to secure access to the Arabian Sea through PoK. In 1994, Indian parliamentary resolution reiterated the legal position that the entire territory of the erstwhile princely state of Jammu and Kashmir is an integral part of India. CPEC violates our sovereignty, which is a much higher concern than commercial interests. Why should we subscribe to

Arvind Gupta is the Director of the Vivekananda International Foundation (VIF), a leading Indian public policy think-tank

Belt and Road Forum 2019: China unrolls version 2.0, addresses vital concerns

eading Indian analysts have noted that with its promises of transparency, open markets and a focus on quality, China has taken on board the various critiques of the BRI. At the Belt and Road Forum 2019, organized in Beijing in April, China addressed mounting concerns that its ambitious infrastructure drive was creating debt traps for participating countries. President Xi Jinping’s multibillion-dollar “Belt and Road Initiative” had raised worries about lack of transparency related to project development, land requisition, debt pricing and other contractual issues. In the sixth year of the BRI, the Chinese seem to have understood the importance of the need for the longterm success of its BRI projects and the importance of them yielding returns for both Chinese companies and the countries where they are situated, said Manoj Joshi in The Wire on April 26. He wrote that the new buzzwords

in Xi’s speech, delivered at a huge convention centre on the outskirts of Beijing, were “quality development”, “innovation,” “science”, “green”, “multilateralism” and “sustainability”. Ananth Krishnan, an ace analyst in the India-China space, wrote in South China Morning Post on April 25 that New Delhi’s absence at the Belt and Road Forum would not have any negative impact on Sino-India tie. The two countries, he wrote, were now moving forward to stabilize their relationship. Krishnan noted that although India and China do not see eye to eye, the current post-Wuhan summit approach appeared to be one driven by pragmatism. He observed that this new approach between India and China is less concerned about convincing or pressuring the other side to change its tune. Instead, it is focused on finding avenues of cooperation, whether through Chinese projects in India or in cooperating in third countries.

Since the time China started working on the CPEC, it has sought to coax India into joining the Belt and Road Initiative (BRI). India’s boycott of the first BRI forum and also the second forum indicates that New Delhi’s opposition to the BRI has not changed March-April 2019 ▪

BRI SERVES CHINA INTERESTS

projects which do not respect India’s sovereignty concerns? India and China have a separate bilateral track. In 2014, Chinese President Xi Jinping visited India and there was the promise of huge investment. Within our bilateral framework, if China decides to cooperate on certain projects, they can be structured and executed as per mutually beneficial needs.

On the India-China-Pakistan relationship We know that China will back Pakistan and continue the ‘iron brother’ relationship. For many years, China backed Pakistan on terrorism by blocking the listing of Masood Azhar. China has also repeatedly thwarted India’s membership to the Nuclear Suppliers Group. The strategic nexus between China and Pakistan is very strong. This is not going to change in the near future. It will remain a challenge. With Pakistan, we have a very difficult relationship. This is because for decades,

Chinese Envoy bats for strong IndiaChina ties despite BRI boycott

he said, was the true n April 4, China’s “stabiliser” for both countries. Ambassador to India The Chinese Envoy Mr Luo Zhaohui admitted that China-India wrote in an article in The relations have been disturbed Indian Express, “It should by differences and problems be the direction of efforts for from time to time. Some thirdChina and India to enhance party factors such as Pakistan, mutual trust, enlarge the United States and South cooperation and narrow Luo Zhaohui Asia have implications for down the divergence.” China-India relations as well, he wrote. Mr Zhaohui stated that in the India“China and India have successfully China relations, forward momentum is resolved the issues of Tibet and Sikkim unstoppable. He wrote, “China-India through consultation and dialogue. In relations have experienced ups and recent years, the two countries have been downs. From the perspective of peakexploring “China-India Plus”, a new model valley fluctuation model, the fluctuation of cooperation. It should be the direction interval is getting shorter and shorter of efforts for China and India to enhance which shows the sensitivity, maturity and mutual trust, enlarge cooperation and adaptability of China-India relations.” narrow down the divergence, he said. Efficiently managing mutual differences,

Chinese paramilitary police officers march past a Belt and Road Forum display at Beijing International Airport. Photo: EPA-EFE, SCMP

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Pakistan has used terrorists and their proxies in a covert war against India. It has used terror as a strategy to bleed India. Terrorists who target India are their assets. With China, we have a relationship which we have learned to manage. Despite the crisis like Doklam, we know how to manage the India-China equation.

On India-China trade ties India China trade ties are based on mutual necessity. Both are members of the WTO (World Trade Organization). China and India alike adhere to these international regulations. We gave China access to our huge market without seeking reciprocal access to their markets. China used its domestic market to attract foreign companies. While China gave access to multinationals to its domestic market, it absorbed foreign technological expertise and investment. We have given China access to our huge market without working out and executing the essential regulatory framework. We need to review our entire economic relationship with China. The review of our economic relationship with China should be done in the context of international regulatory frameworks like WTO. Till a few years ago, the economic eco-system with China was essentially in the trading sector. Now, Chinese investment in India has grown by leaps and bounds. There is Chinese investment in sensitive sectors like telecommunications and e-commerce. Chinese corporate majors are looking at opportunities in the Indian market in a big way. They are buying equity in Indian companies and are taking control. That must be reviewed. We have to study the strategic impact of the investments by Chinese companies in India and study how these investments are coming. This can be part of the India-China Strategic Economic Dialogue initiated by Niti Aayog. The introduction of 5G technologies owned by the Chinese companies Huawei

India struggling with lop-sided trading relationship with Beijing

n March 2019, Ananth Krishnan (Has worked as top media correspondent in China for many years) wrote in The Print: While the United States and China inch toward a deal to end their bruising trade war, India is still struggling with its lop-sided trading relationship with Beijing. A commitment from China made by President Xi Jinping to Prime Minister Narendra Modi during the “informal” summit in Wuhan in April last year to import more Indian goods, starting with rice, sugar and pharmaceuticals, has had little impact on a widely imbalanced trading relationship. New trade figures from China’s General Administration of Customs paint an alarming picture of relations with India’s largest trading partner. In 2018, two-way trade reached $95.5 billion, up 13 per cent from the previous year (when it stood at $84.4 billion). India’s imports, however, made up just $18.8 billion. But if trade has increased, so has India’s deficit. The trade imbalance, in China’s favour, is now $58 billion, up from $51 billion in 2017. China’s exports to India have grown to $76.7 billion, now accounting for a record 80

India and China have a separate bilateral track. Within our bi-lateral framework, if China decides to cooperate on certain projects, they can be structured and executed as per mutually beneficial needs

per cent of the total two-way trade. Unlike how China approached the West, India opened a market worth tens of billions of dollars to Chinese technology and power companies, while getting little in return, either in the way of Chinese investments in India or in terms of securing market access for Indian companies in China. Indian companies, meanwhile, continue to have a range of non-tariff barriers in China, particularly in IT and pharma, where a lack of transparency in regulatory policy has hindered Indian firms. While the lack of a level playing field has certainly disadvantaged Indian companies, here, too, our approach hasn’t helped either. India has suffered from a lack of a coherent strategy. India has allowed Chinese companies from telecom to power to enter — and profit from — the Indian market without investing a dollar in India or offering reciprocal access to the China market. In this way, India gave China access to our huge market without insisting on any technology transfer. Consider telecom. India is now one of the biggest overseas markets for Chinese mobile phone companies, but few are manufacturing in India.

has proved to be controversial in many countries on account of the apprehension that these will compromise national security. India must exercise due caution before it opens up its market to Chinese 5G technologies. National security concerns must be factored suitably. Second, China should give equivalent access to Indian companies operating there. In pharmaceuticals and in other sectors, India must insist that our companies should get market access, which China is blocking with nontariff barriers.

March-April 2019 ▪

BRI SERVES CHINA INTERESTS

We need to review our entire economic relationship with China. We have to study the strategic impact of the investments by Chinese companies in India and study how these investments are coming. This can be part of the India-China Strategic Economic Dialogue initiated by Niti Aayog

India-China trade is majorly in China’s favour. While we look at the ways in which we can increase our exports to China, India must curtail the import of non-essential goods from China. From the idols of Indian gods and goddesses to the cleaning cloth used at home, a whole range of non-essential goods is being imported from China. This has adversely impacted the domestic industry. There has to be national consciousness among Indian consumers to use Indian goods. While China confronted India at Doklam and other places and supported Pakistan on terror against India, we are giving a huge market to Chinese companies so that they prosper and flourish. The government must take required measures so that the import of non-essential goods is stopped. Indian companies do not have a level playing field vis-à-vis Chinese companies. Chinese companies are hugely supported by the state. They are given subsidies and are facilitated nationally and internationally. But Indian companies have to survive on their own, without any government support. India should take recourse to antidumping measures within the WTO

▪ March-April 2019

framework. Enhancing our manufacturing capacities is essential. For example, the personalization of Indian SIMs is being done in China. India has the capacity to do this. This is a service which can be provided by the Indian technology companies equally efficiently. But Indian telecom service providers save a minor amount on each SIM card if the personalization is done by Chinese technology companies. Hence, they prefer to take the services of Chinese companies. This way, we also transfer personal data to Chinese companies. This is despite the big noise made that data is the new oil in the digital economy.

Earlier, Chinese mobile phone manufacturing companies were not undertaking any manufacturing in India. The Government of India raised tariffs in key areas. This has made Chinese mobile phone manufacturers begin manufacturing in India. Such some steps will have to be taken by the Government of India. One, the government must take measures that enable Indian companies to get fair opportunities in the Chinese market. Second, we must ensure that our regulatory framework is such that we are able to get Chinese companies to Make in India, rather than using India merely as a marketplace. India cannot afford to be complacent vis-à-vis its diplomatic or economic relations with any country. Huawei is a cause of concern for several nations across the world on the grounds of national security. Many nations have become circumspect about allowing Huawei operations, believing that imports from Huawei compromise national security. We must be equally prudent about Huawei operations, and impose conditions or restrictions on them if required. 

ANALYSIS ADVANTAGE CHINA

How the Dragon and the Elephant can tango together From China and India to the world as a whole 10

â&#x2013;ª March-April 2019

 Mao Keji

rom the flattering words of the Fortune 500 chief executive upon visiting India to the rocketing ranking of India in indices like ‘Ease of Doing Business’ or ‘Global Competitiveness,’ optimism about India is on the rise like never before. As China’s economic growth somewhat flags, especially among the shocks caused by the Sino-U.S. tariff disputes, India is not only seen as the other poster child for the emerging market on an equal footing with China, but also depicted as the successor apparent to China as the next economic powerhouse. However, a closer examination ruthlessly reveals that India’s economic performance still lags significantly behind China. So, instead of indulging in rosy anecdotal evidence and high-sounding albeit distorted indices concerning itself, it is more helpful for India’s growth prospects and bilateral economic relations to focus on what it can do to improve its industrialization level.

Gap between India and China likely widening The disparity between China and India can be best illustrated by their respective economic trajectories. Although they were of similar economic volume for most of the time before the 1990s, China’s economy has strikingly grown to be almost five times bigger than that of India. So, even if India occasionally registers a growth rate close to or exceeding that of China, the difference in their absolute size is actually widening. Given this, if India really wants to catch up with China, it not only needs to achieve a much faster growth rate, but also needs to maintain such a rate for at least a few decades. The real question is: how can India maintain such a rate of growth for such a long period of time? If there is any secret behind China’s extraordinary growth record in the past

40 years, it is China’s booming manufacturing sector. Since the reform and opening up in the late 1970s, a huge part of the agricultural labour force has been continuously reallocated into the more productive manufacturing sector. China successfully recorded great productivity growth in this process of massive industrialization. In comparison to India, China boasts a much stronger manufacturing sector hiring a lot more (29.3 percent) and contributing a lot more (39.5 percent). Thanks to a strong manufacturing base, the Chinese economy has consolidated its economic modernization and pioneered its way into innovationdriven development. It is the labour allocation pattern that largely explains the diverging economic growth trajectories between the two countries. India, in spite of its decent growth record, lags far behind China in industrialization. Agricultural sector makes up 15.4 percent of India’s GDP, but hires as much as 47 percent of its labour force. India’s industrial sector contributing 23 percent of GDP only employs 22 percent of workers. India’s service sector stands out as it contributes 61.5 percent to the economic output by using only 31 percent of the labour inputs. India thus presents an odd economic landscape. Even though it shows characteristics of a post-industrialized economy with the service industry assuming a dominant position like that of the U.S. or the U.K., its low level of productivity exposes its awkward reality of underdevelopment. The unsatisfactory industrialization record is the cause of many issues that India is facing today. The absence of a robust manufacturing sector prevents India from achieving a massive improvement in its labour productivity and hence, in per capita income. While China created tens of millions of middle-class jobs as it became the workshop to the world, most of workforce in India could only toil in woefully unproductive jobs in the informal and unregulated economy.

The author is an associate researcher at the International Cooperation Centre of the National Development and Reform Commission of China

The absence of a robust manufacturing sector prevents India from achieving a massive improvement in its labour productivity and hence, in per capita income March-April 2019 ▪

ANALYSIS ADVANTAGE CHINA

Moreover, almost all major financial and macro-economic risks that haunt the Indian economy today—overreliance on foreign capital inflows, fragile foreign exchange rate, vulnerability to oil price hikes as well as susceptibility to a fickle monsoon—are either caused by its underdeveloped or uncompetitive manufacturing sector, and can be greatly relieved by materializing its huge manufacturing potential. It’s time for New Delhi to ponder long-term solutions to these issues by strengthening its economic competitiveness, rather than resorting to ad hoc fire-fighting policies like capital controls, non-essential import restrictions, and interest rate hikes. A foreign exchange expert insightfully puts it: “Nobody can live forever on somebody else’s money.” The long run solution for India lies in industrialization.

Different path to industrialization Fortunately, Indian decision-makers have stressed on the role of industrialization, especially since Narendra Modi rose to premiership in 2014 and ‘Make in India’ was made a national strategy. India so far has yet to present a clear roadmap for its odyssey into industrialization. In this regard, a close examination of India’s and China’s different paths to industrialization can be very helpful. As the world’s only two members of the ‘one billion population club,’ China and India share three important advantages: a large and low-cost labour force, a huge domestic consumption market, and a great supply of high-quality human capital known for professional services and science-engineering talents. However, it is the two countries’ opposite approaches to these advantages that have determined their contrasting performance. China unfolded the three-step model in an optimized sequence. It first pioneered into labour-intensive and exportoriented industries like apparel, toys and furniture at the low end by tapping into its huge workforce. With initial capital

▪ March-April 2019

and expertise accumulated, it then exploited the huge domestic demand to cultivate local industrial players, so they could navigate through the fierce global competition in intermediate industries like consumer electronics and machinery. After these, China is now climbing the value chain by working on research and development based on its large talent reservoir. In this way, China expects to reap high added value from the cuttingedging industrials like integrated circuit, pharmacy and aviation industries. It was through such a three-step model that China could allocate and mobilize its resources most efficiently according to its changing comparative advantages. By doing so, China has not only risen to have the largest industrial output in the world, but also marched towards the top of the global value chain. With exactly the same three advantages, however, India’s approach was totally different. Instead of working from the low end, through the intermediate tier and then to high-end industries like China did, India has pursued a completely reversed sequence. For decades, India has been famous for its highly competitive technology-and-capital-intensive industries like

New Delhi must strengthen its economic competitiveness through a strong manufacturing base rather than resort to ad hoc fire-fighting policies like capital controls, nonessential import restrictions and interest rate hikes

pharmaceuticals and IT services. India’s intermediate tier industries, like mobile phone and automobile parts manufacturing industries, have made major progress in recent years. They still lag behind in terms of international competitiveness and industrial ecosystem. Counter-intuitively, India’s labour-intensive industry is disproportionally underdeveloped, leaving its huge workforce largely untapped. Such a distorted industrial development practice is taking a heavy toll on the Indian economy. It does not take care of India’s huge domestic demand for manufactured products. Hence Indian consumers have to rely on imported goods. Neither does it provide enough employment opportunities for India’s evergrowing workforce, making job creation a haunting nightmare for successive Indian administrations.

