Warm contact, lukewarm outcomes

While the Narendra Modi visit to China has helped further people-to-people contacts a great deal, it hasn’t appeared to measure up to the government’s claims on substantive economic, diplomatic and strategic issues
“Sampark, Samvad, Parinam… “Visits, [Contact], Dialogue, Results” was Union External Affairs Minister Sushma Swaraj’s three-word criterion for success when she recently outlined the ministry’s achievements on the completion of one year by the Bharatiya Janata Party-led National Democratic Alliance (NDA) government. She also recounted how the government had connected with 101 countries. Yet, of these countries the government has interacted with — 18 of which Prime Minister Narendra Modi has visited — none was as anticipated as his visit to China last month.

Fault lines

Primarily, this visit was to repair the India-China relationship, because regardless of the optics, the past year has been a particularly bad one for the equation between the two neighbours along all the fault lines: on the Line of Actual Control (LAC), across the subcontinent, and in the South China Sea.

On the LAC, a three-month long stand-off at Chumar in Ladakh cast its shadow on Chinese President Xi Jinping’s visit to India in September 2014. Next came another stand-off over the subcontinent, most visible in Sri Lanka, over the issue of Chinese submarines in “India’s ocean”. Other Indian initiatives such as relief efforts undertaken by both countries, among others, in Nepal after the earthquake there in April; Mr. Modi’s visit in March 2015 to the Indian Ocean island nations (Seychelles, Mauritius and Sri Lanka); or the extension of credit lines to Bangladesh and Afghanistan were, often erroneously(mistakenly,गलती से), played up in the public narrative as India’s way of “countering China”.

On the subject of the neighbourhood, Ms. Swaraj made it clear that India is upset with the $46 billion China-Pakistan Economic Corridor (CPEC) “through India”. That Mr. Xi made the announcement of projects in Pakistan Occupied Kashmir (an 870MW hydropower project and the Havelian-Thakot highway) just weeks before Mr. Modi’s China visit was in itself both puzzling and worrying.

Finally, there was the fault line that upsets China the most — that of the South China Sea and India’s perceived shift towards the United States and Japan on the issue. Each of Mr. Modi’s references to Chinese aggression and ensuring the freedom of navigation — during his speech in Japan in September 2014, his discussions with the Vietnam Prime Minister during his visit to India in October 2014, his address at the East Asia Summit in Nay Pyi Taw (November 2014), the India-U.S. joint statement in Washington and the joint vision statement in Delhi — have all sent sharp ripples(wave,लहर) through Beijing.

People contact

All this meant that Mr. Modi had his task cut out for him when he landed in Xian, China, to a grand reception and several hours of interactions with Mr. Xi, finally capped by a Tang dynasty style banquet. His interactions at the Tsinghua University, and Fudan University, on subsequent days, were equally friendly. As the Director of the Institute of China Studies, Alka Acharya, who visited China two weeks later said, “The visit has left a positive impact, especially at the level of citizens.”

While the welcome accorded to Mr. Modi was unusually warm, eventually the visit will have to be judged, as Ms. Swaraj put it, not by the contact, but by the dialogue and outcome. And while the Modi visit has helped further people-to-people contacts a great deal, beginning with Mr. Modi’s foray on Weibo, the Chinese social media network, the visit didn’t appear to measure up to the government’s claims on the substantive issues.

Unresolved issues

At her press conference, Ms. Swaraj listed these “substantive issues” as being: “Economic issues, i.e. the trade deficit, and political issues, i.e. LAC clarification, stapled visas, land boundary agreement (settlement) and the sharing of hydrological data”. All prior engagement with China, she said, had been “goodie goodie” and merely customary (rasm-rivaaz). While one may discount her casual dismissal of all boundary talks so far (including the 1993 Agreement on Maintenance of Peace and Tranquility along the Line of Actual Control in the India-China Border Areas, signed by Prime Minister P.V. Narasimha Rao; the Declaration on Principles for Relations and Comprehensive Cooperation Between the Republic of India and the People’s Republic of China by Prime Minister Atal Bihari Vajpayee in 2003; and the Border Defence Cooperation Agreement signed by Prime Minister Manmohan Singh in 2013) as the rhetoric(loud and confuse talk,वाक्पटुता) of a government on its first anniversary, the fact is that this visit saw no new proposal on the boundary issue.

