Indian soldiers erect a military bunker along the Srinagar-Leh National highway during the conflict with China in Ladakh in July 2020. Photo: AFP/Faisal Khan/Anadolu Agency

“Those who do not remember the past are condemned to repeat it.” That famous quote from the Spanish philosopher George Santayana resonates in Indian Prime Minister Narendra Modi’s new China policy. Modi appears reluctant to remember a blunder committed by his country in the 1962 Sino-Indian war. 

Modi is doomed to repeat the mistakes committed by then-prime minister Jawaharlal Nehru on his China strategy as he over-relied on the advice of his pro-Russian strategic aide V K Krishna Menon. Modi relies on Subrahmanyam Jaishankar, his external affairs minister, an ardent believer that an alliance with the US can best fulfill India’s strategic interests.

Modi bent many of the traditions and norms of India’s foreign policy and strategy in the 2019 general election. To secure his seat as prime minister for a second term, he used foreign affairs as the instrument to attract voters. He used territorial nationalism as an electoral agenda by manipulating the Pulwama terror attack and subsequent surgical strike on Balakot, Pakistan. Modi vowed to take back Pakistan-administrated Kashmir during the election.  

Despite failure on every front in domestic affairs, Modi successfully amplified his popularity with his foreign policy. He successfully concealed his internal policy failures from voters by impressing them with his engagement with the superpowers’ leaders, such as US President Donald Trump, Chinese President Xi Jinping, Russian leader Vladimir Putin, and others.

Economic theory says that whatever goods and services are offered in the market, they must be paid for by their consumers, meaning no one gets something for nothing. The theory is best represented by a famous dictum, “There ain’t no such thing as a free lunch.” The maxim equally holds in international relations and strategy.

Every hug and handshake with the leader of a superpower is associated with a specific price. These prices are sometimes expressed in monetary terms. Modi paid the price of US$43 billion for the S-400 missile defense system for hugging and hand-shaking with Putin. With French President Emmanuel Macron, it was $30 billion for the Rafale deal. These were explicit monetary costs, not strategic costs associated with hugging Putin and Macron. However, Modi needed to pay a high strategic price in the cases of Trump and Xi. 

For instance, Modi held the “Howdy, Modi!” event with fanfare in Houston, Texas, on September 22, 2019, and about 50,000 people of Indian origin from across the US attended it. Trump’s participation was the center of the event’s attraction, and he spent one hour with Modi. 

Similarly, Trump participated in an event attended by 125,000 people in the world’s largest cricket stadium, in India’s Gujarat state on February 22 this year. Modi displayed an effusive bonding between him and Trump, and the US president delivered a speech portraying the Indian PM as an “exceptional leader … and a man I am proud to call my true friend.”

But Trump’s participation in these events and professed admiration for Modi were not for free. Modi needs to pay by playing the role of trusted ally and friend of the US strategically.

Trump a trusted ally?

The United States’ most recently issued national security strategy said it still holds to the “one-China policy” and categorically stated that the US does not look for regime change in China. However, Modi sent two members of Parliament to participate in the Taiwanese president’s virtual swearing-in ceremony.  

Neither the US president himself nor any of India’s friends and allies, including Quad countries, issued statements in favor of India on the Sino-Indian military standoff in Ladakh. There was not even any mention of Ladakh in the joint statement issued after the heavily hyped virtual summit between Modi and his Australian counterpart Scott Morrison on June 4. 

If a full-scale war with China breaks out, India will find no one is backing it. The US was in crisis even before the pandemic. Its public debt is about 125% of gross domestic product, and a Wall Street report suggests it could reach 2,000% of GDP. 

One of the world’s leading experts on Asia, Stephen Roach, warns that a changing global power balance combined with a galloping US budget deficit could spark a dollar crash soon. 

The US itself wants a better trade deal with China. After the November presidential election, the deal will likely happen. Modi’s calculation of India gaining from China’s losses as a consequence of the pandemic and realignment of global power seems absurd.

Modi has a false expectation that India will be able to build economic muscles rapidly and ruthlessly after the pandemic. He believes the post-pandemic world will witness a realignment of global supply chains.