A more realistic approach to Sino-Indian economic cooperation More nuanced Sino-Indian economic

cooperation can definitely make a difference. India’s emerging mobile phone industry perhaps is the best example. By 2017, India had bypassed Vietnam to be the world’s second-largest mobile phone producer by volume, occupying 11 percent global production. As late as the 2014-15 fiscal year, 78 percent of the mobile phones sold in India were still imported as completely made units. Only three years later, the percentage had dramatically reduced to 18 percent in 2017-18. Such an amazing achievement was only made possible by Chinese mobile phone tycoons like Xiaomi, Vivo, Oppo and Huawei, which dominate the Indian market with a combined market share of more than 60 percent. When India again raised customs duties on mobile phones and their components in April 2018, major Chinese companies began considering relocating the entire mobile phone ecosystem to India by encouraging their affiliated suppliers to follow in their investment footprints there.

Labour-intensive and export-oriented industries like apparel, stationery and household items are the perfect candidates to create jobs and generate exports. This can happen if India can thoroughly reform itself in areas like labour regulation and land acquisition

With vertical supply chains and horizontal industrial clusters burgeoning in India, a robust mobile phone ecosystem is in the making. It will for sure cut local production costs dramatically. Once such an ecosystem is put in place, it in turn will attract more business, kicking off a self-reinforcing process. In this regard, India’s mobile phone industry has finally progressed onto the right track. So far, such a pattern seems to fare best in intermediate tier industries in India that are driven by local demand, such as consumer electronics, engineering equipment as well as automobile parts. This is largely because these industries’ huge local demand combined with Indian government’s protectionist tariffs and industrial policies have made investing in local factories commercially viable. Although these tech-savvy industries seem to be prospering, their ability to create jobs and generate exports is actually dwarfed by low-end industries like apparel, stationery and household items. Given the experience of Japan, South Korea, China and even lately Vietnam, it was these seemingly primitive industries that led the industrialization boom by absorbing massive agricultural labour and quickly making a dent in the highly competitive global export market. In this regard, labour-intensive and export-oriented industries, which tap into India’s abundant labour endowment and bring about new market opportunities for fatigue Chinese capital, are the perfect candidates. This can happen if India can thoroughly reform itself in areas like labour regulation and land acquisition. If India’s industrialization is inevitable in its journey towards becoming a real global economic powerhouse, China – as the only other member in the billion-people club and a forerunner in industrialization – must play a more important role. Bearing this in mind, instead of obsessing over the cliché of the dragon-elephant comparison, scholars from both countries need to be more realistic and see what they can best do to achieve shared prosperity between the two giants. 

March-April 2019 ▪

INDIA-CHINA CHALLENGES IN PARTNERSHIP

Concerns, unanswered questions prevent India’s participation in BRI 14

▪ March-April 2019

Many factors have shaped China’s decision to support India on the listing of Masood Azhar; this move can initiate a new phase in Sino-Indian relations  Kuldeep Khoda

he Belt and Road Initiative (BRI), mooted by President Xi Jinping of China in 2013 as an ambitious infrastructure project aimed at global trade connectivity, has generated interest and acceptability among many nations. China has announced it as an economic cooperation initiative, though it is widely perceived as an economic, political and strategic thrust by China at global level. The precise number of projects under BRI is still fluid, as these are being worked out informally between the investors and the recipient countries. As of now, it mainly comprises of many economic corridors slated for completion by 2049, to coincide with the 100th anniversary of the establishment of the People’s Republic of China. China Pakistan Economic Corridor (CPEC), announced in 2015, is a 62 billion USD endeavour. In addition to CPEC, the Bangladesh-China-IndiaMyanmar (BCIM) corridor and ChinaIndo China Peninsula Economic Corridor (CICPEC) are the most relevant as far as Indian interests are concerned. The New Euroasia Land Bridge Economic Corridor (NELB), China-MangoliaRussia Economic Corridor (CMREC) and the China Central Asia-West Asia Economic Corridor (CCWAEC) are also being conceived for implementation in our neighbourhood. The BRI encompasses infrastructure investments in the fields of construction, sea and land transport, communication, power and energy across large number of countries in Asia, Europe, Africa and Latin America. The key areas of cooperation include synergising development activities, forging financial cooperation to upgrade infrastructure facilities and communica-

tion, give boost to trade relations, besides promoting social and cultural exchanges between various nations. When Xi Jinping formally announced the Belt and Road Initiative six years back from Kazakhstan, not many could foresee its reach and wide acceptance across many countries and continents. Several Asian, European, Caribbean and Latin American nations have signed MOUs to be part of the initiative.

Italy first G7 nation to endorse BRI BRI got a big boost when Italy endorsed BRI in March this year, becoming the first among the G7 countries to do so. As part of Italy’s stamp of approval, 29 deals were clinched aimed at Chinese investors pumping in $2.8 billion – particularly in developing port infrastructure in Genoa, Palermo and Trieste aimed at cross continent connectivity and China’s economic integration with Europe. Italy, which is facing economic problems, believes that the deal will result in increased exports to China and will help in reducing national debt, which is among the highest in Eurozone. Following Chinese investment Piraeus, the Greek harbour port, saw a steep rise in its growth. It rose to be globally the 38th largest container port in 2017 from ranking 93rd in 2010. This has raised expectations among many countries in the BRI. China, on the other hand, hopes for faster access to Europe to find newer markets for increasing inventory of Chinese products at home – giving a boost to slowing domestic growth and nearly stagnant exports. Panama was the first Latin American nation to sign MOU with China to promote BRI. China did not have diplomatic relations with Panama until

The author is a former Director General of J&K Police (2007-2012) and Former Chief Vigilance Commissioner J&K (2013-2017). He is the recipient of the Webber Seavey Award for Quality in Law Enforcement (awarded by International Association of Chiefs of Police, Washington, USA), Prime Minister’s Award for Excellence in Public Administration, President’s Police Medal for Distinguished Services, President’s Police Medal for Meritorious Services, Operation Vijay Medal (Kargil operations) and Antrik Suraksha Seva (Internal Security Duty) Medal awarded by the Government of India.

March-April 2019 ▪

INDIA-CHINA CHALLENGES IN PARTNERSHIP 2017, even though it has extensive trade interests linked to Panama Canal, being its second largest user. President Xi Jinping was successful in getting Panama on board, first to establish diplomatic ties and then sign the MOU on BRI. During his visit to Panama last December, large number of agreements were signed between the two countries on forging and strengthening economic ties, cooperation in the fields of science and technology, education, social and cultural relations and exports of Panamian goods to China. Shortly after establishing diplomatic relations, President Juan Carlos Varela of Panama had visited China in November 2017, taking along a team of businessmen, scholars and media persons to take forward the new bonhomie between the two nations and explore and identify all areas for “win- win cooperation”. The Panama Canal, linking the Atlantic and Pacific Oceans, is the busiest trade artery. Geopolitically and also strategically, it is vital to both to China and America. Expectedly, USA has labeled Chinese ventures in Europe and Latin America as “predatory economic activities with other countries”. China is using its economic power and making it difficult for European countries to resist Chinese investment at a time of economic troubles in European Union. The enormous expenditure under each of the projects, coupled with ever increasing number of projects under BRI and China’s willingness to extend loans to various nations to meet the costs, reveals its economic and industrial might and its ambition to spread political and strategic influence globally.

CPEC undercuts India’s political, strategic interests CPEC is by far the most relevant BRI project involving India’s political and strategic interests. The cost of various rail, road and power projects was initially pegged at USD 46bn, which got revised to USD 62bn in 2017. Pakistan recently cancelled the Rahim Yar Khan power project, part of CPEC, amid fears of rising debt. CPEC is funded by China

▪ March-April 2019

Chinese President Xi Jinping shakes hands with Italian Prime Minister Giuseppe Conte as he arrives at Villa Madama in Rome, Italy

Development Bank, Exim Bank of China and Industrial and Commercial Bank of China, besides the two main funding agencies set up by China for the purpose, viz Asian Infrastructure Investment Bank (AIIB) and Silk Road Fund. Recent trends indicate growing scepticism over funding costs of BRI projects. The projects under CPEC will virtually extend over the length and breadth of Pakistan. It will cover Baluchistan, Gilgit Baltistan, Khyber Pakhtunkhwa, Punjab and Sind in Pakistan, besides linkage to Xinjiang in China. The seaports of Gwadar and Karachi will get linked to northern Pakistan, western China and central Asia. CPEC also involves relaying and rebuilding of the Karakoram Highway from Hasan Abdal to Chinese border. The 1100-km highway between Lahore and Karachi and the upgradation of the Karachi-Peshawar railway line to finally connect with Xinjiang are part of the Initiative. Power generation projects

worth USD 33bn to overcome electricity shortage and laying of pipeline to transport gas from Iran are included. China is keen to get India on board and be part of BRI. However, India has concerns and unanswered questions which prevent its participation in this global effort mainly financed by China through provision of interest-bearing loans from various Chinese institutions and banks. Consequently, India did not participate in the first Border and Road Forum for International Cooperation in 2017. The second meet scheduled for April 25-27 was attended by representatives of over 100 countries, including around 40 leaders of various governments. Russia, the big neighbour of China, participated. Indian Ambassador to China Vikram Misri said CPEC “ignores core concerns on India’s sovereignty and territorial integrity”. He added: “India shares the global aspiration to strengthen

The Republic of Panama and the People’s Republic of China sign MOU to promote BRI

connectivity and it is an integral part of our economic and diplomatic initiatives. We ourselves are working with many countries and institutions in our region and beyond on a range of connectivity issues”. However, the connectivity issues must be based on universally recognized

international norms, good governance and rule of law, he added. Consequently, India rejected the invite for the second meet being hosted by Beijing. The China Pakistan Economic Corridor (CPEC) runs through disputed Pakistan Occupied Kashmir, illegally retained by

China is using its economic power and making it difficult for European countries to resist Chinese investment at a time of economic troubles in European Union. The enormous expenditure under each of the projects, coupled with ever increasing number of projects under BRI and China’s willingness to extend loans to various nations to meet the costs, reveals its economic and industrial might and its ambition to spread political and strategic influence globally

Pakistan after the war in October 1947. The state of Jammu & Kashmir, like 562 other princely states, acceded to India through an instrument of accession at the time of the partition of British India into two sovereign countries of India and Pakistan. Pakistan came to retain over 83,000 sq. km of this former princely state through a United Nations-enforced Cease Fire. Out of this, in 1963 Pakistan ceded over 5000 sq. km. Shaksgam valley of Gilgit Baltistan to China, despite the fact that Pakistan itself was in illegal occupation of this land. China, after the 1962 war with India, further occupied over 37,000 sq.km. of Aksai Chin in Ladakh region of J&K. India was left with less than half of the Jammu & Kashmir which had acceded to India through a proper and legally valid instrument of accession, signed in October 1947 by the state’s ruler Maharaja Hari Singh and the Indian Government. In 1994, the Indian Parliament unanimously

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INDIA-CHINA CHALLENGES IN PARTNERSHIP

To expect that a democratic country of 1.25 billion people will become part of CPEC will undermine India’s stand on J&K, which it has maintained right from 1947. It will also project India as a weak nation not able to defend its valid and legitimate interests. This will amount to a huge letdown of the people by the government. India cannot afford it, despite the economic advantages that BRI may have to offer adopted a resolution declaring the preceasefire undivided state an integral part of India, thereby reiterating India’s stated position on Jammu & Kashmir. China again rubbed India on the wrong side by entering into MoU with Pakistan for building the corridor without consent or consultation with India – an act

▪ March-April 2019

against internationally accepted norms. To expect that a democratic country of 1.25 billion people will become part of CPEC will undermine India’s stand on J&K, which it has maintained right from 1947. It will also project India as a weak nation not able to defend its valid and legitimate interests. This will amount

to a huge letdown of the people by the government. India cannot afford it, despite the economic advantages that BRI may have to offer.

BRI’s debt trap for partner nations Many smaller nations where projects under BRI have taken off have started accumulating huge debts. Venezuela has accumulated a debt of $62bn. Brazil, Argentina and Ecuador have piled up debt to the tune of $42bn, $18bn and $17bn respectively in execution of BRI projects till last year, raising the prospect of these many similarly placed countries coming under debt trap. China, on its part, has marketed BRI as a huge opportunity for economically troubled nations to kick-start and revive their sagging economy with a forecast of turn around and job creation giving a big boost to GDP. To make the deal

An installation at the second Belt and Road Forum for International Cooperation (BRF) in Beijing.

sweeter, funding requirements have been arranged through Chinese governmentbacked institutions and banks. The interest rate for the loans for funding these projects is significantly higher than the soft loans extended by developmental institutions like World Bank and IMF. Besides the loan repayment, defaulting nations run the risk of losing ownership of projects and immovable assets like land or ports, as happened with Sri Lanka. It had to part with Hambantota Port, and leased it to China for 99 years in lieu of the loan extended to it for developing the port. China thus got the much-needed foothold at a vantage point to control its maritime trade through Indian Ocean. Of late, there is global skepticism about the implications of the huge funding involved in the BRI projects. For China, BRI is a convenient channel to export its surplus capital, generated and

Photo courtesy: cgtn.com

Given the implications encountered by countries implementing BRI projects, India’s participation or otherwise in BRI will require an in-depth analysis of the terms and conditions on offer by China. We will have to take into account India’s security, and also strategic implications of the intended projects in India and neighbouring countries accumulated over decades of export-led investment, to profitable outlets. BRI will facilitate and establish new markets for goods manufactured in China. Two ends of Euroasia, Africa and the oceans are planned to be economically integrated with China along with the Silk Road economic belt and the maritime silk road. Beyond economic strategy, China has taken the BRI route to signal a paradigm shift in its foreign policy. Beijing’s thrust

to build ports and other trade facilities in Latin America has raised alarm in Washington. Russia, USA, Japan, India and other nations are skeptical at the prospect of China gaining economic and strategic advantage at their expense, and making inroads in their traditional regions of influence. Right from the days of Europe’s exploratory sea voyages in late 15th century towards the West by Christopher

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INDIA-CHINA CHALLENGES IN PARTNERSHIP

Prime Minister Narendra Modi travelled to Tashkent to make a final diplomatic pitch for India’s entry into the Nuclear Suppliers Group (NSG)

Columbus (1492) or to east by Vasco da Gama (1497-99), ocean routes have been dominant for world trade. Domination by recognized western powers has been a key feature of the global system that China, through this initiative, wants to reverse or at least dilute.

