Emerging China

Downloaded by [University of Defence] at 01:36 24 May 2016 Emerging China Downloaded by [University of Defence] at 01:36 24 May 2016 This page intentionally left blank Downloaded by [University of Defence] at 01:36 24 May 2016 Emerging China Prospects for Partnership in Asia

Editors Sudhir T. Devare Swaran Singh Reena Marwah Downloaded by [University of Defence] at 01:36 24 May 2016

LONDON NEW YORK NEW DELHI First published 2012 in India by Routledge 912 Tolstoy House, 15–17 Tolstoy Marg, Connaught Place, New Delhi 110 001

Simultaneously published in the UK by Routledge 2 Park Square, Milton Park, Abingdon, OX14 4RN

Routledge is an imprint of the Taylor & Francis Group, an informa business

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All rights reserved. No part of this book may be reproduced or utilised in any form or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system without permission in writing from the publishers. Downloaded by [University of Defence] at 01:36 24 May 2016 British Library Cataloguing-in-Publication Data A catalogue record of this book is available from the British Library

ISBN: 978-0-415-50236-8 To the vision and perseverance of India’s founding fathers Downloaded by [University of Defence] at 01:36 24 May 2016 This page intentionally left blank Downloaded by [University of Defence] at 01:36 24 May 2016 Contents

List of Abbreviations xi List of Tables and Figures xv Preface and Acknowledgements xvii

Introduction Sudhir T. Devare, Swaran Singh and Reena Marwah 1

Part I: Asian Multilateralism

1. ASEAN Multilateralism and the Engagement of Great Powers 21 Aileen S. P. Baviera

2. ASEAN at the Crossroads of Regionalism: The Indonesia Perspective 36 Meidyatama Suryodiningrat

3. Regional Cooperation and Engagement: The East Asia Summit 46 Ong Keng Yong

4. Regional Security Architecture: Indian and Chinese Positions 52 D. S. Rajan

5. The Emerging International China–India Division Downloaded by [University of Defence] at 01:36 24 May 2016 of Labour and India’s Quest for Status Parity and Security with China 64 John W. Garver

6. China’s Strategy in Asian Regional Cooperation: Towards Multi-layered Engagement 98 Fu-Kuo Liu viii Emerging China

Part II: Engaging China

7. Emerging China-centrism: Prospects for Epistemic Partnership in the Divided Sino–phone World 117 Chih-Yu Shih

8. China’s New Patterns of Relationship with East Asia 143 John Wong and Sarah Y. Tong

9. China’s 21st-century Status and Challenges 168 Phung Thi Hue

10. China’s Rise: Changing Contours of Japan’s Foreign Policy 182 Tomohiko Taniguchi

11. Changing Patterns in South Korea’s Relations with China and India: The Way Forward 201 Chung-in Moon

12. In the Midst of the Major Powers: Malaysia’s Strategic Options and Outlook 215 S. M. Tang

13. China–Singapore Cyclical Relations in the Longue Durée: Some Lessons for the Future 228 Jean-Louis Margolin

14. Emerging China: Prospects for Partnership in Asia — A Perspective from Sri Lanka 241 Nihal Rodrigo

15. Involving China through Asian Integration: Downloaded by [University of Defence] at 01:36 24 May 2016 A Nepalese Perspective 256 Mohan P. Lohani

16. Burmese Tango: Indian and Chinese Games and Gains in Burma (Myanmar) since 1988 269 Renaud Egreteau Contents ix

Part III: China–India Equations

17. The Trust Deﬁ cit in India–China Relations 295 Tansen Sen

18. Soft Power and Foreign Policy: Emerging China and its Impact on India 306 Christian Wagner

19. The Shifting Balance of Power and China–India Relations: Between Cooperation and Competition 319 Zhang Guihong

20. India Rising and China–India Strategic Interaction: Geopolitical Uncertainty versus Conﬁ dence Building 333 Zhang Li

21. The Rise of China and India: Prospects of Partnership 348 Hu Shisheng and Peng Jing

22. Where are India–China Relations Heading?: A Futuristic Outlook 375 Ranjit Gupta

About the Editors 398 Notes on Contributors 400 Index 407 Downloaded by [University of Defence] at 01:36 24 May 2016 This page intentionally left blank Downloaded by [University of Defence] at 01:36 24 May 2016 List of Abbreviations

AAS Association of Asia Scholars ADB Asia Development Bank ADBP Agricultural Development Bank of Pakistan AFTA ASEAN Free Trade Area APC Asia–Pacifi c Community APEC Asia–Pacifi c Economic Cooperation APT ASEAN Plus Three ARATS Association for Relations across the Taiwan Straits ARF ASEAN Regional Forum ASA Association of Southeast Asia ASEAN Association of Southeast Asian Nations AWACS Airborne Warning and Control System BCIS Bandaranaike Centre for International Studies BFA Boao Forum for Asia BIMSTEC Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation BJP Bharatiya Janata Party BOI Board of Investors BRIC Brazil, Russia, India and China CAFTA China–ASEAN Free Trade Area CBMs Confi dence Building Measures CEPA Comprehensive Economic Partnership Agreement CEPEA Comprehensive Economic Partnership of East Asia CIIS China Institute of International Studies

Downloaded by [University of Defence] at 01:36 24 May 2016 CNOOC China National Offshore Oil Co. CNPC China National Petroleum Corporation CoD Community of Democracies CPC Communist Party of China CSC China Scholarship Council CSIS Centre of Strategic and International Studies DPJ Democratic Party of Japan EA East Asia EAEF Euro–Asia Economic Forum xii Emerging China

EAS East Asia Summit EEZ Exclusive Economic Zone EFA Education Forum for Asia ERIA The Economic Research Institute for ASEAN and East Asia EU European Union FBI Federal Bureau of Investigation FDI Foreign Direct Investment FIE Foreign-invested Enterprise FTA Free Trade Agreement GAIL Gas Authority of India Limited GDI Global Democracy Initiative GDP Gross Domestic Product GHG Greenhouse Gas GMS Greater Mekong Sub-region IBEF Indian Brand Equity Foundation IAEA International Atomic Energy Agency ICAPS Indian Association of Asian & Paciﬁ c Studies ICCR Indian Council for Cultural Relations ICWA Indian Council of World Affairs IIDCA India International Development Cooperation Agency ILO International Labor Organization IMF International Monetary Fund IOR-ARC Indian Ocean Rim-Association for Regional Cooperation IRASEC Institute of Research on Contemporary Southeast Asia ISDP Institute of Security and Development Policy ISEAS Institute of Southeast Asian Studies ITEC Indian Technical and Economic Cooperation

Downloaded by [University of Defence] at 01:36 24 May 2016 KINU Korea Institute of Uniﬁ cation Studies LAC Line of Actual Control LDC Less Developed Country LTTE Liberation Tigers of Tamil Eelam MAPHILINDO Malaysia, the Philippines and Indonesia MD Missile Defence MEA Ministry of External Affairs MGC Mekong Ganga Cooperation List of Abbreviations xiii

MI Military Intelligence MoU Memorandum of Understanding MTR Military Technological Revolutions NAM Non-Aligned Movement NATO North Atlantic Treaty Organisation NIEs Newly Industrializing Economies NIEO New International Economic Order NIO New Information Order NRI Non-Resident Indian NSG Nuclear Suppliers Group ODA Ofﬁ cial Development Assistance OECD Organization for Economic Cooperation and Development OIC Organization of the Islamic Conference ONGC Oil and Natural Gas Corporation PLA People’s Liberation Army PLAN People’s Liberation Army Navy POSCO Pohang Iron and Steel Company PPP purchasing power parity PRC People’s Republic of China RoK Republic of Korea SAARC South Asian Association for Regional Cooperation SCO Shanghai Cooperation Organisation SEATO Southeast Asia Treaty Organization SEF Straits Exchange Foundation SERI Samsung Economic Research Institute SEZ Special Economic Zone SLOC Sea Lane of Communication SLORC State Law and Order Restoration Council SIPRI Stockholm International Peace Research Institute SOEs State-Owned Enterprises

Downloaded by [University of Defence] at 01:36 24 May 2016 TAC Treaty of Amity and Cooperation UMNO United Malays National Organization UN United Nations UNDP United Nations Development Programme UNSC United Nations Security Council US United States USD United States Dollar USFJ United States Forces Japan xiv Emerging China

USNIC United States National Intelligence Council USSR Union of Soviet Socialist Republics WTO World Trade Organization WUC World Uygur Congress ZOPFAN Zone of Peace, Freedom and Neutrality Downloaded by [University of Defence] at 01:36 24 May 2016 List of Tables and Figures

Tables 5.1 Growth of China–India and Total China and India Trade 72 5.2 China’s Big-ticket Imports from India, 2005 75 5.3 India’s Big-ticket Imports from China, 2005 76 5.4 Comparisons of China–India Imports from the Other 79 5.5 Top 10 Export Sectors for China and India, 2005 80 5.6 Share of Imports to OECD Markets Supplied by China and India 81 5.7 Global Market Share of Indian and Chinese Exports in Various Sectors 83 5.8: Foreign Sales of Services by Service Category, China and India 85 5.9 Chinese and Indian In-bound FDI 89 5.10 Comparative Advantages of India and China in Attracting FDI 90 5.11 International Reserves Excluding Gold: China and India 93 5.12 Total Value of Arms Imports by China and India, 2001–2007 94

8.1 Production of Major Industrial Products, 1978–2008 146 8.2 East Asian Economies: Performance Indicator 149 8.3 Origins and Destinations of East Asian Intra-Trade 151

11.1 Korea–China Trade Relations 204 Downloaded by [University of Defence] at 01:36 24 May 2016 11.2 Korea–China, Korea–India Investment 204 11.3 Korea–India Trade Relations 209

13.1 Singapore’s Main Trading Partners since 1825, in Percentage of Total Trade 237 xvi Emerging China

Figures 5.1 International Division of Labour, Hard Power and Indian Quest for International Parity with, and Security from, China 68 5.2 Chinese and Indian In-bound FDI Displayed as Line Chart 89

8.1 East Asia Economic Growth, 1960s–2008: The Flying Geese Pattern 150 8.2 ASEAN-5 and China Competing for FDI, 1990–2008 154 8.3 China’s Trade Balance with Selected Countries (US$ Bn) 155 8.4 China at the Centre of Global and Regional Production Networks 156

10.1 Relationships 183 10.2 Afﬁ nity towards the Chinese 190 10.3 The Arc of Freedom and Prosperity 198 Downloaded by [University of Defence] at 01:36 24 May 2016 Preface and Acknowledgements

With the end of the Cold War that ended the rigid bipolar system of international relations, the centre of gravity started shifting towards the Asian landmass. This has since witnessed the heralding of multivariate emerging new alignments and also new power struggles amongst Asian countries. As a result, Asia, home to more than half of the global population, has increasingly become the focus of global debates and this growing consciousness about rising Asian’s dynamism has unleashed transformations both inside and outside their own societies. In fact, comprising today of some of world’s fastest- growing economies and increasingly dynamic societies, fastest-rising defence expenditure, fi ercest resource competition and the most serious confl ict-prone regions of the world, Asia is expected to trigger trends to redefi ne the future order of things much beyond its immediate periphery. As Asian economies reinvent themselves, they face new challenges. They need to cope with ongoing boundary disputes, evolving competition over scarce resources, newer defence capabilities and strategic equations and, more recently, with the rise of religious extremism and terrorism. However, at the same time, as forces of globalisation continue to sweep their enthusiasm, Asian countries cannot ignore their growing interdependence and interlinks. It is making them conscious of the time being ripe for developing Asia to begin debating how to take advantage of their commonalities to overcome their common challenges. This journey can begin only by taking the fi rst

Downloaded by [University of Defence] at 01:36 24 May 2016 essential step in appreciating one another’s cultural, political and economic diversity. Asian civilisations have been the custodians of a rich and composite culture that have lived together and mingled since ancient times. The progress of these countries — both large and small — crucially hinges upon these core and age-old values of mutual coexistence, peace and tolerance that deﬁ ne their pan-Asian values and identity. The rise of China without doubt remains a major force in this fast evolving Asian puzzle. The world has come to accept that China’s xviii Emerging China

rise has the potential to unleash systemic changes in Asia and beyond. The focus now remains on how to ensure that China’s rise remains peaceful and that it has positive spin-offs for other Asian countries. More recently, India has come to be recognised as an emerging new player and the hyphenation of China and India — as two drivers of economic growth in Asia — has came to occupy the centre stage of debates and publications since the early years of the 21st century. Moves of their tango together have become especially important in the backdrop of the global economic slowdown of 2008–2009 which witnessed China and India standing together with their continued high growth rates and robust economies. The efforts made by China and India (as part of G 20) to restore fuller and healthier global growth is seen as a major force in ensuring recovery. Besides, both China and India continue to emphasise the need for a peaceful neighbourhood to ensure their continued rise. Both are increasingly seeking enduring partnerships across Asia and beyond as they realise the signiﬁ cance of building a pan-Asian reality. It was in this milieu that in March 2009, the Indian Council of World Affairs (ICWA) and Association of Asia Scholars (AAS) began discussions on organising a conference on the emerging dynamics of China’s rise. Especially in view of India’s rise and its increasing interest, along with China, in expanding the role for emerging economies via strengthening multilateralism, there was an urgent need to initiate a serious debate in Asian relations from the Indian perspective. This proposal from AAS was to receive an enthusiastic response from Ashok Kumar, then Acting Director General, ICWA. In the follow-up discussion emerged the idea of taking this ﬁ rst conference on Emerging China as the starting point for an Asian Relations Conference Series to commemorate ICWA’s foundation day every year with an annual conference on a theme about Asian relations that had once been the favoured idea of the founding fathers of the ICWA.

