Countering China on Economic and Strategic Fronts

Syllabus: GS II: India and its neighborhood-relations.

Context: India and China’s border dispute turned into a deadly clash for the first time in more than four decades. Casualties took place on both sides. Event raised nationwide demand to counter China on both strategic and economic fronts.

Background: Confirmed facts about incursions during May are that Chinese forces came in sizable numbers and crossed the un-demarcated Line of Actual Control (LAC) at quite a few points in the Ladakh and Sikkim sectors. These were in the vicinity of Pangong Tso (Lake), the Galwan Valley, the Hot Springs-Gogra area (all in Ladakh), and at Naku La in the Sikkim sector. Talks at the levels of NSA and military commanders, from lieutenant generals to brigadiers and lower formations are going on to resolve the deadlock.

Concern for India: India needs to undertake a detailed analysis of recent events to find proper answers to several vexed questions. China has been strengthening its border infrastructure in recent years along the LAC. Hence it is necessary that India should speed up its work to build strong border infrastructure including completion of Darbuk-Shyok-Daulat Beg Oldi road. Simultaneously it is necessary to strengthen its economic and strategic capabilities to effectively counter China.

Economic Hit: India took strong decisions such as banning 59 Chinese apps (under Section 69A of the IT Act), barring Chinese companies from bidding for road projects, stopping imports of power equipment, prohibiting Chinese investment in micro, small and medium enterprises, and blocking their consignments in ports. The intention is to send a message across that China will have to incur an economic cost for such misadventure.

Banning of 59 Chinese applications such as TikTok, Shareit, Mi Video Call, Club Factory and Cam Scanner, citing threat to national security and sovereignty might cause loss of approximately $20 billion, suggested by the Media reports. Soon after the government banned all those Chinese apps, India’s first social media app was launched by Vice President, M Venkaiah Naidu, on 5th July, 2020 known as “Elyments”, with multiple features in a single platform, hence some Media house called it the 'Super App'. Banning on TikTok in the country has resulted in a surge in downloads for desi apps such as Chingari, Roposo, Bolo Indya, Mitron, among others. Hence it is evident that the move not only gave a stern reply to China but also gave a boost to the Indian start-ups.

Also, with this latest Chinese offensive, the chances of Chinese telecom equipment maker Huawei’s participation in the multi-billion dollar 5G project in India is at high risk of continuation reflected by the statement of Government officials “Besides economic interests, this project also involves serious security concerns”.

Along with these New Delhi is actively pursuing an economic policy of self-reliance, anti-China sentiments have gripped major global economies such as the United States, and it is the prime suspect for spreading the Covid-19 virus.

India’s trade deficit with China fell to $48.66 billion in 2019-20 on account of the decline in imports from the neighbouring country, according to government data.

In April, the government tightened FDI norms coming from the countries which share land borders with India. As per the amended FDI policy, a company or an individual from a country that shares land border with India can invest in any sector only after getting government approval.

The DPIIT (Department for Promotion of Industry and Internal Trade) /to reduce our dependence on China, has reached out to trade associations, seeking a list of items imported from China ranging from automobiles, pharmaceuticals, toys, plastics, furniture etc.

Strategic Hit: US Secretary of State Mike Pompeo’s announcement, on June 25, that the US will move some troops from Europe to Asia to counter expansionist China’s threat to India and Southeast Asian countries.

At the ground-level, we have reinforced our positions, and move forward to the LAC all along, enhancing the operational-tempo of the three services as a measure of deterrence. Indian warships have shown heightened presence at the Indian Ocean choke-points. Cyber emergency response teams country-wide remain on high alert. While building-up stocks of weapons, ammunition and spares, the Ministry of Defence has been continuously working on local defence-production.

Also India is actively working in the strengthening of the Quadrilateral Security Dialogue (or the ‘Quad’) with the US, Japan and Australia, and building a regional security architecture around this core.