China using BRI as a flexible tool China initiated BRI projects with Malaysia in order to gain influence in Malacca Straits. The new Malaysian government announced cancellation of some BRI projects due to debt concerns. China responded by slashing the cost of a major rail project by 30%. CPEC will give China direct access to Arabian Sea. Taking cue from Malaysia, the Imran Khan government in Pakistan wants to renegotiate CPEC cost due to fears of mounting debt. BRI projects in Maldives have put the nation in debt equal to two-

▪ March-April 2019

third of its GDP. BRI projects in Sri Lanka resulted in the surrender of Hambantota port to China for 99 years. China’s BRI ventures in Myanmar and Bangladesh aim to secure influence in Bay of Bengal and Indian Ocean. In Latin America, BRI has enabled China to gain strategic foothold in Panama Canal and two most important oceans on either side of America. These are part of Chinese efforts to dilute the dominance of western powers on global trade routes. The import of Chinese workforce in these countries has belied their expectation of jobs creation. Critics allege opacity in the financial deals, and a deliberate attempt by China to impose financial imperialism on economically weak but strategically located nations. World Bank has said that BRI comes with “potential benefits and risks”. Noted economist Michele Ruta cautions that for some countries, “the financing required for BRI projects may

expand debt to unsustainable levels”. The bigger projects carry “environmental, social and corruption risks”, especially in countries with weak governance.

India must continue to study BRI closely Given the implications encountered by countries implementing BRI projects, India’s participation or otherwise in BRI will require an in-depth analysis of the terms and conditions on offer by China. We will have to take into account India’s security, and also strategic implications of the intended projects in India and neighbouring countries. The projects undertaken by China under BRI in Pakistan, Myanmar, Bangladesh, Maldives and Sri Lanka have negatively impacted India’s defense, strategic and maritime interests. India has many unresolved issues with China. These have the potential of escalation

if not resolved permanently as per internationally accepted norms and in the spirit of good neighbourly relations. The unresolved border issues between India and China have been a cause of concern since decades. India has a well defined position on the Doklam issue. China is trying to distort the issue and create uncertainty in our north-eastern states. This has the potential to disturb the integrity of our nation. China’s territorial claims over Arunachal Pradesh, raising questions on Sikkim’s integration with India, occupation of Aksai Chin in Ladakh are issues where China needs to understand and appreciate India’s view point before we can take BRI as a genuine Chinese effort vis-à-vis India. Our galloping trade deficit with China is now a major cause of concern for the government. From $16bn in financial year 2007-08, the trade deficit vis-àvis China rose sharply over the last decade, and reached $59.3bn in 2017. For any country, whatever its size of economy, a huge trade deficit can have serious implications on its economic independence. The Indian government has impressed upon Beijing to increase Indian imports, and has identified areas where the increasing deficit can be scaled down. Under pressure, China agreed to take measures to bring deficit gradually to respectable levels. Consequently, trade deficit in 2018 got reduced to $57.4bn from $59.3bn in 2017. Indian Commerce Minister Suresh Prabhu celebrated the figures with a tweet, calling it “whopping, unprecedented reduction” in trade deficit with China. But it turns out that China may be camouflaging trade figures. While trade deficit with China has reduced by $1.9bn, our trade surplus of $3.9bn with Hong Kong has turned into trade deficit of $2.7bn. Interestingly, during 2018 there has been a sharp rise in Hong Kong’s exports to India of same goods that saw a reduction of Beijing’s exports to New Delhi compared to 2017. There has been re-routing of Beijing’s exports to Delhi via Hong Kong. Consequently, the combined

trade deficit of China and Hong Kong has risen from $55.4bn in 2017 to $60.1bn in 2018. So much for the honesty of purpose displayed by China in its trade dealings with India.

China’s support in listing Masood Azhar a positive move Since 2009, China at the behest of terror sponsoring Pakistan, blocked the UNSC move four times through “technical hold” to declare Azhar Masood a global terrorist. Frustrated US decided to “use all resources to ban Azhar Masood” so that he is “held accountable for terror attack on India” and announced to move a resolution in UNSC. France, UK and all other members had earlier backed the move to declare Azhar Masood a global terrorist, which had

being a responsible nuclear state and is committed to its use for peaceful purposes. India also adopted “No First Use” policy in 1998 after Pokhran-II tests and in 1999, released the draft of the doctrine that nuclear weapons are solely for deterrence and that India will pursue a policy of “retaliation only”. A policy of discrimination against India’s entry in NSG has been displayed brazenly by China citing reasons which it has not applied to itself for continuing to be part of the same group. On the other hand, India has displayed an honest commitment towards developing firm and trustworthy relations with its neighbours, except for terror-sponsoring Pakistan. India settled border issues with Bangladesh in 2015 involving 162 enclaves. India ceded 17,161 acres of land to Bangladesh to get

India still awaits concrete positive moves from China to remove the trust deficit in relations between the two countries. A policy of discrimination against India’s entry in the Nuclear Suppliers Group has been displayed brazenly by China citing reasons which it has not applied to itself for continuing to be part of the same group landed China in isolation. A discussion on resolution in Security Council would have exposed China’s duplicity on fighting global terror and projected it as a terror-supporting rather than as a terror-opposing nation. On May 1, under international pressure and in order to avoid global embarrassment, China lifted the “technical hold”, paving the way for UNSC to declare Mohammad Azhar Masood a global terrorist. The repeated stance of China blocking India’s entry in Nuclear Suppliers Group (NSG) has been another persistent irritant in relations between the two countries. This is despite the fact that India has a proven track record of

7,110 acres in return. This revealed the magnanimous face of India in developing positive and lasting relations with its smaller neighbours. India settled the Katchatheevu island ownership dispute with Sri Lanka, favouring the latter through an agreement. India still awaits concrete positive moves from China to remove the trust deficit in relations between the two countries. To expect India to join China’s ambitious BRI or be part of CPEC – which runs through Indian claimed territory under Pak administration – neither displays any diplomatic logic nor meets the Indian public’s expectations of laying the foundation of a long and lasting IndoChina friendly relationship. 

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GEOPOLITCS EMERGING REALITIES

Sino-India Engagement

Not Symbolism but Strategic Depth Needed 22

â&#x2013;ª March-April 2019

 Dr. Faisal Ahmed

ith the United Nations Security Council (UNSC) adding the name of Masood Azhar in the ‘Sanctions List’ thus declaring him a global terrorist, and China not blocking the move anymore, the global security architecture has been strengthened. This has long been a matter of national security consideration for India. To benefit the people across the world, and to deepen international cooperation, global powers must adopt stringent measures to deter terrorism. This renders the Chinese cooperation in the UNSC an exemplary one. In fact, India and China are well positioned to redefine the Indo-Pacific geo-economic architecture. Their bilateral cooperation is determined by their respective national interests. Nonetheless, the crests and troughs in this engagement continue to occur at certain, if not a regular, interval. The troughs go deeper, tend to be symbolic at times, and are evoked by popular media representations. Symbolism, at times, is apparent during visits, negotiations, or when converging or diverging on multilateral fora, or while adopting certain posturing on border or maritime issues. But, given their huge potential to co-exist, it is high time that the two countries focus more on their convergences, and reject the use of symbolism as a diplomatic instrument. Therefore, both India and China must make concerted efforts to attain a strategic depth in their relationship. Some key issues are discussed herein.

Belt and Road Initiative India’s position on China’s Belt and Road Initiative (BRI) has been restrictive and apparently disassociated. This unwillingness is largely attributed to two key factors. Firstly, India objects to the Chinese understanding of, and its advances in, the Pakistan-Occupied Kashmir (POK), through which the corridor i.e. China-Pakistan Economic

Corridor (CPEC) traverses. India’s nonacceptance of the CPEC is envisaged in the question of sovereignty, as any such acceptance would en principe deter India’s geopolitical gravity, at least in South Asia. Secondly, China’s growing influence in the Indian Ocean has made India not only diplomatically cautious, but strategically sceptical too. In recent years, it is apparent, albeit more so through popular media representations, that India has been aiming to contain Chinese influences in the Indian Ocean. Whereas such a strategic posturing is highly solicited, it should not be allowed to create potential disadvantages for India’s economic diplomacy. A good diplomacy, as is the need of the hour, should imply striking a balance between politics and economics – especially in the case of India and China. The balance, howsoever delicate, must remain! Interestingly, BRI is not about CPEC alone. There are many routes included in this initiative which grants China a potential outreach to Central Asia, the Middle East, Europe and Southeast Asia. These routes have been identified along already developed economic corridors (see Table 1 that depicts the corridors and indicates the transport-related projects therein). During the Second BRI Forum for International Cooperation held in Beijing this April, China has listed 283 deliverables as its concrete outcome. These range from BRI Special Lending Scheme by China Development Bank and Export-Import Bank of China, to offering Belt and Road Master’s level fellowship program. Therefore, it is imperative that along with maintaining its stand on CPEC, India should not remain oblivious of such a geo-economic and developmental model being embraced by many of its neighbours and trade partners. With all certitude, let us also understand that BRI is not about China alone. There are other stakeholders too and most of them are India’s friendly states. Moreover, China is further looking forward to an experience-

Dr. Faisal Ahmed is an Associate Professor and Chairman of the International Business Area at FORE School of Management, New Delhi

Given their huge potential to co-exist, it is high time that India and China focus more on their convergences, and reject the use of symbolism as a diplomatic instrument. They must make concerted efforts to attain a strategic depth in their relationship March-April 2019 ▪

GEOPOLITCS EMERGING REALITIES sharing program for BRI partner countries within which it intends to invite multiple stakeholders viz. think tanks, political parties, scholars, among others. Stakeholders from India too must attend such future BRI meetings. A pro-active posturing would bring two distinct advantages for India. One, it will provide India a relevant platform to officially register its reservations on CPEC and strengthen its stance. Second, it will enable India to track BRI related developments that may possibly surround India in the future, given the fact that most of India’s neighbours and friends also endorse China’s BRI – what may the reason be.

Shanghai Cooperation Organisation Some of the routes under the Shanghai Cooperation Organisation (SCO) are also part of BRI. After being part of the SCO, India is expected to make workable commitments on international transport facilitation agreement. For India, being a part of BRI will thus have the potential not only to strengthen its defense and economic partnership with other SCO members, but will also give opportunity to circumvent its strategic pursuits in the POK – a matter of sovereignty. Furthermore, SCO members have already signed the Agreement on Facilitation of International Road Transport. The routes proposed under the Agreement are critical to India’s interest in the Commonwealth of Independent States, and more specifically in Central Asia. The agreement envisaged free movement of vehicles across the border subject to certain regulations stipulated therein. In fact, it is a regulation for international movement that entails harmonizing national laws and regulations of the member countries. As per the SCO web site, the following are important routes and check points listed in Annexure I of the Agreement between the SCO members on creating favorable conditions for international road transportation (See box). These routes are mainly situated in

▪ March-April 2019

Table 1: Major Corridors under BRI Corridors

Transport Projects

China-Mongolia-Russia Corridor

1. Railway line proposed-Beijing-Tianjin (China)-UlanBator (Mangolia)-Ulan-Ude (Russia). 2. Road corridor- Tianjin (China)-Ulan-Bator (Mangolia)Ulan-Ude (Russia).

New Eurasia Land Bridge CorridorzZ

1. Railway Corridor- Urmuqi (China)-Astana (Kazakhastan)-Moscow (Russia)-Rotterdam (Germany). 2. Road Corrdor- Urmuqi (China)-Astana (Kazakhastan)Moscow (Russia)-Rotterdam (Germany) 3. Road corridor- Jinjiang-Urmuqi (China)-Dushanbe (Tajikistan)-Samarqand (Uzbekistan)-Tehran(Iran)Istanbul (Turkey)-Germany.

China-Central Asia-West Asia Corridor

1. Rail and road corridors from China to TajikistanUzbekistan-Iran

China-Pakistan Corridor

1. Road corridor from Xinxiang (China)- Pakistan Occupied Kashmir (through Karakoram Highway)- Khyber Pakhtunwa-Gwadar Port (Pakistan) 2. Road Corridor from Xinxiang (China)- Pakistan Occupied Kashmir (through Karakoram Highway)Peshawar- Karachi Port (Pakistan). 3. Upgradation of Railways from Kotri to Attock and railway line linkages to Gwadar Port. 4. Rebuilding entire railway line from Karachi to Peshawar.

Bangladesh-China-IndiaMyanmar Corridor

1. A road connectivity is proposed from Kolkata (India)Dhaka (Bangladesh) to Kunming (China) via Myanmar

China-Indochina Corridor

1. Road connectivity from China via Lao PDR to Thailand, Malaysia and Indonesia. 2. Railway Connectivity from China to Singapore via Lao PDR, Thailand and Malaysia.

Source: Compiled by the Author Note: There are several projects under each identified corridors. China plans to build road and rail projects in order to improve its connectivity with other neighboring countries.

Box 1: Important routes and check points based on agreement between SCO members • Barnaul - Veseloyarsk (Russian Federation) / Auyl (Republic of Kazakhstan) Semey - Bakhty (Republic of Kazakhstan) / Bakhtu (Peoples’s Republic of China) - Tacheng Airport - Kuitun - Urumqi • St. Petersburg - Orenburg - Sagarchin (Russian Federation) / Zhaisan (Republic of Kazakhstan) - Aktobe - Kyzylorda - Shymkent - Taraz - Almaty - Khorgos (Republic of Kazakhstan) / Horgos (Peoples’s Republic of China) - Urumqi - Lianyungang • Urumqi - Kashgar - Karasu (Peoples’s Republic of China) / Kulma (Republic of Tajikistan) - Murghab - Khorog - Dushanbe (Vahdat) • Urumqi - Khorgos (Peoples’s Republic of China) / Korgas (Republic of Kazakhstan) - Almaty - Taraz - Shymkent - Konysbaeva (Republic of Kazakhstan) / Yallama (Republic of Uzbekistan) - Chinaz • At-Bashy - Torugart (Kyrgyz Republic) / Turugart (Peoples’s Republic of China) Kashgar - Urumqi - Lianyungang

Trade Patterns and Deficit India’s economic engagements with China are multi-faceted. Chinese on one hand compete with India in markets like Africa, Central Asia and Southeast Asia, while on the other it complements Indian manufacturing industries with cheaper inputs. In 2018, the Sino-India bilateral trade touched US$90 billion, though with

Figure 1: India-China Bilateral Trade and Trade Deficit (in US$ billion), 2001-2018 80

Import

a huge trade deficit for India accounting for US$57.33 billion. Figure 1 depicts the bilateral merchandise export and import statistics, as well as the widening trade deficit between India and China during the period 2001-2018. The figure reflects India’s exports to and imports from China, along with a line curve denoting the trade deficit. In fact, the trade deficit started widening in the late 2000s. In 2001, the exports from India to China accounted for more than 50 per cent of its imports from China. This was reduced to 42 per cent in 2010 and 16 per cent in 2015 resulting in major gap between imports and exports leading to a continuous widening of trade deficit.

Export

Central Asia. Some of them are expected to open by 2020. Since India and Pakistan are part of SCO, some of the proposed routes under SCO also involve routes connecting India and Pakistan. In order to derive geo-economic gains from SCO, India ought to utilize the opportunity offered through such agreements. It is important to note here that India tried to materialize such an agreement at subregional levels with Bangladesh, Bhutan and Nepal in South Asia; and with Thailand and Myanmar in Southeast Asia as well. However, these initiatives are still under negotiation. Therefore, it is imperative for India to participate in SCO’s Agreement on International Transportation. Moreover, India and China have already acceded to the Convention on International Transport (TIR) which can also be used as working protocols on the identified or proposed routes under TIR.