Downloaded by [University of Defence] at 01:36 24 May 2016 Soon, Ambassador Sudhir T. Devare was to take over as Director General, ICWA. He was equally receptive to this idea of the ICWA– AAS Asian Relations Conference Series. Meanwhile, Ambassador Ashok Kumar had contributed signifi cant insights into the preparation of the original concept paper which was formally adopted by the ICWA’s Programme Committee, chaired by Ambassador S. J. S. Chatwal. Very briefl y, the ICWA was set up in 1943 by India’s freedom fi ghters and eminent personalities of that time. Under Jawaharlal Nehru’s Preface and Acknowledgements xix

inspiration and the leadership of Sarojini Naidu, the ICWA had held the epoch-making Asian Relations Conference in April 1947 (before India’s independence), which was addressed by the likes of Mahatma Gandhi and Jawaharlal Nehru. Cambridge History records Nehru stressing that India was ‘the natural centre and focal point of many forces at work in Asia’. Nehru had convened another inter-Asian conference in January 1949. In his writings and speeches, Nehru had laid great emphasis on the manner in which postcolonial India would rebuild its Asia connections. At this conference Nehru declared: ‘Asia is again fi nding herself ... one of the notable consequences of the European domination of Asia has been the isolation of the countries of Asia from one another.’ The AAS, by comparison with KWA, is a younger organisation that was registered in New Delhi in November 2005, and now comprises nearly 300 mid-career and senior experts in Asian Studies across all disciplines and across China, East, Southeast and South Asian countries. Given its vision of ‘globalising Asia’, it closely shares its objectives with the ICWA, which promises to debate and disseminate analysis on Asian relations from Asian and Indian perspectives. The fi rst conference — and this fi rst volume — had its own concerns and anxieties. The thematic outline, participants’ list and logistics of the conference were debated and discussed in detail amongst members of the organising committee, including Ambassador A. N. Ram, Mr Vijay Gokhale, then Joint Secretary (East Asia), Ministry of External Affairs, Government of India, Professor Amitabh Mattoo, Ambassador Ranjit Gupta and Professor Manoranjan Mohanty, among others. The conference theme was fi nalised in May 2009, leaving a good six months for the preparations. Within a few weeks of the invitations being dispatched, there was an overwhelming response from scholars, diplomats and policy makers both from within and outside Asia. More than 50 delegates from 15 countries including the USA, UK, Germany, Japan and South Korea, participated in its Downloaded by [University of Defence] at 01:36 24 May 2016 proceedings. There were participants and paper presenters from various parts of India and a general audience that touched nearly 290 people at the opening and closing sessions. The success of the conference and its outcome in the form of this volume owes much to the intellectual rigour displayed by the organising committee, paper presenters, session chairs and all other participants of the conference. Luminaries and experts included Hon’ble Vice President of India, Mr Mohammad Hamid Ansari, who opened the conference series. In his keynote address, the Vice President delineated India’s xx Emerging China

extraordinary democratic traditions and their signiﬁ cance for global peace and development. He outlined the centrality of China and India to Asia and of Asia to the emerging global reality of the 21st century. To quote from his speech:

A glance at the Asian map shows that over a wide arc extending from West Asia, through Central Asia, to South and South East Asia to East Asia, Indian and Chinese interests intersect. Active partnership between New Delhi and Beijing and mutual sensitivity to each other’s concerns is thus vitally necessary if stability, security and prosperity in the shared spaces in their near and distant neighbourhood are to be effectively ensured. The leaderships of India and China during the past two decades have cooperated in creating mutual political and economic stakes for mutual benefi t. Economic cooperation between us has become a principal driver of our strategic and cooperative partnership for peace and prosperity. Yet, cooperation does not preclude competition. We realise that countries compete in global markets and such competition is constructive and benefi cial rather than adversarial. The post-Cold War world also demands that we readjust our theoretical models of state behaviour. Traditional concepts of polarity, alliance building, balance of power and spheres of infl uence have to contend with the impact of globalisation where opportunities for, and threats to, human welfare and national progress have a global character. How India and China deal with various transnational challenges such as terrorism, illegal migration, smuggling of drugs and arms and pandemics would affect large parts of Asia. The joint vision of the leaderships in India and China is to ensure a global order in which our simultaneous development will have a positive impact for our peoples and economies, as also for the rest of the world.

Session chairs included senior diplomats and academics like Ambassador Brajesh Mishra, Ambassador A. P. Venkateswaran, Ambassador K. S. Bajpai, Professor G. P. Deshpande, Professor S. D. Muni, Professor Satu Limaye and Professor Brahma Chellaney. Downloaded by [University of Defence] at 01:36 24 May 2016 They provided the necessary direction to the thematic sessions and, along with the other participants, gave valuable suggestions to the paper writers for improvement of their papers. We must also record the excellent cooperation that we received from the contributors of the articles who meticulously carried out revisions; we wish to acknowledge each one of them with gratitude. We are also grateful to the eminent Gandhian scholar, Late Mr L. C. Jain, whose mere presence in the closing session transported Preface and Acknowledgements xxi

the delegates to the realms of the ﬁ rst Asian Relations Conference of March–April 1949 where he had worked as an executive assistant to Sarojini Naidu and helped in organising that historic conference in New Delhi. Dr Shashi Tharoor, then Minister of State for External Affairs, delivered the Valedictory Address, in which he underlined the imperatives for India to continue to contribute to international security and prosperity and to the democratic and sustainable development for all Asian countries. In his words,

The US is no longer seen as the sole determining nation of today’s global order. With the emergence of a signifi cant number of countries with great infl uence and potential in their own regions and often beyond them they feel relatively unconstrained by the reach of American power. The economic rise of China, allied to its increasing military capabilities, also raises the question of how long the word ‘superpower’ can remain a singular noun. It is in this context that we see the emergence of a multi-polar world. This has intriguing implications for India, because a number of our tried and tested foreign policy principles were formulated in a very different era. Non-alignment, which simultaneously rejected the logic of the Cold War, affi rmed the right of former colonies to assert their autonomy in international decision-making and maximized our space for manoeuvre in a bipolar world order, is a refl ection of its time.

Like the Hon’ble Vice-President, Dr Tharoor also informally inter- acted with the delegates of the conference where they had brief introductions and interactions. This was a useful exercise as it helped in creating a focused and businesslike ambience for conference discussions. We sincerely express our thanks to both of them for showing such affection to us and having us see them as part of our deliberations. The conference, that lasted three days, could never have been a success without the untiring efforts of Dr Ramesh Chandra, Deputy Director General and Ms Padmaja, Director, ICWA, and their Downloaded by [University of Defence] at 01:36 24 May 2016 dedicated team. They were instrumental in putting together all the logistics and especially in organising an exhibition showcasing the photographs of the ﬁ rst Asian Relations Conference through several visuals and photographs that were sourced from the National Archives. Several individuals, including members of the AAS and its senior advisor Dr Lourdes Salvador (Executive Director of the Asian Scholarship Foundation) and Professor Chih-yu Shih from Taiwan National University merit special thanks for their indulgence, advice and guidance. xxii Emerging China

For preparation of the ﬁ nal draft of the volume, comments and suggestions by anonymous referees were extremely useful and we wish to underscore our thanks for their advice for reorganising the sequence and titles of a few articles, thus streamlining the present outline. The secretarial assistance provided by Mr Vijay Sharma is greatly appreciated. The cooperation, patience and support provided by the editorial team at Routledge is gratefully acknowledged. Needless to say, we look forward to this book making a valuable addition to debates on China’s rise, and remain responsible for any errors and omissions that may have eluded our eyes or understanding.

Sudhir T. Devare Swaran Singh Reena Marwah Downloaded by [University of Defence] at 01:36 24 May 2016 Introduction

Sudhir T. Devare, Swaran Singh and Reena Marwah

China’s rise has been the staple diet for media headlines and discussion amongst the global academic and policy circles for the last three decades or more. This has become a growing industry especially amongst major powers and China’s neighbours. Most analysts agree today that this unprecedented rise of China remains predicated on and intertwined with the rise of Asia in general and therefore has direct implications for other Asian countries. Therefore, the axiom that the 21st century will be the Asian century has been the refrain that, in turn, calls attention to and reinforces the signiﬁ cance of emerging China and its implications. At the very outset, most scholars like to paraphrase this as ‘the re-emergence’ of China, thereby underlining the past where, till the beginning of the Industrial Revolution or, to be precise, till the 1820s, China accounted for one-third of the world’s gross domestic product (GDP).1 China was not only the largest economy in recorded history; in fact, until the 15th century, it also had the highest per capita income and it was the world’s technological leader. This backdrop says something about the likely magnitude of China’s future rise and makes its peaceful rise critical for the stability and prosperity of other Asian countries. India being the peer aspirant candidate and immediate neighbour of a similar size and aspirations, remains especially curious about these trends of emerging China; its implications are seen to bring both new challenges and opportunities Downloaded by [University of Defence] at 01:36 24 May 2016 for India’s foreign policy and a promise to herald several new trends in the evolution of Asian relations.

1 Stephen Green, Good Value: Reﬂ ections of Money, Morality and the Uncertain World, London: Penguin Books, 2009, p. 44; Pradumna P. Rana, ‘The Re-emergence of a Prosperous and Integrated Asia’, The Strait Times, Singapore, 3 October 2009. 2 Sudhir T. Devare, Swaran Singh and Reena Marwah

Reviving Pan-Asian Visions To begin with, China’s rise seems to revive debates about pan-Asian identities and Asian values. It was soon after the Industrial Revolution of the late 19th century that the world’s centre of gravity had shifted away from Asia to Europe and, eventually, after World War II, to the northern hemisphere, called the fi rst-world countries. Collapse of the Soviet bloc from the late 1980s was to make USA the sole surviving superpower and democracy and free market as the model of social life. Meanwhile, the colonial experience of Asian countries during the 19th and 20th centuries had systematically destroyed intra-Asian trade and dialogue and weakened pan-Asian identities, histories and cultural legacies. Having stayed at the periphery far too long, recent efforts to revive pan-Asian linkages have faced entrenched inward-looking development strategies, isolating Asian countries from the rest of Asia as they continue to rely solely on their linkages with some major power, often their ex-colonialist. Cold War dynamics only further cemented this isolation and divide and China was no exception to these trends. This is what explains its swings between Moscow and Washington, DC. The fi rst miracle was to happen in the form of the Association of Southeast Asian Nations (ASEAN)-led regional interlinkages since the early 1990s. The talk about the re-emergence of Asia has since become a much validated hypothesis. It is important to note that while ASEAN had triggered this recent revival of Asian multilateralism in foreign relations, the leverages, especially economic dynamism, has been added to it by countries like Japan, China and South Korea followed by India and several other rapidly developing Asian countries. The size, strategic location and rise of China has strongly encouraged visions of the rise of Asia and the resultant debates about pan-Asian identity, pan-Asian multilateralism and the Asian way of discoursing on issues of norms and institutions have Downloaded by [University of Defence] at 01:36 24 May 2016 since begun building a momentum of redefi ning Asian relations. On the fl ip side, however, these rising Asian economies also remain extremely diverse and disconnected, and skeptical of China that is at the centre of the Asian landmass. Asian political perspectives remain equally incoherent, sometimes working at cross purposes. This fl ows partly from the fact that Asian nations were never really territorial states until their interface with colonialism and this dichotomy continues to underwrite their knowledge of ‘self’ and ‘other’, which complicates their mutual policies and perceptions. The colonial myths of Introduction 3

the middle kingdom, religious and cultural diversity remain major concerns across Asian countries. This makes their epistemological contrast with Europe so evident. Indeed, the proposition that there are ‘Asian’ values, which is often at the root of the search for an Asian identity, is often understood only as a critique of the ‘European’ enlightenment project and thereby loses its ‘clash of civilisations’ absolutist spirit. From this perspective, Asian values need instead to be grounded and located in those basic norms of behaviour that are discussed as well as accepted across much of geographical Asia. These are values that run like common threads through the rich fabric of Confucianism, Hinduism, Islam, Buddhism and Shintoism and so on that today underlines Asian multilateralism. ASEAN in the Lead Applying the golden mean approach, major powers of Asia have evolved consensus in allowing ASEAN to take the driver’s seat in these efforts towards resurgence of the Asian people. From amongst the contemporary political perspectives, the ‘ASEAN Way’ has since come to be the most cohesive and potent proposition in reviving this search for pan-Asian identities and values. ASEAN Way relies on political commitment of member states to enforce agreed yet non-binding directives, though their agreements so far have largely been confi ned to economics and trade. Asian discourses seem to fi nd ASEAN as a relatively acceptable candidate and model to lead Asia’s search and formation of shared pan-Asian identities and agenda. Though given its Cold War origins and orientation, ASEAN countries had initially been skeptical of China. However, China’s role in ASEAN’s recovery from the East Asian fi nancial crisis of the late 1990s had made China an acceptable partner and Beijing today sees ‘the ASEAN Way’ as echoing its own national interest, thus making China utilise ASEAN as a vehicle of its own ambitions.

