Eye on China: 120 FDI Proposals – LAC Talks Stalled – Nepal Intrigue – EU Deal Stumbles – PLA’s 2020 Perspective – Democratic Life Meeting

Eye on China is a weekly bulletin offering news and analysis related to the Middle Kingdom from an Indian interests perspective.

I. India-China Ties

It’s been a slow news week in terms of the bilateral India-China relationship. India’s MEA said this week that the next round of military talks between the two sides could be held soon. So, there’s no clear date yet for this. In the meantime, Army chief General MM Naravane on Wednesday visited various high-altitude forward areas in eastern Ladakh and reviewed India’s overall military preparedness. Snehesh Alex Philip reports for ThePrint that the chief visited Rechin La in the southern bank of Pangong Tso, where the Indian and Chinese troops are engaged in a stand-off, just 200-300 metres apart. His report quotes an unidentified source as saying that we shouldn’t expect any breakthroughs anytime soon between the two countries. In another sign that things are unlikely to get resolved anytime soon, reporting for The Telegraph, Imran Ahmed Siddiqui writes that the “Indian Army has identified as many as 20 sensitive spots from Ladakh to Arunachal Pradesh along the Line of Actual Control (LAC) which are likely to witness border incursions and transgressions by the Chinese People’s Liberation Army once the winter is over and the snow melts.” Another report says that with summers expected to heighten tensions in eastern Ladakh, the government has fast-tracked the construction of 12 indigenous fast patrol vessels with specialised capabilities to counter Chinese boats in the Pangong Tso.

Moving away from the boundary issue, there are a couple of other stories to note this week. First, PTI reports that the Indian government has received over 120 foreign direct investment (FDI) proposals worth about Rs 12,000 crore from China since April, when it was made mandatory for a company from countries sharing land border with India to invest in any sector only after getting government approval. The report adds that an inter-ministerial committee has been formed by the government to scrutinise these proposals. Most of the investments are apparently for brownfield projects. Second, there’s been some moves on the South China Sea. This weekend, Indian and Vietnamese ships are taking part in a “passing exercise” in the South China Sea. The drill is being held after he INS Kiltan – an Indian anti-submarine warfare stealth corvette – docked at Vietnam’s Ho Chi Minh City on Thursday carrying 15 tonnes of humanitarian relief supplies for those affected by the floods in central parts of the country. Of course, earlier in the week, Indian Prime Minister Narendra Modi and his Vietnamese counterpart, Nguyen Xuan Phuc, called for a peaceful, “open and rules-based” Indo-Pacific, while also proposing the two countries enhance their defence and security partnership. At a virtual summit on Monday, the two leaders agreed to increase military-to-military exchanges in the form of regular ship visits, joint exercises, and training and capacity building programmes across all three military services and their coastguards. At the meeting, Modi also talked about the South China Sea Code of Conduct not undermining the interests of other countries or third parties in the region. Taking note of these comments, Liu Zongyi writes in the Global Times’ Chinese version that apart from commercial interests, India’s focus on the South China Sea is the product of a desire to “put pressure on China and force China to make concessions on the issue of border confrontation.”

Third, Beijing had some unsolicited advice for New Delhi this week in the context of the ongoing joint exercises of its air force with that of Pakistan. The Air Forces of China and Pakistan are holding their annual exercises Shaheen (Eagle)-IX since the second week of December in Pakistan’s southern Sindh province. When asked about these drills, China’s foreign ministry said that these were “routine” and “not targeting any third party.”

Finally, India and Russia have not held their annual summit this year. This is the first time in two decades that the meeting hasn’t taken place. Officially, both governments have said that the pandemic is to blame for the failure to hold the meeting. But a piece by ThePrint’s Nayanima Basu kicked up a storm. She argued that “tensions have begun to simmer in the bilateral ties over Russia’s rhetoric against India’s increasing alignment with the US.” The other axis of this issue is China, of course. Moscow has played an important role amid India-China tensions through this year. Writing about the situation in Global Times, Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, opined that “Cracks are emerging in Russia-India ties. Where this bilateral relationship heads will depend on the development of China-Russia, US-Russia, US-India and China-US relations. If ties between the US and India keep heating up; if US and Russia tensions continue to mount; if the US and China antagonism goes on unabated, cracks between India and Russia will always exist. But in general, cooperation between Moscow and New Delhi now outweigh their tensions. Their current rift will not cause qualitative changes in their relations anytime soon.”

Let’s end with this piece by Fudan’s Lin Minwang, where he begins by talking about Donald Trump presenting the Legion of Merit to Modi and then outlines a case for differences between India and the US. He writes that “New Delhi is trying to profit from the major power competition between Beijing and Washington.” He then adds that Indo-US cooperation under Biden will have its limits, particularly on issues of values, domestic policies, and trade. He then goes on to call the purchase of S-400 missile systems from Russia as a “metaphorical time bomb,” which Pompeo could have ignored, but Biden-Harris are unlikely to do so.