Eye on China: LAC Standoff – China-EU Meeting – Vaccine Race – Beidou Completed – HK Law Vote – Australia Tensions – US Frictions – CPEC Funds

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

I. The Standoff Continues

Are both sides escalating at the LAC or are we deescalating? There’s official statements, OSINT contests, juvenile psyops and satellite imagery disagreements. It’s really the darndest thing. The more information that seems to be out there, the less clarity we seem to have. What’s more, the Chinese side appears to be fairly on point in its messaging, which is largely consistent. In contrast, Indian messaging is very unlike what it was in Doklam. There’s lots of confusion and clarifications. Anyway, let’s look at what’s happened through the week.

Ground Situation

First, let’s look at what reports are telling us about the situation on the ground. ANI reports that amid heightened Chinese fighter aircraft and helicopter activities, the Indian armed forces have deployed their advanced very quick-reaction surface-to-air missile defence systems, including the Akash missile, in the Eastern Ladakh sector. Shishir Gupta’s report in HT says that Indian SAM deployment is in response to China’s SAM in Aksai Chin in May. His report also ends with this curious comment. Indian “national security planners are confident that better sense will prevail over PLA Commander-in-Chief Xi Jinping and Western Theatre Commander Zhao Zongqi as no conflict is one sided.”

Going back to the ANI report I mentioned above, it adds that Chinese forces have brought in the Sukhoi-30 and its strategic bombers to the rear locations which have been detected flying near the Indian territory maintaining the 10 km plus distance from the boundary. It further states that “Chinese choppers have been flying their very close to the Indian LAC in all the troubled sectors including the Sub Sector North (Daulat Beg Oldie sector), Galwan valley near Patrolling Point 14, Patrolling Point 15, Patrolling Point 17 and 17A (Hot Springs area) along with the Pangong Tso and Finger area where they are now moving closer to the Finger 3 area.” The last bit implies that PLA troops are pushing further.

Another report by Vijaita Singh for The Hindu quotes an unidentified government source as saying that there has been a “noticeable thinning of presence of Chinese troops,” but structures have not been removed from locations in dispute. The piece adds that as per the official, removal of structures was not part of the original June 22 agreement at the Corps Commander-level talks. “It was decided that there will be no patrolling, movement of troops and vehicles or any fresh construction activity by either side. This reduction (of structures) was not being expected.”

Meanwhile, Manu Pubby reports that “the Chinese have violated the Indian perception of LAC in Depsang by moving in troops and building a considerable strength close to the area with tanks and artillery, sources said. The buildup is of particular concern as China claims an area of about 20 km inside the Indian territory. Sources said Chinese deployments are now well within the Indian side of LAC and at least two roads are rapidly being constructed for fast movement of troops.” Sushant Singh of the Indian Express adds: “Around 30 km south-east from the important airstrip of Daulat Beg Oldie (DBO), the Chinese army has moved and deployed in large numbers up to a place called Y-junction or Bottleneck on the Depsang plains. Sources said the Chinese deployments include troops, heavy vehicles, specialist military equipment.” There’s also reporting of the PLA building a helipad along Pangong Tso.

Other reports talk about significant Chinese build-up in Galwan Valley, with tents being placed in the location of the June 15 clash. This, of course, is being refuted by others. For instance Nitin Gokhale and Lt. General S.L. Narasimhan, who is a member of the NSAB. General Narasimhan told The Wire’s Karan Thapar that media reports about Chinese military construction and troop incursions in Galwan, Pangong Lake and Depsang are exaggerated and “none of it is true.” He also reportedly said that the Galwan clash of June 15 began on Indian territory but, because in a melee both sides are pushing each other around, it could have ended on the Chinese side of the Line of Actual Control. He categorically said there were no Chinese troops on India’s side of the LAC when the June 15 clash ended. The report adds:

“Questioned by The Wire about reports Chinese troop levels on their side of the LAC have increased by perhaps 30%, General Narasimhan said there had been some increase in some areas between June 15 and 22 but he specifically added not thereafter. In fact, he suggested, in the last five days (June 22-26) Chinese troop levels on their side of the LAC have probably diminished. However, General Narasimhan made one further point. He said if Chinese troop levels are increasing so are Indian troop levels. He said Indian troops levels have gone up equally on our side.”

