Even though both meant something else, the fact is the two countries have come a long way from just being inimical neighbours. Bilateral and global contexts have completely changed from 1962. China may be a bigger military and economic power than India, but it can hardly afford a military conflict today.
China’s global ambitions
During the past few years, Chinese President Xi Jinping has unleashed a grand propaganda for image makeover of the country. China does not want to be perceived as a bigger, richer and more powerful North Korea. In his first speech to the World Economic Forum at Davos in January, Xi surprised the world by defending economic globalisation and speaking against emerging protectionist trends all over the world.
Since there are signs of the US backing off from its position of the global leader, China is eyeing that role. But for that it needs to shed the image of a bellicose dictatorship and an unreliable trader. That’s why China is increasingly presenting itself as a responsible power to the world.
China’s global dream is best exemplified by its One Belt One Belt (OBOR) initiative where it tried to portray itself as a responsible global economic force which is willing to work for greater economic good of all.
Bullying and belligerence run counter to China’s ambition to replace the US as global leader or at least its rhetoric of emerging as a responsible world power and a reliable, open economy. In the Doklam standoff, China has stooped to a new low of threatening to encourage separatism in Sikkim while it had started with a threat of armed conflict. Such posturing will hardly evoke confidence in innumerable small countries in Asia and Africa with whom China seeks economic partnership.
China’s efforts for supremacy in Asia are often challenged by India. A recent example is Regional Comprehensive Economic Partnership (RCEP). It is a proposed free trade agreement (FTA) between the 10 member-states of the Association of Southeast Asian Nations (ASEAN) and Australia, China, India, Japan, South Korea and New Zealand.
For China, it means a lot as it will account for about 40 per cent of world trade. RCEP will provide much-needed markets for Chinese goods.
But, as Foreign Policy has reported, the China-backed trade deal meant to cement the Beijing’s dominance in Asia has veered off course because India is hesitant to open its borders to cheap Chinese goods. Though the RCEP is likely to be finalised by the year-end, it may not be exactly in the form China would like.
China’s ambition to set the rules of the game, at least in Asia, is often frustrated by India. India’s boycott of OBOR is a good example. An armed conflict with India will certainly put an end to China’s dream of an overarching role in Asia. China can fulfill that dream only by engaging India positively.
The trade dependence
China-India trade cooperation has deepened over the years and the bilateral trade has grown 24 times in 15 years, from $2.9 billion in 2000 to $70.8 billion in 2016. China has emerged as one of the fastest-growing sources of Foreign Direct Investment (FDI) into India. It was 17th largest in 2016, up from the 28th rank in 2014 and 35th in 2011. A number of Chinese companies are setting up manufacturing units in India. It is India that depends on China in the trade equation—India’s trade deficit with China has risen to $46.56 billion. China’s exports to India account for only 2 per cent of its total exports.
Yet, no one can deny India offers China a promising market. An armed conflict will threaten trade ties. Maybe that’s why China stopped Indian pilgrims from vising Mansarovar but not trade through Nathu-la. China stopping the trade route might have invited a similar Indian response.