Adopting similar stances on free trade, counterterrorism and global issues such as climate change, recently Sino-Indian relations have become more multi-dimensional in nature. Working together on platforms such as BRICS and the Shanghai Cooperation Organization (SCO) has produced a new synergy between the two nations that could prove auspicious for South Asia.
On the world stage also, China and India account for more than a third of the global population and 20% of its gross domestic product. Not only that, they are the biggest, fastest-growing and most populous developing countries, so this is not a minor development.
India has been in the process of a rapprochement with China for the past few months. Bilateral ties have been on an upward trajectory since several high-level visits this year, the most significant of which was Indian Prime Minister Modi’s Wuhan summit with Chinese President Xi Jinping.
Having met as many as 15 times in the last four years, the two leaders have developed a good understanding, and attending the SCO Summit in Qingdao, Modi affirmed in his speech, “We have reached a stage where physical and digital connectivity is changing the definition of geography. Therefore, connectivity with our neighborhood and in the SCO region is our priority.”
Several factors may have contributed to the new synchronicity in Sino-Indian relations, such as the prevalent US tendency toward protectionism that has affected even its allies such as South Korea and India, forcing the latter to rebalance itself closer to home. Notwithstanding the fact that it is described as a “leading global power and major defense partner of the United States” in the 2017 US National Security Strategy, India is still being hit by trade tariffs, and it is being criticized by Washington for its trade policies.
Another factor is the upcoming election in India, ahead of which Modi has to present a better economic outlook for the next five years. Negotiating a new bilateral Sino-Indian economic agreement, India could also do with some help to boost Modi’s Make in India policy.
When he launched the policy in September 2014, the Indian PM pledged to create 100 million new jobs by 2022 and make manufacturing account for around 25% of GDP by 2025. However, according to the World Bank, only 650,000 new jobs had been provided while manufacturing accounted for just 16% of the economy by financial year 2017-18, and economic growth slowed from 7.1% to 5.7% in 2018. Demonetization, inadequate infrastructure and tough labor laws are said to be the reasons behind this failure of “Make in India.”
Thus an economically cooperative relationship with China has become a necessity for India. It requires Chinese infrastructure investment to bring back vibrant economic growth and fulfill its dream of becoming an economic and geopolitical powerhouse by 2025.
Having the resources and authority to help build India’s industrial foundation, China could enhance its prospects with the Belt and Road Initiative (BRI). Recently, India put together a list of goods that are becoming costlier because of the trade war and which could be exported to China instead of the United States. Increasing exports would also help reduce the US$63 billion trade deficit it has with China, its top trading partner.
Trade value between the two nations reached a high of $84.4 billion recently, and generally there is 20% growth every year. By lowering barriers on some Indian goods, in turn China has also made efforts to address Indian reservations over the trade deficit.
From the foreign-affairs aspect, organizations like the SCO and trade and infrastructure projects like the BRI are binding the region closer in a mutually beneficial equation. Unfortunately, both the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) have failed to deliver, and this region needs to find common ground to achieve a better understanding.
At present, South Asia lacks unity and integration, and good relations between the two major powers, China and India, is a good omen. Even as bilateral relations between China and India become more tightly knit, it may be just a matter of time before Pakistan and India also sort out their issues. Playing a supportive role, China could help build bridges, and even if just a modicum of success is achieved, an India-Pakistan-China triangle could ensure the long-term peace and prosperity of South Asia.
Finally, in recent times, India has become the world’s largest weapons importer by purchasing 13% of the arms in the world, according to the Stockholm International Peace Research Institute (SIPRI). In the future, those finances could be re-channeled to poverty reduction and economic development if vibrant geo-economic relations are established.
Focusing on preserving global free trade and increasing economic bilateral interaction, Sino-Indian diplomatic and economic ties have immense potential to transform the whole region if they can achieve sustainable, coordinated priorities.