Leadership Transition in China: What does it hold for India

China’s leadership transition in the wake of the 18^th Party Congress has been orderly except a few hick ups created by the by the Bo Xilai episode. With this Xi Jinping would be at the helm of China’s military, party and state, and Li Keqiang taking the reins of government affairs from March 2013. The going would not be as smooth as the transition had been for the new leadership, for the macro as well micro socio-economic and political environments are not as conducive as these were a decade back. A year or two or even more would be invested in consolidating and strengthening leadership positions before making big decisions. The top priority of the leadership would be to focus on the domestic economy which is marred by the declining exports and increasing social imbalances and corruption. The expectations and pressure on the new leadership would be very high as Hu’s tenure witnessed China’s GDP bouncing to 7.2 trillion USD from a meager 1.20 trillion USD. It would be extremely challenging to further consolidate post reform achievements, and the task of making China a fully well off society by 2020. Politically, it would also be tough for the new leadership to backtrack or escalate the maximal position Hu’s leadership took vis-à-vis territorial disputes with neighbors.  In the light of this, China’s foreign policy is going to be a low keyed one where continuity would be emphasized and status quo at different levels maintained.  Let’s examine how India would fit in this continuity and status quo approach:

Territory:

The new leadership would best endeavor towards maintaining a status quo on the border, for it would be impossible for the leadership to enhance or reduce the maximal position China has taken on solving the border issue with India. Hu’s reign saw China taking such positions as regards its territorial disputes with neighbors that the previous generations shied from. Both sides know it better that 38 rounds of talks (8 before 1988, 15 between the JWGs and 15 between the Special Representatives) in last three decades have failed the officials of both the countries to conclude a settlement. The December 3, 2012 informal border negotiations between Shiv Shankar Menon and his counterpart Dai Bingguo who is about to retire in next March remains a non starter like other formal rounds between the two countries, even though Menon has talked of “considerable progress” on the border issue during his recent China visit. Does he indicate that there is a breakthrough as regards accepting the claims of disputing parties as regards the Line of Actual Control (LAC)?  If it is the case, there is indeed a ‘considerable progress’ contrary to the general viewpoint that the talks at the Special Representative level have really run out of steam, and these seem to have been reduced more or less to perfunctory level by changing venues within the respective county. The outcome of the 15 rounds between the Special Representatives is a “common understanding report” to be submitted to respective governments for their perusal.

The breakthrough to this author looks impossible as both sides have diametrically opposite views on various sections of the LAC. The Working Mechanism for Consultation and Coordination on India-China Border Affairs, which was formed during the 15th round of border talks in New Delhi in January this year, and the maritime cooperation proposals to undertake joint operations against pirates and sharing technological knowhow on seabed research proposed by the Chinese foreign minister Yang Jiechi in March 2012 only adds a few new dimensions to the security issue but do not suggest the resolve to settle the issue. Therefore, the best we can expect from China in the next four or five years is to maintain status quo on the border and leave the question to next generation.

Trade:

As far as bilateral trade is concerned, this would be the real focus of the new leadership, for it could be a catalyst in sustaining the domestic growth to some extent and maintain the desired continuity in the bilateral relations. Secondly since the US would also be looking towards India for greater trade and investment, job creation and economic growth, China would like to compete with the US in Indian markets for getting a sizeable pie, be it the infrastructural development, power and energy sector or the telecom and banking sectors. The present 200 plus strong Chinese delegation that participated in the November 26-27 Strategic Economic Dialogue (SED) in New Delhi manifests it quite clearly. It is also an indicator that economics of bilateral relationship has become much more important than any other impending issues including the border. The widening trade deficit and shrinking trade volume has portrayed a gloomy picture of the bilateral trade.

Bilateral trade between India and China reached a record $73.9 billion last year, with the imbalance widening to $27 billion.  In 2012, the trade has faced a downturn and reached only $55.6 billion during the first ten months, with $23 billion trade deficit for India. Even though both countries have pledged to take the figure of bilateral trade to $100 billion by 2015, however, in the face of ballooning trade deficit and declining volume throws new challenging to the future leadership in India and China alike. The recently concluded SED may improve these figures as 11 MoUs worth $5.2 billion were signed between India and China. Most of the investment would be in the private sector as chunk of this capital rests in a $3 billion financing agreement between Reliance Power Ltd and China’s Guangdong Mingyang Windpower Group Co. Ltd and a $800 million agreement between NIIT China (Shanghai) Ltd and China’s Hainan province to establish an information technology enclave in Hainan. Since this was the second SED, we could expect the fifth generation leadership in China to adopt more proactive approach towards investment in India rather than the traditional cautious and incremental attitude.