Trade Deficit

During the last 18 years, India’s exports to China increased by 18-fold from US$0.92 billion in 2001 to US$16.40 billion in 2018, whereas India’s imports from China during the same time period increased by more than 40-fold from US$1.83 billion in 2001 to US$73.74 billion in 2018. This impacted severely on account of bilateral trade deficit which is not in favour of India. Tables 2 and 3 provide a glance of top 5 commodities (in terms of value) being traded between India and China (at HS 2-digit level) for the last three years. At two-digit level of HS-code, the top five commodities accounted for 47 per cent of the total exports from India to

March-April 2019 ▪

GEOPOLITCS EMERGING REALITIES China in 2016 which increased to 60 per cent in 2018 (see Table 2). It suggests that India’s export to China is less diversified. Diversification can increase the number of commodities in its export basket, possibly reducing the trade deficit – though not substantially. The case of India’s imports from China is also akin to the case of India’s exports to China. The top five commodities accounts for more than 65 per cent of the total imports from China to India over the recent years (see Table 3).

Investment Flows Another key issue is about investment flows. Chinese companies including Alibaba, Xiaomi and others have invested considerably in India. The Chinese investments in India has increased approximately eight times within just two years and crossed the US$5 billion mark in 2018. Sectors in India that are attracting Chinese investments include consumer goods, transportation and logistics and artificial intelligence (AI), among others. India is already experiencing trade deficit with China on current account. The growth in foreign investment from Chinese side will further lead to deficit on capital account as well. Therefore, India’s concern could potentially be to gain similar economic advantages in Chinese economy for its own manufacturers and investors. Moreover, India expects not only investment inflows from Chinese side but also technology transfer from China, particularly in the areas of manufacturing, transportation, and emerging technologies like AI and Internet of Things (IoT). On a slightly different note, India needs some reciprocity from Chinese side in issues concerning the non-tariff barriers (NTBs) imposed by China on Indian goods. These NTBs entails stringent rules pertinent to certification and labeling, customs delays and re-exports related restrictions.

Global Value Chains India’s imports from China are increasing disproportionately, leading

▪ March-April 2019

to widening trade deficit. The U.S.China trade deficit could lead to a trade war between the two countries. In case of India and China, the solution lies in purely economic efforts. With China, India need to enhance intra-industry trade, increase participation in global value chains (GVCs) and diversify the export portfolio in order to reduce trade deficit. However, given the magnitude of this deficit, it would be strenuous and time-taking to make a considerable breakthrough. The policy space must continue to boost the participation and value chain upgradation of small and medium enterprises (SMEs) in India. This will help Indian SMEs become lucrative for lead firms, thus becoming a participant in their GVC, just as Chinese SMEs have been doing. Also, liberalising investment regime, reducing supply-side constraints, and leveraging mutual gains from their respective manufacturing policies viz. ‘Make in India’ and ‘Made in China 2025’ can lead to some pragmatic outcomes.

Developing Common Positions Another key concern for the two countries is their willingness to build common positions at multilateral and regional Table 2: Top Five Exports from India to China (USD million) HS Code

Commodity

2016

2017

2018

'27

Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes

700.0

1017.8

3085.9

'29

Organic chemicals

785.6

1697.4

3053.9

'52

Cotton

1263.3

1147.6

1461.3

'26

Ores, slag and ash

1166.2

1507.8

1128.2

'39

Plastics and articles thereof

267.2

426.4

1052.1

Sub-total

4182.3

5797.1

9781.4

Total bilateral export

8916.1

12492.4

16403.9

Source: International Trade Centre, Geneva Note: The top 5 exports in this table have been arranged as per the descending order of their value in 2018. After that, the values of years 2016 and 2017 for those commodities have been extracted to develop the table.

A good diplomacy, as is the need of the hour, should imply striking a balance between politics and economics – especially in the case of India and China. The balance, howsoever delicate, must remain fora. China is the largest trading partner of India accounting for approximately 12 per cent share in India’s total trade in 2017-18. Disaggregating the exports and imports, it is statistically evident that China accounts for 4.4 per cent of India’s global export and 16.4 per cent of India’s global imports. Furthermore, India and China are the two emerging economies, with a combined population of 2.72 billion, that are suitably playing leadership role in representing the global South and asserting the Southern voice across several multilateral fora including the G20. Both countries have developed common positions on several critical issues including climate change, food security, etc. and have helped safeguard the interests of developing countries. Being members of BRICS, the two countries have been working closely on New Development Bank, which established headquarters in Beijing and Table 3: Top Five Imports of India from China (US$ million) HS Code

Commodity

2016

2017

2018

'85

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television ...

20871.2

27539.0

23348.7

'84

Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof

10728.1

12808.1

13649.6

'29

Organic chemicals

5585.6

6570.8

8520.0

'39

Plastics and articles thereof

1837.3

2137.7

2691.0

'73

Articles of iron or steel

1202.4

1375.8

1723.5

Sub-total

40224.5

50431.5

49932.8

Total bilateral import

60483.1

71971.2

73738.2

Source: International Trade Centre, Geneva Note: The top 5 imports in this table have been arranged as per the descending order of their value in 2018. After that, the values of years 2016 and 2017 for those commodities have been extracted to develop the table.

was headed by an Indian professional. India also responded well on the proposal to establish Asian Infrastructure Investment Bank (AIIB) by China. AIIB has started financing India’s developmental needs. AIIB is financing US$329 million project in Gujarat for improving rural connectivity which will benefit eight million people. AIIB is also providing loan worth US$ 160 million for a project called ‘power to all’ in Andhra Pradesh, and has cleared a US$400 million loan for a water sanitation project in the state. On the strategic front, on April 23, 2019, two Indian Naval Ships namely INS Kolkata (a destroyer), and INS Shakti (a fleet tanker) sailed to the port of Qingdao and participated in a naval fleet on the occasion of the 70th anniversary of the People’s Liberation Army (Navy), or PLA(N). Chinese President Xi Jinping reviewed this multinational fleet representing sixty countries on the occasion.

Conclusion This article has examined various wideranging issues between India and China. The two countries are expected to develop mutual trust on strategic issues so that any deviation does not harm the potential of their economic engagements. Also, the contentious issues solicit more convergences between the two countries. Bilateral dialogues, whether official talks like those in BRICS and SCO or informal meetings like the Wuhan summit, are the only way to negotiate and develop bilateral common position on issues pertaining to sovereignty, national security or trade competitiveness. Nevertheless, India’s engagement with China continues to grow, albeit in search of a strategic depth. 

March-April 2019 ▪

BRI STRATEGIC AND ECONOMIC IMPLICATIONS

China must address concerns about BRI impact

â&#x2013;ª March-April 2019

 David Devadas

ndia was a lone dissenter when it chose to stay away from the inaugural global meet on the Belt and Road Initiative (BRI) in Beijing on 14-15 May 2017. A host of presidents, prime ministers and ministerial delegations attended the first BRI Forum. India’s was a bold decision, linked to its objections over the route of the ChinaPakistan Economic Corridor (CPEC). The corridor, described as pivotal to BRI, passes through Gilgit and other parts of the state of Jammu and Kashmir, which is juridically part of India. India’s foreign ministry spokesperson had stated: “No country can accept a project that ignores its core concerns on sovereignty and territorial integrity.” (https://www.aspistrategist.org.au/understanding-bri-africamiddle-east/, accessed 25 April, 2018) In the year since India took that bold stand, several governments and thinktanks have taken note of the strategic and economic implications of BRI. The fate of Hambantota port in Sri Lanka had already underlined the leverage that BRI projects give China in a host of countries around the globe. A simple look at the volumes of Chinese debt that BRI projects entail makes it clear that a very large number of these debts could result in China calling in the collateral. In very many places, the project and the area around it are the collateral. Significant portions of very many countries could end up in China’s hands. Worries about the potential impact of BRI have sharpened since China has already, since the beginning of the century, turned reefs in the South China Sea into artificial islands. It has installed military equipment and personnel there, and declared almost the entire sea as Chinese property. And it has refused to accept international arbitration over a dispute with the Philippines over some of those islands. India is naturally concerned about China’s intentions with regard to the western Indian Ocean. Its control over Hambantota, the Maldives (which lie

at the centre of the Indian Ocean), and its military base on a leased port at Djibouti at the entrance of the Red Sea are worrisome. For, if one combines these initiatives with the dominance that the Gwadar port which China is developing in Pakistan would give it over the Arabian Sea, they together suggest a potential strategic takeover of the western Indian Ocean.

Concerns over Kashmir India’s overall strategic concerns about the possibility of China getting a large measure of control over parts of south Asia run deep. China would win friends and partners if it were to address these concerns with patience and in a spirit of goodwill and accommodation. Let us first examine issues relating to India’s northern state, Jammu and Kashmir. China occupies a part of the state, including Aksai Chin and the Shaksgam valley. It has built up military strength on the eastern border of the state in recent years. And China made it clear a decade ago that it did not respect India’s sovereignty over the state. In 200910, it insisted on giving visas to citizens from the state on pieces of paper rather than on their Indian passports. Even the Indian passport of the then Commanderin-chief of the Indian Army’s Northern Command was not accepted. Chinese troops are present in parts of the Jammu and Kashmir state which are under Pakistan’s control. It owns and operates huge installations there, not far from the Line of Control that divides the state between India and Pakistan. There is talk of some of these being so secret that no Pakistanis are allowed to enter. Apart from these factors, some Indian strategists suspect that China may even have subtly supported Pakistan’s animosity against India. China’s deep links within Pakistan’s military, which dominates that country, were manifest when Pakistan’s Chief of Army Staff, General Pervez Musharraf, remained in Beijing through much of the fighting

David Devadas, author of The Story of Kashmir and The Generation of Rage in Kashmir (OUP, 2018), is an analyst of politics and geopolitics. This article is the copyright of David Devadas. He must be credited in any citation of its contents

India’s overall strategic concerns about the possibility of China getting a large measure of control over parts of south Asia run deep. China would win friends and partners if it were to address these concerns with patience and in a spirit of goodwill and accommodation March-April 2019 ▪

BRI STRATEGIC AND ECONOMIC IMPLICATIONS during the Kargil war in 1999. That is only one layer of China’s involvement with Pakistan. There are fears among some sections in India that China could even have direct influence over terrorist groups based in Pakistan, including Lashkar-e-Taiba and Jaishe-Mohammed. These fears came up in 2017, when official spokespersons of those outfits issued statements praising China, and promoting its role in south Asia. Indian analysts have naturally viewed with deep concern China’s repeated use of its veto to block the listing of Jaish founder Masood Azhar on UN terror lists. Some have even read its repeated refusal to budge on this in light of those terror groups’ statements lauding China, and not only as support for the Pakistani state. China’s announcement at the beginning of May 2019 that it was finally lifting its technical hold on Masood Azhar being named on the UN Sanctions Committee’s terror list has eased those concerns somewhat. However, China did not entirely allay fears about its intentions. For, it only lifted its hold when the US was about to take the matter to the open floor of the UNSC. An open debate on the issue in the Security Council, with China defending a terrorist openly at such a forum, would have put China in a bad light before the world.

cultural ties. China is taking up heavily debt-laden projects in all the Central Asian republics, in Afghanistan, and of course in Pakistan. The most important aspect of BRI investments in Central and south-east Asia is the geographical location of countries considered to be in the highest risk category with regard to debt default. These include Mongolia, Kyrgyzstan, Tajikistan, and Laos—all of which are contiguous with China. Afghanistan, which connects with China through the Wakhan corridor; Cambodia, which is contiguous with Laos; and Pakistan, which connects through Gilgit, are in the next category of risk. The territorial contiguity of these countries with China naturally give us pause. For, when the Communist party first took power in 1949, Mongolia was counted in the same bracket as Xinjiang and Tibet. Chairman Mao sent troops into Xinjiang almost immediately, and into Tibet soon after.

Debt traps in Pakistan In this light, India must view with deep concern the extent to which CPEC could allow China to take over India’s western neighbour, with which India has had the deepest and longest cultural and historical ties. Plans laid out under the CPEC project go far beyond developing the Gwadar port, and highways, railway lines and pipelines from Gwadar to western China. More than 50 separate Memorandums of Understanding (MoUs) have been signed by Pakistan and China under the aegis of CPEC. The vast outlay is earmarked for an array of projects, many of which are not directly related to transportation. These include the lease of tracts of agricultural land to China, trade in the produce of those lands, food processing industries, cloth weaving infrastructure, and even a metro train for Lahore city. In fact, the plan metamorphosed over the couple of years after it was unveiled

Regional concerns Some Indian strategists are concerned about China’s objectives with regard to the integrity of India’s sovereign territory all along its Himalayan frontiers. Some BRI maps show access routes running through Tibet and Nepal and across India’s heartland, all the way to the Arabian Sea. No such projects have been discussed or approved in the public domain. India’s stated concern about its territory in the Gilgit region extends to its south Asian neighbourhood – as also to the central Asian and south-east Asian regions. With both these regions, India has had long and deep historical and

▪ March-April 2019

The multibillion-dollar China-Pakistan Economic Corridor is a flagship project under Beijing’s Belt and Road Initiative. Photo courtesy: South China Morning Post

to such an extent that the Corridor itself became more like a grid of roads to cover a large part of Pakistan. Three inter-connected highway corridors are planned, only one of which is to run through Balochistan and North-Western Frontier Province (NWFP). The middle corridor is to pass along the length of the Indus river. What seems likely to be the main corridor is to pass through the heart of Sind and Punjab, from Karachi to Rawalpindi and beyond. A railway line is to run along this axis. One loop of this corridor is to pass through Lahore, just 35 kilometres from the Indian border. China’s Parliament specifically approved a 4.2 billion USD concessionary loan for the Multan to Sukkur stretch (about 40 per cent) of the Lahore to Karachi motorway. But even this is not a gift. China is to supply 90 per cent of the $ 2.59 billion US dollars required for that motorway as a loan. Analysts estimate that CPEC would bring a $ 2 billion USD saving in China’s annual oil

transportation costs. This means that the amount China would save in 16 months on only the cost of importing oil could cover the entire cost of that 387 km stretch of motorway. It is arguably possible that China would get those savings as well as the possibility of calling in the collateral on its loan. Power has long been identified as a major bottleneck for Pakistan’s development. Since 2005, large parts of Pakistan have suffered huge power shortages, particularly during the stifling heat of summer. About a third of the CPEC budget, 27 billion USD, is earmarked for 18 power projects. Dams are to be built to provide hydroelectric power. Even bigger power projects are to use coal, both locally mined in Pakistan, and imported. Together, the coal-based projects are to produce more than 8,000 MW of power—about 68 per cent of the

Some observers are uneasy about Pakistan’s ability to maintain a robustly autonomous role on the world stage. Since all the CPEC activities are to be financed by China, it would surely have a pivotal role in decision-making. The possibility of a virtual takeover of its western neighbour by a country that is fast emerging as a robust superpower cannot but be cause for worry in India

total 12,144 MW of power that is to be produced through Chinese expertise and investment. The extent to which China will control Pakistan’s abundant water resources and food production is not entirely clear, nor the extent to which these might be treated as resources for the entire belt, including the rugged and water deficient stretches of western China.