India has signed defence foundational agreements with the US, paving the way for mutual logistics support for each other’s armed forces (Logistics Exchange Memorandum of Agreement or LEMOA) – enabling access to advanced technologies from the US, and an agreement (Communications Compatibility and Security Agreement or COMCASA) to facilitate US defence companies to partner with the Indian private sector for defence manufacturing (ISA or Industrial Security Annexe to the General Security of Military Information Agreement – GSOMIA).

China continues to propagate its expansionist agenda all along its borders as after India and Nepal, the Communist country has now set its eyes on Bhutan. During a virtual meeting of the Global Environment Facility (GEF) early June, China raised objections to the grant issued for the Sakteng Wildlife Sanctuary (SWS) in eastern Bhutan’s

Trashigang district. It borders India and China, and Beijing has now claimed that the location is disputed. Emphasizing on the words of former External Affairs Minister Late Ms. Swaraj as 'Bhutan is the closest friend of India', India should bring this Chinese aggression on the global platform, and announce publicly to provide complete protection to Bhutan.

India has increased its operations in the Strait of Malacca and the region around Indian Ocean. The Strait of Malacca is a narrow waterway between the Malay peninsula and the Indonesian island of Sumatra. It accounts for nearly 80 percent of Chinese oil imports.

The Chinese military on 6th July, 2020, began withdrawing troops from the Galwan Valley and Gogra Hot Spring after National Security Advisor Ajit Doval and Chinese Foreign Minister Wang Yi held lengthy talks on Sunday. Mr. Doval and Mr.Wang are also the special representatives on the India-China boundary talks.

The way forward for India:

Infrastructure improvement in border areas: Whether it is in Kashmir, Arunachal, and Andaman, India's neglect of its border areas has weakened its territorial status. Thus, we should improve the infrastructure in these border areas.

Improving internal connectivity: India should remember that China's BRI has not started as an external initiative. It was built on the current internal "Go West" strategy launched two decades ago, with a focus on integrating China's domestic market and connecting its developed east coast to the interior provinces.

Improve connectivity with neighbours: India should modernize connectivity on its land and maritime borders with its neighbours in the subcontinent, Southeast Asia and the Gulf by completing our projects in these areas.

India should build and rejuvenate its relations with Nepal. Both countries enjoy a unique relationship that goes beyond diplomacy and the governments of the day. Both are interdependent through shared social, cultural, economic and other civilization links. Here, the ties are not between the governments alone. Over three million Nepalese live in India and lakhs of Indians live in Nepal. The Gurkha Rifles, known for the best in warfare, are incomplete without the Nepalese. They fight to keep India secure, so where is the scope for conflict ? The people of Nepal fought for India’s independence. B.P. Koirala and many more Nepalese made enormous sacrifices during the freedom struggle. Both countries have open borders and unique ties. This reminds us that both countries have shared interests while respecting each others’ sovereignty. There is no place for a ‘big brother’ attitude. The regimes in New Delhi and Kathmandu have to exercise caution and restraint. The Map controversy on Lipulekh, Kalapani and Limpiyadhura should be seen in retrospection by Nepal.

Collaborate with others: Economic sanctions by India alone will hardly sting China, which has responded in good measure to punitive trade actions by the US. For India, it may work only when there is a broader coalition among big economic powers, including the US, Japan, UK and Australia. Japan has already outlined its $ 150 billion Partnership for Quality Infrastructure called Belt and Road Initiative to support all infrastructure projects in Indo-Pacific and Eurasia. There should be greater busyness on the QUAD. India should also improve access to Europe by accelerating projects like International North–South Transport Corridor (INSTC) and others.

Connecting the dots:

Question for Prelims

Consider the following statements:

1. India's trade deficit with China shows a declining path in the last two financial years.
2. India recently tightened its Foreign Direct Investment norms for the companies belonging to a country that shares land border with India.

Which of the above statements is/ are correct ?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question for Mains

"In the light of recent geopolitical changes in the South China Sea, the significance of QUAD has increased" Discuss.