Trust deficit vs trade deficit

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As expected, the meeting started with a lot of hype. China’s President Xi Jinping said, “We (India and China) both shoulder the historical responsibility of improving the wellbeing of our two peoples…. It is the right choice for both countries to be friends… and to have the dragon and the elephant come together.”

India’s Prime Minister Narendra Modi was equally optimistic. He said, “Last year in Kazan, we had very fruitful discussions, which gave a positive direction to our relations. After the disengagement on the border, an atmosphere of peace and stability has been created.”

But such public statements hide the deep historical mistrust between the two nations. While the two leaders may agree to cooperate for mutual growth and development, global peace, and a multipolar world order, merely to combat the US President Donald Trump’s antics, there is no guarantee that existing differences will not turn into later conflicts. It has happened before, and it can happen again. Both leaders are too smart to really reveal what is on their minds.

The fact remains that standard phrases and platitudes give “no real clue” to China’s thinking, feels former Indian foreign secretary, Kanwal Sibal. Sadly, the same mindset applies to India. There are several stumbling blocks for better understanding and trust between the two nations, and these include issues such as Tibet, Pakistan, disputed borders, river waters, roles in the extended neighbourhood, and their respective relations with the US.

It is the asymmetry in China and India’s power, both real and perceived, which is the real cause for the (past and present) tensions and rivalry between them, states a recent paper by Chietigj Bajpaee and Yu Jie of the Chatham House. China is three times the size of India; it has a GDP that is five times bigger, and; its military spending is three times higher. Since the 1962 war between the two nations, China, as India’s former prime minister, Jawaharlal Nehru, lamented, wants to show that it is more powerful.

Part of India’s problem was the personalisation of the bilateral relationship at the highest level, says Srinath Raghavan, a visiting senior research fellow at the National University of Singapore’s Lee Kwan Yew School. He adds that this led to a sense of being let down by the other side, which may not have happened to the same extent had we taken a more objective view of the relationship.

Apart from the experts, even the Indian public seems worried. A Gurugram-based professional says, “We know the past. We know how China backtracks. Still, we are talking about being friends with China. Have we forgotten what happened in the wake of the Hindi-Chini Bhai Bhai slogan? Another ardent South Delhi-based BJP supporter adds, “Everything that this Government has done is near-perfect. But we need to rethink our foreign policy.”

Given this history, context and background, can the Modi-Xi meeting translate into normalising the relations? Modi’s visit takes place when the two sides wish to re-engage after a four-year military face-off at the border. It comes in the aftermath of ‘Operation Sindoor’ when China provided Pakistan with intelligence, surveillance and reconnaissance support. India’s dilemma in dealing with China is increasing, says Sibal. In a recent piece, he argued that “we have to both resist and engage (with) China.”

Gautam Bambawale, the former Indian ambassador to China, suggests a policy of ‘trust and verify.’ But he is pragmatic enough to add that it is difficult to expect trust to be restored overnight after the recent border conflicts between the two. Raghavan agrees that trust can be built only by understanding each other’s claims at the border, and verifying actions, which is an ongoing activity.

Although as XI said, India and China are the world’s two most populous countries, with a combined population that accounts for 40 per cent, China’s perception of India remains a problem. The former does not treat India as an equal. Beijing thinks of New Delhi as a side-story in its larger geopolitical rivalry with Washington. China is the second largest economy in the world, and enjoys global clout. Its opinions are sought for the major challenges facing the world.

India has shown remarkable growth in recent years, and is projected to become the third largest economy. Its influence at the global stage has increased, and it is regarded as the key articulator of the Global South. But China continues to regard India as an appendage of the US, and sees the bilateral relation through the American prism, states the Chatham House paper. This tendency has led Beijing to overlook New Delhi’s sensitivity, which has led to problematic relations, and frustrations in New Delhi.

To match China’s power, India moved closer to the US in the recent past. The US, which regards China as a peer competitor that can challenge its global hegemony, encouraged the growing ties with India. America’s interest is in India’s markets, and as a geopolitical counterweight to China in the Indo-Pacific region. But these equations have changed largely due to Trump’s tariffs.

This has forced India to explore options, particularly with China for investments, and plugging into the latter’s supply chains to build a local manufacturing base. Some pundits think China can become the new pivot in Asia for India. C Raja Mohan, an international affairs expert, argues that it is misleading to conflate India’s current difficulties with the US with the potential outcomes in the series of meetings between India, China and Russia. Neither China nor Russia can offer much respite to India on the trade front, which is the problem area in the India-US relations.

A recent letter by President Xi to his Indian counterpart, Draupadi Murmu, on the anniversary of the establishment of diplomatic relations between the two nations acted as a catalyst for the current re-engagement. But the trade between the two is heavily in China’s favour. India runs a deficit of $100 billion. India’s industry is heavily dependent on China for rare earth magnets and lithium batteries, active pharma ingredients, tunnelling equipment, Chinese engineers from iPhone production and Chinese supply chains.

While re-engagement commences, the building of trust and loyalty will not happen in a day. The Xi-Modi meeting has kick-started the process, and raised the stakes for both nations. As the Chatham House paper cautions, while economic inter- dependence between China and India may reduce the likelihood of a major conflict, it does not prevent a broader geopolitical rivalry between the two.

Daily Pioneer
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