Opaque legalities In a paper written at Korea University’s Law School in Seoul, Asif H. Qureshi held that, of the 51 MoUs signed between Pakistan and China with regard to CPEC, the most important appeared to be the May 2013 Memorandum of Understanding on the Cooperation of Developing the China-Pakistan Economic Corridor Long-Term Plan and Action Plan. The MoU was signed between the National Development and Reform Commission of the People’s Republic of China and Ministry for Planning and Development of the Islamic Republic of Pakistan. Qureshi wrote: “This understanding does not have the hallmark of legal drafting and language. The language is essentially counted in soft terms viz., ‘agree to cooperate’, ‘explore and promote’. Moreover, the dispute settlement provision refers to the resolution of disputes through ‘friendly consultations’. Under the circumstances, it probably is reasonable to infer that the totality of all the MoUs exhibit similar characteristics—namely, they are not international agreements registered with the UN under Article 102 of the UN Charter. In conclusion, the whole apparatus as between China and Pakistan is essentially set up in soft law. Soft law is more effective for the more powerful State in circumstances where the power ratio between two countries is unequal.” Some observers are therefore uneasy about Pakistan’s ability to maintain a robustly autonomous role on the world stage. Since all the CPEC activities are to be financed by China, to the tune of a projected 80 billion US dollars,

March-April 2019 ▪

BRI STRATEGIC AND ECONOMIC IMPLICATIONS China would surely have a pivotal role in decision-making. Chinese troops are to be deployed for security, at least of the vast numbers of Chinese engineers, technicians and other personnel that would build and then operate the various projects that are to come up under the aegis of CPEC. The possibility of a virtual takeover of its western neighbour by a country that is fast emerging as a robust superpower cannot but be cause for worry in India.

China’s unprecedented rise By 2016, China had become the largest bilateral trading partner for 124 countries, while the United States was the largest trade partner for only 56 countries (Parag Khanna, #Connectography, June 2016). And that was just for starters; the goals that China set for itself were unparalleled. President Xi Jinping announced at the UN in Geneva in January 2017 that, “In the coming 5 years, China will import $8 trillion worth of goods, attract $600 billion worth of foreign investment, make $750 billion of outbound investment and Chinese tourists will make 700 million outbound visits. All this will bring more development opportunities to other countries”. The most notable aspect of that statement was that he did not mention the worth of the goods that China intended to export during that period. Already, over the past 30 years, China’s vast exports of all kinds of goods had turned its bilateral trade with other countries into a very unequal relationship, dominated by the other country’s imports of Chinese goods. The second notable aspect of that statement was that, whereas countries across the world had sought inbound investment over the past four decades, and used the levels of inbound investment as a ready reckoner of their economy’s buoyancy, China was now giving far greater weight to its own investments in various parts of the world. Its plans for outbound investment were not simply more than expected inbound investment, they were likely to be twelve-and-a-half times bigger.

▪ March-April 2019

It is clear that Xi intends for China to take over from the US as the main anchor for world trade, communication, cultural norms, and geopolitical relations. Among developing countries, India is the country most likely to find its potential circumscribed by China’s dominance. It must therefore carefully assess the consequences of China’s current trajectory and weigh its options These investments abroad are primarily meant to ensure prosperity for China’s vast population, rather than the good of the host countries. The domestic objectives relate primarily to China’s internal labour market. The demographic challenge to China’s labour force, which its erstwhile one-child policy had created, posed a huge political risk when Xi began his second term in 2013. Returns on the projected investments in foreign countries are meant to offset declining domestic productivity as labour costs within China become less competitive. The aspirations of China’s vast numbers of neo-rich have begun to climb. Any frustration of those aspirations could cause political turmoil. Especially since Xi intended to stay at the helm of China for longer than the two terms (ten years) his two predecessors had, he had to plan for long-term growth. Long before Keynes, building infrastructure had long been a double fillip for economies. The construction

itself provided employment, and salaries. When those salaries were spent, they stimulated the economy, and savings became investible wealth. Those who used the infrastructure that had been constructed came up with manifold economic opportunities. FDR with his New Deal and Hitler had revived their countries’ respective economies by spending vast amounts on infrastructure. “For Xi Jinping, the BRI is less about a return on the investment and more about making sure that the Chinese people are economically satisfied, allowing the Communist Party to continue to govern,” wrote Isaac Kfir, director of the national security program and head of the Counter-terrorism Policy Centre at the Australian Strategic Policy Institute. “And that requires unfettered access to new markets, which is why Xi has staked China’s future on this ambitious program.” Chinese control over proposed BRI projects could allow Chinese companies and Chinese labour to earn income in other countries—rather than provide local employment the way projects under the Marshall Plan did.

Vast plan The BRI, and its accompanying Maritime Silk Route (MSR), is to connect the entire major landmass of the world stretching between Vladivostok in the east, Cork in the west, and Cape Town in the south— and the ocean and seas within and around this vast landmass. It is to consist of highways, railway tracks, oil and gas pipelines, fiber-optic cables, airports, ports, refineries, power grids, and the cities and towns required to keep all these going. The closest parallel to the Belt and Road Initiative was the infrastructure that the Roman Empire built across Europe, when Rome ruled most of western Europe, north Africa, and the western edge of Asia. The 89,000 kilometers of highways, bridges, and aqueducts of the Roman Empire had allowed Roman legions to march across Europe, and be supplied quickly, so that Rome could take slaves and extract levies on produce

Prime Minister Narendra Modi and Chinese President Xi Jinping

across the vast area. Infrastructure was the backbone of Rome’s economic reach as well as its military might. All these arms of BRI are not only about creating infrastructure, but putting down the sinews of a globally integrated economic, financial, and security system, which would be centred on, and controlled by, China. It is to be “a multi-dimensional infrastructure network,” (http://www.xinhuanet.com/ english/2017-05/14/c_136282982.htm, accessed 26 April, 2017), as Xi stated at the first global forum on the enterprise. Developing and projecting Chinese soft power is to be a large part of the enterprise. Xi spoke of building an “educational Silk Road and the health Silk Road, and… cooperation in science, education, culture, health and peopleto-people exchange. Such cooperation has helped lay a solid popular and social foundation for pursuing the Belt and Road Initiative. …Projects of people-topeople cooperation such as Silk Road culture year, tourism year, art festival, film and TV project, seminar and think tank dialogue are flourishing.” China’s

central government established funds for 10,000 scholarships for students from countries participating in BRI, and the governments of Chinese states set up separate scholarships. Of course, trade remains the core of the enterprise, and the volumes are staggering. Xi stated at that conference that the “total trade between China and other Belt and Road countries in 20142016 has exceeded US$3 trillion, and China’s investment in these countries has surpassed USD 50 billion. Chinese companies have set up 56 economic cooperation zones in over 20 countries, generating some USD 1.1 billion of tax revenue and 180,000 jobs for them.” That is only the current trade in products that various countries already produce, as a result of the various trajectories of their respective national economies. Xi indicated that he had in mind a far more internationally coordinated system of production. He said, “We should deepen industrial cooperation so that industrial development plans of different countries will complement and reinforce each other. Focus should be put

on launching major projects.” Xi made it obvious that he envisages a new superstructure for international financing, which would include (and perhaps, in time, subsume) Bretton Woods and the other post-War institutions that were largely controlled by the US. He said in the same speech: “China has engaged in multiple forms of financial cooperation with countries and organizations involved in the Belt and Road Initiative. The Asian Infrastructure Investment Bank has provided USD 1.7 billion of loans for nine projects in Belt and Road participating countries. The Silk Road Fund has made USS 4 billion of investment, and the 16+1 financial holding company between China and Central and Eastern European countries has been inaugurated. With distinctive focus, these new financial mechanisms and traditional multilateral financial institutions such as the World Bank complement each other. A multi-tiered Belt and Road financial cooperation network has taken an initial shape.” It is clear that Xi intends for China to take over from the US as the main anchor for world trade, communication, cultural norms, and geopolitical relations. The US naturally views this as a challenge. Among developing countries, India is the country most likely to find its potential circumscribed by China’s dominance. It must therefore carefully assess the consequences of China’s current trajectory and weigh its options. India should continue to hold up a questioning mirror to China regarding India’s territorial integrity, and to other BRI participant countries regarding the mega-project’s consequences for their sovereignty. The path forward towards a common future must be charted through consultative mechanisms that build a partnership of equals. China could effectively allay Indian concerns if it were to engage transparently, determined to win friends and partners in a spirit of give-and-take. The best way forward would be for both countries to feel comfortable about the contours of the emergent Asian century. 

March-April 2019 ▪

BRI CRITICAL ASSESSMENT

CHINA’S BELT AND ROAD INITIATIVE, AND INDIA

To Get In or

Not Get In?

▪ March-April 2019

 Dipankar Sengupta

he Peoples Republic of China hosted the second Belt and Road Forum for International Cooperation in Beijing on April 26-27. While the media and other observers were keen to see which country attended it and which did not, it may be worth one’s while to draw ones attention away from that circus and concentrate on the Belt and Road Initiative exclusively to see what it is, whether India can benefit from it and what modifications in this initiative can maximize India’s benefits from participating without harming other partners. This per se is not difficult to do. The surprising thing is that this has not been done yet. India’s potential participation in the BRI has a tendency to be mixed with a whole range of issues that it has with China. These issues are mainly those that security and trade. These issues can and should be dealt with separately. This is not to deny their obvious importance. The argument is that progress in those areas (or the lack of it) should have no bearing on India’s position on the BRI. This article aims to carry out such an analysis to see whether India should participate in China’s BRI. We begin by asking as to what BRI actually is. This is followed by a section that describes potential benefits that can accrue to India due the BRI in its present form. We then examine how this could change if the BRI were to be modified suitably to enhance the potential gains from it.

What is BRI? The first problem is to define the BRI. While there is no shortage of commentaries on the BRI, all this has served to dim memories as to how and why this term came about. This is important because the genesis of this initiative and its nomenclature and the term indicate its evolutionary nature. They indicate a possible flexibility that could potentially be used to India’s advantage. It was in 2013 that the slew of infrastructural projects undertaken

by China across several countries and continents were sought to be shown by China as a “parts” of a well thought out “whole”. This was initially called the One Belt One Road initiative. Now, the same is called the Belt and Road Initiative. According to Chinese officials, the term “One” in the original title lent itself to “misinterpretation”. A World Bank study describes the BRI as “an ambitious effort to improve regional cooperation and connectivity on a trans-continental scale”. The study notes the China-centricity of the initiative, and then covers itself by stating: “The scope of the initiative is still taking shape – more recently the initiative has been interpreted to be open to all countries as well as international and regional organizations.” The Chinese descriptions of the BRI are even more grandiose and encompassing. The failure to arrive at a coherent common description and vision for the BRI is not accidental. While connectivity and projects relating to connectivity are key component of BRI, they are not it only component. The difficulty lies with the range of projects that the Chinese have sought to bring under the umbrella of BRI as well as glaring inconsistencies in stated objectives. Take for example the China Pakistan Economic Corridor (CPEC), which is closely associated with the BRI. Connectivity projects are a small component of the entire investment in CPEC. Power projects are distinct from connectivity, and they account for over half the total investment in this specific initiative. Thus new definitions and visions encompass this development too. For China, the BRI aims “To construct a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool, and technology database.” Clearly, very little is left out.

Dipanakar Sengupta is Professor of Economics, University of Jammu, Jammu and Kashmir, India

India’s potential participation in the BRI has a tendency to be mixed with a whole range of issues that it has with China. These issues are mainly those that security and trade. These issues can and should be dealt with separately. This is not to deny their obvious importance. The argument is that progress in those areas (or the lack of it) should have no bearing on India’s position on the BRI March-April 2019 ▪

BRI CRITICAL ASSESSMENT To accomplish this, a sum of $1 trillion has to be spent. So far Chinese Companies have cornered $340 billion worth of construction contracts. The bill for every project will be picked up by the country in which the project is located. This has led to the souring of certain dreams in some nations.

What does the BRI do? What has the BRI done so far? For one thing the BRI so far has acted as a vent for Chinese excess capacity in a host of industries. The $210 billion spent so far, the $340 billion worth contracts already cornered demand for Chinese goods and services past, current and present. The balance of $1 trillion will probably be dominated by the Chinese as well. Chinese trade with the rest of the world both in terms of volume and growth has done very well even without the BRI. Thus given its price tag, whether BRI can economically be justified by China if they were to foot the entire bill alone is doubtful. Certainly, the investment in the transport segment of CPEC yields very little economically for China given the fact that Chinese industry is concentrated along the coast far away from Pakistan. Thus the mere ability to use the port of Gwadar to send goods to the Middle East does not make it economically rational. The basic principle behind the financial viability of any infrastructural project is simple: Will the project lead to a rise in the production of goods and services – causing taxes to rise such that this increase in tax revenues is sufficient to pay interest and amortisation costs of the project? If the project does not lead to the projected rise in the production of goods and services, then the country which has bought this project will run into difficulties. Sri Lanka’s Hambantota Port built by the Chinese failed to generate sufficient revenue to pay off the payments on debt acquired to build the port. The Sri Lankan government had to lease it to a Chinese company for a sum which will be used to pay off the Chinese debtors who financed the construction of the port.

▪ March-April 2019

As studies carried out by the World Bank point out, the ability of the country that enters into the BRI as a partner and then has an infrastructural project executed (by the willing Chinese) to ensure that the project helps to pay for itself is by no means assured. It depends on a host of factors like the regulatory regime in that country, the state of the export market (if the debt incurred for project is denominated in foreign currency), the state of the local market etc. A country that decides to contract debt to have a project(s) financed risks the possibility of national assets being taken over if the project(s) does/do not payoff. Thus apart from Sri Lanka, there is the case of Zambia handing over the Kenneth Kaunda Airport in Lusaka to the Chinese EXIM Bank apart from other assets. Is India also in the same league as these countries? Does it make sense for India to join BRI?