Downloaded by [University of Defence] at 01:36 24 May 2016 As regards China, in spite of its engagement with its neighbouring regions and its ‘good-neighbourly’ policies, China’s growing power raises concerns amongst its neighbouring countries. Some scholars suggest the Communist Party of China to be its explanation for it remains rather focused, almost entirely, on self-interest. They question as to why China would accede to pan-Asian multilateral regional frameworks when it can accomplish its objectives more effectively through bilateral ones. They believe its engagement to be at best only tactical, even artiﬁ cial. China also has its own share of suspicions. 4 Sudhir T. Devare, Swaran Singh and Reena Marwah

For the Chinese, it is the continuing US presence in Asia that seems to stoke the worst fears of America colluding with other Asian countries to prevent the peaceful rise of China. It is in this context of China’s uncertain yet sustained economic miracle of four decades that the Chinese elite, as well as China watchers outside China, feel the need to deconstruct the China puzzle. Prima facie, this has triggered an equally impressive pace of internal transformation in China’s social, political and even cultural personal- ity that makes experts see this miracle posing a challenge not only to China’s political elite but also to the entire Asian region and beyond. Experts across the world are working hard to fathom China’s evolving new ideational and cultural formulations and the transformations in its material infrastructure, which underwrites the evolving tenor in its foreign relations. The emergence of India has obtained it a hyphenated relationship with China. This has resulted in China engaging even more attention from India’s academics and policy makers. China’s ‘Harmonious World’ Thesis As part of its search in its legacy and its past and as part of the revival of Confucian culture, China’s new formulations like ‘harmonious world’ (externally), ‘spiritual civilisation’ and ‘peaceful development’ (internally) have emerged as major themes of China’s foreign policy debates.2 At the same time, however, this also echoes China’s overarching urge for ‘socialisation’ and ‘co-option’, both amongst the Chinese masses and among China watchers outside. Each of these formulations have been a major tool in understanding the emerging China phenomenon and also in exploring prospects of partnership with emerging China that require a deeper understanding of the Chinese mind. In this exercise of expanding mutual understanding and appreciation lie prospects for building pan-Asian partnerships

Downloaded by [University of Defence] at 01:36 24 May 2016 for maximising Asia’s opportunities and minimising its costs. From this perspective and with a focus on Asia’s future, Asian discourses on exploring the potential for partnership with China

2 Bonnie S. Glaser and Melissa E. Murphy, ‘Soft Power with Chinese Characteristics: The Ongoing Debate’, in Carola McGiffert (ed.), Chinese Soft Power and its Implications for the United States, Washington, DC: Center for Strategic and International Studies, 2009, p. 24; Yang Jiemian, ‘Chinese Diplomacy and Theoretical Innovations of 30 Years of Reforms and Opening Up’, Guoji Wenti Yanjiu, Shanghai, 13 November 2008. Introduction 5

can be the best way of understanding China and increasing positive spin-offs from its rise. Such engaging of China is likely to only further re-inforce pan-Asian consciousness and interlinkages. Experts in this volume seem to suggest using emerging China’s leverages in facilitating the rise of other Asia’s, India being one of them. China scholarship in Europe and America seems to have the advantage of viewing it from a distance. Moreover, these countries have been working in close partnership with Asian scholars to fathom the China puzzle and in understanding China’s policy priorities. While this volume represents one such exercise of partnership amongst China scholars from across the world, there does remain a certain focus on understanding the analysis of China from the perspectives of its immediate neighbours. But in the end, there remains a common ﬂ owing theme about the rising Asian consciousness and the author’s perspective on how it is evolving in relation to emerging China. Given that India is now seen as a peer and aspirant candidate for a similar pan-Asian proﬁ le in the making (and that the venue of the conference was New Delhi), a whole section is devoted to China–India relations and what they mean for understanding and managing China’s rise and its implications for Asian relations. In this Volume Broadly speaking, this volume seeks to examine the evolving contours of pan-Asianism through the lens of emerging Asian relations with China’s rise in its centre as its major trigger. The focus also remains primarily on assessing the impact it may have for the growth trajectories of China’s neighbouring countries. The volume from there on focuses on exploring the potential for building ‘partnership’ with rising China and highlighting various components of China’s engagement with its Asian neighbours as well as their engagement, in turn, with China. A whole section focuses especially on China’s

Downloaded by [University of Defence] at 01:36 24 May 2016 relationship with its aspirant peer candidate, India, highlighting their mutual stakes by examining their economic and security cooperation as well as their engagement with other countries and regional forums where one may be driving the other’s policy initiatives. This also throws light on how fast-evolving Asian relations may have implications for ensuring China’s peaceful rise and also peaceful China–India relations. This ambitious exercise, envisioned jointly by the Indian Council of World Affairs (ICWA) and Association of Asian Scholars (AAS) 6 Sudhir T. Devare, Swaran Singh and Reena Marwah

and deliberated during a three-day international conference on the theme ‘Emerging China: Prospects for Partnership in Asia’ held in New Delhi from 21–23 November 2009, was inspired by the historic contribution of the two Asian relations conferences held at ICWA during 1947 and 1949. Given the overwhelming positive response, and in view of the shared expertise and interests of the participants — eminent China scholars drawn from 15 countries including the US, Germany, France and all of China’s neighbours as and from various reputed institutions across India — these papers were commissioned by the organising committee well in advance and revised on the basis of the discussions and comments during the conference and by publisher’s referees. In this volume, the fi nal chapters are now presented under three major sub-themes: (a) Broad contours of the emerging Asian multilateralism; (b) China’s regional vision and strategies and responses of its neighbouring countries; and (c) China–India equations moving from bilateral to a regional interface and initiatives which seem to refl ect a positive spin on their mutual perceptions and policies. Part I: Asian Multilateralism Although the term ‘multilateralism’ dates back to 1858, it came back to be part of popular parlance in the 1960s, following World War I, since when it has evolved into one of the well-established ‘isms’. The basic defi nition of the term has not changed very much since the elementary defi nition was developed in 1990 by Robert Keohane, who defi ned multilateralism, as the ‘practice of coordinating national policies in groups of three or more States’.3 Two years later, John Ruggie formulated a slightly nuanced defi nition of multilateralism by saying that ‘multilateralism refers to coordinating relations among three or more states in accordance with certain principles’.4 But multilateralism in Asia has its derivations and paradigms and this

Downloaded by [University of Defence] at 01:36 24 May 2016 remains the focus of the chapters in this section. Multilateralism in Asia is known for having received its major ﬁ llip with the establishment of ASEAN in 1967. Its distinction of being an association involving none of the major powers was to be appreciated

3 Robert O. Keohane, ‘Multilateralism: An Agenda for Research’, International Journal, 45 Autumn 1990, p. 731. 4 John Ruggie, ‘Multilateralism: The Anatomy of an Institution’, International Organization, 46 (3): 566–68, Summer 1992. Introduction 7

much later. To begin with, ASEAN was seen as a coalition of anti- communist countries (Indonesia, Malaysia, Philippines, Singapore, Thailand, joined later by Brunei) but the expansion of ASEAN in the 1990s and the creation of a series of institutions around ASEAN have since transformed it into a model of Asian multilateralism that goes beyond categories derived from European and North American regional experiences. Indeed, the ‘ASEAN Way’ has since come to be an accepted expression indicating focus on informal and implicit ways of organising inter-State cooperation. The East Asian brand of multilateralism has strengthened itself in recent years mainly due to economic and ﬁ nancial regional crosscurrents, which in turn have contributed to intra-regional trade that has substantially increased across East Asia with China at its core. For the 10 ASEAN countries plus China, Japan, South Korea, intra-regional trade grew from 36.1 per cent in 1985 to about 50 per cent in 2000 and then to 55 per cent in 2003. China, over time, has become an even bigger trading partner of ASEAN. The current account surpluses of these 13 East Asian nations amounts to more than US$200 billion per year, this despite a shift towards more domestic-led growth in their economies, thereby signifying a trend towards more matured economies in the region. East Asia, as a result, has become an enormous pool of foreign reserves, with China alone accounting for over $1.8 trillion. A major portion of these Asian foreign exchange reserves today sustains the US deﬁ cit through the Japanese and Chinese purchase of American treasury bonds. It is interesting to note that this Asian wealth, as a result, remains ‘parked’ outside Asia and does not necessarily help in building East Asian cooperation.5 But this also keeps these big powers relatively placed with rising Asian powers and this has helped sustain Asian multilateralism without the great powers trying to stymie these trends as an unacceptable alternative paradigm or a challenge to their dominance. Downloaded by [University of Defence] at 01:36 24 May 2016 The Shanghai Cooperation Organisation (SCO) remains another emerging pan-Asian model of multilateralism, and was created in 1996 as a Shanghai Initiative. It is often cited as an example of quick success and as an Asian brand and wisdom described by the Chinese as an alternative paradigm of managing international security. But its determination to keep the US out has often become its limitation.

5 For details see Eric Teo Chu Cheow, ‘Strategic Relevance of Asian Economic Integration’, Economic and Political Weekly, 3 September 2005, p. 3960. 8 Sudhir T. Devare, Swaran Singh and Reena Marwah

Similarly, the South Asian Association for Regional Cooperation (SAARC) is another regional grouping nearer home in Asia that also intends to promote multilateral cooperation. Starting 1985, this grouping now comprises of eight countries: India, Nepal, Bhutan, the Maldives, Pakistan, Sri Lanka, Bangladesh and Afghanistan. Its recent expansion to include a whole set of new observers — including China, South Korea, the US, the European Union, etc. — refl ects its growing dynamism and confi dence. These 25 years of SAARC have witnessed 16 summits yet it continues to be one of the least integrated regions of the world due to complex political issues between countries of the region. Indeed, Asia has witnessed a whole range of new multilateral forums that may include the Conference on Interaction and Con- fi dence building across Asia (CICA), Asian Cooperation Dialogue (ACD), Boao Forum (which is a China-led effort at building an Asian forum like the Davos World Economic Forum), Six-party Talks for North Korean nuclear proliferation, to name a few; these have seen multilateralism becoming the cardinal instrument of organising Asian relations. But, as the world’s centre of gravity gradually shifts away from the West to the East, there are several questions that remain unanswered. To begin with, West and Central Asia have not been quite integrated into these emerging Asian fl ourish so far. Asia has also continued to be a mosaic of states with varying levels of development, size and ideologies with a whole range of old and new challenges to their development and peaceful co-existence. Will Asia become the world’s new economic and geopolitical centre of gravity or will it become the arena for a new power struggle? Will Asia be able to act as a cohesive bloc or will there be tensions in achieving a balance of power amongst major Asian powers? The chapters in this section examine some of these compelling questions from different perspectives. In the opening article, Aileen S. P. Baviera traces the role of insti- Downloaded by [University of Defence] at 01:36 24 May 2016 tutions in regional security strategies through her work on ‘ASEAN Multilateralism and the Engagement of Great Powers’. She examines the ASEAN brand of multilateralism and how ASEAN engages great powers in regional community building in East Asia. Multilateral arrangements offer advantages to its participants: access to information on the position of stakeholders, thereby reducing their transaction costs. But multilateral institutions also bring constraints on sovereignty and necessary limits on what might be more effectively pursued in bilateral relations. ASEAN, she concludes, is currently Introduction 9

at the centre of various multilateral arrangements in Asia and these are intended to gradually help enmesh, socialise or bind the great powers, and to advocate for certain norms for guiding Asia’s regional security relations. ‘ASEAN at the Crossroads of Regionalism: The Indonesia Perspective’ by Meidyatama Suryodiningrat is categorical at the very outset on how ASEAN remains the driving force of Asian regionalism. According to him, this trend has served the region well for the last two decades and yet this arrangement is unlikely to suffi ce for the evolving power shifts that fl ow from the rise of China. China’s rise, according to him, does pose an existential challenge besides system challenges for Asian relations. Diffi cult choices have to be made by the various Asian groups and their member states — especially by Indonesia as the region’s primus inter pares — particularly vis-a-vis the popular thesis of ASEAN’s centrality in Asian multilateralism. Managing rising China therefore remains an essential acid test in evolving a new regional security framework and its engagement with regional powers beyond Asia. The article by Ong Keng Yong on ‘Regional Cooperation and Engagement: The East Asia Summit’ examines how India has much to gain from its participation in the East Asian Summit (EAS) process. The forum, in his view, is an inexpensive multipurpose regional platform enabling India to groove with its extended neighbourhood in the East; reach out to a diverse canvass for securing its own interests; and for a peaceful and prosperous future. ASEAN’s role in the EAS and the other ASEAN-centric mechanisms has also reinforced the centrality of ASEAN in the regional architecture. The ASEAN elite believe in being neutral and non-confrontational and they adopt a stakeholder-based approach to attract the major Asian powers to work with ASEAN to promote and advance mutual interests. That it welcomes India in its deliberations augurs well for India’s policy