India would reciprocate provided the balance of trade issue is addressed through a bigger market access to Indian companies in the Chinese markets. The investment in high speed railway and other infrastructural building projects could be considered as big opportunity windows to both the countries.  For India it could prove as an opportunity to learn from China experience, for it was during last 30 years of experience that China could develop its own technologies, perfect its  manufacturing facilities, bring in new managerial practices and become self reliant in many sectors, like heavy machinery and computer hardware. The recently opened retail sector is another example where India can learn from China, as to how China protected the interests of its farmers, as to how they were brought into the fold of new supply chains, and how it successfully created its own brands in retail giving tough competition to the foreign brands like Wall Mart and Carrefour etc. If all goes well the bilateral trade during Xi JInping’s tenure could jump to $250 billion or even more. 

Tibet:

Tibet and border issue are linked but as long as border is not settled the issue would continue to haunt both India and China. As of November 30, 2012 the self immolations by the Tibetans in inside TAR and other Tibetan inhabited areas in China have reached 90, and have attracted worldwide attention albeit China has targeted “Dalai Clique’ for spearheading such ‘separatist plots.’ Hu Jintao during his reign initiated ‘strike hard’ campaigns in Tibet in the name of stability and security on the one hand and targeted the Dalai Lama for feigning ‘separatism’ in Tibet on the other. He has appointed his protégé Ling Jihua in charge of the Tibet policy, and we could see the continuation of Hu’s policies in Tibet.  Xi Jinping’s father Xi Zhongxun who was responsible for Tibet’s affair in the 1980s was believed to be a soft on the Dalai and the minorities. If he carries some of his father’s influence, we may see somewhat softer approach towards Tibet. In this regard one has to wait and see what kinds of people are selected to the Central Working Coordination Small Group on Tibet that really formulates the policies for Tibet.

I believe since the main focus of the Chinese leadership is going to be economic development, Tibet would see greater investment in terms of infrastructural development, be it roads or railways and the investment in tourism industry. Infrastructural building in Tibet has already caused great concern in India. According to Indian Defense Minister A. K Antony’s statement of March 2011, “The total road network in TAR is assessed at 58,000 km in 2010. Extension of Qinghai Tibet Railway to Xigaze is in progress. Another railway line from Kashgar to Hotan in Xinjiang Uighur Autonomous Region is under construction,” besides there are five operational TAR airfields namely Gongar, Pangta, Linchi, Hoping and Gar Gunsa. Antony further said that “necessary steps” were being taken in consonance with India's national security concerns.” It could be discerned that there are attempts to enhance the military capacity along the borders by both India and China along with the modernization of armed forces. This kind of capacity enhancement and modernization may create further tension along the LAC and vitiate the security environment in the region. It would also be a challenge to the new leadership in China as well as in India after 2014 to find better mechanisms to maintain peace and find better ways to resolve the pending issue.

Terrorism:

It is widely perceived that the US withdrawal from Afghanistan in 2014 would further destabilize the Af-Pak region. The new equations would be a litmus test to the new leadership in China. Will Xi Jinping continue the present Chinese policy of steadfast support to Pakistan or will China accommodate the Indian and US concerns as regards terrorism and cross border terrorism? It has been admitted by the Chinese academicians that the “mono-dimensional (danweixing) China-Pak relationship is focused at military security cooperation with not an endogenous (neishengxing) aim but around external security concern (waibu anquan guanqie) that is to counter India.” They further posit that “this kind of cooperation, to a greater extent is due to the long rivalry of both Pakistan and China with India, as India for a long time has been number one enemy of Pakistan, and also poses major threat to the security of western China. It is in this context that China has not recognized the thesis of cross-border terrorism, especially in south Asian context albeit it is aware of the Trans border nationalism and its effects in Xinjiang that borders 8 countries including India.