India and the BRI What are India’s problems with the BRI at various levels? India’s reservations with the BRI is at two levels. India’s stance (and this is an oft held one) is that initiatives such as these that involve so many nations have issues with respect to national sovereignty, national laws etc. Therefore such initiatives are best supervised by a multilateral agency that is sensitive to these issues, and preserves equality between participating countries. For example, the Trans-Asian Railway that aims at an integrated rail network across Europe and Asia is a project of the United Nations Economic and Social

Commission for Asia and the Pacific (UNESCAP). The BRI is a Chinese initiative, and is structurally bound to reflect Chinese interests. China stresses on the increasingly “multilateral” nature of the BRI necessitated by the fact that the sheer number of projects under the BRI umbrella will require the active mobilization of technology, management and human resources on a global basis and cannot be the preserve for any one country. But the complete dominance of China so far makes it clear that as of now, it is not yet “a symphony performed by all relevant countries”! The specific project that India has voiced its opposition to is the China Pakistan Economic Corridor (CPEC). This Corridor comprises the Xinjiang-toGwadar port project which passes through Gilgit Baltistan. This is an integral part of India. Even going by the UN resolutions, it should have been vacated by Pakistan. The nomenclature of CPEC clearly weighs

China stresses on the increasingly “multilateral” nature of the BRI necessitated by the fact that the sheer number of projects under the BRI umbrella will require the active mobilization of technology, management and human resources on a global basis and cannot be the preserve for any one country

Prime Minister Narendra Modi during the India China Business Forum in Shanghai

in favour of Pakistan as it is wittingly or unwittingly endorses Pakistan’s position on Jammu and Kashmir. Thus in its present form, participation in the CPEC in particular and the BRI in general becomes politically impossible for India. The nature of the second objection is not an economic one. It could therefore be argued that if India wanted to participate in the CPEC, there are a number of ways in which this could be done to ensure that India’s position visà-vis Pakistan-Occupied Kashmir is not undermined. A change of nomenclature and appropriate legal verbiage can go a long way in assuaging India’s objections. Indeed, the Chinese Ambassador to India had stressed that China has no desire to get involved in sovereignty and territorial issues between India and Pakistan and then proceeded to exceed his brief by offering to rename the CPEC. When the Pakistan inquired about the proposed name change, the Chinese Embassy quietly deleted the speech containing this offer from its website. This development notwithstanding, the possibility of India participating in the CPEC where her sensitivities are kept in mind and respected exists. After all, India and Pakistan had opened the Line of Control between the two parts of Jammu and Kashmir to trade. India and China have put their disagreements on a number of issues aside to promote

engagement wherever possible. The Chinese Envoy to India Mr Luo Zhaohui wrote in an article in The Indian Express that matters like the Masood Azhar case should not curb growing India-China ties. He specifically argued: “It should be the direction of efforts for China and India to enhance mutual trust, enlarge cooperation and narrow down the divergence.” This has certainly been India’s attitude in spite of several irritants offered to India by China. In spite of irritants and the seemingly absence of a coherent strategy on other issues, India has been relatively liberal with China, allowing it access to Indian markets. Take for example the telecom market. One-sided access to China has led to Chinese companies conquering the market without any corresponding gain for India. There is logic to this attitude. Access to Indian markets has led to a very favourable trade balance for China, which they would be unwilling to risk. This is more so given the slowing Chinese economy, which makes the Chinese leadership even more risk averse to adventurism – indeed capping it even when such adventurism takes place. Given this, the possibility of India participating in a specific BRI project cannot be ruled out if Indian sensitivities are respected. It is also striking that this time round (at the time when the second BRI Forum

meeting is being held), India has not voiced its concerns as vociferously as the previous time. This change in tone and tenor cannot be divorced from certain current developments, especially the partial recanting of the China’s long held position on Masood Azhar. China finally decided to drop its objection to the UN listing Jaish-e-Mohammed (JeM) chief Masood Azhar as a terrorist. The question that arises is: Has there been a quid pro quo that has been arrived at behind the scenes where India changes its stance on BRI while China gives up its stance on Masood Azhar? The answer possibly lies in between the strict binaries. If this is completely true, then this is a poor bargain where India is concerned. Masood Azhar the individual loses his importance and relevance sans the terror infrastructure put in place by the Pakistani deep state over decades of effort and investment. To make it about an individual alone and enter into a multilateral framework which is formally dominated and controlled by one country is clearly not worth the price. However, we may also keep in mind that India’s initial articulation of its concerns about the BRI found so many takers, who have chosen to stay away from this initiative. Therefore these concerns need not be stated again with such vehemence while world memory is still fresh, if leeway can be made with China on the Masood Azhar front is a plausible theory. Thus China “saves face” while India “gains face.” This is a likely quid pro quo where both parties win and only Pakistan loses. It is then possible that the Chinese may be open to other changes in the BRI to make it possible and attractive to India to participate, and that India may indeed have given signals that such development cannot be ruled out. The major question, however, is that even if participation is possible, does it make sense for India to participate?

An economic rationale for joining BRI Is there an Economic Rationale for joining

March-April 2019 ▪

BRI CRITICAL ASSESSMENT BRI? What does joining BRI or any of its component initiatives mean? Answers to the two questions are connected. As we will argue, they serve to join India’s reservations about BRI in general and CPEC in particular. The economic justification for joining/ undertaking any venture has to come from a cost-benefit analysis: what are the costs of that venture and do the flow of benefits that arise from that venture pay for the costs? In particular, what is the cost of India joining the CPEC? Indeed that requires an answer to the second question: what does joining CPEC or BRI entail for India? For most of China’s partners in the BRI, joining any of its component initiatives has meant inviting China to build roads or any other infrastructure deemed to be part of BRI’s mandate. The initial investment has been put up by China, but the liability remains that of the host nation. The cost of the project is thus the cost that the partner country incurs. The benefits from the project that will hopefully accrue from that project would be enhanced commerce that the project will draw/support. The participating government must therefore devise a way to capture a part of these gains which hopefully would suffice to pay for the project. There is of course no guarantee that this would happen as the case of Sri Lanka and Zambia demonstrate. Herein, China or Chinese companies repossessed the assets that had been constructed. Clearly, India’s involvement will not resemble this sort of participation. Unlike most of China’s current partners, India has both the resources as well as the knowhow and the capability to construct all types of projects currently included in the BRI list. Thus participation in the BRI or CPEC is unlikely to make India invite China to build projects related to connectivity. India is capable of doing so itself, and definitely when it comes to supporting infrastructure on India’s side of the border. In the future, it would also mean adopting or harmonizing domestic rules to allow for freer entry and exit for freight and even passenger traffic – steps

▪ March-April 2019

Belt and Road Forum, roundtable discussion

that are part of trade facilitation. The Bangladesh–China–India– Myanmar (BCIM) Economic Corridor and the China–Pakistan Economic Corridor (CPEC), both are described by Xinhua as “closely related to the Belt and Road Initiative”. Both pass though Indian territory. Hence Indian involvement means a harmonization of rules, and also Indian participation in developing its infrastructure in its territory, so that seamless connectivity is achieved across economies. The owners/creditors herein will be the Indian government. What are the benefits? Clearly the benefits will depend on access to markets that these initiatives will provide. Herein lies the problem. Take for instance the CPEC. Even if a change of nomenclature and innovative use of legal verbiage makes Indian participation a possibility, which market does India have access to through CPEC, which it did not have before? In its present form, India accesses no new markets through CPEC. But take the scenario that like BRI itself, the CPEC were to evolve to include feeder roads into the main/arterial Yarkand Gwadar route from India via Ladakh and from the Central Asian Republics into the Xinjiang part of the route. Also,

consider that these feeder routes were to include oil and gas pipelines and power grid lines. Then India not only has access to these markets, but it can also tap into their hydel as well as hydrocarbon resources. Such modifications would be completely consistent with the current vision of the BRI. If the above modifications were to be worked into the Yarkand Gwadar Initiative, then energy-hungry India would have a cheap source of energy and also supply access to the Central Asian markets with Indian goods. Even with current infrastructure, the cost of transporting goods per tonne from Delhi to the Central Asian Republics via Ladakh, Tibet (Ngari) and Xinjiang is roughly equal to that transporting goods from Western Europe. This is to India’s benefit as well as Central Asia. Indeed the largest gainers would be the currently impoverished Republics of Tajikistan and Kyrgyzstan. In such a case, the benefits from joining the Yarkand Gwadar Initiative for India would clearly outweigh costs. There has never been any indication that such a development is on offer, although they are stressed in the policy documents regarding the BRI.

initiative therefore become relevant and readily comprehensible. After all, one could argue that what the BRI aims to do is to facilitate trade. WTO could have been empowered to supervise this initiate. But the current trajectory of the BRI lends credence to suspicions that among other things, China wants it to serve as a vehicle for her “to write new rules, establish institutions that reflect Chinese interests, and reshape ‘soft’ infrastructure.”

To Sum Up

This is what leads us to the larger question about BRI. If matters of access, which is the most important goal of any project or initiative about connectivity are not guaranteed, then why should a country join that initiative? Clearly in a project involving connectivity, access to markets both to export and procure have to be given unconditionally. These cannot be matters for negotiation and discussion. Who or what mechanism in the BRI ensures this or any other matter that becomes subject to disagreement among partner countries? Only recently has the BRI started to to do something in this regard. The Singapore International Mediation Centre (SIMC) signed a Memorandum

of Understanding (MOU) with the China Council for the Promotion of International Trade (CCPIT). Under the MOU, the SIMC and CCPIT will jointly develop the rules, case management protocol, and enforcement procedures for disputes submitted to mediation and establish a panel of mediators to resolve disputes arising out of The Central People’s Government of China’s Belt and Road Initiative projects. The framers of these rules are therefore an organ of the Chinese government and a Singaporean not-for-profit Entity. The other partners so far have no role to play in the formation of ground rules! India’s reservations about the BRI not being a conventional multilateral

The possibility of India participating in the CPEC where her sensitivities are kept in mind and respected exists. After all, India and Pakistan had opened the Line of Control between the two parts of Jammu and Kashmir to trade. India and China have put their disagreements on a number of issues aside to promote engagement wherever possible

There is hardly any area where China wittingly or unwittingly has not provoked India. Be it the issuance of stapled visas to Indian citizens from Arunachal Pradesh (and previously Jammu and Kashmir as well), protectionist policies especially with respect to certain generic Indian drugs (especially those that tackle cancer), incidents on the border and until its recent volte face, its earlier actions on the Pakistani terrorist Masood Azhar (even while it carries out enormous repression of the Uighur Muslims in Xinjiang) – all these actions make it extremely difficult for any government in Delhi to deal with China objectively. While it is difficult to read a coherent strategy into the list of actions that Delhi has taken vis-à-vis China, India’s China policy so far has been shorn of emotion. India’s economic policies have so far been “correct.” India’s economy is sufficiently large and autonomous to allow her to let China develop stakes in the Indian economy so that it avoids misadventure out of self interest. The drivers of Corporate India are still family or individual driven, and are not so amenable to be bought over. However when it comes to initiatives like the BRI involving so many nation states, India’s approach when it comes to the principles of multilateralism as well as the specific practices of certain initiatives have been well thought of. While the Beijing conference on 26-27 April had a large number of members, many major world economies stayed away. This underlines the very points that India has stressed upon from the very beginning. 

March-April 2019 ▪

SINO-INDIAN RELATIONS PUNE ACTION PLAN

India, the world’s largest democracy and the most diverse nation, elects a new government

STRONG RELATIONS WITH CHINA

The Roadmap For India’s Next Government There is a series of steps that the new Indian government should take to cement ties with China. The Pune Action Plan provides a comprehensive methodology for the soon to be newly-elected Government of India to proceed fast forward in its relationship with China in the second half of 2019.

▪ March-April 2019

 Gautam Bambawale

ven as India heads into a general election, it is important to keep focus on and not lose track of how the country must shape its foreign policy over the coming five years. Suggestions, inputs, advice on these issues will be valuable to whichever government is formed. Within our larger foreign policy matrix, there is no denying the fact that India’s relations with China constitute one of our most important challenges in the national security arena. Thus, even while attention is currently on the election schedule, thinkers, analysts, academicians and observers in western India have been giving a lot of thought to the next steps in India-China ties. Since these plans and ideas have been sharpened, fleshed out and given final shape through debate and discussion in the city of Pune, it would be appropriate to call it the ‘Pune Action Plan on India-China Relations’. First, given the nature of China’s polity, which is highly centralised, it will continue to remain important to drive the relationship from the top down. Therefore, we agree that there should be intense political interaction, starting with the top leadership and filtering down to the ministerial level and then senior official level. It will be essential to have an early visit to India by Chinese President Xi Jinping in the second half of 2019 to keep up the momentum from the Wuhan Informal Summit of April 2018 as well as to impart new impulses with the formation in office in India as a result of our elections. Whether the interaction between Xi and the Indian prime minister continues to be of the informal variant we experienced at Wuhan will be for the two sides to decide. The positive aspect of the informal summit format is that it permits just the two leaders of the most populous nations on the globe to interact with each other over significant amounts of time, thereby enabling the two to indulge in strategic communication on each country’s

hopes and fears, their assessments and calculations, their dreams and their goals. Such an exchange of views is indeed of significant value, especially amongst nations which need to build upon mutual trust. Second, it will be important to enhance military-to-military interaction and cooperation between India and China. Currently, the exchanges are mainly between the armies of the two countries. It will be essential to expand this to the navies, which are meeting on the high seas more often. Such exchanges should not merely be limited to study visits, attending courses in the military schools of the other side and perfunctory port calls by naval ships. They need to go beyond such symbolism and aim at getting a better understanding of the doctrines, practices and assessments of the other side. Naturally, this will not be immediately possible but a start has to be made somewhere. On the border itself, there is a need for new confidencebuilding measures, which will aim at defusing the increasing close proximity situations that have been witnessed in the recent past. Additional Standard Operating Procedures (SOPs) may also have to be put into place. Third, to address the increasingly adverse balance of trade India experiences with China, it is essential to work with the Chinese government to ensure greater market access in China for Indian pharmaceutical products, particularly our cheap formulations. Also, we must look at the “invisible” part of our payment balance with China and make a focused effort at attracting more Chinese tourists. Marketing Incredible India in China will be a first step, but we shall also have to work with Chinese travel agents, the various airlines which fly between our countries, the new online agencies as well as the social media methodology to popularise India as a tourism destination. Naturally, we will also have to ensure facilities in India for Chinese tourists who have very special needs. If such an effort is indeed made, our mountains

This article first appeared in The Indian Express on April 9, 2019 under the title ‘The Pune plan for China’. Gautam Bambawale, a former Indian Ambassador to Bhutan, Pakistan and China, is currently a distinguished professor at Symbiosis International (Deemed University), Pune

It is important to keep focus on and not lose track of how the country must shape its foreign policy over the coming five years. Suggestions, inputs, advice on these issues will be valuable to whichever government is formed March-April 2019 ▪

SINO-INDIAN RELATIONS PUNE ACTION PLAN

Some of the gentlemen involved with the shaping of the Pune Action Plan for China: (Left to right) Sanjay Kanvinde, IT professional; Gautam Bambawale, former Indian Ambassador to Bhutan, Pakistan and China; Lt Gen (retd) Shammi Mehta, former chief of Western Command, the Indian Army

and our beaches, our temples and our heritage sites, our Buddhist trail as well as our wildlife sanctuaries are likely to be hugely popular with the Chinese — one estimate states that we can expect 1.5 million tourists to visit India by 2020. Fourth, it is important to acknowledge that China has rediscovered Bollywood. The success of relatively recent offerings such as Dangal, Secret Superstar and Hindi Medium indicates that the Chinese audience will flock to movies which have a strong theme, an excellent script and good acting. While Bollywood will continue to tap the Chinese market on its own, since the government is important in China, India should offer whatever assistance may be required by our filmmakers in marketing their ware in China. Films are important since they are a vehicle for promoting mutual trust and understanding between societies and peoples, while at the same time helping earn our movie-makers important markets and foreign exchange. In addition to films, India’s other export which is reaching out to millions of ordinary Chinese folk is yoga. We must continue to promote yoga in China and, once again, this is best done through the private sector, but the government could consider effecting policies which promote this “soft power” export. It is

▪ March-April 2019

(Left to right) Dr Amitav Mallik, environmentalist; Commander Anand Khandekar, formerly with Indian Navy, Gautam Bambawale

significant that in order to celebrate International Yoga Day in China on June 21 each year, our official outposts in that country are able to bring in as many as 8,000 to 10,000 people at each of the many events in China. Sixth, it will be essential to engage China in the field of sports, where they are extremely strong. While Vivo and Oppo will continue to sponsor the Indian Premier League in cricket, we can encourage Chinese coaches in table tennis, gymnastics, track and field, as well as shooting, archery and swimming to come to India and train our youngsters. We shall benefit from such assistance. On global issues, India has established the International Solar Alliance (ISA) in partnership with France with its headquarters in India. China, which is an important manufacturer of solar panels and other related equipment, must join the ISA at an early date. This would be a win-win proposition for both countries and will provide an excellent example of how the two can work together in international organisations. Now that Japan and Saudi Arabia have joined the ISA, it is time to step up our encouragement to China to participate in this important area of environmental policy where we have no fundamental differences. We shall have to continue working

with China to convince them that they must remove their hold at the UN Security Council on the listing of Masood Azhar under the 1267 sanctions. We are confident our diplomats must be on the job even as we speak. Eighth, the negotiations on the Regional Comprehensive Economic Partnership (RCEP) are now mainly between India and China. We must ensure that RCEP has a strong commitment with respect to services and the movement of natural persons which is important for India. Perhaps, side letters between India and China on bringing the lower tariffs into effect at later dates may be the way to resolve the current impasse. Ninth, it is important to understand that better relations with China do not mean we have to go slow in our relations with other countries — whether the ASEAN or Australia, Japan or the US. Putting our links with China on a firmer footing can be done simultaneously with stronger ties with other players in the region. Indian diplomacy is nimble enough to face this challenge. Looked at holistically, the Pune Action Plan provides a comprehensive methodology for the soon to be newly-elected Government of India to proceed fast forward in its relationship with China in the second half of 2019. 

