The past few years have signalled a marked change in the global order. Asia is on the rise, and there are many assertions about the continent becoming the new centre of the world. It is home to more than half of the world’s population, and out of the world’s 30 largest cities, 21 are in Asia. The UN trade and development body UNCTAD asserted last year, that Asian economies will be larger than the rest of the world combined in 2020, for the first time since the 19th century.
A large role in this economic growth of Asia has been led by China and India, along with various other economies of the ASEAN (Association of South-east Asian Nations) region.
The past decades have seen the bilateral relations of India and China, being marked by the long standing disputes on the borders. However, with the bonhomie witnessed between the two countries since 2014, the bilateral relationship was expected to foster well. But with the 70-day long stand-off between the two at Doklam in 2017, and the recent clashes at Ladakh, the bilateral ties between the two Asian neighbours are poised to be affected. After days of prevailing tensions at the Line of Actual Control (LAC), India shot out an diplomatic ultimatum to China, accusing it of instigating a war-like situation along the 3,488 km long LAC, through its aggressive military posturing in East Ladakh.
Both India and China have much in common. Beginning from being the oldest civilizations in the world, today, they are home to largest populations in the world. In one sense it means, that they are manufacturing hubs with a larger workforce, as well as increasing purchasing power with the growing economic affluence.
According to reports published in May 2020, the Chinese economy which has witnessed an astonishing growth over the past few decades, holds the second place in the list of top 10 economies of the world, with a nominal GDP (Gross Domestic Product) of USD 9.2 trillion in 2019. India with a nominal GDP of USD 2.9 trillion, was till recently the world’s fastest growing economy.
India and China, have strong trading relations, though they are mostly tipped towards China. India’s imports from China in 2019-2020 reached $65 billion, out of a $81 billion two-way trade.
In the Fiscal Year (FY) 19, 5.1 percent of India’s exports were destined for China, while only 3 percent came to India. While 13.7 percent is the figure of India’s imports from China, for China it is only 0.9 percent from India. China is a crucial trading partner, and imports from China accounted for over 14 percent of India’s total imports in FY20, which is the highest share among all nations.
The tipping of the scale of bilateral trade in the favour of China, makes it difficult for India to work on ‘boycott of Chinese products’ after the tensions at Ladakh. This might be an opportunity for India, to work on developing indigenous industries to ward off its dependence on the Chinese products, but that will be a long and tedious process before becoming a reality.
The Perils – Maritime ruse and Revival of the Old Silk Route
In comparison to India, China stands on a firmer economic ground. It seems that this economic affluence has coincided with a desire to have a greater role with regards to the larger surrounding region as well. This has translated itself into an expansion on the part of China- over the surrounding lands and water, and which India increasingly views as China’s growing belligerence. Over the past few years, China has gradually diminished the strategic space for India in South Asia and the Indian Ocean.
China is augmenting its naval strength, with the expansion of its submarine fleet and aircraft carriers, with the aim of strengthening its presence in the Indian Ocean. It displayed its military power in the western Indian Ocean, holding many joint naval exercises. China, Russia and Iran held an unprecedented four-day joint naval exercise in the Indian Ocean and the Gulf of Oman. Pakistan and China held a major naval exercise at the beginning of the year, called the ‘Sea Gardens 2020’. The exercise which included frigates, destroyers, fast attack crafts were meant to consolidate the ‘all weather strategic partnership’ between the two countries.
China had been embroiled in maritime disputes with the south-east Asian countries. Recently, it flouted the verdict of an international tribunal, which rejected its claim on its maritime boundaries with the Philippines. It maintains a military presence in violation of international law, in what is internationally recognized as the Philippines’ territory.
China also sparked a major confrontation with Indonesia, by providing military escorts to fishing vessels, areas it claims, close to Indonesia’s Natuna Island. On a recent visit to Myanmar, the Chinese President finalised a number of agreements on a large number of economic projects. Many experts believe that these projects may eventually lead Myanmar, into a Chinese debt trap, securing Chinese access to and control of a port in the Bay of Bengal, as had happened in the case of the Hambantota Port, of Sri Lanka.
Adopted by the Chinese government in 2013, the Belt and Road Initiative aims to revive ancient trading links of China, stretching north and south, and extends all the way to the eastern Mediterranean. A part of this stretch has been named the China-Pakistan Economic Corridor, which connects Eastern China to Pakistan. The strategic collusion between China and Pakistan exacerbates security challenges for India. India increasingly sees the Belt and Road Initiative (BRI) as a predominantly strategic megaproject designed to project Chinese influence on its neighbourhood and beyond. A major terminus for the BRI is the Pakistani port of Gwadar. The Gwadar port is of particular geo-strategic importance, as it is situated very close to the Strait of Hormuz, a vital corridor for oil and petroleum exports. According to an estimate, over 67 percent of global oil and petroleum supplies pass through this corridor to the rest of the world.
The year 2020 has been a year of massive economic downturn due to the coronavirus pandemic. While the economic growth have been curtailed, for this year and the maybe the next, India and China remain strong economies and military powers. With large populations and a favourable economic growth, they are viable manufacturing hubs, as well as markets. However, increasing regional ambitions are a constant peril in spiralling these two Asian neighbours on a path of conflict.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of South Asia Strategic Research Center (GASAM)