Finally, check out this report by Ajay Banerjee in The Tribune. He suggests that the PLA is pushing forward to try and “fix the LAC alignment as per its unilateral claim line proposed as a boundary with India during discussions in 1960.” The report adds: “The 1960 Chinese Claim Line (CCL), in areas facing Daulat Baig Oldie, Depsang plains, Murgo and the Chip Chap river, stretches several kilometres west of the 1956 claim line, originally proposed by Chinese Premier Zhou Enlai at talks with India. An additional 5,100 square km area was claimed in the cartographic aggression in 1960.”

Talking & Trading Barbs

There were a couple of dialogues between India and China this week, a few interviews that stirred the pot, a trilateral foreign ministers’ meeting and then some statements from the Indian Prime Minister and Home Minister.

First, there have been no further talks between the commanders on the ground since the 11-hour June 22 talks between Lt General Harinder Singh, who heads the Leh-based 14 Corps of the Indian army and Major General Liu Lin, commander of the South Xinjiang Military District. But there was a diplomatic dialogue at the 15th meeting of the Working Mechanism for Consultation & Coordination on India-China Border Affairs. MEA’s readout says that the two sides discussed in detail the developments in the India-China border areas…and agreed to maintain communication both at diplomatic and military level including under the framework of WMCC to resolve the existing situation peacefully.” The Chinese readout is fairly straightforward. It talks about the two sides implementing the consensus between the two foreign ministers and military commanders on June 22 and talks about resolving issues through dialogue and consultation. It doesn’t, however, specifically mention that the WMCC will be the platform for this process. ANI, on the other hand, reports, citing unidentified sources, that a WMCC meeting will be held every week going ahead to resolve the dispute. 

Meanwhile, the Chinese MoFA and MoD issued detailed statements this week. MoFA first dismissed claims that 40 Chinese soldiers died in Galwan as “false information.” And then on June 24, offered a detailed version of events. It reiterated claims on Galwan Valley, accused Indian troops of crossing the LAC and claimed that India was unilaterally changing the status quo with its infrastructure development. Zhao Lijian ended saying: “We hope the Indian side can strictly observe and implement the above-mentioned consensus, meet China halfway and take real actions to restore peace and stability in the border areas.” MoD’s Wu Qian, meanwhile said that on June 6, “the Indian side promised that they would not cross the estuary of the Galwan River to patrol or build facilities, and the two sides would discuss and decide phased withdrawal of troops through the meetings between commanders on the ground.” He reiterated that India should bear responsibility for the events and then repeated that both sides should now work as per the June 22 consensus. Later in the week, China’s ambassador to India Sun Weidong spoke to PTI, emphasising the same narrative. The interview, which has its problems from a journalistic perspective, has landed PTI in a bit of hot water.

On the Indian side, the MEA put out a detailed statement on June 26. It says that the PLA hindered normal and traditional Indian patrols in early May in the Galwan Valley area, and then in mid-May sought to change the status quo in other areas. On the clashes, it reiterated that “the Chinese side departed from these understandings in respect of the LAC in the Galwan Valley area and sought to erect structures just across the LAC. When this attempt was foiled, Chinese troops took violent actions on 15 June 2020 that directly resulted in casualties. Thereafter, both sides remain deployed in large numbers in the region, while military and diplomatic contacts are continuing.”

The statement adds: “since early May, the Chinese side has been amassing a large contingent of troops and armaments along the LAC. This is not in accordance with the provisions of our various bilateral agreements, especially the key 1993 Agreement on the Maintenance of Peace and Tranquility along the Line of Actual Control in the India-China Border Areas. This notes in particular that ‘each side will keep its military forces in the areas along the line of actual control to a minimum level compatible with friendly and good neighbourly relations between the two countries’. Obviously, the Indian side had to undertake counter deployments and the resulting tension has thereafter expressed itself.” Essentially, the MEA placed the onus of escalation on the Chinese side, adding that “a continuation of the current situation would only vitiate the atmosphere for the development of the relationship.”

