The recent social media rumours about China wanting to dump the American dollar in favour of the nation’s own currency for international trade has since been found to be a rumour, a mischief of sorts. It is equally likely that someone, possibly not excluding China, may have indulged in kite-flying to test the waters, if only for the distant, post-Covid future.
Be it as it may, there is a message for India as to the possibilities on the China front, especially in relation to the nation’s ‘Neighbourhood Policy’. China may be better placed than in the pre-Covid era to hit where it hurts, and without firing a shot, be it from across the long land borders up north or the Indian Ocean waters, where China still remains an extra-regional power.
For long, strategic experts have concluded that China would not want any military engagement with India for a long, long time to come. They also agreed that China does not want to grow politically and economically to compete, both in the regional and global geostrategic space.
Unlike Pakistan, China understood it cannot weaken India ‘through a thousand cuts’, as the ISI continues to try despite always failing. Beijing has not held on to the theory after its early forays to fund and aid some of the Northeastern insurgency groups failed to help. Instead, China has spread its net around India since the turn of the century, and seems to be reaching where it wants India to be stuck in the neighbourhood.
Net-provider of security: The greater Indian focus on South Asia over the past decade and more, and Prime Minister Narendra Modi’s apt coinage of the ‘Neighbourhood First’ phrase at his inauguration in May 2014, owes to a full understanding of China’s motives and methods. Despite the ‘Wuhan spirit’ displayed by Modi and Chinese President Xi Jinping and the prompt follow-up with ‘Chennai Connect’, nothing has dissuaded Beijing from wooing India’s neighbours more than earlier.
In his time, Modi’s predecessor as prime minister, Manmohan Singh of the Congress, declared that India was the ‘net provider of security’ for South Asian neighbours. The continuing Indian naval dominance in the Indian Ocean, then and since, and also the Quad construct involving the US, Australia and Japan, flows from such a strategic concern, which are for real.
However, China seems to be in no great hurry to rush through its military project, if any for South Asia, aimed at tying down India militarily and by extension economically, too, in particular. After all, wars burn money as none else, and India is in no position or mood to undertake a war, be it with China or Pakistan, short or long. This does not include any war that is forced on India.
Development spending: In this background, China seems to have done its calculations well. For a decade and more now, Beijing has been choosing India’s friendly neighbours for massive development spending. In comparison, while India’s economy has vastly improved over the past nearly three decades, it has not reached a stage where it can divert massive capital to the neighbourhood to help fund their developmental expenditure, at least over the short and medium terms.
This is where China has displayed an upper hand. In almost every country in India’s neighbourhood, starting from Sri Lanka and Maldives in the Indian Ocean region to Bangladesh, Nepal, Afghanistan and Pakistan, China has made huge investments in domestic infrastructure, to improve transportation and increase power generation, two of the major ingredients for greater and faster industrialisation.
New Delhi did try to encourage private Indian investors to chip in where the government itself cannot find the funds for developmental expenditure in neighbouring nations. The results have been mixed at best, but have not moved as fast as thought—and was/is needed.
Soft-power influence: In this context, the argument is put forth that India did exert a lot of positive vibes and influence in the post-Independence past, when it was poorer than at present. Nations like Sri Lanka in the immediate neighbourhood were even aspiring to become ‘another Singapore’, but failed.
So, when India’s China war happened in 1962, there was a lot of sympathy and political support for India in the neighbourhood. Now, again, the support and sympathy remain, but the quality of the same has changed. There is an urgent need for India to strengthen its soft-power relations with individual neighbours and the neighbourhood as a whole.
Such soft-power projections do not necessarily include perceptions of ‘common cultural affinities’, which are at times frowned upon in the neighbourhood, for different reasons. Yet, there is no denying that through the past two-plus decades, India did deliberately end up losing the advantage, known in the neighbourhood as ‘India’s traditional sphere of influence’.
Reclaiming that position is not hard to do, but for that to happen, India needs to retune its global ambitions even more and recalibrate its understanding of the neighbourhood from the current perspectives of those nations as much as from New Delhi’s institutional memory, which is not always the right way to go about it.
N Sathiya Moorthy
Distinguished Fellow & Head of Chennai Initiative, Observer Research Foundation
(Email: sathiyam54@nsathiyamoorthy.com)