Why is this Issue Pertinent?

It is quite natural to feel that perceptions of what happens in a country’s government, institutions, and people would be more or less similar or congruent in another country as perceived by its various constituent parts. It is therefore easy to surmise that this could be so among two neighbours like India and China, or between India and Pakistan. I do not know if this monolithic view (of transparent information and perceptions of what goes on in the other country) is true between the two parts of Korea, North and South, but it is certainly not true in case of India’s perceptions of its major neighbours. India and Pakistan (and Bangladesh) were together as one nation under the British rule, and earlier too during certain periods of dynastic rule in the sub-continent, but since their births in 1947, their histories and institutions have become so divergent that it is virtually impossible to know what is happening in Pakistan even to well-informed Indians sifting through India’s vibrant media, strategic analysis and research studies in both India and institutions abroad. In fact all that the most well-informed are sanguine about is that Pakistan is ruled by many power blocs and institutions at loggerheads with one another, and that their ordinary citizens very rarely exercise influence over them even when they are allowed to vote the government to power. The scope of this note will not allow us to elaborate on this issue further.

If this lack of transparency leading to perception problem is acute in case of Pakistan, I hold the view that it is bizarre in case of China. The two people do not have a shared history in any sense of the term, unlike the people of India with those in Pakistan, Bangladesh, and Sri Lanka, though they had some trade links in historical time. Much as we may dispute on its importance, our view is that trade, investment and other economic policies are critically dependent on politics and other strategic consideration, and in a democracy like India perceptions play a major role in policy formulations. There is a wide range of perceptions in India about China, and these two biggest emerging economies of the world are already underlining the tectonic shift in international politics and economics at the world stage.

It has been variously estimated that in two decades  India will overtake China as the world’s most populous country, perhaps with a larger work force and savings and investment rates, but China will emerge as the strongest economy in the world and establish itself as a military superpower, with economic and political influence in most if not all continents. There are already hints that the Chinese currency (Yuan or RMB) will also emerge as a world reserve currency replacing the monopoly power of the US dollar, and commensurately reduce the economic hegemony of USA as an economic superpower. There are unmistakable signs that the Euro itself may come under strain with many economies of the European Monetary Union (EMU) in doldrums starting with Greece, and the contagion may spread to Spain and Portugal as well, with some even contending that it may spread to a thus far robust economy such as Italy. In the event, the EMU is under strain, leaving China and India in the forefront of the world economy.

Some economists at Harvard University, Dani Rodrik, et. al., however place their bets on India in assessing their relative long term prospects, based largely on India’s vibrant democracy (despite their lapses) and many well-functioning institutions, such as the rule of law based on a robust Constitution, and several others which were undoubtedly the legacy of the British rule in India. However, their prognostications are with respect to relative economic performance in the medium to long term. Nobody would question China’s emerging supremacy with respect to military prowess and its economic and political clout in world affairs. Professor Lord Meghnad Desai of London School of Economics, a Labour member of the House of Lords and a keen India watcher, has held the view for many years that China was streets ahead of India as an economic power, but that is when India’s growth story was nowhere near the double digit figure that is at a kissing distance now. I personally subscribe to the view that the Indian economy is not yet poised to challenge the economic might of China nor its superpower status, and I also think that the Indian rupee is not yet ready to play the role of a world reserve currency that the Chinese Yuan will attain, provided it makes certain adjustments to shoulder greater responsibilities. But that is a subject I shall not delve into here.

The critical issue here is as two emerging giants of the world as neighbours in Asia, will the two countries bury their hatchets and move on as partners?   My vote is an overwhelming affirmation of this position as strategic partners. My view is based largely on the governance issue in the two countries, with the Chinese in firm control of their national priorities and India, despite its legislative and judicial checks and balances, is poised to take responsible decisions in the national interest. And a critical factor is that they will not go to another war between the two. The story is very different from that of Pakistan, whose stakeholders draw oxygen from war-mongering and terrorism on the Indian soil. While India has many problem neighbours of relatively small size, China has not just India but Russia, Japan, Korea, Mongolia and other nations in central Asia to contend with. Its economic interests and food and raw materials supply is linked with countries in South America, Africa, and Australasia, and the government in Beijing is now less committed to its ideological position and more strident in providing for mass consumption at home while leveraging its superpower status to secure international hegemony, a la Britain, Soviet Union, and USA in their heydays.

In this note I shall briefly outline the many layers of Indian perceptions about China, which will undoubtedly have a strong influence on India’s emerging relations with China and hence on the world economy at large. I shall try to cover the following perceptions, in no particular order of priority, to articulate the economic, social, political and military power of China as perceived by Indian institutions and peoples, including the Indian Diaspora as a separate category,  and would specifically include, besides certain official positions, the perceptions of political parties, the civil society as articulated by major media outfits and NGOs, the common voter, the consumers of products of Chinese origin, and give some flavour of regional disparities as displayed in their local concerns.
 

