As tensions between India and China ‘de-escalate’, the preferred diplomatic term these days, both sides know that the tragic border skirmish that resulted in the recent death of 20 Indian soldiers is more than a boundary conflict along the Line of Actual Control.
For China, this is about asserting its superiority over India’s democratic system, something that China has been telegraphing to the world for decades. Indeed, in a May interview with the German broadcaster DW, Wang Huyiao, a senior former Chinese government official said it for the thousandth time, “In the 1980s, China and India had the same level of economic development. Now, China is five times ahead of India.”
Huyiao’s statement is technically true but it is India’s global rise that China is most wary of. As one of 14 countries that share a border with China - the others are Pakistan, Afghanistan, Tajikistan, Kyrgyzstan, Kazakhstan, Mongolia, Russia, North Korea, Vietnam, Laos, Myanmar, Bhutan, and Nepal - India is the only country that has the ideological, geographic, economic, and military heft to act as a viable counterbalance to China in the region.
Vibrant democracy
India’s achievements, despite its systemic poverty and illiteracy, have come as a democracy with a vibrant and largely independent press. Free speech and religious rights are its hallmarks. India’s frequent elections are a massive exercise of democratic expression. Election outcomes always result in peaceful transitions of political power.
India’s scientific exploits, such as in space, and stature as the world’s IT and BPO services backbone, have no equal among countries in the region. Indian-origin leaders in academia, the arts, and business span the globe - two of the world’s biggest tech companies are run by them. It is little wonder that India is the world’s darling when love is not imposed. Better yet, few countries hate India, accepting it as a large, lively, imperfect, mystical place that celebrates vast internal differences in culture, language, and history, and proudly unites under one flag, with zero coercion.
At over $13 trillion in GDP, China is all about power and coercion - and these days, not even subtle. China is the world’s second-largest economy and a leader in iron, steel, aluminium, textiles, cement, cellphones, personal computers, shoes, chemicals, toys, electronics, rail cars, and ships. Its $300 billion investment in the “Made in China 2025” initiative extends this dominance to ten new industries including next-generation IT, robotics, AI, aerospace, new energy vehicles, new materials, biomedicine, and agricultural equipment. If China is successful, there will not be a single advanced sector in which China would not be a key player.
Global ambitions
But China cannot advance its global ambitions unilaterally without finding markets for its wares and partners to push its agenda of control. So, it has been carefully developing a strategy to divide and conquer, creating inter-country fights with which it deals, in a thinly-veiled plan to dominate the world while maintaining harsh control over its own people, through draconian laws that make a mockery of human and religious rights.
China divides the world into four buckets.
In the first pile are the 78 countries that are indebted to it for investment, like the One Belt One Road Initiative. Many of these are failing nations that have long eschewed democratic governance and are run by corrupt leaders eager to trade away state assets for investments and private kickbacks to Swiss bank accounts. China has no law, such as the US Foreign Corrupt Practices Act, that prohibits its citizens and entities from bribing foreign government officials to benefit their business interests.
Nor does China particularly care about human rights violations or other lawless behaviour in the countries with which it does business. To China, access to markets and natural resources is the only thing that matters. Considering that there are 193 countries in the UN, China’s vice-like grip over nearly 40 per cent of the world’s nations is a scary achievement that is of serious concern to Western governments.
Fourth largest investor
In the second pile are the many countries that are dependent on China for both high-tech investment and trade. Germany sells more to China than to the five largest European countries combined. It is no coincidence that China is the fourth largest investor in Germany. Australia’s GDP growth during the last 20 years, since China was admitted to the WTO in 2001, would have been a small fraction but for China’s voracious appetite for Australia’s natural resources.
Russia, a long-time Chinese ally at the UN Security Council always eager to vote down Western proposals, and a country that shares a 2,625 mile-border with China, is in this group too. Nearly all countries in the second pile have a love-hate relationship with China. They like Chinese money and its cheap products but hate just about everything else that is Chinese.
In the third bucket are countries that China dominates through a sheer show of force. Vietnam, the Philippines, Malaysia, Taiwan, Indonesia, and other countries are afraid of Chinese hegemony in the South China Sea. But dependent upon China for trade, they neither have the financial means nor the military wherewithal to mount an effective defense.
Trump’s stand
Standing alone in the last bucket is the United States, a military power that spends four times as much as China does on defence and has an economy that is nearly twice that of China’s but with only a fourth of China’s population. Until President Trump took office, the US was squarely in the second pile, selling aggressively to China and benefiting from China’s unique position as the world’s factory. But US trade with China got so lop-sided that deficits routinely topped $500 billion a year. China is also the US’s largest debtor, buying more Treasury bonds than any other country.
Trump pulled the U.S. away from the second bucket and created the fourth group all by himself. He has attacked China like no other world leader, accusing it of stealing intellectual property and making it hard for American companies to do business there because China imposes mind-numbing contracts that always favour Chinese companies at the expense of foreign entities.
Trump has levied tariffs on Chinese goods arguing that China doesn’t buy enough from the US. He has used national security provisions to limit Huawei (and other Chinese technology companies with close ties to the Chinese Communist Party) from doing business in the United States. He has cancelled visas for Chinese researchers at American universities if these researchers have connections to the Chinese government.
Chinese propaganda
And since February, he has relentlessly attacked China as not only the source of the Covid-19 virus but also as a country that did not do enough to prevent its spread. He has even cancelled America’s funding of the World Health Organization charging that the WHO is a puppet of Chinese propaganda.
Into which bucket does India fall? Clearly, neither the first nor the third, because India is a global power in its own right, earning a non-permanent seat on the United Nations Security Council just last week. India has a strong military although its defence budget is only about half of China’s defence expenditures, and most of India’s budget is set aside for pay and pensions. India doesn’t have the manufacturing and supply chain infrastructure that China has, but India can come closest to challenging China’s capabilities. For example, in the pharmaceutical industry, India’s global strength is not that far off from China’s.
Does India then belong in the second bucket? At first glance, it appears so because India’s trade with China is important for both countries. But India buys four times more from China than India sells to China, so, China has more to lose in a protracted fight with India. This is especially true if India begins to source its purchases from other countries or begin to manufacture them on its own and export, to directly compete with China.
Philosophical candidate
What scares China, even more, is that India is a strong philosophical candidate to join the United States in the fourth pile. China doesn’t want India in the fourth bucket and is eagerly hoping for Trump to lose the election this November and see Joe Biden become America’s 46th President. Biden will meekly return the US to the second bucket of appeasing China at all costs. India, without American support, cannot be in the fourth group all by itself and take the fight to China, so the fourth pile will collapse like a house of cards - an outcome China strongly favours.
But if Trump gets re-elected, things could become more complicated for China. Trump can claim that what propelled him to a second term was his aggressive anti-China policy to bring China in line. Joining hands with India, he could realign America’s vast commercial assets to help re-organise the world’s supply chain to increasingly originate from India. This would be a severe blow to China and the Belt Road Initiative countries. It could usher in a new period of realignment away from China’s aggressive postures to manipulate and dominate the globe.
The Galwan Valley clashes are therefore not just about forces fighting with fists, rocks, batons and clubs wrapped in barbed wire. They are instead a preview of how the world’s centre of gravity of power will likely change in the coming months.