Downloaded by [University of Defence] at 01:36 24 May 2016 makers. D. S. Rajan’s article titled ‘Regional Security Architecture: Indian and Chinese Positions’ analyses the prevailing security environment in East Asia through Chinese lens. The principal challenging factor here remains the inﬂ uence of the US. As efforts towards establishing a regional security order progresses further, Beijing is seen articulating a China-led security order across Asia. China’s desire to exclude the US from the East Asian integration process is distinct from the approaches of other regional powers like India, Japan, Australia, 10 Sudhir T. Devare, Swaran Singh and Reena Marwah

and ASEAN, all of which have different motivating factors especially with regard to defi ning Asian multilateralism. Given this diversity, obstacles seem to be really too strong to the further development of economic, political and security integration in Asia. For him, the remedy clearly lies in the ability of all stakeholders, including China, to be able to forge consensus for a constructive partnership. The thesis of John Garver’s article, ‘The Emerging International China–India Division of Labour and India’s Quest for Status Parity and Security with China’ propounds how the emerging economic division of labour between China and India in the global economy will exacerbate India’s quest for status rivalry and security dilemma with China. This conclusion is substantiated by analysing the composition of India–China trade, the structure of Chinese and Indian trade fl ows with third-world countries, by making a comparison of services exports of the two countries as also the fl ow of foreign direct investments (FDI) to the two countries. The argument is made that manufacturing and high technology (which is substantially derivative of manufacturing) are closely linked to the generation of advanced military power, and that India will very probably continue to lag behind China in this crucial sector. This is because of the fundamental structure of the international division of labour that has made China the manufacturing hub of Asia. ∗Fu-Kuo Liu’s article titled ‘China’s Strategy in Asian Regional Cooperation: Toward Multi-layered Engagement’ examines Asian multilateralism from the Chinese perspective. Liu is Chair of the Division of American and European Studies at the Institute for Inter- national Relations, National Cheng Chi University, Taiwan and thus has a dual advantage of being Chinese as also having a certain distance for an objective understanding on Chinese perspectives. He explains how China has utilised multilateralism in shaping its peaceful image and has thus gained a superior position in international and regional

Downloaded by [University of Defence] at 01:36 24 May 2016 initiatives across Asia. This conclusion is derived through a detailed analysis of China’s strategic calculations for manoeuvring bilateral economic and security arrangements in the Asia–Paciﬁ c region and by participating in Asia’s multilateral forums. Part II: Engaging China In the Cold war era, the drivers of East Asian multilateralism in the form of ASEAN had perceived China as a dangerous and feared power. This was especially reinforced by Beijing’s sustained and Introduction 11

substantial support to various radical outﬁ ts and even its postures of military expansionism. The same region has since become an example of China’s engagement. What has sustained this counter trend? In the last three decades, China’s foreign policy towards its neighbours across Southeast Asia has been based on clear strategic calculations. Trends in China’s foreign policies towards its Asian neighbours are now attempting a new balancing act between soft and hard power. East Asia has especially experienced China’s smart power, aimed at pursuing national interests in a changing international environment. This section provides a broad narrative on China centrism in the economic, political and diplomatic spheres among the Asian countries’ foreign relations. This includes experts’ perspectives from Singapore, Nepal, Malaysia, South Korea, Myanmar, Sri Lanka and Nepal that provide inputs towards these countries’ understanding and engagement of and by China, including their interface in various Asian multilateral forums. While the issue of terrorism in the multilateralism format has been discussed elsewhere, here an interesting parallel between terrorism in Sri Lanka by the LTTE and acts of terrorism in Urumqi has been drawn by Nihal Rodrgo to highlight the growing sense of commonality with China. The article by Chih-Yu Shih titled ‘Emerging China-centrism: The Prospect for Epistemic Partnership in the Divided Sino-phone World’ makes an interesting assertion on how, despite all efforts, China- centred studies are not self-evidently coherent. Across Asia, they remain dichotomous to the core and contribute to the confusion, even confrontation. Possible responses from overseas Chinese writers reveal at least two kinds of China-centrism: one based upon China’s development needs, to which pre-1949 history is irrelevant; and the other embedded in Chinese history and cultural tradition, whose historiography trivialises the span of 60 years after 1949. They have

Downloaded by [University of Defence] at 01:36 24 May 2016 yet to give birth to an epistemic community on the bases of nascent China-centric consciousness and to locate China in Asia. China Studies among overseas Chinese scholars, according to Shih, remain politically driven and value-laden. In the future, though, he gazes at China studies in China triggering counter currents of a possible integration, albeit remaining political in nature. John Wong and Sarah Y. Tong, in their jointly written article titled ‘China’s New Patterns of Relationship with East Asia’, present an attempt to conceptualise China’s relationship with East Asian 12 Sudhir T. Devare, Swaran Singh and Reena Marwah

economies in the context of its relentless rise as an economic power. They begin with a premise that China stands today at the centre of the global and regional production networks. Their view of the Sino-centrism of the East Asian groupings makes them ask a diffi cult question, i.e., Is China’s dynamic growth sustainable? How will its neighbouring economies respond and adapt? They conclude that for the mostly open economies in East Asia, closer economic integration and interdependence with China has become essential for a strong economic future of Asia as a whole. Phung Thi Hue’s article titled ‘China’s 21st Century Status and Challenges’ examines the tenor of China’s achievements and suggests that Beijing is likely to assert its competitive advantage and status in the world in the fi rst decades of the 21st century. According to her, most Asian nations, especially those in China’s neighbourhood in Southeast Asia — like Vietnam — are already seeking ways of maintaining and expanding relations with China. On its part, China has its own compulsions to improve comprehensive relations with these countries in the region to promote its growth-led development. Hue believes that China is ordained to play an important role in pan- Asian pursuits. Yet, with a number of continuing internal socio- economic problems and complexities in its foreign relations, China’s international status may be compromised overtime. Tomohiko Taniguchi’s article has an interesting title: ‘China’s Rise: Changing Contours of Japan’s Foreign Policy’. It seeks to explore the basso continuo in Japanese perceptions of mainland China and he confi rms that Japan was consistently an ‘outlier’ in the East Asian order centred increasingly on imperial China. He examines the infl u- ence that China has had as a revisionist power and its likely impact on Japan. It is from this perspective that he traces the manner in which Japan and India have forged a closer relationship since 2005. In particular, this article examines the concept of the ‘Arc of Freedom

Downloaded by [University of Defence] at 01:36 24 May 2016 and Prosperity’ formulated in the Japanese foreign policy and re- conﬁ rms the importance of India in this formulation. He asserts that it is imperative for India to take a proactive stand vis-à-vis Japan and to intensify their mutual relations in the pan-Asian context. Summit diplomacy, frequent visits and exchanges of academics and ofﬁ cials as well as Indo-Japanese joint maritime training exercises are suggested to strengthen the existing links between India and Japan. Chung-in Moon in his article titled ‘Changing Patterns in South Korea’s Relations with China and India: The Way Forward’ asserts Introduction 13

that China’s rise and power projection across Asia could precipitate some worries among its Asian neighbours. He goes on to add that given South Korea’s expanding access and profi le, these issues are not likely to become the sole determinants of South Korea’s policy towards either China or India. In his opinion, as long as South Korea does not regard China as a real or potential threat, Seoul’s policy towards China and India would not entail any trade-off outcomes or either/or formulations. South Korea’s choice would be to befriend both China and India and foster closer political, diplomatic and social relations as well as cooperate with both China and India towards building the larger Comprehensive Economic Partnership Agreement (CEPA) with both countries. S. M. Tang’s article, ‘In the Midst of the Major Powers: Malaysia’s Strategic Options and Outlook’, contends that Malaysia fundamentally views developments in both China and India positively. He underlines how Malaysia’s core interests lie in co-opting Chinese and Indian interests into the larger regional framework, with emphasis on Asian multilateral cooperation. The challenge for Malaysian foreign policy, according to him, lies in creating opportunities in the Southeast Asian region for both China and India, and to pursue their interests peacefully and to avoid marginalising either of them in the long run. Jean-Louis Margolin’s article titled ‘China–Singapore Cyclical Relations in the Longue Durée: Some Lessons for the Future’ examines the dynamics of China’s relations with Singapore. He underlines how Singapore has shifted repeatedly between a mostly regional role, a pan-Asian centrality and a global affi rmation. In addition, he concludes that during most periods, India and China have never been a matter of either/or for Singapore. The growth of closeness towards one has seldom meant the slowdown with the other. In fact, during the last decade, viz. 2000–2010, China’s increasing infl uence

Downloaded by [University of Defence] at 01:36 24 May 2016 has not prevented India’s advance in the Singapore economy and external relations. Nihal Rodrigo, in his article titled ‘Emerging China: Prospects for Partnership in Asia — A Perspective from Sri Lanka’, delineates the multidimensional engagement of Sri Lanka with China within what he calls ‘the New World Symphony’. This article describes India and China as joint composers/conductors, all nations hopefully performing in harmony. Rodrigo presents the political, economic and cultural imperatives in the backdrop of the historical connection 14 Sudhir T. Devare, Swaran Singh and Reena Marwah

between Sri Lanka and China as well as Sri Lanka and India. It is in this larger backdrop that he examines the role of China as an observer country in the SAARC. From here he examines China’s motivations to become a full member and seek greater infl uence. Mohan P. Lohani, in his article ‘Involving China through Asian Integration: A Nepalese Perspective’ fi nds Beijing as keen to work for Asia’s rise as a more developed, prosperous, peaceful and stable region. China and India are Nepal’s immediate neighbours and therefore critical of its foreign policy. While Nepal has benefi tted from the cooperation extended by its two friendly neighbours, she would also like these powerful nuclear neighbours to respect the sensitivities of a relatively small neighbour, which is keen to devote its energies and attention to accelerating the pace of development aimed at improving the living conditions of Nepalese people. This article seeks to underline Nepal’s role in Asian resurgence via its role in China–India relations. ‘Burmese Tango: Indian and Chinese Games and Gains in Burma (Myanmar) since 1988’ by Renaud Egreteau offers an innovative perspective on the perceptions and realities of China and India’s strategic communities and their infl uence over Myanmar. By questioning the assumption that Myanmar offers China and India a strategic theatre — in which the competitive equation between these two Asian giants fi nds its ultimate expression — this article highlights the geopolitical obstacles that Beijing and New Delhi have had as part of their engagement with Myanmar. It analyses both the diffi culties and successes that China and India have experienced with Myanmar’s praetorian and still xenophobic regime since its rekindling in 1988 which makes the Chinese and Indians appear as fi erce competitors. Part III: China–India Equations

Downloaded by [University of Defence] at 01:36 24 May 2016 This section provides an intensive discussion on China and India as the two emerging economic powers in Asian resurgence. Articles in this section examine their relationship as of paramount signiﬁ cance for the peaceful rise of Asia. While both these countries share dimensions of certainty in terms of being important Asian powers, opting for independent diplomatic positions, prioritising development, promoting healthy competition, articulating friendly neighbourhood policies, working towards regional cooperation and global coordination, there are dimensions of uncertainty as well. These include their Introduction 15

continuing mutual trust defi cit, their complicated boundary question, the US, Pakistan and Tibet factors as well as India’s nuclear status and aspirations for a UN Security Council seat. Describing themselves as the two largest developing nations on earth, representing more than one-third of humanity, China and India recognise that they have a signifi cant historical responsibility to ensure comprehensive, balanced and sustainable development of their countries and to promote peace and development in Asia and the world as a whole. India has its inherent advantages and limitations in understanding China. Being the peer ancient Asian civilization, postcolonial nation state and on the path of a similar trajectory of economic development, India perhaps has both the urgent necessity, the skills as also the responsibility to reckon with and lead such discourses on ‘emerging China’ as well as explore prospects that fl ow from it for building partnerships across Asia. Besides, India has begun to be recognised as a major stakeholder in the Asian cooperation and even international system. This will potentially facilitate India to develop its own strategies to cope with emerging new trends of pan- Asian transformation. All this evidently has direct and immediate implications for India’s foreign policy and India’s resurgence. Indeed, a better understanding of China promises to sustain India–China equations on a fi rm and positive footing, generating new avenues for their joint efforts in providing direction to the future of Asia and the evolution of a pan-Asian identity and initiatives. In the immediate, it is remains critical for New Delhi and Beijing to manage their partnerships in their shared spaces and in peripheral regions like Southeast Asia, Northeast and Central Asia and so on. Their successful and stable interactions can also help in India’s northeast being transformed into a bridge for regional peace and development of this larger Asia–Pacifi c region. Contributors, both from China and India, have been candid in Downloaded by [University of Defence] at 01:36 24 May 2016 presenting their analysis on some of the thorny issues which continue to obstruct the bilateral partnership of these two emerging Asian powers, yet not sidelining the possibilities of mutual benefi t for both and exploring their contributions to the peaceful rise of Asia. Continuing with the overarching thread of pan-Asian multilateralism, some of the authors in this section examine how China utilises multilateralism in shaping its image to secure a superior position in international and regional issues and what it means for India. 16 Sudhir T. Devare, Swaran Singh and Reena Marwah

The opening chapter of this part by Tansen Sen, ‘The Trust Deﬁ cit in India–China Relations’, argues that a lack of basic knowledge about each other remains one of the major reasons for their continued insecurity and increasingly uncomfortable relations. He attributes ignorancity for some of the distrust in China–India relations and why these hurdles continue to be insurmountable even when there have been sustained efforts from both sides. In the contributor’s opinion, bilateral understanding between the two countries can be achieved by following the cultural route, which necessarily presumes a dialogue among these two civilisations. Christian Wagner underlines the importance of soft power and discusses its importance for Asian foreign policies. In his article titled ‘Soft Power and Foreign Policy: Emerging China and its Impact on India’, he alludes to the idea that soft power has gained new importance in the foreign policies of India and China. According to him, foreign policies of both China and India need to now evolve a ﬁ ne balance between soft and hard power in order to achieve smart power and to pursue national interests in a changing international environment. India, he says, follows a defensive approach and is, therefore, still hesitant to use her most important soft power resource, i.e., her successful democratic experience, in global and regional competition with China. Zhang Guihong’s article, titled ‘The Shifting Balance of Power and China–India Relations: Between Cooperation and Competition’, presents a statist discourse on their contemporary strategic equations. He asserts that while the shift in their balance of power has bilateral, regional and global implications, how to manage this shift remains a great challenge for both New Delhi and Beijing. In his opinion, the balance of power between China and India had tilted towards China in early 1980s and this trend has since been further strengthened by the recent rise of China. The many factors that have contributed to