Memory of India-China War Lingers on

First let us note certain facts of history, ideology, and geo-politics of our relations in the last half century that have influenced these perceptions. India was a new state which gained independence from British rule when the People’s Republic of China (PRC) was established in October 1949 by the Communist Party of China (CPC) under the leadership of Mao Zedong. Although China allied itself with the then Soviet Union as a fraternal socialist country, soon fissures developed between these two giant states, and after the death of Stalin in 1953, Chairman Mao was the leading figure of then world communist movement. China started drifting apart from USSR by late 1950s, and asserted its leadership position in the world communist movement. This was important to Indian history and its international diplomacy.

Though formally a ‘non-aligned country’ then India was closely involved with the USSR in its military strategy and procurement, and also planned economic development. India’s five year economic plans were strongly inspired by Soviet economic growth. The USA was not able to extend its strategic influence over India in almost half century of India’s independence since then, a situation that changed only recently. India had signed a pact of friendship with China based on five basic principles with the non-aggression treaty as its cornerstone. Notwithstanding major changes in Sino-Soviet relations, China was taken as India’s friendly neighbour. Unfortunately, a war ensued over a border dispute in 1962, and India’s strategic preparedness and prestige was severely mauled in the fallout of the skirmish. China did not agree on the McMahon line drawn by the British demarcating the border between the two. There was nothing that the Soviet Union could do at that time despite being a good friend of India, and USA was outside the influence for both the potential giants in Asia then.

What followed in China during the Great Leap Forward of the early sixties and the ensuing Cultural Revolution starting in the mid-sixties as China drew its iron curtain on the world was not to be known then. In India the war scarred nation and its citizenry were aghast at this state of affairs, which was only aggravated by two successive years of droughts and famine conditions. Nehru, then PM of India, went into a sulking mood and the media blitzkrieg on China bashing went into overdrive, with even the very powerful Indian mainstream cinema (Bollywood) cashing in on this China bashing frenzy. After a brief spell of Shastri at the helm, Mrs Indira Gandhi emerged through a period of power struggle to be firmly in control of power in India. When Indira Gandhi was firmly ensconced, she used her cunning diplomacy and power politics, despite American Naval muscle flexing,, to dismember Pakistan; Bangladesh emerged on the world in 1971-72.

By then (in 1969) the Nixon-Kissinger diplomacy had established a covert relationship with China as part of their global strategic diplomatic positioning, bring in China on board  when Mao was still at the helm. The wedge that was created with USSR and its allies through this repositioning had its effects on India strongly felt. The Washington firmament was then draggers drawn with Indira Gandhi’s India, who was herself fighting a survival battle at home with her adversaries, and she had turned to the Soviet Union and the Indian left for this power game. When Bangladesh emerged, the geo-politics of the region was crystal clear. China was India’s enemy number one along with an embattled and humiliated Pakistan and an infuriated USA, but with Bangladesh and Soviet Union as sisters-in-arms. The atmosphere was palpably charged in India and the south Asia region. This situation lasted, despite some changes in sub-continental politics in the mid-seventies, till the end of the decade. 

In the mid-sixties, the Indian Communist Party was split on ideological grounds with one party supporting communism of the Soviet variety and the other of the Chinese dispensation, but both outside power. This was the perfect setting for the India-China relations to be at its nadir. At the time all groups in India were opposed to everything Chinese, with the possible exception of the Chinese cuisine which is an all-time favourite. Even the villain in the cheap mainstream Indian film many a time had a passing facial resemblance with Chinese features! Only a tiny communist movement described as violent in ideology and destructive of the established orders (described as Naxalites, after a rural movement in West Bengal that started it) called themselves as Maoists and was reportedly supported by China, and by then the two main communist parties of India were outside their sphere of influence. China had no constituency in India, had no markets to sell their sub-standard products then, and was a rogue country in popular parlance, only greater or lesser in degree than what was then Pakistan. On top of that India had hosted the Dalai Lama as its honoured guest in the Dharamshala (in the Indian state of HP), but that has a strong constituency in Tibet and those supporting the cause in Europe, America and elsewhere. China still does not recognize the Indian state of Arunachal Pradesh claiming that as part of its territory, in addition to a disputed part in Kashmir region. These two issues have retained strong hangovers from which India had to emerge in the following decades as China woke up as a giant and opened its doors to the outside world in 1979, after a reported power struggle in that country and economic reforms that it has undergone under a strong party control.
 

Emerging out of the War Shadows

The war with China more than anything else had dealt a body blow to the popular Indian psyche about China and it lingered on for those who remembered it and the aftermath of privations partly created by the droughts in India due to monsoon failure. The communists were treated as villains then not so much for their ideology - for all national governments in India drew sustenance and inspiration from the Soviet system then in place, including its national defence from the Treaty of Friendship - but the Communist movement in India had not distanced itself from the aggressors who had dented India’s national pride. Very soon the Indian communists (both major parties) also learnt the survival game and disconnected from the Chinese regime of the time, except for some fringe elements. This strategy is evident from their behaviour as the main communist force of India today, the CPI(M) has aligned back with the Chinese regime after the latter have chastised and sanitized themselves in the world stage!

