China’s foreign policy under Xi Jinping has been described as increasingly assertive, even to the point of once being dubbed wolf warrior diplomacy. The task of implementing this policy has fallen on an old hand in Chinese diplomacy, foreign minister Wang Yi. His brief since 2014 has been to “proactively strive for achievements to let the world hear of the Chinese solutions and Chinese voices”. Wang was once seen as his master’s voice. But now things have gone to a higher level, with events like the Shanghai Co-operation Organization summit in Tianjin that China is using in conjunction with Russia to propagate a larger alternative to the US. Xi and Wang have also turned their attention to India, perhaps realising that its leadership, spurned by Donald Trump in trade talks after a highly visible phase of bromance, would be amenable to new overtures. For China too, it made sense to forge a détente with India, as it too faced the tariff heat from Trump.
Mostly, then, it is a case of hard times leading to strange compulsions. Clearly, Trump’s tariffs have been a force in bringing the countries back to the table. Wang now has a challenging role to perform. During his visit to India in the run-up to Tianjin, he engaged in meaningful interactions with Indian interlocutors, including his counterpart S. Jaishankar and National Security Advisor Ajit
Doval, which seems to have set the stage for an economic thaw, even if not a strategic one. Prime Minister Narendra Modi’s visit to China, some five years after the deadly Galwan clash, in which 20 soldiers from both sides died in hand-to-hand combat, is therefore significant in more ways than one. The incident had brought back memories of the 1960 conflict, and a boycott of Chinese goods had been fanned by certain elements in India.
It is too early to say that the Russia-India-China alignment will gain more traction, initiating a process that, over time, to become a major counterweight to the Western alliance, led by the US. On paper, BRICS, now just RIC, is a force to reckon with, because the economies of these three countries just account for about a quarter of global GDP. The latest detente between India and China is likely to lead to freer movement of the respective nationals, as the freeze has been disruptive to joint ventures in both countries. Besides, India could do with a possible lifting of curbs on fertiliser supplies from China, apart from rare earth minerals and tunnel-boring machines, as media reports seem to suggest. It is, however, worth noting that with respect to China, there will always be a sliver of uncertainty over what has actually been agreed upon, given the generally opaque nature of the Chinese state.
So, India will have to follow the policy of the late US President Ronald Reagan, while dealing with the erstwhile Soviet Union: trust, but verify. One needs to recall that, during the recent four-day war with Pakistan, it was Chinese real-time intelligence and equipment that was being used against India. The new arrangement should be based on mutual respect, mutual interest, and mutual sensitivity.
The trade talks must be seen in the context of specific product dependencies of India vis-a-vis China. India’s annual bilateral trade with China is in the range of $120 billion, with India running a $100 billion trade deficit. India’s share in bilateral trade has shrunk from 42 per cent two decades ago to 11 per cent now, with a high import content in pharmaceuticals, electronics, renewables, chemicals, synthetic yarn, and power equipment, among others. China’s share in the imports of some of these commodities is high indeed, such as silicon wafers (97 per cent), computer monitors (67 per cent), erythromycin (98 per cent), solar panels (83 per cent), lithium-ion batteries (75 per cent), and PVC resin (41 per cent).
The deficit is a matter of concern because it is not only large but also structural. What makes it more serious is that China now dominates India’s import baskets across virtually every industrial category – from pharmaceuticals and electronics to construction materials, renewable energy, and consumer goods. The overwhelming dominance gives Beijing potential leverage against India, turning supply chains into a tool of pressure in times of political tension. India has time and again flagged its concern over the ballooning trade deficit and the non-trade barriers faced by Indian goods in the Chinese market. These are issues that will have to be squarely addressed before the Modi-Xi tango wins acclaim.