Downloaded by [University of Defence] at 01:36 24 May 2016 the shift in their balance of power between the two Asian powers are examined here. Zhang Li, in his article titled ‘India Rising and China–India Strategic Interaction: Geopolitical Uncertainty Vs Confidence Building’ looks at India’s ascendancy and contends that it will considerably inﬂ uence its relations with China and produce profound implications for Asia and the world at large. Geopolitical approaches highlight competition or even potential conﬂ ict between them, whereas the two Asian giants have tried to cultivate and manage a Introduction 17

credibly stable relationship in view of their mutual benefi ts as well as the regional and global compulsions. At the operational level, an immediate need is to give real substance to their existing framework of partnership and explore institutionalised strategic engagement in order to maximise the consensus and shared interests. The fulfi lment of this goal needs and merits a concerted endeavour. Hu Shisheng and Peng Jing’s jointly written article, ‘The Rising of China and India: Prospects of Partnership’, outlines the positives and negatives in India–China efforts for building a meaningful partnership. This article concludes that this objective remains a realisable one. The contributors refl ect on the imperative for both China and India to begin by building up a solid strategic partnership in various sectors. Many factors, the contributors underline, have contributed to the present scenario in which the partnership remains yet to be realised. The legacies of the Cold War such as ‘zero-sum game’, ‘natural barrier’, ‘buffer zone’, ‘balance of power’ or the developmental gap present psychological challenges to these two emerging Asian giants. They urge both sides to try and transcend their bilateral relationship into a solid strategic partnership with a global vision. The last chapter by Ranjit Gupta, aptly titled ‘Where are India– China Relations Heading: A Futuristic Outlook’, covers some of the perennial problematic issues in China–India equations. Starting with their contrasting legacies and motivations and highlighting how from 1950 to 1958, it asserts how India had acceded to every request or demand made by China and even gone on an unprompted, self- propelled global campaign on behalf of the diplomatically isolated People’s Republic of China in every conceivable forum. Even after the 1962 debacle, having initiated the processes of rapprochement, India has continued to bend over backwards to accommodate China’s sensitivities. By plotting the future in such a description of their past, this article represents an interesting shade of the Indian spectrum of

Downloaded by [University of Defence] at 01:36 24 May 2016 perspectives on China. Locating difﬁ cult issues of the China–India equation in crystal- gazing at the future of ‘emerging China’, and especially in examining its implications in enhancing or undermining prospects for partnerships across Asia, presents an important discursive challenge. Starting nearer home, such perceptions about the China–India mutual equations present an acid test for Asian relations in general and for India’s foreign policy in particular. It is with this concern that this volume makes an attempt to outline the changing contours of Asian 18 Sudhir T. Devare, Swaran Singh and Reena Marwah

relations and also explore evolving new consensus amongst reputed China scholars from across the world on what rising China means for Asia’s future order. It, however, remains to be seen as to how effectively we are able to present this case in favour of engaging China as a precondition to ensure a peaceful rise of the rest of the Asian countries and of a pan-Asian identity and vision as a whole. References Cheow, Eric Teo Chu Cheow. 2005. ‘Strategic Relevance of Asian Economic Integration’, Economic and Political Weekly. 3 September. Green, Stephen. 2009. Good Value: Reﬂ ections of Money, Morality and the Uncertain World. London: Penguin Books. Glaser, Bonnie S. and Melissa E. Murphy. 2009. ‘Soft Power with Chinese Characteristics: The Ongoing Debate’, in Carola McGiffert (ed.), Chinese Soft Power and its Implications for the United States. Washington, DC: Center for Strategic and International Studies. Jiemian, Yang. 2008. ‘Chinese Diplomacy and Theoretical Innovations of 30 Years of Reforms and Opening Up’, Guoji Wenti Yanjiu. Shanghai. 13 November. Rana, Pradumna P. 2009. ‘The Re-emergence of a Prosperous and Integrated Asia’, The Strait Times. Singapore. 3 October. Downloaded by [University of Defence] at 01:36 24 May 2016 Part I Asian Multilateralism Downloaded by [University of Defence] at 01:36 24 May 2016 This page intentionally left blank Downloaded by [University of Defence] at 01:36 24 May 2016 ASEAN Multilateralism and the Engagement of Great Powers 21

1 ASEAN Multilateralism and the Engagement of Great Powers

Aileen S. P. Baviera

With the emergence and proliferation of various multilateral institutions and arrangements intended to help prevent confl ict and promote security in the Asia–Pacifi c theatre in the last 15 years, experts and policy analysts have invested much effort in evaluating the real value and contributions of such pan-Asian foreign policy initiatives. Debates about Asian multilateralism and its signifi cance relative to traditional bilateral or ‘mini-lateral’ security arrangements, as also the unilateralist actions taken by great powers, have long been at the centre stage of the global debates. These were initially spurred by the end of World War II and again by the end of the Cold war, and then in their recent incarnations following the events since 11 September 2001 and in the aftermath of US military adventures in Afghanistan and Iraq. The most recent debates on multilateralism have been framed on the one hand by concerns that a new hegemonic era characterised by US dominance may have fallen upon the world with the demise of Cold War bipolarity, and on the other hand by frustrations that the multilateral and collective security arrangements centred around the United Nations presented an ineffective alternative, especially in so far as global security governance and the management of new

Downloaded by [University of Defence] at 01:36 24 May 2016 transnational security challenges were concerned. Even as grand questions were being raised about the form and shape of the post-Cold War security architecture to come, governments in the Asia–Paciﬁ c (particularly in East Asia) were already responding to the challenge by increasing their economic interdependence by building new and inclusive networks and partnerships. Central to the ASEAN-led efforts at regional security cooperation has been the anticipation of both the need to engage a China that was rapidly growing in economic power and political inﬂ uence, and 22 Aileen S. P. Baviera

the need to somehow balance against the possible negative effects of such infl uence. ASEAN, as a result, has come to be the central player in the revival of multilateral institutions, primarily by acting as institutional and norm entrepreneur1 for innovative regional arrangements (including the ASEAN Regional Forum, ASEAN Plus Three, East Asia Summit, among others) that were intended to promote prosperity and enhance stability and order in the face of changing security challenges and shifting power confi gurations.2 This article traces some of the concepts around the role of institutions in regional security strategies, examines to what extent the ASEAN brand of multilateralism fi ts into the discourses on institutions and then explores the dynamics, advantages and pitfalls of ASEAN’s security strategies of engaging great powers in regional community-building initiatives. Debates about Multilateralism Multilateralism in diplomacy and security studies has many sides and defi nitions to it. At the simplest level, it refers to processes of decision making and joint action involving three or more states in matters affecting shared diplomatic and security interests. In 1990, R. O. Keohane defi ned multilateralism as ‘the practice of coordinating national policies in groups of three or more states’.3 In global governance, multilateralism has also come to be associated with the participation not only of state representatives but also of industry experts, scientists, legal scholars, civil society activists and other individuals or groups, particularly in decisions that refl ect the complexity of issues of global governance and the state of interdependence that nations fi nd themselves in.

1 The concept of ‘norm entrepreneur’ was made popular by modern constructivist scholars. The ﬁ rst wave of scholarship on normative change examined the

Downloaded by [University of Defence] at 01:36 24 May 2016 propagation of ‘cosmopolitan’ or ‘universal’ norms, such as the campaign against landmines, ban on chemical weapons, struggle against racism, intervention against genocide, promotion of human rights and so on. ASEAN may be considered a norm entrepreneur in its propagation of regional codes of conduct in inter-state relations. 2 A. Acharya, ‘How Ideas Spread: Whose Norms Matter? Norm Localization and Institutional Change in Asian Regionalism’, International Organization, 58 (2), 2004, pp. 239–75. 3 R. O. Keohane, ‘Multilateralism: An Agenda for Research’, International Journal, 45, 1990, p. 731. ASEAN Multilateralism and the Engagement of Great Powers 23

However, beyond its obvious multi-actor form, as a philosophy (or an ‘-ism’) in diplomacy and security, the ‘new multilateralism’ emphasises a belief in the interrelatedness of various domains and functional areas of human activity. Economic growth, social development, culture and identity, political stability, state security and human security — all somehow affect and interact with each other, such that the pursuit of a set of objectives in a particular domain often requires lateral consideration of other domains and the implementation of an integrative, coherent response. This new multilateralism stands in contrast to the traditional UN approach of specialised bodies tackling only single-dimensional problems. Many observers also point out to a normative dimension — how multilateral institutions and arrangements are ostensibly democratic and egalitarian. By bringing in many participants, they enhance the legitimacy of decision-making processes through the greater validity of the inputs, although there remains the need to prove the credibility and effectiveness of the decision-outputs themselves. In reality, however, as Keohane points out, there is still a need to strengthen transparency and accountability, and to introduce democratic norms of good governance in multilateral institutions, which at present still tend to be undemocratic. The United Nations Security Council is a case in point. The practical advantages offered by multilateral institutions and arrangements to its participants include providing greater information on different dimensions of an issue and positions of various stakeholders; reducing transaction costs compared to having to negotiate agreements separately with different actors; as well as raising the costs of defection by other members who fear not only criticism by others but loss of these beneﬁ ts mentioned. Developing countries especially ﬁ nd them helpful when dealing with more powerful counterparts, because they can enjoy a greater

Downloaded by [University of Defence] at 01:36 24 May 2016 amount of fi ctive equality around the multilateral table that an asym- metrical bilateral setting would not allow. On the other hand, multilateral institutions and mechanisms can also be led by a dominant actor — almost always a great power — who may fi nd it easier to control and infl uence outcomes or obtain compliance of other countries through such means. Multilateral institutions can bring disadvantages such as constraints on sovereignty, and unnecessary limits to what might be more effectively pursued bilaterally. Great powers, in particular, tend 24 Aileen S. P. Baviera

to avoid the burdens of multilateralism since they have other, more reliable and predictable instruments of infl uence (e.g., economic leverage or the use or threat of force). Governments of developing countries have also been known to resent how multilateralism can lead to infractions of their sovereignty, especially when they are forced to comply with rules that make them unpopular with domestic constituents. In other words, it can be argued that multilateralism as the world has actually experienced it does not per se represent a particular normative standpoint and can operate under various theoretical as- sumptions about inter-state relations (e.g., those of realism, liberalism and constructivism), although realists dismiss its institutions as epiphenomenal. It can be both a boon and a bane, whether one is a powerful state or a weak one, depending on specifi c circumstances and how one crafts his own role and strategy on this platform. In general, however, great powers prefer to exercise their autonomy and thus place a low priority on multilateral action, while weaker, developing countries tend to rely on multilateralism to enlarge their collective voice and minimise uncertainty in the international environment. Multilateralism as an organising principle in international relations can better be understood in contrast to its polar opposite — unilateralism — and to a lesser extent, bilateral military arrangements (e.g., alliances directed at third parties), both seen by many today as either lacking in legitimacy or insuffi cient in addressing more contemporary security challenges which tend to be transnational in nature. Unilateralist great powers that refuse to abide by rules that have been agreed upon by the majority of states, or in the fi rst place refuse to participate in collective rule making for common benefi t, ultimately become isolated. Unilateralist great powers are likely to fi nd themselves in the same league as the so-called rogue states by

Downloaded by [University of Defence] at 01:36 24 May 2016 this deﬁ nition; in particular, a power that argues exceptionalism from rules ultimately risks losing legitimacy in any claim to leadership. Bilateralism, on the other hand, described as a belief that inter- state relations are best organised on a one-on-one or dyadic basis, implies exclusivity and a speciﬁ c reciprocity, or a transactional relationship based on quid pro quos.4 In the security realm, both are

4 D. Capie and P. Evans, The Asia–Paciﬁ c Security Lexicon, Singapore: Institute of Southeast Asian Studies, 2002. ASEAN Multilateralism and the Engagement of Great Powers 25

more likely to give way to unregulated state competition and spiraling confl icts in the long term, even if arguably better poised to respond to actual confl ict situations already at hand, because of their propensity to create security dilemmas. In another article, I argued that the more truthful dichotomy is not between multilateralism and bilateralism per se, but between a multilateralism grounded on inclusivist, cooperative security concepts founded upon positive security, shared interests as well as norm agreement on the one hand, and exclusivist zero-sum or negative security-oriented military alliances (bilateral or multilateral) that are implicitly or explicitly directed against third parties, on the other hand. How exactly multilateralism might contribute to confl ict management and prevention of war is an important question, both generally speaking as well as for our consideration of ASEAN and its engagement of the great powers. For this we turn to J. G. Ruggie’s elaboration (furthered by J. Caporaso) of three properties that are said to constitute multilateralism and distinguish it from other forms: (a) indivisibility; (b) generalised principles of conduct; and (c) diffuse reciprocity.5 Indivisibility can be thought of as the scope (both geographic and functional) over which costs and benefi ts are spread. Multilateral economic cooperation is bound to have spillover effects on security attitudes and vice versa and the benefi ts become spread out over a wider region than the actual cooperation covers. On the other hand, economic disputes and mutual security threat perceptions likewise feed on each other, with potential risks and costs even for neighbouring states. Either way, fear of this spillover effect helps strengthen the commitment of parties to the cooperative mechanism, while encouraging neighbouring states that are indirectly affected to lend their support to the multilateral institutions. Multilateral institutions operate by generalised principles of con- Downloaded by [University of Defence] at 01:36 24 May 2016 duct, which usually come in the form of norms exhorting general if not universal modes of relating to other states, rather than differentiat- ing relations case by case on the basis of individual preferences,

