Eye on China: Wei’s Visit – Tech Leap – DoT Invites Huawei – Party’s PLA – Bank Reform – China-EU-US – Backing Wolf Warriors – COVID-19 Investigations

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 still not clear when India and China will be engaging in the next round of talks along the LAC. New Delhi is apparently waiting for “certain clarifications” on the disengagement and de-escalation roadmap from Beijing, reports Shishir Gupta for HT. The report adds that “step by step disengagement and de-escalation moves will be detailed in a written agreement if the clarifications are to satisfaction of both the countries.” In the meantime, Foreign Minister S. Jaishankar had some interesting comments this week, which should temper any optimistic expectations. Speaking to The Hindu’s Suhasini Haidar, he underscored that the broader India-China relationship was predicated on peace and tranquility at the border. “We are not saying that progress in ties depends on solving the boundary question, but it clearly does on maintaining peace and tranquillity, while seeking a solution,” he said. Here’s more on the relationship: “My sense is that India approaches China more bilaterally, but with the challenge of global rebalancing. In contrast, I think China seems more affected by third parties, whether in our own region, or whether, you know, in their global calculations.” When asked about the duration of the standoff and when one can expect to see some resolution, he said: “I don’t know if you remember Sumdorong Chu [India-China standoff in 1986 that ended only nine years later]. I mean, I know in this day and age, there’s a lot of media pressure on you and on me. But you know, there are complicated issues [that] will take time and I will go for what is my interest and my bottom line. I mean, I will not be stampeded into accepting something which is less.” 

Also note this conversation at the Global Times forum, with Chinese and Indian experts. I am choosing only to highlight Chinese views. “Chinese experts believe India has carried out a ‘forward policy’ to encroach on the border area and India’s rigidness and unwillingness to compromise makes the border disputes hard to solve. ‘Border disputes are Achilles’ heel of China-India ties,’ Zhao Xiaozhuo, a research fellow at Academy of Military Sciences of the PLA, said at the forum. Zhang Jiadong, a professor at the Center for American Studies, Fudan University, noted that China and India are both emerging economies and have growing interactions, but the level of ties between the two is not rising but declining. He said India’s hostility toward China and China’s contempt for India are both wrong.”

Hu Shisheng, from the China Institutes of Contemporary International Relations, said: “The widening gap in strength between China and India has increased India’s anxiety. As structural problems remain unsolved, any small disturbance driven by Indian anxieties will make waves in bilateral ties.” He added: China’s strength makes India wary, but India does not believe in China’s will for peace. Sun Shihai, former president of the Chinese Association for South Asian Studies, said: “The core of the US-endorsed Indo-Pacific Strategy is to contain China’s development. India hopes to use the strategy and its relations with US to hedge influence of the China-proposed Belt and Road Initiative and win major powers’ respect for India.”

Staying with boundary issues, Nayanima Basu reports for ThePrint that India is worried about China carrying out salami slicing with respect to the border with Bhutan. Therefore, New Delhi is pushing Bhutan to settle the border issue with China to enable it to define the trijunction area of Doklam. This is what the unnamed source is quoted as saying: “China is now doing in Bhutan what it did in the South China Sea — first create settlements and then bring in civilian population so that it becomes more complicated for them to settle the matter soon. This in turn, makes it more difficult for India also to bring up the tri-junction issue with the Chinese.” Meanwhile, NDTV reports, based on satellite imagery, that China has constructed at least 3 villages, approximately 5 kilometres from the Bum La pass which lies close to the tri-junction between India, China and Bhutan in western Arunachal Pradesh. Also this week, the new annual report by the US-China Economic and Security Review Commission was published. It’s a long report. You can find my breakdown of the key elements in this thread here. The report talks about the India-China boundary issue, focussing on the clashes at Galwan Valley. Most media outlets in India picked up this bit from the report: “some evidence suggested the Chinese government had planned the incident, potentially including the possibility for fatalities.” Yet the evidence cited is really limited to draw such a conclusion. Anyway, when asked about this, the Indian MEA basically said that both countries need to stick to agreed-upon agreements and protocols.

Moving on from the boundary issue, India on Thursday said China must ensure its hydropower projects don’t infringe on the water rights of lower riparian states. This came as Beijing asserted its right to build a dam on the lower reaches of the Yarlung Zangbo or Brahmaputra river close to the Line of Actual Control. China reportedly is planning a super dam along the river in Medog county of the Tibet Autonomous Region (TAR). Here’s what the MEA’s spokesperson said when asked about this: The Chinese side has informed India on several occasions it is “only undertaking run-of-the-river hydropower projects which do not involve diversion of waters of the Brahmaputra…We intend to remain engaged with China on the issue of trans-border rivers to safeguard our interests.” The Chinese Foreign Ministry brushed aside any concerns from India. Hua Chunying said it was China’s “legitimate right to carry out hydropower station development in the lower reaches of the Yarlung Zangbo River.” She added that work on the dam was “still in the early planning and research stage, and there is no need to read too much into it.” Yeah, this is going to be challenging. There are some reports of talks in India about offsetting this by building a dam in Arunachal Pradesh.

Next, there was some excitement among India’s rice traders as reports emerged that China has started importing Indian rice for the first time in at least three decades due to tightening supplies and an offer from India of sharply discounted prices. B.V. Krishna Rao, president of the Rice Exporters Association said that he hoped “they may increase buying next year after seeing the quality of Indian crop.” I wouldn’t hold my breath. This is not really a quality issue for Beijing. It’s purchases this time come as China’s traditional suppliers, such as Thailand, Vietnam, Myanmar and Pakistan, have limited surplus supplies for export and were quoting at least $30 per tonne more compared with Indian prices. Finally, a story that’s left me scratching my head. Mint reports that after restricting Chinese investments in India and banning over 200 mobile apps, the government has now included Chinese telecom equipment company Huawei in working groups for the rollout of 5G networks in the country. The department of telecommunications (DoT) has constituted working groups for 5G rollout in eight sectors, including agriculture, fintech, transportation and education. Huawei will be part of the working groups that will conduct a study on the 5G rollout for healthcare and fintech sectors.

Click here to read the full newsletter.