Eye on China – Xi’s Tibet Plan – SCS Tensions – Wang in Europe – Economic Vision – Rectification – Dhaka Protest – Af-Pak-CPEC – Chips & Vaccine Race

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

This week India’s MEA shared details about the 18th round of talks under the Working Mechanism for Consultation & Coordination on India-China Border Affairs. The MEA said that “both sides have reaffirmed that the two sides will continue to sincerely work towards complete disengagement of the troops along the Line of Actual Control (LAC) in the Western Sector in accordance with the agreements reached between the two Foreign Ministers and the two Special Representatives (SRs) during their conversation on 5th July.” In contrast, India’s Chief of Defence Staff Bipin Rawat this week spoke about the military option being on the table if the dialogue process failed.

Little appears to have changed really. For instance, let’s take a look at what Ambassador Sun Weidong said this week. He termed the Galwan valley clashes an “unfortunate incident…that neither China nor India would like to see,” adding that “now we are working to handle it properly. It is a brief moment from the perspective of history.” That’s all well and good, but he added: “China sees India as a partner instead of a rival, and an opportunity instead of a threat. We hope to put the boundary question at an appropriate place in bilateral relations.” In other words, Beijing’s not budging on the boundary. Sun later spoke to CNBC TV18, telling them that “China and India should avoid mutual attrition, nor be opposed to each other. Instead, we should meet halfway to bring our relationship back on the right track at an early date.” And also this: “China has sincere will to resolve the boundary question and hope India will also show political will. China is committed to advancing talks towards an early harvest.”

Anyway, more talks are likely between the two sides, as defence minister Rajnath Singh and external affairs minister S Jaishankar will make back-to-back visits to Russia early next month for meetings of the Shanghai Cooperation Organisation. Indian, Chinese and Pakistani troops were also set to take part in Exercise Kavkaz in Russia starting in mid-September, but reports inform that New Delhi has withdrawn from these in protesting the situation at the LAC. Meanwhile, Sushant Singh reports for Indian Express that “with the rigid and inflexible Chinese stance on further disengagement along the Line of Actual Control dimming hopes of a breakthrough in the next round of military talks between the two sides, the Army is preparing for all contingencies on the disputed border in Ladakh, including the possible threat of Chinese manoeuvres in October when weather conditions improve.” ThePrint’s Snehesh Alex Philip reports that new satellite imagery shows China is building two air defence positions that will cover the 2017 Doklam stand-off area and also Naku La in Sikkim.

One last bit on the boundary issue was the viral image on Chinese social media, showing the tombstone of a 19-year-old soldier believed to have been killed during the fighting in Eastern Ladakh. Of course, China has officially not released any details about deaths, but do check out this piece by Shi Jiangtao in SCMP on why it might be a good idea for Beijing to come clean on this.

On the economic front, the Financial Times reported this week that the Indian government is planning to phase out equipment from Huawei and other Chinese companies from its telecoms networks. The policy essentially appears to be to not announce a formal ban, but rather to tell vendors to not opt for Chinese products. Reuters reports that Alibaba has put on hold plans to invest in Indian companies. The report adds, citing unidentified sources, that Alibaba will not put in fresh funds to expand its investments in the country for at least six months. However, there are no plans to reduce its stakes or exit investments. The Chinese conglomerate and its affiliates Alibaba Capital Partners and Ant Group have invested more than $2 billion in Indian companies since 2015 and participated in funding rounds of at least another $1.8 billion, according to data from PitchBook, which tracks private market financing. 

OnePlus, on the other hand, is reportedly planning to further develop its India research and development center as the global R&D base especially for software development. It says that the India center will become its largest research facility globally by 2022. What’s also been unhindered by tensions is Chinese purchase of Indian steel. Out of the 4.64 million tonnes of steel that Indian firms sold between April and July, Vietnam and China bought 1.37 and 1.3 million tonnes, respectively. The Chinese purchases are the largest since data recording began, reports TOI.

Two more reports around the India-China dynamic that are worth noting. First, there’s this Shishir Gupta story about India looking to upgrade the airstrip at INS Kohassa, Shibpur in north Andamans and at the Campbell strip at Nicobar into full-fledged fighter bases. The airstrip at Agatti, in Lakshadweep, he writes, will also be upgraded for military operations to secure both the Bay of Bengal upto Malacca Straits and Arabian Sea up to Gulf of Aden. He says this is being done in the context of new talks on the Kra Canal. I’ve not noticed any reports of such talks. But hey, who knows. Implicit in all of this is, of course, China’s Malacca Dilemma. On this, do check out RADM Sudarshan Shrikhande’s latest piece. He argues that “in the Indian public discourse – including noisy TV debates – a persistent refrain is that trade warfare aimed at China’s “jugular” in the Malacca Strait may be the most effective option to relieve pressure along the Himalayan border…But there is also often an element of irrational exuberance in making the difficult seem easy.” “The history of commerce warfare at sea is instructive. Degrading an enemy’s shipping always takes a long time and a lot of resources – the outcomes are not pre-ordained and could have unforeseen consequences.”

Finally, there was an exchange of barbs (here’s the Mandarin version of the Sino-Pak joint statement) after Pakistani Foreign Minister Shah Mahmood Qureshi’s visit to China. Qureshi later said that China dismissed India’s position on Kashmir. In that context, here’s Zhao Gancheng, research fellow at the Shanghai Institute for International Studies, saying: “India’s removal of Kashmir’s special autonomous status is beyond India’s internal affairs. This is because Kashmir is a disputed region between India and Pakistan which is widely recognized by the international community. Furthermore, after revocation of its special autonomous status, the custom and life styles of local residents, especially Muslims, will be greatly impacted. India’s position in terms of the statement on Kashmir in the joint press release will not affect China’s stance on this disputed region.” Of course Zhao isn’t worried about customs and lifestyles of Muslims in Xinjiang. Reports also inform that during the visit, Qureshi sought support with regard to the prospect of Pakistan’s blacklisting by the FATF.

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