Also on Friday, Indian envoy to Beijing Vikram Misri spoke to PTI. There was lots of controversy around some of the tweets following the interview, but here’s the operative bit in the ambassador’s comments: “I think there should be a realisation on the Chinese side that there is no gain in trying to alter the status quo on the ground especially by resorting to force … that will not just damage the peace and tranquillity that existed on the border but it can have ripples and repercussions in the broader bilateral relationship.”

Let me end this part of this section by two comments from Prime Minister Modi and Home Minister Amit Shah on Sunday. In his radio broadcast on Sunday, Modi spoke about Indian soldiers giving those coveting Indian territory a “befitting reply.” Amit Shah, meanwhile, characterised the situation with China as a “battle.” To me, he was speaking metaphorically, but not the best choice of words.

RIC Meeting

Also this week was the Russia-India-China foreign ministers’ meeting. Here’s what Wang Yi said as per the People’s Daily: “Wang Yi made three suggestions on strengthening China-Russia-India cooperation: First, adhere to multilateralism and improve global governance. The second is to strengthen anti-epidemic cooperation and work together to overcome the epidemic situation. The third is to improve the cooperation mechanism and form a tripartite joint force. Support the Russian side to hold the first China-Russia-India defense ministers meeting to enhance the level of defense and security cooperation. Wang Yi emphasized that China, Russia, and India are both big countries that insist on strategic autonomy. We should grasp the overall cooperation situation of the three countries as partners and opportunities.” India’s EAM S. Jaishanker, meanwhile, mentioned Dr. Kotnis’s legacy at a time when Russia was marking the 75th anniversary of the conclusion of the Second World War. He also added: “the leading voices of the world must be exemplars in every way. Respecting international law, recognizing the legitimate interests of partners, supporting multilateralism and promoting common good are the only way of building a durable world order.”

Economic Backlash

Moving away from narratives to actual economic outcomes. Reuters reports, citing sources, that customs officials at Chennai, one of India’s biggest ports, have held shipments originating from China for extra checks. The report adds: “The increased scrutiny on shipments from China at Chennai Port, which handles various cargo including automobiles, auto components, fertilisers and petroleum products, could disrupt supply chains. While there is no official order from the government yet, customs officers there have told importers to not allow goods coming from China to leave the port without being inspected, three sources said.” This is, of course, also having an impact of American companies that manufacture in China. But this apparently is not a one-way phenomenon. The Hindu BusinessLine reports that Federation of Indian Export Organisations (FIEO), an apex body of export promotion councils, wrote a letter to the Ministry of Commerce and Industry, stating that Hong Kong and Chinese Customs were holding back export consignments from India over the last few days.

Another Reuters report citing sources says that e-commerce players in India such as Amazon’s local unit and Walmart’s Flipkart will consider asking sellers on their platforms to list the country of origin on products. This was a part of a discussion between online retailers hosted by the commerce ministry’s Department for Promotion of Industry and Internal Trade (DPIIT), the report adds. In Delhi, the Hotels & Restaurant Owners Association has reportedly decided to boycott Chinese goods and not offer accommodation to Chinese nationals. The former is free choice, the latter is uncalled for discrimination. In Maharashtra, the government has reportedly put on hold three agreements worth Rs 5,000 crore signed with Chinese companies last week. These include a Rs 3,770-crore MoU with Great Wall Motors to set up an automobile plant in Talegaon, a PMI Electro Mobility’s joint venture with Foton (China) to set up a 1,000-crore unit that would help create 1,500 jobs, and the Hengli Engineering commitment to invest Rs 250-crore as part of its phase II expansion at Talegaon.

Also, traders’ body CAIT has reportedly written to Reliance Industries chief Mukesh Ambani and 50 other captains of India Inc including Ratan Tata, Azim Premji, Gautam Adani, Ajay Piramal, Anand Mahindra and Sunil Bharti Mittal seeking their support in its campaign to boycott Chinese goods.

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