5 J. Caporaso, ‘International Relations Theory and Multilateralism: The Search for Foundations’, International Organization, 46 (3), 1992, pp. 600–601; J. G. Ruggie, ‘Multilateralism: The Anatomy of an Institution’, in idem (ed.), Multilateralism Matters, Columbia University Press, 1992, pp. 3–47. 26 Aileen S. P. Baviera

situational exigencies, or a priori particularistic grounds. Such non- discriminatory principles — based on international law, agreed norms and established rules — must be recognised as appropriate regardless of the particular interests of participants or the circumstances that may exist. By tying behaviour to generalised principles, states increase predictability and begin to exhibit greater policy continuity in the face of changing circumstances, including international power shifts, thus contributing to stability. Diffuse reciprocity meanwhile ‘adjusts the utilitarian lenses for the long view, emphasizing that actors expect to benefi t in the long run and over many issues, rather than every time on every issue. While not necessarily able to enjoy short-term advantages, members can expect to receive roughly the same amount of aggregate benefi t as the rest over a period of time’.6 The expectation of diffuse reciprocity leads states to build multilateralism into their security and foreign policy strategies, since the pay-offs for the partial subordination of sovereignty and policy coordination are bound to be enjoyed over a period of time rather than immediately. Diffuse reciprocity also makes it possible for states to nurture bilateral relations with potential adversaries within the multilateral group, in part through the confi dence-building effects of habitual dialogue. Other scholars argue that multilateral institutions contribute to greater stability and security by functioning as ‘social environments’ in which ‘actors learn about one another, negotiate and grow common norms, exercise persuasion and social infl uence, come to new agreement about political roles, and develop new collective narratives’. This constructivist view has been said to be particularly relevant to regional institutions in East Asia, which tend to be more informal and less coercive.7 ASEAN Multilateralism and Regional Security

Downloaded by [University of Defence] at 01:36 24 May 2016 ASEAN multilateralism operates at two levels — as a framework for relations among its member states, and as a platform for ASEAN’s collective ties with other countries and regions of the world. In the

6 J. Caporaso, ‘International Relations Theory and Multilateralism’. 7 M. Barnett, ‘The United Nations and Global Security: The Norm is Mightier than the Sword’, Ethics and International Affairs, 9, 1995, pp. 37–54; A. Johnston, ‘Treating International Institutions as Social Environments’, International Studies Quarterly, 45, 2001, pp. 487–515. ASEAN Multilateralism and the Engagement of Great Powers 27

fi rst category, former Secretary-General Rodolfo Severino evaluates ASEAN as successful in terms of the following: preventing outright armed confl ict from taking place between any two of its members, and providing a generally peaceful, stable and friendly environment (remarkable given the fact that Southeast Asia is still rife with bilateral boundary and territorial disputes and historical animosities); laying the foundations for regional economic integration; focusing cooperation on common problems; and ‘slowly developing a regional consciousness’.8 It is also successful in bringing about agreement among its member states on certain norms such as reliance on consultations and consensus building, the peaceful settlement of disputes, neutrality, non-interference in internal affairs and a nuclear-weapons free posture. On the other hand, its shortcomings have been mentioned as pertaining to lack of progress in implementing many of its agreements: failure to respond collectively to crises involving its members due to the principle of non-interference in internal affairs (examples include Indonesia’s East Timor problem in the 1990s, and the Myanmar issue today); lack of a proactive role in resolving disputes among member states;9 being a club of the elites of Southeast Asia while failing to involve citizens’ groups and other stakeholders in regional policy processes; and having little sense of common identity or ‘we-feeling’. As ASEAN has signed a charter intended to transform the grouping into a rules-based institution (as opposed to much of the informality that characterised its fi rst 40 years), it is expected to strengthen its own capacity to play a positive role in regional economic and security governance. Its programme of community building based on economic, security and socio-cultural cooperation also requires greater efforts at identity-building and the development of a strong regional consciousness. ASEAN was not always, and in many ways still is far from, the

Downloaded by [University of Defence] at 01:36 24 May 2016 exemplar of multilateralism. Nonetheless, it is considered the most successful experiment in regionalism next to the European Union.

8 R. Severino, ‘ASEAN Beyond Forty: Towards Political and Economic Integration’, Contemporary Southeast Asia, 29 (3), 2007, pp. 406–23. 9 Indonesia and Malaysia brought their disputes over Sipadan and Ligitan islands to the International Court of Justice rather than utilising ASEAN’s own dispute settlement mechanism. To date, the High Council has not been convened for such a purpose. 28 Aileen S. P. Baviera

Ruggie’s properties of multilateralism, simply put, have been translated into ASEAN’s contemporary principles as well as strategies for regional diplomacy and security. ASEAN’s inclusiveness and comprehensive agenda for cooperative security — reflections of indivisibility — are evident in its membership expansion to include even erstwhile adversaries like Vietnam in the broad geographic footprint of the ASEAN Regional Forum (ARF), and in the conﬂ uence of economic and security cooperation mechanisms in ASEAN itself. ASEAN’s emphasis on generalised, non-discriminatory principles takes the shape of its various agreements and declarations among members and with dialogue partners. Its pursuit of strategic engagements and regional identity- and community-building efforts stands as recognition of long-term shared interests and is clearly in expectation of diffuse reciprocity. Notwithstanding the legendary diversity of the ASEAN nation states (in terms of culture; levels of economic, social and technological development; and political and legal systems) and the blatant disagreements among them, ASEAN’s own relative success in multilateralism is based on unities created by geographic contiguity, a shared history of colonisation, common problems as developing countries, increasing economic and security interdependence, and continuing vulnerabilities to and fear of power competition among its bigger neighbours. It is in the second category of multilateralism — ASEAN’s relations with these neighbours — that this article wishes to focus on, as it involves ASEAN’s engagement of the great powers. A scorecard of achievements and shortcomings in this regard might generally include the following positive contributions: its successful brand of multilateralism has made it a central actor in regional diplomacy, attracting bigger and more inﬂ uential countries to associate with it; it has had some measure of success in norm diffusion, having helped

Downloaded by [University of Defence] at 01:36 24 May 2016 socialise other states into the habits of dialogue and consultation and serving as a catalyst for other mini-lateral networks (e.g. among Northeast Asian dialogue partners — China, Japan, South Korea); through the inclusivist ASEAN Regional Forum, it has brought even former and present adversaries to a common table focusing on a common security agenda; and it has helped jumpstart broader regional economic integration of East Asia through the ASEAN Plus Three mechanism, even while simultaneously consolidating ASEAN identity and moving toward strengthening ASEAN institutions. ASEAN Multilateralism and the Engagement of Great Powers 29

On the other hand, ASEAN is perceived by various quarters to have fallen short in its attempts at multilateral diplomacy in terms of, among others: losing the initiative in the East Asian community- building process when the East Asia Summit, originally intended as a higher-level ASEAN Plus Three mechanism, was prematurely convened and redirected into an even broader regionalist project including India, Australia and New Zealand; a lack of dynamism as a ‘driving force’ of the ARF, where its gradualist orientation and resistance to developing stronger institutions weakened the enthusiasm of countries that were more concerned about developing the ARF’s capacity to manage actual conﬂ icts and regional ﬂ ashpoints; lack of a common foreign and security policy, thus diminishing the value for other countries of relating to the member states collectively; and perception of its procedural norms as ineffective in dealing with crises. While there are many who might argue that ASEAN’s claims of playing the driving role and enjoying centrality in regional diplomacy are neither credible nor sustainable, there are few who would offer an alternative that would be acceptable to all the other actors. If anyone among the great powers — the USA, China, Japan, Russia — or even middle powers such as Australia or India were to attempt to play the convening, facilitating and catalysing role that ASEAN has performed for regional security institutions, there would be much more suspicion and resistance by other regional states along the way. The objective of multilateralism of late has been to encourage the great powers to become partners and stakeholders in the stability and prosperity of Southeast Asia, while preventing dominance by any single one in order to maintain autonomy of the member states and of the ASEAN itself. Historically, this had not always been the case. Since ASEAN’s establishment there have been differences among

Downloaded by [University of Defence] at 01:36 24 May 2016 ASEAN states’ perceptions of how to relate with the great powers. Despite the declaration of the zone of peace, freedom and neutrality (ZOPFAN), there were strong ideological differences among the original member states on how to interpret neutrality. Of the ﬁ ve, only Indonesia appeared genuinely against the presence of the great powers in Southeast Asia at the time of ASEAN’s founding, eschewing foreign military presence. Malaysia’s vision of neutrality in ZOPFAN was one that required guarantees by the great powers, which Indonesia would not concede. 30 Aileen S. P. Baviera

Malaysia and Singapore were tied to the UK through the Five- Power Defense Agreement, while the Philippines and Thailand were treaty allies of the USA, the Philippines in fact hosting two of the USA’s biggest overseas military installations. Fear of communist contagion during the Indochina wars and the Chinese Cultural Revolution moreover gave all fi ve countries reason to tolerate a strong US presence, if only to match Chinese and Soviet support for communist governments and movements scattered throughout the region at that time. In addition, Singapore cast suspicion toward Indonesia and Malaysia and the Philippines toward Malaysia as well, leading both to want US military presence to deter any potential sub- regional hegemony. But deference to Indonesia as the biggest country led ASEAN to adopt a strong pro-independence, ‘anti-foreign military presence’ rhetoric in its early documents and statements, even while pragmatism dictated an altogether different reality. During Vietnam’s occupation of Cambodia, beneath the seemingly united front against Vietnam were sharp differences in threat perceptions. Thailand was prepared to cooperate with China to contain Vietnam’s perceived hegemonic ambitions in Indochina. However, Indonesia and Singapore saw Vietnam as a future potential ally against China, whom they perceived as a bigger threat. It was to ASEAN’s credit that the concerns of the frontline state — the most seriously affected member — were given weight, and national preferences were suppressed to give way to regional interests. It therefore came as a surprise to many that, soon after Vietnam’s withdrawal from Cambodia, Thailand was the fi rst to reach out diplomatically to Vietnam and Indochina, hoping to ‘turn the former battlefi eld into a marketplace’. The legacies of colonialism, the proxy wars of the great powers in Indochina and their own vulnerability to communist infi ltration convinced the original ASEAN states then that it was necessary for Downloaded by [University of Defence] at 01:36 24 May 2016 their own survival to adopt a strategic policy of keeping all big powers at bay, and instead to build national and regional resilience that would enable them to take control of the destiny of Southeast Asia. This was a far cry from the present situation — the recognition that following the end of the Cold War, Southeast Asia’s security (and economic) interests would be best served by bringing in — not one but all — great powers that had legitimate stakes in the region. ASEAN Multilateralism and the Engagement of Great Powers 31

Engagement of the Great Powers ASEAN is currently at the centre of various multilateral arrangements that are intended to help enmesh, socialise or bind great powers, and to provide frameworks, norms and procedures for security relations in the region. Yet ASEAN itself does not have credentials as having a major infl uence over traditional security issues in its part of the world — as it lacks military capability, experience in collective security and expertise on issues such as proliferation of weapons of mass destruction, confl ict on the Korean peninsula or across the Taiwan Straits that are the fl ashpoints in the region. Only since the establishment of the ARF did ASEAN begin to overtly pursue security cooperation with dialogue partners; and among its members it is only in recent years that the concept of a security community has emerged. On the other hand, the great powers are direct stakeholders and are able to exercise much more critical roles in the management of regional security — such as through the Six-party Talks on the part of China and the USA, and the US system of bilateral military alliances, scattered forward presence and logistical support arrangements in Southeast and Central Asia. In a scenario of confl ict escalation in East Asia’s regional fl ashpoints such as the Korean peninsula, Taiwan Straits, South China Sea and the growing rivalry for regional infl uence between China and Japan, there is little expectation that ASEAN or its expanded regionalisms such as the ARF can play a leading substantive role, no matter that they have made signifi cant contributions by setting into place multilateral security networks involving the major stakeholders. To its credit, the ARF has organised exercises and demonstrations involving maritime security and disaster relief, and continues to build the groundwork for coordination on counter terrorism and transnational crime. Given this situation, a question often raised is whether the regional