DATANG ENVIRONMENTAL INDUSTRY GROUP “Time for India to move towards “zero-defect and zero-effect” “Zero defect in production with Zero effect on the environment” “We serve in protecting the environment for future generation Join hands with us for better living world”

Only by observing the laws of nature can mankind avoid costly blunders in its exploitation. Any harm we inflict on nature will eventually return to haunt us. This is a reality we have to face.

“We, the present generation, have the responsibilities to act as a trustee of the rich natural wealth for the future generations. The issue is not merely about climate change it is about climate justice.”

President of China Mr. Xi Jinping

Prime Minister of India Sh. Narandra Modi

China Datang Corporation (CDT) is an extra-large scaled power generation enterprise group and is a solely state-owned corporation directly managed by the CPC Central Committee with the registered capital of USD 2.9 billion. By the end of 2014, CDT’s assets both in operation and construction are distributed in 31 provinces, municipalities and autonomous regions national wide with the total installed capacity of 140 GW, surpassing the threshold of 100,000MW to become an extra-large scaled power generation enterprise in the world. In 2015, CDT is listed as No.392 in Fortune Top 500 companies. Datang Environmental Industry Group (DTEG) is specialized in FGD for DeSOx, SCR/SNCR & DeNOx technology and are in this business for last more than 10 years. DTEG entered in Indian market with its subsidiary company Datang Technology & Engineering India Ltd, registered in December 2013.

Businesses:

 DTEG – Specilized in Environmental Protection Services.  CDTE – CDT’s Overseas/Domestic project entity to provide comprehensive One-stop BOT/EPC (+F) services.  DTEI – CDTE’s Indian subsidiary to provide Environmental solution services in the areas of FGD, DeNOx & dust removal.

Datang Environmental Industry Group’s Major Achievements

• Completed installation of FGD for 183 units of Power plants of total 140 GW. • Completed installation of Denox for 153 units of Power plants of total 56900 MW. • DTEG has commissioned 1st FGD system in India of 600 MW unit of ILFS Power project of 2X600 MW at Cuddalore Tamilnadu. • DTEG also has vast experience of operation and Maintenance of FGD system for many power plants in China.

“Committed to efficient generation of Power with sustainable form on Pollution Control” Datang Environmental Industry Group, China

Datang Technologies & Engineering India Pvt Ltd, India

No. 120 Zizhuyuan Road, Haidian District, Beijing 10097, P.R. (+86)10-58389999 (+86)10-58389810 www.cdte.com.cn

Room No. 2, 2nd Floor, Shreeram Bhuvan 772, Mumbai – 400014, Mb. +91 9910072333 March-April 2019 ▪

DIGITAL ECONOMY CHECKS AND BALANCES

A tech upgrade for India-China relations Chinese technology companies that are steadily establishing themselves in India have the potential to transform the scenario for entrepreneurs, consumers and governments even in the face of geopolitical tensions. The Indian government should view this development as an opportunity and an asset

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 Dev Lewis

hinese technology companies are now world leaders in areas such as artificial intelligence, e-commerce and fintech. After investing heavily in South East Asia, they are rapidly establishing themselves in India, with venture capital firms following suit. This can have a transformative effect on the Indian technology scenario over time and catalyze an Operating System (OS) upgrade for the India-China relationship. The Indian government should encourage these developments, but also must move swiftly to enforce regulation that improves user data privacy and demand data localization with guidelines on cross-border data transfer. This is critical if India is to realise the benefits of growth and innovation while also guarding against security risks. Prime Minister Modi made his first visit to China in 2015 just as the Alibaba Group had made its maiden investment in Paytm and the potential for cross-border investments in this area was becoming apparent. The accompanying tables show that Alibaba has a consolidated lead. But it is now accompanied by the who’s who of China’s internet industry in fintech, e-commerce, ridesharing, content, and messaging, either through a stake in a local Indian company or directly through their own products. The cumulative Chinese investment in Indian startups is estimated to be between $4-5 billion, thus making it the largest source of Chinese investment in India in just two year. Their presence in the market can be divided into two categories: equity investments in Indian startups, or a more direct relationship, often through Indian subsidiaries. Table 1 & 2 captures investments in Indian startups with a company-by-company and deal breakdown.

Giants and unicorns The Alibaba Group (with affiliate Ant Financial), followed by Tencent, are the biggest, with investments in India’s most

prominent unicorns, Flipkart, Hike, and Ola, bringing their rivalry to the Indian subcontinent. Alibaba’s investments dovetail neatly with its strategy to control what Jack Ma considers the ‘iron triangle of success’ – e-commerce, payments, and logistics – while Tencent’s investments in Hike, for instance, align with its superapp, WeChat. Likewise, three of China’s largest unicorns, Didi, Bytedance, and Meituan-Dianping, have each invested in their Indian counterparts. On the VC front, upstart India-focussed funds, such as Cybercarrier, paved the way with a flurry of small investments, attempting to bring to Indian startups their capital and experience with scaling comparable business models in China. Now, more are following in their footsteps. Yet others have taken a more direct route to Indian consumers, with Android apps, all popular in India, such as UC Browser (Alibaba-owned), Cheetah Mobile, and Cleanmaster, and content aggregators, such as Newsdog, among many others. The latest big ticket entrants are Ofo and Mobike. The big two dockless bike micro-rental companies in China are attempting to bring the bike-sharing phenomenon to Indian cities. Chinese Smartphone manufacturers Xiaomi, Oppo, and Vivo have been dominating the India market since 2016.

What does this investment mean for India? The infusion of Chinese capital is an important new source of funding. It is also often accompanied by an access to technology and best practices in China that enables Indian entrepreneurs to compete with capital-rich Silicon Valley players. If implemented well, this can have positive effects all round. First, Indian consumers benefit through products designed exclusively for their needs as opposed to U.S. imports. Second, India’s tech landscape can thrive, with local startups generating data that can help develop AI-based systems – from autonomous driving to AI assistants. This can solve problems in the Indian context and shore up value for the

Dev Lewis is Marketing and Research Manager at Infosys China and a Digital Asia Hub Research affiliate. The article was first published on Gateway House: Indian Council on Global Relations. It can be accessed on https://www.gatewayhouse. in/india-china-tech-upgrade/

The Indian government should move swiftly to enforce regulation that improves user data privacy and demand data localization with guidelines on crossborder data transfer. This is critical if India is to realize the benefits of growth and innovation while also guarding against security risks March-April 2019 ▪

DIGITAL ECONOMY CHECKS AND BALANCES economy. New Delhi, for its part, finds oversight easier for companies based within the reach of Indian law than those in the distant Bay area. Chinese capital and technology are thus an opportunity for India to develop its own innovative tech giants – just as foreign investors did with China’s big three, Baidu, Alibaba, and Tencent. The Indian government can leverage the strengths of Alibaba and Tencent to help its own entrepreneurs realize goals around digitisation, Smart Cities, and building AI infrastructure, just as it is doing with Google and Microsoft. Finally, professionals on both sides of the border can hereby collaborate, exchange ideas, and avail of a larger talent pool that is equipped with more knowledge and less prejudice. This kind of exchange was a key factor in the growth of China’s relations with Japan and the U.S. over the past few decades despite the existing geopolitical strain. The involvement of foreign technology companies poses questions around data protection and management because access to data is central to the development of most AI-based technologies. Given the geopolitical tension between the two countries it is natural to expect an added layer of suspicion over access to Indian user data or the influence of the Chinese

It is naive to expect Chinese Internet companies to enter India and adhere to standards that don’t legally exist. There must be strict but clear safeguards that may borrow from these laws and regulations, designed keeping the Indian system in mind 46

▪ March-April 2019

government. Reports of some Chinese apps leaking data to servers based in China is a concern, as is the record of lax security standards in apps, such as UC Browser, exposed by Citizen Lab researchers.

User data is the new oil User data is the fuel that powers companies, driven by advertisement revenue and machine learning algorithms. It incentivizes them to overlook security

issues in the eagerness to acquire user data. The recent Cambridge AnalyticaFacebook episode is a prime example. It is therefore critical for the Indian government to devise a coherent set of regulations around data protection, data localisation, and cross-border data transfer. Data generated in India, especially by Indian citizens, must be held in servers based in India, with strict stipulations on what can be allowed to be transferred out. China’s own Cybersecurity Law, armed

Nearly all new members of the Chinese People’s Political Consultative Conference are from the technology industry. In the long run, having these influential technology companies invested in a healthy relationship with India potentially offers a counter-balance

with a growing regime of standards and specifications, as well as the European Union’s, through its General Data Protection Regulation (GDPR) are moves in this direction. In fact, due to the Cybersecurity Law, there are almost no restrictions keeping the government from accessing private data. It is naive to expect Chinese Internet companies to enter India and adhere to standards that don’t legally exist. There must be strict but clear safeguards that may borrow

from these laws and regulations, designed keeping the Indian system in mind.

New engagement India should view Chinese investment as a political opportunity and an asset. It offers scope for dialogue outside the rigidity of government channels. This calls to mind Jack Ma’s meeting with U.S. President Donald Trump just days after the election results, with Ma acting as both Chairman of the Alibaba Group and

acolyte for President Xi Jinping. China is far from a monolithic entity and Xi is beholden to a number of interest groups. The People’s Liberation Army is known to play a highly influential role in dealings and policy formulations pertaining to India. In the long run, having these influential technology companies invested in a healthy relationship with India potentially offers a counter-balance. It must be noted that nearly all new members of the Chinese People’s Political Consultative Conference are from the technology industry. In the past few years there has been a sharp push by the Party towards greater fusion with the private sector, with companies setting up Party cells amidst suggestions for State investment as a form of mixed ownership. It is in the Indian government’s interest to actively leverage these developments. The China-India bilateral relationship has grown tremendously over the past 15 years, but has hit turbulence over the last couple of years. The digital economy has positioned Chinese and Indian private companies to play a leading role in unlocking bilateral growth through a flow of people, capital and ideas. Delhi and Beijing should focus on creating a more facilitative environment to manage growth sustainably and tip the scales in favour of cooperation. 

March-April 2019 ▪

EMERGING TECHNOLOGIES INDIA AND CHINA

BLOCKCHAIN BENEFITS ď Ž Dr Binod Singh Ajatshatru

ndia and China are increasingly realizing the immense economic and administrative benefits of blockchain technology. Both countries are emerging as two major beneficiaries of blockchain technology in providing public goods and maintaining social harmony. But even in two of the largest economies of the world, due to the lack of coordination and trust between the private players and public institutions, the technology is yet to be popularized. It is encouraging that at the government level now, some changes are being seen in the adoption of blockchain technology by India and China. They are taking significant steps for the assimilation and integration of this technology within their economic and administrative structures. One can expect to see further investment in the

â&#x2013;Ş March-April 2019

blockchain space as China and India aim to become global leaders in the blockchain development sector. On March 12, about 50 tech enthusiasts of the blockchain industry met in New Delhi for a one-day informal discussion on the future of promoting blockchain technology in BRICS countries. The conference was hosted by the New Delhibased think-tank, the BRICS Institute and Indo-American Business Chamber of SME, in collaboration with MIO Foundation, Singapore. Many leading Indian IT and blockchain companies from Gurgaon, Hyderabad and Indore participated in the conference. Experts from Russia, China, India and South Africa presented their views, analyzed the current scenario of the market players and technology. The conference was intended to send the message to a message to the BRICS nations to further promote blockchain technology in governance and finance.

The delegation visited IIT and JNU computer departments, and interacted with their faculty and students for setting up join incubation centers. At the end of the conference, the delegation visited Taj Mahal and were mesmerized by its beauty. BRICS countries, especially India and China, are destined to play a key role in the next phase of digital globalization, and popularize the use of blockchain technology in providing financial and other services. The delegates proposed some innovative ideas to make this technology available to growing number of users across the world. BRICS countries are one of the fastest growing hubs for this technology, therefore a close cooperation and coordination between them is desirable. China, Russia and India are investing in blockchain technologies and pushing towards a cashless society. China is currently the leading player and also an investor in the Indian fintech industry.

It is believed that blockchains will revolutionize the Internet and change the face of it. Economies like India and China can immensely benefit from its use. The delegates at the conference discussed that the potential benefits of the blockchain go beyond just economicâ&#x20AC;&#x201D;they extend into political, humanitarian, social, and scientific domains. The technological capacity of the blockchain is already being harnessed by specific groups to address real-world problems. Delegates also expressed concern that since the blockchain industry is still in the early stages of development, there are many different kinds of potential limitations. The classes of limitations are both internal and external, and include those related to technical issues with the underlying technology, ongoing industry thefts and scandals, public perception, government regulation, and the mainstream adoption of the technology. ď ą

March-April 2019 â&#x2013;Ş

GLOBAL ECONOMIC GROWTH IMPORTANT ENGINES

The China-India

Advantage Both countries are backbone forces for promoting multi-polarization and economic globalization

 Li Jian

y the end of April and early June 2018, President Xi Jinping and Prime Minister Narendra Modi held consecutive meetings in Wuhan and Qingdao, China in less than a month and a half. Not just in the

▪ March-April 2019

bilateral diplomatic history of China and India, even if we look at the bilateral relations of other countries across the world, such high-frequency interaction of top leaders is rare. It is a strong indicator that, under the present scenario of world cooperation, the political and economic engagement between China and India will enter a new phase. The Chinese economy has fully begun

the shift from “high-speed growth” to “high-quality development”. With this, a growing number of Chinese companies and investments will flow to India, a country with a population of more than one billion. The Chinese companies and their investments will bring Chinese production capacity and experience to India. In recent years, India has initiated

a series of reforms for acceleration in infrastructure construction, uniting taxation, drawing foreign capital and business and other vital areas. These reforms are aimed at improving administrative efficiency, and also removing the stumbling blocks that hinder economic “high-speed growth”. The Indian corporate sector is keen to embrace Chinese technology and Chinese historical development experience based on various national conditions which are closer to China than to the United States, Europe, Japan and South Korea.

