India’s careful approach to China continues

This is an article published in our April/May 2018 Issue.

Indian Ocean Region
Great Power Competition in the Indian Ocean Region.

The speculation of Chinese dominance in the Indo-Pacific region has been well documented in the Indian press. The Belt and Road Initiative (BRI) has raised New Delhi’s fears that Beijing’s infrastructure projects will bring more than economic prosperity to host countries.

New Delhi is carefully monitoring China’s activities in the Indian Ocean Region (IOR) and along its northern border at Doklam. Despite its concerns, it will need to find a balance between engagement with China and ensuring that its own national interests and security are not undermined.

One need only look at the list of Chinese Belt and Road projects in India’s immediate neighbourhood to understand where the perception of encirclement by Beijing-friendly governments stems from. To India’s West, the China-Pakistan Economic Corridor cuts through disputed Jammu and Kashmir territory that is claimed by India. But Nepal, Bangladesh, Myanmar, Sri Lanka and the Maldives have also seen Chinese investment and infrastructure projects as part of the BRI.

The projects in and of themselves are not necessarily contentious and in fact fill an infrastructure investment gap in Asia. Indeed, the Asian Development Bank in 2017 estimated that infrastructure needs in developing Asia and the Pacific require roughly US $1.5 trillion per year until 2030. However, there has been increased speculation over their terms and conditions for the financing of China’s BRI projects. The financial debt resulting from some of these projects has resulted in fears over ‘debt trap diplomacy’. Repercussions of debt trap diplomacy are not just the loss of sovereign control over infrastructure, but also include the dominance of Chinese contractors in BRI projects.

The potential strategic locations of BRI deep water ports across the IOR has led some observers to highlight a resemblance to the geopolitical ‘String of Pearls’ theory. First coined in 2005, it predicted that Chinese commercial and military facilities in countries bordering the Indian Ocean would result in a network on which Chinese maritime dominance could be achieved. The commercial ports under BRI that encircle India have caused concern, not least because the Chinese-operated container terminal at Colombo Harbour in Sri Lanka, received two Chinese submarine calls in 2014.

These visits alone are not proof that the String of Pearls strategy is alive and well. However, China has been expanding its military footprint in recent years. In November 2017, China opened its first overseas naval base in Djibouti, which according to official reports, is a logistics facility to support its international humanitarian obligations such as anti-piracy missions. However, other reports have emerged over a potential Chinese naval and air base opening in Jiwani, located between Chabahar Port in Iran and the Chinese-built Gwadar Port in Pakistan.

It is no secret that Beijing seeks to transform into a maritime power. As stated in its 2015 National Defence White Paper, the People’s Liberation Army Navy (PLAN) plays a central role in China’s ambition to shift to ‘open seas protection’ instead of its previous prioritisation of ‘offshore waters defence’.

Although India’s suspicion over Chinese ambitions in its immediate neighbourhood therefore continues to rise, New Delhi is carefully continuing to pursue a policy of strategic engagement including infrastructure investment, such as the expansion of Chabahar Port in Iran. Working more closely with like-minded partners, like Japan, on jointly delivering alternative sources of investment to countries in the Indo-Pacific is another facet to India’s outward economic investment policy. Although measuring up to Chinese levels of investment will be difficult, the value of the investments that India engages in will lie in its transparency, sustainability and adherence to recognised international rules and norms.

India will also, however, continue to work with China and other states on managing regional connectivity projects through its membership of the Chinese-led Asian Infrastructure Investment Bank (AIIB), which helps finance infrastructure projects, including in India. Indeed, India is a founding member of the AIIB, its second-largest shareholder (behind China) and is set to host the annual AIIB meeting in Mumbai in June of this year.

However, India is also investing more in its defence and security foreign policy through bilateral relationships with IOR countries to promote collective maritime security and ensure its access to strategic facilities in the IOR. In January 2018, India signed an agreement with the Seychelles to develop, manage, operate and maintain military infrastructure on the island as part of its bilateral defence and security cooperation. An agreement was also signed in February that will allow the Indian Navy to access Oman’s Duqm port for logistics and support.

More recently, India and France agreed reciprocal access to each other’s naval facilities, including the French facilities in La Réunion, Mayotte, and the French Southern and Antarctic Lands. Leaving aside questions over India’s resources and the modernisation of its Navy, this will in theory allow the Indian Navy the ability to extend its reach in the IOR.

While India’s strategic engagement will continue to evolve, it will seek to avoid the military and economic consequences of a conflict with China. Over the past week, both Indian and Chinese foreign ministry spokespersons have signalled the importance of maintaining a positive bilateral relationship, with the latter noting that ‘the Chinese dragon and Indian elephant must not fight each other, but dance with each other.’ The question is, to who’s tune?

by Veerle Nouwens