Modi hopes the United States, Australia, and many European countries will delink their economies from China. They will seek India as a partner and ally. Their factories will relocate to a new destination, India. 

However, India entered the Covid-19 crisis just recently. Indian public health experts estimate a total of 670 million infections and 500,000 fatalities by the end of this year.

As well, the economy is projected to decline. The consumers of Indian exports are low- and middle-income families of advanced economies. They have been hit hardest by the Covid-19 pandemic, and will suffer from a further plunge in effective demand next year. 

Before the pandemic, India’s foreign trade was favorable with the European Union, and that with the US was also positive. And Modi’s target is the EU and US as key trading partners after American companies relocate to India from China. 

But there is no guarantee that US firms will shift to India, because fewer than 5% of companies relocated to India after the US-China trade war started in March 2018. And even if they do relocate, that won’t guarantee India’s economic growth, because the effective demand for Indian goods in the international market is not likely to increase for a few years.

Economists like Michael O’Leary and Carlos Rodriguez believe a V-shaped recovery of the advanced economies is unlikely. The sluggish recovery from the 2008 economic meltdown suggests a strong likelihood of an L-Shaped post-pandemic recovery in the developed economies.

Chinese suspicion

Modi announced on May 12 the concept of Atmanirbhar Bharat (Self-Reliant India) along with an economic rescue package of more than $260 billion to stimulate a post-pandemic recovery. 

Beijing perceived that Modi’s intent was to tighten its policy on foreign direct investment from China. India’s welcome to American companies that want to relocate from China is a selective target against Chinese investment.  

China wants to decouple India from the US. It has severe concerns about India’s move because of the two countries’ shared 3,400-kilometer border. Chinese strategists think India is a proxy of the US to contain China in the Himalaya and the Indian Ocean.  

Chinese Foreign Ministry spokesman Zhao Lijian, without referring to any particular agreement, has been repeating what he expressed last month, “We urge the Indian side to work together with us, abide by our leadership’s important consensus, comply with the agreements signed, and refrain from unilateral actions complicating the situation.” He was hinting at the agreement and consensus between Modi and Xi during their two informal summits in Wuhan and Mamallapuram.

Beijing also perceives that Modi looked toward the US despite an agreement to work with China in making “the Asian Century.” Modi is reluctant to see the “importance of respecting each other’s sensitivities, concerns, and aspirations” as outlined in the joint statement issued after the first summit.

Modi and Xi agreed to seek a fair, reasonable and mutually acceptable settlement on the India-China boundary issue. However, after revoking Article 370 of the Indian constitution, India issued a new map that included Pakistan-administrated Kashmir.

In excitement, speaking at the Lok Sabha, lower house of Parliament, Modi’s henchman and home minister Amit Shah said he would take back Aksai Chin, China-administrated Ladakh. Then Jaishankar flew to Beijing and reassured China that India had no intention of expanding its territory.

China initially understood the incident as a domestic political issue in India. However, after a succession of later events – policy changes on the issue of Taiwan, on tightening China’s investment in India, restructuring of the World Health Organization, the Covid-19 probe, the Quad, and the defense deal with Australia – Beijing’s suspicions intensified. 

Chinese strategists think that Modi has changed his mind on his agreement on “building an open, multipolar, pluralistic, and participatory global economic order,” and that he has abandoned the partnership with Beijing and wants to deter its increased footprint in its own back yard and the Indo-Pacific rim at the behest of the US.

China wants to send a clear message to Modi to abide by the consensus and agreements reached with Beijing during the two informal summits or prepare for a worse consequence than in 1962 from the military face-off in Ladakh. 

If Modi fails to reset the course toward fulfilling the consensus and agreement reached during the two summits, China will punish India much harder than in 1962. Then Modi’s fate is likely to be as depicted by 19th-century Russian historian Vasily Klyuchevsky, who said, “History teaches us nothing, but only punishes for not learning its lessons.” 

Bhim Bhurtel teaches Development Economics and Global Political Economy in the Master's program at Nepal Open University. He was the executive director of the Nepal South Asia Center (2009-14), a Kathmandu-based South Asian development think-tank. Bhurtel can be reached at