On at least two occasions, Mr. Modi’s suggestion to China of a “clarification of the LAC” has been met with silence, and has received no mention in the joint statement. “In terms of an outcome this is a non-starter,” says author and Centre for Policy Research analyst Srinath Raghavan, adding that “we have tried this in the 1990s and even exchanged some maps of the Western sector.” Those attempts ended in an impasse when it became obvious that the perceptions of the LAC by the Indian and Chinese Armies, respectively, were far removed from each other. Changing tack, Mr. Vajpayee then agreed to set up the “SR [Special Representatives]-talks” to resolve the boundary issue once and for all, rather than to try and clarify the LAC.

Therefore, it is significant that the latest Joint Statement (paragraph 11) also only records a commitment to the SR talks and the three-stage process, while agreeing to operationalise a new confidence-building measure, of hotlines between the militaries. Subsequent public exchanges between National Security Adviser Ajit Doval and the Chinese Ministry of Foreign Affairs officials over the McMahon Line(boundary between ind and china) and the LAC clarification only underline the gap in perception.

The issue of “stapled visas” for residents of Arunachal Pradesh remains unresolved, as it is linked to the boundary issue, Ms. Swaraj said. Going forward, the government may find it useful to consult the interlocutors of the United Progressive Alliance (UPA) government (apart from Foreign Secretary S. Jaishankar who was Ambassador to China), when the Chinese Embassy stopped stapling visas for the residents of Jammu and Kashmir in 2011.

On the sharing of hydrological data, the India-China joint statement records no progress either, and the paragraph on the issue (paragraph 27, Joint Statement, May 2015) mirrors the “appreciation to China for providing flood-season hydrological data and the assistance in emergency management” of trans-boundary rivers that the Singh-Li joint statement (paragraph 7, Joint Statement October 2013) did.

Although Ms. Swaraj didn’t list it as a key issue, India’s concerns on cross-border terrorism were mentioned for the first time in the joint statement (paragraph 32) with a clear phrase on agreeing to “disrupt terror networks and their financing and stop cross-border movement of terrorists in accordance with UN and international laws”. This would be an important step, except that China’s actions have belied those strong words. As reported over the past few months, China has blocked at least three Indian requests against the terror elements, Hafiz Saeed, Zaki-Ur-Rehman Lakhvi and Syed Salahuddin, listed by the UN’s 1267 committee on monitoring Taliban and al-Qaeda entities.

Breaking down the MoUs

Finally, the economic issues of bilateral trade and the growing deficit. Much has been made of the $22 billion in memoranda of understanding (MoU) signed during Mr. Modi’s visit. To begin with, such big figures can be misleading as only a fraction comes to fruition. Much like the figures of $46 billion announced by Mr. Xi for the CPEC in April, or the $50 billion announced by Chinese Premier Li Keqiang for Brazil in May 2015, this will have to be confirmed when the money actually comes in.

Of the 26 MoUs signed in Mr. Modi’s presence, a chunk is between private entities, which includes the Adani group and Bharti Airtel, and for financing and credit facilities from the Chinese development banks, Industrial and Commercial Bank of China and China Development Bank. The Indian Embassy has refused to respond to a request for a break-up of all the MoUs, but an official conceded that at least half were straight loans. While the loans are an important precedent for Chinese banks, in terms of expressing confidence in Indian companies, these along with a few other MoUs signed on renewable energy are unlikely to have any impact on the massive $48-billion trade deficit between the two countries. According to a parliamentary written reply by Union Commerce Minister Nirmala Sitharaman, in 2014-15, India’s exports to China stood at $11.95 billion while imports were $60.39 billion. It remains to be seen how the newly set up joint working group on trade deficit will address the issue, even as the deficit has ballooned by another 34 per cent during a difficult year in bilateral ties. A more significant development that should have been highlighted is this: the State-to-State economic partnerships, with Gujarat, Maharashtra, Karnataka and Andhra Pradesh in particular, and which Chinese companies are eyeing as manufacturing bases.

Restart in ties

As a consequence(result,परिणाम), Mr. Modi’s visit may not have been a gamechanger on the substantive issues outlined by Ms. Swaraj, but should be seen as a “restart point” for those ties, with fresh commitments from the leadership on both sides to address issues whose resolution has evaded(avoid,इंकार) them for decades. It has also put Mr. Modi centre-stage in China, where he is seen as a man who “means business” with the mandate to get that business done. Most significantly, it has brought Mr. Modi and the NDA’s foreign policy full circle in a year when he has engaged China early and often. Completing that circle of initial engagement is an important first step as they follow through on Deng Xiaoping’s idea, often repeated by Mr. Modi, of an “Asian century”, possible once the two countries resolve their differences.