I also mentioned two other features – the strong influence of the mainstream cinema in India in creating consciousness of the ordinary masses, and the popularity of the Chinese food, which has however remained a favourite through thick and thin. Let us not belittle the enduring influence of culture on social consciousness, particularly the culinary delights of exotica. To drive home the point, let us not forget that the Indian food has gained considerable ascendance in the western world and even in east Asia and elsewhere as India rides on popular consciousness in these countries, buttressed at times by the leadership favouring such preferences. As Indian food has entered the kitchen of western homes, so Chinese cuisine has come to occupy an important corner of Indian gastronome. This is no doubt an urban middle class intrusion, but so are the recruits to the civil society and opinion makers in a democracy.

In fairness to Indian ethos the Chinese as villains has not survived in the Indian film world beyond the decade of the sixties. It is possible that the powerful Indian Censor Board has played a role in this image reversal. In my view, except for the unfortunate skirmish in 1962, there is not much that has dented India’s perception of China, and that generation (of above 50 years) is now mature in the civil society and is fully aware of the real politic of world power and the need for restraint for good relations between two economic giants, though the same generation controls the political, economic, and diplomatic firmament in India today and is capable of spoiling the party. The media, both printed and electronic have been generally responsible in their analysis of China matter in my opinion. I must also add that the firm control that the Chinese Communist Party has over its policy stance has allowed its larger economic and strategic interests to rise above pettiness despite the nagging irritants that these pose. China plays its hands to flex its new biceps and triceps of world muscle, but never assaults physically.

Writing about India-China relations Ashok Malik, a political and diplomatic columnist wrote and I quote his column “Why China is Different” in the  Yahoo India news ‘Corner Plot’ dated 18 May 2010): As an Indian diplomat pointed out, China simply cannot afford a big, all-out war that could disrupt trade and oil supplies. "The extent to which the top Chinese leadership is compromised by its holdings in the Shanghai stock market is not recognised," he said, "they would not want to jeopardise their investments." Later in the same piece Malik muses if China is going to behave like Switzerland or post-war Japan but negates it, but posits the more pertinent consideration for China to allow space for both giants in Asia: “Much of this has to do with economics. India is not in China's league and is unlikely to get there for decades. However, China sees it as a legitimate foreign policy mission to thwart India's economic advance. It would be happy to see India trapped in a difficult neighbourhood, which puts off potential business partners and investors. It is wary of India's admittedly fitful attempts (to) become a manufacturing power. As for ballooning bilateral trade, China would be quite satisfied if its current 'colonial' nature remained undisturbed - Indian exports raw material such as iron ore to China and gets cheap toys and electronic goods in return.” I feel that while there is still a degree of lingering suspicion and discomfort, particularly in official circles to play safe, the mood is positive.

That does not however mean that India’s defence preparedness to face China’s possible military strike is at all at ease in all three domains of military defence. Nowhere is this more apparent than the build up of nuclear overheads to strike Chinese cities directly being build up in the eastern sea front of India. As nuclear strategist know well this deployment provides the credible posture of nuclear deterrence to the two giants as long as both are responsible enough not to strike first. This is much better preparedness than what India had in 1962 against a man to man conventional war on the northern border with China.

All this has changed the market situation in India for Chinese goods and investment. The Indian market is very price sensitive, and if nationalism is not an issue, Indians would buy the cheap Chinese products in droves and they are doing, even when they know that the products are of doubtful quality and come without warranties and frequently smuggled in – who cares as long as they meet the functional ends, not just Chinese toys and like, but massive quantities of electronic goods like mobile phones at the bottom of the market and other IT products. China has a huge trade surplus with India too, as with most its other trade partners, and India does not pay back through invisibles earnings due to a serious language barrier. China still does not have major capital account transactions such as direct or portfolio investments, but India pays through its earnings in the multilateral trading system.
 

Competition and Cooperation but no Serious Strategic Threat

Where does that leave the emerging India-China relationship? Pretty much robust I must admit. China is aware that it is much ahead of India as economic and military power in the world stage, and while some scandalous actions in third countries (in Africa and elsewhere) are reported about Chinese firms and agents deliberately spoiling the Indian trade brand, these are likely to be covert and infrequent in occurrence, and more like two business houses running down each other in the fight for market power. It is also likely that China may prefer to see India being strangulated by its regional superpower politics in south Asia to have little energy left to stand up to China’s stature in the world stage, but this is again likely to be a covert game. China’s quest for energy and raw materials security in Asia, Africa, Latin America and Australia is far too advanced to bother about engaging with India. I see great prospects of the two emerging giants as partners at the high table of power. This is also very critical for other countries in Asia and elsewhere. Japan, Korea, and Taiwan are major trade partners of China and bigger than India, but there is scope for both competition and cooperation in this region.