Downloaded by [University of Defence] at 01:36 24 May 2016 institutions that ASEAN has helped put in place can be central to efforts in building a new security order or will they play only an adjunct role, despite the strong regional advocacy of multilateralism. What is there that might preclude a hegemon from seeking to impose order itself, or a concert of great powers arrangement from emerging, with either scenario thus derailing the ASEAN-driven, inclusivist and multilateral cooperative security project? One argument put forward is that the incipient multilateral institutions can continue to be useful 32 Aileen S. P. Baviera

only insofar as the great powers themselves (principally defi ned as the USA, China, and Japan) fi nd them instrumental in one way or another. The great powers are bound to remain engaged if the institutions provide them arenas for preventing the rise of a countervailing power that might use its infl uence in the ASEAN Regional Forum, ASEAN Plus Three and the East Asia Summit to frustrate one’s own security objectives and strategies. For instance, the US would fear China using the new regional institutions to undermine or challenge the system of US bilateral alliances; China would fear the US/Japan bringing Taiwan into regional dialogues; and Japan would fear China seizing regional economic leadership from it. In such cases, their presence alone may suffi ce to serve as a deterrent. But to the great powers, any of these scenarios might be adequate reason for them to choose to participate around the multilateral table, even if they have low expectations of other benefi ts. Multilateralism can also be attractive to great powers pursuing a common security agenda that would require the support and participation of middle and small powers. Examples would be cooperation against terrorism, transnational crime and pandemics. Active participation and playing a high profi le in regional institutions would help ensure that one’s great power status is continuously accepted as relevant and legitimate even in the multilateral processes, because, after all, power has signifi cance only when exercised. The USA, as the greatest power and most advanced economy, poses an understandable resistance to institutions that it fears may dilute its own infl uence, but it faces the dilemma that non-participation is even more likely to dilute its infl uence, especially in light of the activist role that China and, to a lesser extent India, the world’s newest rising powers, are choosing to play in regional community building. There have been indications that Beijing’s inroads into Southeast Asia and regional diplomacy in the last several years are related to perceived Downloaded by [University of Defence] at 01:36 24 May 2016 indifference and lack of enthusiasm in Washington for ASEAN’s initiatives. This, plus the self-infl icted failures of the George W. Bush government’s early unilateralist foreign policy, has led the Obama administration to more recently adjust its policy towards greater support for multilateralism in general and a more favourable outlook on ASEAN in particular. Having just acceded in July 2009 to ASEAN’s Treaty of Amity and Cooperation — as the 16th non-Southeast Asian country to do so — the US is expecting to be invited to be part of the East Asia Summit soon. ASEAN Multilateralism and the Engagement of Great Powers 33

It is conceivable that other factors may account for Washington’s more fl exible posture toward East Asian regionalism. One such factor is the important role that ASEAN (in particular, Indonesia and Malaysia) is bound to play in its war on terror and in the larger context of developing alternatives to radical Islam. Another possible factor is US success in strengthening bilateral security ties with major Southeast Asian countries (including establishing a new defence dialogue with Vietnam).10 Economic interests as well as the need to manage a rising China motivate Japan’s regionalism. It continues to be the leading economic power in the region, although its slow economic recovery and political malaise set against China’s trajectory of high growth and diplomatic offensives lead to perceptions of Japan’s infl uence as being in decline. While it plays an active role in the ASEAN Plus Three, particularly in the management of the effects of the Asian fi nancial crisis, it is seen to be tailing behind China (as was the USA) in initiating free trade agreements that would further promote regional economic integration. Japan’s concerns became very clear when it pressed for the inclusion of the USA, India, Australia and New Zealand in the run-up to the fi rst East Asia Summit. The Summit, which was originally conceived to be composed of the APT members, became an entirely new entity when Japan, with the support of Indonesia and Singapore, moved to expand its composition out of fear and apprehension that China could easily dominate the region through the APT process, given the current power dynamics. When the EAS meeting was fi nally held in 2006, the USA was not involved. Although the technical obstacle to its future participation has now been removed with its accession to the TAC, it remains to be seen whether substantive opposition will emerge as expected from China and Malaysia (the latter being loyal to the original Mahathir concept of an East Asia Downloaded by [University of Defence] at 01:36 24 May 2016 without western participants).

10 The second US–Vietnam political, security and defence dialogue was held in Washington, DC in June 2009, discussing bilateral and regional security issues, including expanding cooperation in peacekeeping operations and training, humanitarian assistance and disaster relief, maritime security, counter terrorism and counter narcotics cooperation, border security, non-proliferation and exchanges of high-level visits. 34 Aileen S. P. Baviera

Japan also prefers a regional community bound by shared democratic values, something that the new ASEAN Charter takes cog- nisance of as desirable, but which is not bound to be a prominent goal of ASEAN just yet. Thus, independently of its links with ASEAN, it has explored (apparently unsuccessfully) a quadrilateral coalition of democratic powers of East Asia involving itself, Australia, India and the USA. To what extent this initiative was indeed inspired by ideational factors such as importance given to shared identity and norms, or to what extent it was an instrumentally convenient way of locking out China, is now anybody’s guess. China has directed its multilateral strategy in the region mainly at strengthening linkages with ASEAN, at a time when other powers’ credibility and inﬂ uence over Southeast Asia had seriously eroded. China’s participation in the APT, ARF and now East Asia Summit has thus far been at little cost and much beneﬁ t. It is primarily through ASEAN, and subsequently through the Six-party talks, that China has been able to claim recognition as a legitimate regional power in East Asia, a role which other powers such as the USA, Japan and perhaps India would have denied. China’s engagement with ASEAN, among other things, helps undercut attempts by other powers to portray China as a threat, thus pre-empting any ASEAN support for containment strategies against it. It also helps prevent ASEAN support for Taiwan independence. Moreover, ASEAN’s emphasis on cooperative security and multilateralism can help secure for China a more stable and harmonious regional environment. China’s clearly stated preference for the APT (a grouping that excludes the USA and its western allies) rather than the EAS (where a future US role is under consideration), however, reveals how it sees ASEAN as part of its own balancing and hedging strategies against other great powers. The East Asia Summit might also be seen as a competing vision

Downloaded by [University of Defence] at 01:36 24 May 2016 of regionalism, standing somewhat in contrast to the visions of ASEAN, the ARF and the APT, all of which have thus far been seen as mutually reinforcing cooperative and consultative mechanisms. While the EAS is also ostensibly ASEAN-led, its origins in power balancing and lack of clarity in collective purpose pose a challenge for ASEAN’s management of its cooperation agenda. One main added value of the EAS to regional community building is expected to arise from the participation of India — as a rapidly growing economy, a major democracy, a huge developing country, with its increasing ASEAN Multilateralism and the Engagement of Great Powers 35

diplomatic activism and new strategic ties with the USA. But India will need to deﬁ ne if it sees itself committed to the long-term program of community building driven by the philosophy of multilateralism, or if its primary objective remains power balancing. The challenge for ASEAN then, and for its so-called centrality in East Asian regionalism, is to prevent these contradictory impulses of zero-sum power balancing on the one hand, and cooperative security on the other hand, from pulling the regional community-building project in different directions. It will take the herculean efforts not only of ASEAN, but of each of the great powers as well as of India, to ensure that proper groundwork continues to be laid for the attainment of the long-term rewards of multilateralism. References Acharya, A. 2004. ‘How Ideas Spread: Whose Norms Matter? Norm Localization and Institutional Change in Asian Regionalism’, International Organization, 58 (2): 239–75. Barnett, M. 1995. ‘The United Nations and Global Security: The Norm is Mightier than the Sword’, Ethics and International Affairs, 9: 37–54. Capie, D. and P. Evans. 2002. The Asia–Paciﬁ c Security Lexicon. Singapore: Institute of Southeast Asian Studies. Caporaso, J. 1992. ‘International Relations Theory and Multilateralism: The Search for Foundations’ International Organization, 46 (3): 600–601. Johnston, A. 2001. ‘Treating International Institutions as Social Environments’, International Studies Quarterly, 45: 487–515. Keohane, R. O. 1990. ‘Multilateralism: An Agenda for Research’, International Journal 45: 731. Ruggie, J. G. 1992. ‘Multilateralism: The Anatomy of an Institution’, in idem (ed.), Multilateralism Matters, pp. 3–47. Columbia University Press. Severino, R. 2007. ‘ASEAN Beyond Forty: Towards Political and Economic Integration’, Contemporary Southeast Asia, 29 (3): 406–23. Downloaded by [University of Defence] at 01:36 24 May 2016 36 Meidyatama Suryodiningrat

2 ASEAN at the Crossroads of Regionalism: The Indonesia Perspective

Meidyatama Suryodiningrat

The Association of Southeast Asian Nations (ASEAN) was formed under the historical backdrop of the regional suspicion and hostilities of the Cold War years. This had linkages to their colonial experience as whether during its brief history of independence or the colonial era, ASEAN’s fi ve founding members had almost no history of political and security cooperation without the aegis of their former colonial masters. Just months prior to the signing of ASEAN’s founding document in Bangkok on 8 August 1967, the founding members — Indonesia, Malaysia, the Philippines, Singapore and Thailand — were in one way or another involved in open confrontation with one another. But the dramatic political changes within Indonesia, which saw the fi ery fl amboyance of President Sukarno toppled by the pragmatism of President Soeharto, was to usher an unprecedented era of peace, stability and cooperation unseen in the region’s history and contribute to ASEAN multilateralism. It was also a case of convergent domestic needs of most, if not all fi ve, founding member states. These Southeast Asian states were ruled by emerging regimes that needed to consolidate their domestic power and coveted legitimacy by exalting tangible economic growth. Ferdinand Marcos began his two-decade rule of the Philippines in

Downloaded by [University of Defence] at 01:36 24 May 2016 1965, while Singapore also broke away from Malaysia after an ill- fated two-year union in the same year. Malaysia was consolidating its federation while Thailand was still under military rule. Bickering among these neighbours proved unproductive at a time when domestic challenges were paramount. The need for survival outweighed the tendency for competition. Furthermore, there was also an imperative by countries like Malaysia and Singapore to embrace the internal changes within Indonesia which had ushered in a new regime under Soeharto that seemed to retreat from the confrontational foreign ASEAN at the Crossroads of Regionalism 37

policy of his predecessor, Sukarno. In other words, any association which could help keep Indonesia’s ‘suspected’ expansionist tendencies in check was welcome. Several years earlier, Sukarno had launched a low-level confrontation to oppose the creation of the Malay Federation which he perceived as a proxy for colonialist powers to retain their hold on the region. He envisioned a new world order characterised by the struggle between the Old Established Forces and New Emerging Forces, which was followed by the promotion of a so-called ‘Jakarta–Phnom Penh–Beijing–Pyongyang’ axis. The New Order’s foreign policy under Soeharto in fact undertook ‘a strategic retreat’ with an emphasis on pragmatism: the fulfi lment of national interests defi ned as the accumulation of internal strength through economic development.1 The idea of ‘concentric circles’ was developed in which ‘regional resilience’ could only be established, developed and maintained if members of the (sub-) region fostered ‘domestic resilience’ of their own. The new direction of Indonesian foreign policy would be, as Soeharto himself stated, ‘directed to improving international relations in Asia–Africa, including non-aligned countries. The creation of regional stability and cooperation in Southeast Asia will get fi rst priority.’2 Hence Soeharto’s New Order foreign policy was conceptualised as a foundation to develop internal strength, refl ecting the New Order’s belief that Indonesia’s foreign policy can only be ‘independent-and- active’ after the Republic achieves a necessary internal strength. As Indonesianist Michael Leifer has pointed out, the New Order’s foreign policy ‘as it emerged after the transfer of power reinstated a former course rather than pursuing a novel one’.3 The premise of this national and regional resilience through a concept of ‘concentric circles’ was the means to create a conducive immediate environment whereby the nations involved could focus on

Downloaded by [University of Defence] at 01:36 24 May 2016 developing their national capacities. Nevertheless, while Soeharto’s New Order itself was by nature partial to the ‘West’ it still retained

1 Rizal Sukma, ‘The Evolution of Indonesia’s Foreign Policy: An Indonesian View’, Asian Survey, 35 (3), March 1995, p. 303. 2 Chairman of the Ampera Cabinet Presidium, Government Report to the People, Jakarta: Department of Information, 1967, p. 18. 3 Michael Leifer, Indonesia’s Foreign Policy, London: George Allen & Unwin, 1983, p. 111. 38 Meidyatama Suryodiningrat

a strong independent streak, refusing to be the pawn of superpower rivalry. Then Indonesian Foreign Minister Adam Malik told the House of Representatives (Indonesian parliament) on 5 May 1966:

Security and peace in Southeast Asia are the responsibilities of the countries within the area. Foreign military bases are no positive contribution to peace and security but on the contrary may even threaten peace and security.

Three months later, President Soeharto himself outlined his vision of a united, peaceful, independent region:

If one day an integrated Southeast Asia can be established, this part of the world then may stand strongly in facing outside inﬂ uences and intervention from whatever quarter it may come. Be it of political and economic nature, or a physical-military intervention. A cooperating Southeast Asia…constitutes the most strongest bulwark and base in facing imperialism and colonialism of whatever form and from whatever quarter.4

The tenets by which ASEAN pursued its mutual interest further refl ected Indonesia’s staunch principle of an ‘independent and active’ foreign policy. While it has a history of leaning to one side over the other, Jakarta has remained consistent in refusing any form of military treaties or alliances, especially allowance of bases on its territory, a national view that refl ects the espoused regional outlook of refusing Southeast Asia to be a chessboard for the major powers. Hence the immediate underlying arrangement of any association among the fi ve Southeast countries needed to satisfy a two-fold interest: First, it would keep any expansionist tendencies in check, whether that be Indonesia or otherwise. Second, the existing regional arrangements would not suffi ce given Indonesia’s aversion to any perceived (direct) interference from powers outside the immediate region. Downloaded by [University of Defence] at 01:36 24 May 2016 This was why established defence treaties such as the Southeast Asia Treaty Organization (SEATO), which was formed in 1954, would not have satisfi ed these needs. While it already included the Philippines and Thailand, SEATO also included Australia, New Zealand, Pakistan, the UK and the USA.

