India, China and the Shades of Grey

We are at an inflection point in this century. Many of our traditional arrangements are failing. To achieve stability in this century we need to discover new solutions. We have to work together to ensure China’s rise is peaceful. We need a strong regional group that can ensure that Chinese expansionist desires are tamed. The Chinese need to understand they should work with all stakeholders and entities in the region for building and sustaining a plural Indo-Pacific order. The EU, US, and India need to hold the line when it comes to the principles of market economics, pluralism and a democratic international order. But it is also true that India and China need to work together as well, if we want a secure Asia. Both strategies – talking and taming – are not in contradiction, they are complimentary” – says Samir Saran, vice-president of the Observer Research Foundation in this interview with Krzysztof M. Zalewski.

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In your recent piece published after “the Raisina Dialogue” on disruptions in the global order you pointed to the rise of China; the current challenges to  the United States’s global position and its  Asia strategy; “non-market” economics; and terrorism. Let us focus on China. Last year you were quite optimistic about the Indian-Chinese cooperation, e.g.  within the BRICS. What is your take this year?

Multilateral fora like BRICS, the G20 and even the Shanghai Cooperation Organization allow India and China to engage constructively, amplifying their voice and agency in matters relating to global governance.  On issues ranging from democratizing of international financial institutions to climate change, both countries often share similar interests. Inadvertently, there will also be a degree of contest between the two, arising from a few core differences in their world-view and specific contexts.

First, it is now more than evident that Beijing seeks to create a Sino-centric Asian order as a launchpad for its global ambitions. Within this region, China will seek to alter the rules-based architecture that has gradually taken root since the end of the Second World War. Other countries will either have to fall in line with China’s propositions, or resist and face their fury.

Larger countries like India, which prize their own agency, interests and ambitions, are unlikely to acquiesce to such hegemony. India is just as determined and capable of having a say in shaping of the emerging regional order and will challenge Beijing’s objectives that are detrimental to their interests, both regionally and globally. This fundamental difference in the organization of the world order—between unipolarity and multipolarity, both global and regional—is going to create some confrontation and contest.

The second factor is of course the boundary issue: a long-standing dispute over the international border, or rather lack of it. In fact, we can’t even agree on how long the border is: China believes it is close to two thousand kilometers, while India claims it is closer to four thousand. The discrepancy is huge, as you can see.

While China has a relatively successful record of resolving boundary disputes with other countries, it sees strategic value in allowing the border with India to remain restive. During the Doklam stand-off, for example, China likely sought to portray India as an unreliable ally for Bhutan, and by extension, its regional partners in general. The border issue in fact is likely to be exploited by China to make India acquiesce to Beijing’s regional and global blueprint.

I, therefore, see the possibility of continuing brawls and skirmishes between the two countries in the near future as China relentlessly pursues the universalization of the Beijing Consensus.

The third area of conflict is the economy. China employs its state-owned enterprises in a strategic manner; by supplying cheap credit and enforcing lax regulations while simultaneously using legal tools to prevent foreign competition.  India now runs a massive trade deficit with China, and tensions are likely to continue over how China promotes its technology companies, digital companies and state-owned enterprises often at the cost of India’s economic growth. India’s inevitable response will complicate the political dynamics as well.

As you mentioned, the Chinese-Indian relationship has a geostrategic dimension as well. Is The Quadrilateral Dialogue (Quad) an answer to these contests? The interpretations behind the increased cooperation between India, Japan, Australia and the US are very diverse, starting from ad hoc collaboration in maritime policing and other comparatively minor issues to the beginnings of the new NATO. What is the nature of this cooperation in your view?

The Quadrilateral Dialogue is not an alliance or a formal security organization. It is a coming together of like-minded countries to manage the maritime commons by improving connectivity, providing maritime security as a public good, and creating a rules-based regional order. It is, at best, what the French would call an entente, in the original meaning of the term.

In one format or another, each of these countries have improved their relationship with each other, and have enhanced their ability to work together in managing regional crises. While China undoubtedly figures heavily in this configuration, the Quad is not fundamentally an instrument of containment, as NATO was. Instead, it is an alternative vision for regional co-operation that takes as a premise the need for a rules-based security and economic architecture. It is meant to be inclusive and may evolve over time.

Can you imagine e.g. Indonesia joining this kind of association?

As I have already mentioned, the Quad is not a formal club. By definition, all countries who subscribe to the idea of a ‘free and open’ Indo-Pacific already converge with the Quad to a certain extent.

States like Indonesia and Singapore enjoy close maritime cooperation with members of the Quad in various bilateral and trilateral formats. Rather than ‘joining’ the Quad in any institutional manner, it is likely that such states will find value in subscribing to and enforcing the norms, rules, and policies that the Quad seeks to uphold and promote.

The phrase ‘Indo-Pacific’ is more widely used than it was even a few years ago. More and more countries in the region are accepting the strategic conceptualization of this space.

Therefore, you will see more plurilateral formations emerging in the Indo-Pacific. Eventually, the balance of power in the ‘Indo-Pacific’ will be maintained using a variety of vehicles, with the Quad being just one of the many political-military instruments.

India cooperates within the “Quad”, but on the other hand it joins– together with Pakistan – the Shanghai Cooperation Organization.  Some would think it is contradictory.   