The China Advantage In fact, China’s technology and experience have already played a significant role in the development of various industries in India. Huawei, ZTE and other telecom companies have made Indian telecom rates more affordable. SEPCO, Shanghai Electric and other power companies have aided in lowering Indian power bills. In the recent years, the upstream supply chain established by the local manufacturing of Chinese smartphone brands such as Vivo, Oppo and Xiaomi has had a notable impact on the Indian digital manufacturing industry. This is another major contribution to India’s manufacturing sector, which has been made possible through Chinese capability and experience. Overall, Chinese companies have contributed in bridging the digital gap in India by providing more affordable telecom network and affordably-priced smartphones to the Indian market. Apart from industrial cooperation, collaborations between China and India in the field of internet technology have been innumerable. Chinese tech giants such as Alibaba, Tencent and Xiaomi, in addition to their main businesses in India, have also helped a large number of Indian tech companies to grow through strategic investments, and through the sharing of valuable product experience. Even non-Chinese investors such as Softbank,

Naspers and other dollar funds have also invested in India, after analyzing the success of some Chinese majors here.

Unwise to replicate Chinese business models in India Nevertheless, it is unwise to simply aim to replicate Chinese business models in India. During 2015, India’s leading internet-based companies attracted huge investments on account of promising market sentiments. Subsequently, these companies were plagued with slow growth and hopelessly tried to turn profitable. The biggest challenge for the internetbased industry in India is to determine the optimum time for various internet business models, based on the country’s overall economic development stage. The question for them is whether India’s current infrastructure and consumer behavior can support the current mode of business development and achieve market adoption. Even in China, the rise of the corporate and manufacturing sector has been due to the gradual improvement of relevant infrastructure and dividends of consumption upgrades. Neglecting the laws of economic development and blindly following a business model irrespective of external circumstances can be catastrophic for any business. The historical, organic development of China is the thus best mirror to reflect and act upon. The judgment about the optimum timing of investment needs to go handin-hand with India’s current corporate and government scenario, and China’s past. Draphant, a Chinese company, has been operating in India for over five years. Based on the historical trend of several Chinese industries venturing into India and our own experience of investing in India, we are hoping to make a contribution to the China-India internet technology ecosphere. A report was recently prepared by a number of Chinese and Indian research

Li Jian is Founder & Chief Executive Officer, Draphant

India has initiated a series of reforms for acceleration in infrastructure construction, uniting taxation, drawing foreign capital and business and other vital areas. These reforms are aimed at improving administrative efficiency, and also removing the stumbling blocks that hinder economic “high-speed growth” March-April 2019 ▪

GLOBAL ECONOMIC GROWTH IMPORTANT ENGINES

In the recent years, the upstream supply chain established by the local manufacturing of Chinese smartphone brands such as Vivo, Oppo and Xiaomi has had a notable impact on the Indian digital manufacturing industry. This is another major contribution to India’s manufacturing sector, which has been made possible through Chinese capability and experience fellows from Draphant Institute. The report was prepared in eight months. It was based on large first-hand structured data, in accordance with the standard framework. The report aimed to present a more realistic and clear scenario of the Indian internet industry, as seen from the Chinese perspective. We at

▪ March-April 2019

Draphant hoped that our report would enable Indian start-up entrepreneurs, Chinese professionals working in Indian internet industries and global investors to understand India more comprehensively, and enable more practical internet business models to succeed in India.

To echo President Xi’s remarks: “Both China and India are important engines of global economic growth and backbone forces for promoting multi-polarization and economic globalization.” We believe that the ‘union’ of the 2.7 billion people of China and India will surely create a better future. 

March-April 2019 â&#x2013;ª

ART PURSUIT OF PASSION

I 54

Different Strokes n China, it is normal for children aged five or even less to start learning painting. Only a few are able to stay committed to painting through senior grades of primary school because of the heavy study schedule. Hannah, a nine-year-old living in Beijing, has an endearing reason for her continued engagement with painting and pencil sketches. She finds it a great escape from hard school work. Hannah extensively engages in different sports: figure skating, gymnastics, swimming and ballet dancing, and has deep interest in the Mathematical Olympiad. Her mother Meng Xiaojia says Hannah is “an ordinary kid who doesn't like school homework, and thus put a lot of energy on other activities”. What marks Hannah out is her persistence and real passion for diverse pursuits.

▪ March-April 2019

Hannah

March-April 2019 â&#x2013;Ş

FILM IBIS TRILOGY

OPIUM TALES Indian filmmaker Shekhar Kapur to direct series based on opium wars between Britain, India and China

ilmmaker Shekhar Kapur is set to direct a series based on author Amitav Ghosh’s ‘Ibis Trilogy’, set in 19th century Asia against the backdrop of the opium wars between Britain, India and China. Justin Pollard, whose credits include the blockbuster Pirates of the Caribbean franchise as well as hit TV series, is on board as historical consultant and story editor. The Ibis Trilogy, which comprises Sea of Poppies (2008), River of Smoke (2011) and Flood of Fire (2015), is centered on the British East India Company’s conflicts with China over the sale of opium in the Asian country in the 19th century, which culminated in two Opium Wars. The series will “interweave the lives of vividly drawn characters against the backdrop of the opium wars between Britain, India and China”, said Kapur in a report in The Indian Express. The series will be produced by Artists Studio, part of Endemol Shine Group,

▪ March-April 2019

in partnership with Endemol Shine India and newly launched TV packaging company DoveTale Media, who initially acquired the rights to the books. The company said its ambition is to create a major high-end franchise for the international market, matching the scale and epic sweep of the Ibis novels, and bring it to a global audience. The project was unveiled at Series Mania in Lille without giving further details such as a launch date, budget and which network or platform the The Ibis Trilogy will debut on. Kapur is a popular Bollywood director with mega-hits to his credit. In 1994, he directed the breakthrough India-UK production Bandit Queen. He crossed over to Hollywood with his awardwinning 1998 epic Elizabeth, starring Cate Blanchett, and its 2007 sequel Elizabeth: The Golden Age. His recent credits include the TNT series Will, which was a fictional take on the early life of William Shakespeare. Kapur was signed by Fox’s Indian digital platform Hotstar for a series which hasn’t been named yet. Kapur said he had always been fascinated that the drug trade, which was the engine for the Industrial Revolution. Amitav Ghosh’s books, he said, brilliantly brought out the vast epic and the emotional tale of opium, from its beginnings in India where it was grown and onto China where it was pushed by drug lords. Kapur said the story followed the journeys of indentured labour from India to colonies around the world. It told intriguing tales of people from India, America and China at a time when modern history was being formed. The series on the Ibis trilogy, he said, could run into many seasons. 

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GUPSHUP

Image courtesy: Southasia.com.au

Dance Diplomacy Chinese Ambassador to Nepal Hou Yanqi stunned the host country when she gracefully danced to a Nepalese folk song at the International Women’s Day celebrations at Kathmandu on March 8. The function was organized by the Embassy of the People’s Republic of China. Dressed in traditional finery, the Ambassador danced beautifully and became a celebrity in Nepal for her appreciation of the local culture. Southasia.com.au said Hou Yanqi, a seasoned diplomat, had also been in news for slamming US Deputy Assistant Secretary of Defense for South and Southeast Asia Joe Felter for his criticism of the Belt and Road Initiative in Nepal.

▪ March-April 2019

GUPSHUP

AndhaDhun wows Chinese audiences AndhaDhun has become the third highest-grossing Indian film in China, after Dangal and Secret Superstar. Itâ&#x20AC;&#x2122;s total box office collections stand at $45.59 Million or 319.87 crore, beating Bajrangi Bhaijaan and Hindi Medium. Bajrangi Bhaijaan had earned $45.53 million in China. Timesnownews.com said that in comparison to about 8,000 screens in India, China has a staggering 45,000 screens, which ensures wider release for Indian films, thus giving them ample scope to make big bucks on foreign land.

Image courtesy: NDTV.com

March-April 2019 â&#x2013;Ş

The kind-hearted thief A knife-wielding thief had a change of heart mid-way through a robbery and decided to return the money he took from the victim, reported Scroll. In an incident that took place at an ATM in southern China’s Guangdong province, the woman had withdrawn 2,500 yuan (around Rs 26,000) when the robber approached her and demanded she give him the money. According to the South China Morning Post, he then asked to see her bank balance – perhaps to check if her could get her to withdraw some more money and hand it over to him – only to discover that she was left with no money in her account. CCTV footage then showed him returning the money sheepishly, apparently feeling bad for her. That did not protect him from the law. The police identified the man and detained him.

▪ March-April 2019

RECENT ICEC EVENTS

Delegates from Yantai City visit ICEC

n February 27, ICEC hosted an official delegation from Yantai, Shandong province. It was led by Mr. Zhao Xinzhi, Yantai Municipal Bureau of Commerce (Foreign Trade incharge) and Mr. Liu Mingjie, Chief, Yantai Municipal Bureau of Commerce along with senior business professionals from some of the top local companies namely; Haiyang Youshang Information Network Technology Co., Ltd.; Yantai Dongfang Electronics Group; Yantai Jinzheng Environmental Protection Co., Ltd. and Shandong Hwapeng Precision Machinery Co., Ltd. They visited India in order to create awareness about the development of Yantai City and share the opportunities for Indians, as well as prospects for Chinese companies to enter India. Yantai is a prefecture-level city on the Bohai Strait in north-eastern Shandong Province, China. It is the largest fishing seaport in Shandong. Being one of the fastest growing cities with a GDP of 435.8 billion RMB (2010), it is currently the second largest industrial city in Shandong, next to Qingdao. The region's

largest industry is agriculture. Other key sectors include automobiles, auto parts, electronics and marine machinery. It is famous throughout China for a particular variety of apple and Laiyang pear, cellophane noodles and is home to the countryâ&#x20AC;&#x2122;s largest and oldest grape winery, Changyu. The city has an ongoing bilateral trade of 200 billion RMB with India. The meeting began with Mr. Zhao

giving a brief introduction of the economy and engagement with India. Mr Zhao spoke about how they were keen to promote their industries further through increased participation in trade fairs and exhibitions in both countries. ICEC advised the delegates on how to strategically enter India. The need for a long-term approach of Chinese companies and local partnership was emphasized.

March-April 2019 â&#x2013;Ş

Henan delegation visits India to understand social development

enan has seen rapid development in its economy over the past two decades. It has expanded at an even faster rate than the national average of 10%. This rapid growth has transformed Henan from one of the poorest provinces to one that matches other central provinces, though still relatively impoverished on a national scale. Last year, Henan’s nominal GDP was 4.5 trillion RMB (US$670 billion), making it the fifth largest

▪ March-April 2019

economy in China, although it ranks nineteenth in terms of GDP per capita. Its major industries are in chemicals, metallurgy, machinery, and recently electronics. An official delegation from Department of Human Resources and Social Security of Henan Province visited India and ICEC on March 8. The delegation’s focus was understanding India’s development in the domain of social security. The group was

led by Mr. Zheng Zijian, Secretary of the Party committee of Social Security Bureau of Henan Province. He was accompanied by the Directors of Social Security Bureau from the municipalities of Pingdingshan – Mr. Dong Hansheng, Nanyang – Mr. Wang Jibo and Zhoukou – Mr. Tu Caimin. ICEC shared about India’s social security system and explained various schemes and programs spread throughout a variety of laws and regulations. It compared the social security system in India, which includes not just an insurance payment of premiums into government funds, but also lump sum employer obligations with that of China for a better understanding. The types of social insurances, such as pension, health insurance and medical benefit, etc. were discussed, and how they differed in both the countries. Towards the end of the meeting, Mr. Zheng appreciated the efforts by ICEC. The entire delegation looked forward to sharing of good practices in the social security and human resource management sector, as India and China share similar population size and demography.

Chinese Artists visit India to showcase Buddhist paintings

n April 14 and 15, ICEC hosted the “Indo-Sino Buddhist Theme Art Exhibition” at the Artizen Art Gallery at Perylal Bhawan in New Delhi. Fifteen artists from Zhejiang province arrived in India to showcase their paintings and calligraphy art on Buddhism and culture. The exhibition was inaugurated by H.E. Zhang Jianxin, Cultural Counsellor, Chinese Embassy in India. He welcomed the delegates and encouraged them to continue such artwork and exchange between India

and China as both nations were linked through Buddhism. Dr. Arvind Alok, Chairman, Buddhist Monuments Developments Council was the Guest of Honour at the event. He shared his extreme happiness and appreciation towards the Chinese artist delegation for visiting India and showcasing their exceptional work. He shared the historic relevance of Buddhism and how it linked the two civilizations of China and India. On that note, he wished for their welfare, wellness and success

through a Buddhist prayer. He welcomed more such delegations to India that promoted cultural exchange between both the countries. ICEC recognized the exhibitors by extending appreciation certificates for all the artists that came down to India and supported them to bring more artists from their academy in the near future. The event was open to public and received visitors from the Chinese Embassy, Chinese companies, art professors and other art enthusiasts from China and India.

March-April 2019 ▪

Delegates from Dongguan visit Delhi

n April 29, a high-level delegation from the People’s Government of Dongguan City was hosted by ICEC. The group was led by Mr. Guanzi Zhang, Deputy Mayor of Dongguan city. Mr Zhang visited with his colleagues Mr. Baohua Ye, Deputy Secretary, Administration Committee of Riverside Towns Developing Economic Zone; Mr. Shaoguang Liang, Investigator of People’s Government of Dongguan City; Ms. Liqun Yuan, Town Communist Secretary, Qishi Town People’s Government; Ms. Xueqin Li, Deputy Secretary of Town Committee and Mayor of Tangxia Town and Mr. Wenzhi Zheng,

▪ March-April 2019

Deputy Director, Ministry of Industry and Information Technology of Dongguan City. The purpose of the meeting with ICEC was to discuss how to develop investment and trade between Dongguan city and India by scientific research and policy guidance, thereby setting up a business mechanism. The purpose of the meeting was also to create opportunities and build a platform for potential enterprises of the Chinese city to enter the Indian market. The delegates from China spoke about the potential of Dongguan and India as partners in advanced technology. Dongguan is a major manufacturing

hub. Its largest industrial sector is manufacturing of electronics and communications equipment. International companies with facilities in Dongguan include DuPont, Samsung Electronics and Maersk. The city is the fourth largest export region in China, behind Shanghai, Shenzhen, and Suzhou. The city has focused on infrastructure investment more than the direct targeting of major corporations with financial incentives for economic development. It is now looking to attract greater engagement with other countries like India.

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INSPIRING VALUES Inauguration Beijing – Mumbai Flight

Appreciating Trade Partners: Sometimes saying thank you is just not enough, appreciating the support is a powerful way of displaying our gratitude to our trade partners. Air China appreciates Travel Agents & Trade Partners by awarding them “Recognition Award” for their support. Product Education to Trade Partners: Introducing products and services, increasing company’s brand awareness and driving sales. Marketing can’t accomplish any of its purposes without effective Product Knowledge. Air China India in our continued effort always maintains close contact with our trade partner and educate them with our product on regular basis. Our partner interacts directly with our guest and it is necessary they have complete knowledge of our product and offer it with confidence. Air China conduct Product Work Shop in major metros & feeder market cities in India.

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