The stability in western China, according to the Chinese government has been endangered by the forces of terrorism, separatism and extremism as well as narcotic smuggling. According to Chinese sources, there are over 50 East Turkestan separatist organizations in Xinjiang; and between 1990 and 2001 there have been 360 terror incidents causing 162 causalities and injuring over 440 people. As far as extremism or religious fundamentalism is concerned, China so far has blamed the pan Islamic religious fundamentalism emanating from Uzbekistan, Kirghizstan, and Tajikistan for armed smuggling, supporting East Turkestan Liberation Organization and creating instability and extremism in Xinjiang. It is mum on Pakistan albeit has admitted since 2001 that al Qaeda was in hand and glove with the Xinjiang ‘terrorists’. The wikiLeaks Gitmo files has made it clear that China’s “all whether friend” indeed provided training grounds to Uighur separatists. Amongst the hundreds of Taliban, there were 22 Uyghur detainees at Guantanamo, many of whom were captured in Pakistan.

In the backdrop of this, will the new leadership stop looking terrorism with Pakistani prism not only inside Pakistan but in the region as such? Will it be cautious in supporting Pakistan playing a dominant role in Afghanistan in the wake of prospective American withdrawal or will it advocate a regional approach where all the countries including India, Pakistan and China will have stakes? It must not be reminded that instability both in Pakistan and Afghanistan will have disastrous effects not only in South Asia, but also in China, especially Xinjiang.

South China Sea:

It is in recent years that China has started to define South China Sea as an area of core interest in addition to Taiwan and Tibet. India’s presence in the area has been challenged by China by resorting to various ways; be it the threat to INS Airavat on 22 July 2011; greeting INS Shivalik with “Welcome to the South China Sea, Foxtrot-47 by the People's Liberation Army Navy (PLAN) frigates in June 2012; or the threats to disrupt ONGC Videsh exploration in South China Sea and reiterating China’s ‘indisputable sovereignty’ in the region. Reciprocating the US, India too has advocated the freedom of navigation in the area, as one third of the world’s shipping lanes pass through this area. China hopes that the US and other players in the region need to be cautious and sensitive to its core interests, for it does not want interference by US and least to talk about the alliance of the democracies when it is embroiled with countries like Philippines, Vietnam, Brunei, Malaysia and Japan in the region. The new rules which China announced for the region on November 2012 authorize its police in the southern province of Hainan to board and seize foreign ships in the South China Sea. The move has already been criticized by various disputing parties, especially Vietnam and the Philippines.  

The new rules would escalate the tension further and push the smaller players in region in the US arms. China is wary about the US declaration that it would concentrate around 60% of its military assets in the Asia Pacific and that it would fiercely advocate the freedom of navigation in the South China Sea. On 3 November 2012 naval chief Admiral D. K. Joshi in a statement has viewed the rapid modernization of Chinese Navy as a “major concern”, and made it clear that India will protect its interests in the disputed South China Sea, even if it means sending forces there.  China immediately made a statement saying that “China opposes any unilateral oil and gas exploration activities in disputed areas in the South China Sea and hopes relevant countries respect China's sovereignty and national interests, as well as the efforts of countries within the region to resolve disputes through bilateral negotiations.” Whether India is in the position to defend its interest in the region or not, it should be clear to the policy makers in India, however, history says that whenever the US and China have come together, India has found itself in a disadvantageous position. On the contrary whenever the US has come closer to India, China has been less assertive in its approach towards India.

China is apprehensive about the US ‘pivot’ in the region and Obama’s second term could see the consolidation and strengthening of this ‘pivot.’ However, learning by its own experiences from Afghanistan and Middle East, the US is unlikely to be an interventionist in the conflicts; rather it would continue to be an offshore balancer in the region. Since China has taken maximal position as regards its territorial disputes with its neighbors, the next leadership could either further escalate the issues or maintain the status quo. However, owing to the macro and micro econo-political environment, fifth generation leaders are likely to maintain a status quo and revert to Deng’s attitude as regards the disputes, i.e. put aside the issue and seek common development of the resources in the disputed areas without referring to sovereignty. It is in this background India would attract wider attention in China than the previous years even though the US is going to be the focus of China’s attention.