I think those who believe India is taking contradictory positions in the organizations across the region do not understand the Eastern ethics of engagement. In Europe, you think in binary categories, like liberal versus illiberal, and so on. I think the Asian understanding is less absolutist; everything is in shades of grey.

With respect to China, the simple fact is that we must learn how to manage conflict while simultaneously improving cooperation when the interests of the two countries do converge. The SCO is one such institution where this is possible. At the same time, it is important for China to understand that a regional architecture cannot be dictated top down from Beijing; this is where the Quad has an important part to play, as a push-back to China’s illiberal impulses.

Both strategies – talking and taming– are not in contradiction; they are complimentary. In one instance, we are trying to work with the Chinese to create a stable and fair Asian order; and in the other, we are working with others to ensure that the Chinese understand the utility of such an architecture for the Asian century.

Thank you very much for bringing up the issue of stability and multilateral formats. Can you imagine a format including India, China and the US speaking to each other in order to ensure stability in Asia?

I think it is implicit that there can be no peaceful Indo-Pacific unless China, India and the US discover the golden median. In fact, it is necessary for a conversation to exist between all major Asian powers, including India, China, Japan, US and Russia in different formats.

I think that Indian-US-Russian conversation would be really important.  We must not let Russia become an outcast that needs to assert itself destructively to be heard. It is important that Russia is mainstreamed into the global system and that it becomes a responsible stakeholder in the emerging order. We don’t want it to become a disruptive country known only for the harm it can bring upon the international order.

I see the merit and the importance of many flexible and informal combinations and groupings, for example: India-Russia-EU, India-China-US or India-China-EU. These tri-laterals have the potential to ensure stability. We are at an inflection point in this century. Many of our traditional arrangements are failing to sustain the postwar international order. To achieve stability in this century in face of illiberal impulses and disruptions, we need to discover new solutions and new institutions.

This kind of new stability in an economic sense needs to be achieved between non-market economies and market economies as well. How do you think we can bring to the table e.g. our Chinese friends to discuss all sorts of issues they may not want to debate with us?

I get your point. But, in order to bring China or any other partner into an open, free and fair-trading system, it is imperative to hold the line in terms of sending an unambiguous message about what commercial practices are acceptable and what are not. It will require consistency in economic policy and its articulation by actors who seek to preserve transparent free markets.

Already the adverse effects of China’s non-market economics are visible: the EU has been unable to speak in one voice when it comes to Beijing on human rights or violations of international law because of how dependent some of its members states are on Chinese investment. This bodes ill for both the future of the Union as well as for the ethos it embodies.

That the very countries that once championed a liberal trading regime are now afflicted by protectionist tendencies also gives cause to worry. If liberal democracies engage in protectionism and closed economic policies, it dilutes the attractiveness and effectiveness of free trading regimes.

It is important that we look at our own actions and strive to protect an open, free market-based economy that we have in many ways incubated over the last seven decades.

Would you say it is possible that India would be equally protectionist towards Chinese companies as China against foreign business? I am thinking e.g. about digital companies.

On the one hand, India is not designed to be as protectionist or as authoritarian as the Chinese are. China uses coercive regulations and lawfare to prevent foreign companies from entering its market, while it uses the power of the state to run roughshod over its citizens’ freedoms—including privacy and free speech. By design, India’s trading obligations and constitutional responsibilities prevent such an approach here.

On the other, India needs to be more mindful.  We need to find a way to ensure that our relationship is reciprocal. If we give the Chinese access to our market and our data, the Chinese must allow the Indian service sector and pharmaceutical companies to enter its market as well. We need to create a relationship of reciprocity, and we need to discover how to do that very soon.

Let us take a concrete example of the One Belt, One Road initiative. What would be your advice for the countries on the road?

I think each country will have to come to its own conclusion. I don’t believe we should be prescribing solutions for others.

However, states must take into account the implications of Beijing’s investments. It is important for countries to exercise caution by insisting that the projects they enter into are sustainable and do not create perverse financial implications and dependencies in a manner that takes away political choice and agency. Recipient countries must ensure that Chinese investments create opportunity for the local economy; safeguard the environment; respect human rights and do not ensnare them in debt.

If countries are able to enforce these guiding principles, whether it is for the BRI or any other connectivity and infrastructure scheme, they would benefit from it. But, if they choose to ignore these fundamentals, they will be in trouble.

Ultimately, the onus of evaluation falls on the recipient country: the Chinese have their own strategic objectives, and if investments under the BRI ultimately result in “white elephant” projects and unsustainable debt, host countries will have no one but themselves to blame.

The interview originally appeared on February 21, 2018 on polska-azja.pl

Krzysztof Zalewski Analyst on India and Energy. Currently a member of the Board of Directors of the Michal Boym Institute for Asian and Global Studies Foundation and is an editor of the “Tydzień w Azji” weekly (published in cooperation with wnp.pl). As a policy expert, he writes about foreign policy and digital transformations in India and Australia. He previously worked at the European Union Agency for Fundamental Rights in Vienna, at the Foreign Relations Office of the Chancellery of the President of Poland, at the Polish Parliament (Sejm) and at the Centre for Eastern Studies in Warsaw.