4 Statement before the Gotong Royong House of Representatives, 16 August 1966, Jakarta: Department of Information, p. 48. ASEAN at the Crossroads of Regionalism 39

ASEAN: Past and Present Four decades later, few can argue that ASEAN has served its purpose. From a region fraught with tension, ASEAN has ensured that no open conﬂ ict has occurred within its members while regional stability allowed various regimes in the individual countries to rule lengthily — Soeharto’s New Order lasted well over three decades in Indonesia; Marcos two decades in the Philippines; the United Malays National Organization (UMNO) and the People’s Action Party (PAP) still dominate politics in Malaysia and Singapore respectively. The interactions further encouraged a formidable culture of dialogue and compromise both at the Track I level of governmental cooperation, and even tracks II and III which bring together regional think tanks and civil society organisations. Economic development has been particularly effective, as various trade and investment arrangements have propelled growth in the region. In fact, ASEAN’s success spurred the trend towards multilateralism and regionalism in the early to mid-1990s. A host of other arrangements were spawned as ASEAN expanded its dialogue. The plethora of regional ‘alphabet soups’ — ASEAN Regional Forum (ARF), ASEAN plus Three, East Asia Summit (EAS), Asia Paciﬁ c Economic Cooperation (APEC) — was a recognition of the grouping’s prominence as the driving force of regional cooperation. Most importantly, ASEAN successfully navigated the contours of superpower interaction to ensure, to some degree, that no regional power would dominate its sub-region. ASEAN’s value-added quality further extended as it created forums that bridged suspicions and forged dialogue, and ultimately cooperation, between northeast Asian powers — China, Japan and South Korea. They achieved success in mitigating tensions without actually resolving them. Speaking of the relationship and linkages of the regional cooperation, Indonesian Foreign Minister Hassan Wirajuda remarked: Downloaded by [University of Defence] at 01:36 24 May 2016 To us in Indonesia, East Asia is more than just a geographical area comprising of what traditionally are Southeast and Northeast Asia. It is a grouping of nations that have formed a habit of consultation and cooperation over the years.5

5 Speech at a breakfast forum with the Carnegie Endowment for International Peace and the United States–Indonesia Society (USINDO), Washington, DC, 8 June 2009. 40 Meidyatama Suryodiningrat

Instead of a straightforward balance of power approach, the strategy has been to bring in regional powers and hedging them as mutual stakeholders in Southeast Asia’s security. The success has also been in no small part to the undeniable fact that US presence has, since the end of World War II, been a lynchpin of security in the region. However, what worked for four decades may no longer suffi ce. The biggest challenge for Southeast Asia over the past two decades has been the rise of China. Once viewed under the narrative of ‘containment vs engagement’ and a potential destabilising force, the rhetoric has changed over the last fi ve years to full-blown cooperation. This in no small part a consequence of Beijing’s own ‘charm offensive’ towards Southeast Asia, changes from a solely bilateral approach towards a complete embrace of ASEAN’s multilateral initiatives. Fears further dissipated as China adhered to ASEAN’s Code of Conduct on the South China Sea and then in 2003 became a signatory to the Treaty of Amity and Cooperation (TAC). The deeper engagement with China was not unaccompanied by a hedging strategy which allowed for a balancing of regional powers through various concocted mechanisms. As Evelyn Goh points out, ASEAN was in fact ‘hedging’ against three unstable outcomes: Chinese domination or hegemony, American withdrawal in the region, and an unstable regional order. Southeast Asian states envisage a situation in which a number of major powers — the USA, China, Japan, South Korea and India — would be actively involved in the region by means of good political relationship, deep and preferential economic exchanges, and some degree of dialogue and exchange.6 After four decades of removing itself as the pawn in a venue of superpower rivalry, Southeast Asia was suddenly fi nding itself as the backyard of potential 21st-century enmity, a gripping climate exacerbated by ‘intelligence assessments’ which clearly show that

Downloaded by [University of Defence] at 01:36 24 May 2016 despite the diplomatic smiles, rivalry is in the air.

There are likely to be tensions between major powers in the region ... Power relatives in Southeast Asia will shift, but less than in Northeast Asia. Southeast Asia will beneﬁ t from its proximity to China and

6 Evelyn Goh, Meeting the China Challenge: The US in Southeast Asian Regional Security Strategies, Washington, DC: East–West Center, 2005, p. 33. ASEAN at the Crossroads of Regionalism 41

India, but will also feel their competitive pressure. China will make its presence felt through soft as well as economic power. — Australian Defense White Paper 20097 Southeast Asian nations welcome increased Chinese engagement, in economic and diplomatic terms, but remain wary of the implications, particularly in military affairs. — CSIS Southeast Asia Initiative8

For ASEAN, and especially Indonesia, the issue is not simply how to deal with the new challenges of the 21st century, or the emergence of a new security structure to sustain peaceful relations, but one in which the 42-year-old grouping will retain its centrality in any new regional architecture without sacriﬁ cing the sovereign independence amidst the power plays of regional powers. ASEAN (and Indonesia in particular) should be desperate in the coming years to formulate, participate, engage in the development of new structures to ensure the tenets which it based its foreign policy outlook in the past are retained for the future. A New Horizon? Despite the external circumstances facing ASEAN, the complexity of the challenge may as much be internal. Foreign-policy stakeholders of ASEAN’s largest member, Indonesia, are showing increased impatience with the lethargic pace of ASEAN itself. After 10 years of domestic reform, the world’s fourth largest country and third largest democracy is on a path of measured reassertion in the foreign policy realm. While ASEAN remains the ‘cornerstone’ of Indonesian foreign policy, it is no longer considered the ‘be all and end all’ of regional cooperation. The emergence of a politically two-tiered ASEAN between the ﬁ rst six members and the newer Indochina inclusions — Cambodia, Laos, Myanmar and Vietnam — is seen as a drawback for Jakarta to manifest what it perceives as its destiny to play a larger Downloaded by [University of Defence] at 01:36 24 May 2016 role in shaping the foreign policy of this new era.

7 Australian Department of Defense, ‘Defending Australia in the Asia Paciﬁ c Century: Force 2030’, Defense White Paper 2009. 8 Center for Strategic and International Studies, ‘US Alliances and Emerging Partnerships in Southeast Asia: Out of the Shadows’, A Report of the CSIS Southeast Asia Initiative, Washington, DC, 2009, p. 1. 42 Meidyatama Suryodiningrat

While not explicit, Marty Natalegawa’s fi rst major foreign policy speech, one month after being appointed as foreign minister, at a meeting in Jakarta in mid-November 2009 of the Council of Security and Cooperation in the Asia Pacifi c (CSCAP) was quite telling. Describing the new ‘taglines’ of foreign policy, two of the fi rst top three dealt with the continued transformation of foreign policy and the potential of new horizons. The other was ASEAN itself. These ideas have in large part been given impetus by the introduction of two separate yet still vague and varying proposals of a new regional security architecture/community — one from Australian Prime Minister Kevin Rudd, the other by Japanese Prime Minister Hatoyama. Arguing for his proposal, Rudd said:

We need mechanisms that help us to cope with strategic shocks and discontinuities. We need a body that brings together the leaders of the key nations in the Asia Paciﬁ c region, including Indonesia, India, China, Japan, the US and other nations, with a mandate to engage across the breath of the security, economic and political challenges we will face in the future. Absent such a body (there is a concern about) the possibility of strategic drift within our region or, even worse, strategic polarization, which ... serves nobody’s interests.9

Though most countries have been lukewarm to either idea, Indonesia itself has entertained its potential. From the present standpoint, with respects to Indonesia’s own ambitions and as the primus inter pares within ASEAN, three options are presently on the horizon: The ﬁ rst will be a new regional security framework which may not be primarily an ASEAN initiative, nor include all 10-members of the regional grouping. While Indonesia will undoubtedly be included as a central player in either initiative, it will not bode well for the future of ASEAN itself. If the grouping’s largest members begin looking outside of ASEAN in the maintenance of regional security, then ASEAN will wither to become no more Downloaded by [University of Defence] at 01:36 24 May 2016 than a ‘local’ socio-economic covenant among 10 countries. The question under this non-ASEAN-driven architecture is how much of ASEAN’s values — the absence of regional power dominance, regional independence — can be sustained. The strength in numbers, which ASEAN acquired as a comparative advantage when dealing with major powers, will no longer avail itself in the new arrangement.

9 Keynote speech at Shangri-La Dialog, Singapore, May 2009. ASEAN at the Crossroads of Regionalism 43

The second option is to revise, strengthen or overhaul the existing ASEAN mechanisms. This would ensure that the centrality of ASEAN as a driving force in the processes is retained, and the relevance of the grouping is not mitigated. However, as mentioned earlier, there is growing impatience with the lethargic pace of the ‘ASEAN Way’ that has largely been a talk-shop forum without producing substantive results or passed the test of actually resolving disputes. While these approaches have found continued support from China, South Korea and India, it is unlikely that the likes of Australia and the USA have the sustained patience for such a dallying approach. Instruments such as the ASEAN Regional Forum, despite including member states of any given crisis that have emerged in Asia, has not become the ‘go-to’ forum for resolving these crises. The third option is convergence of the fi rst two in which a new regional architecture would emerge by using existing forums — the ARF, APEC, etc. — as its practical pillars. Hence there would be no need to establish completely novel tools for the new security community to engage its sectoral dialogues. As Hadi Soesatro suggests, the new architecture can be built on two pillars: one, an economic pillar based on a revitalised APEC with a strong ASEAN plus Three as its core in East Asia; and two, a security pillar transformed from the existing East Asia Summit and supported by the ARF.10 The main drawback with this mishmash arrangement is that it may become too unwieldy as it spans a large string of countries and reduces the effectiveness of movement and negotiation for which the new architecture was intended in the fi rst place. While Indonesia has taken no offi cial view of these developments, there is a creeping shift towards the ideal of the fi rst option and the pragmatism of the third. India, Indonesia and ASEAN Downloaded by [University of Defence] at 01:36 24 May 2016 Indonesia has always strongly felt that India is an important part of this and previous emerging constellations. Jakarta truly welcomes New Delhi as a key regional player. Without any inhibitions, it would like the strategic partnership to grow towards something

10 Hadi Soesastro, ‘Kevin Rudd’s Architecture for the Asia Paciﬁ c’, The Jakarta Post, 11 June 2008. 44 Meidyatama Suryodiningrat

more substantial. Signals of support on the direction of a security framework suitable for New Delhi would be taken seriously by decision makers in Jakarta. As Indonesian Foreign Minister Hassan Wirajuda said at the Third Joint Commission Meeting (2007) between the two countries: ‘We should continue to strengthen our cooperation in the defence and security sector.’ Further evidence of this afﬁ nity can be found in the CSIS Southeast Asia Initiative report released in 2009 in which it surveyed the opinions of regional stakeholders in various countries:

Indonesia welcomes India as an increasingly important regional player, but the relationship is moving slowly. Indonesia is interested in developing relations with India more rapidly and has looked to the new US–India arrangement as a model for potential cooperation ... However, interlocutors noted that overall China is far ahead of India in virtually every facet of bilateral relations.

From the Indonesian perspective, there have been scant and vague signals as to whether India is truly ready to assume its role as a regional power and the responsibility of taking a common stand on issues which stretch slightly beyond its immediate borders. The ‘Look East’ policy is often lauded, but is yet to be convincing. In other words, is India ready to be part of Southeast Asia again? India is a natural ﬁ t, a complement to Indonesia’s vision of a peaceful, prosperous and democratic Indonesia. Not only does Indonesia consider itself a cultural–historical kin to India, it also shares a proud history of anti-colonialism. Economically and politically there are more common points of cooperation between the two countries. They seem to be natural partners, unnatural competitors. Most importantly, Indonesia and India are the two leading democracies in Asia where democracy itself has been on the retreat over the past decade. It is not China or Australia that Indonesia looks Downloaded by [University of Defence] at 01:36 24 May 2016 at as an example of in its democracy but India, with its similarly complex and diverse socio-political system. Hence while Indonesian policy makers will determine based on national interest the future regional security architecture most suitable to the country, strong signals of commitment and preference from New Delhi may go a long way in helping point the best direction to be pursued. ASEAN at the Crossroads of Regionalism 45

References Australian Department of Defense. 2009. ‘Defending Australia in the Asia Paciﬁ c Century: Force 2030’, Defense White Paper 2009. Center for Strategic and International Studies. 2009. ‘US Alliances and Emerging Partnerships in Southeast Asia: Out of the Shadows’, A Report of the CSIS Southeast Asia Initiative. Washington, DC. Goh, Evelyn. 2005. Meeting the China Challenge: The US in Southeast Asian Regional Security Strategies. Washington, DC: East–West Center. Leifer, Michael. 1983. Indonesia’s Foreign Policy. London: George Allen & Unwin, London. Soesastro, Hadi. 2008. ‘Kevin Rudd’s Architecture for the Asia Paciﬁ c’, The Jakarta Post. 11 June. Sukma, Rizal. 1995. ‘The Evolution of Indonesia’s Foreign Policy: An Indonesian View’, Asian Survey, 35 (3): 303. March. Downloaded by [University of Defence] at 01:36 24 May 2016 46 Ong Keng Yong

3 Regional Cooperation and Engagement: The East Asia Summit

Ong Keng Yong

Globalisation is fast changing the world. The most dramatic transformation has occurred in the developing countries of Asia, with China and India being two apt examples. Due to their huge population and vast potential, their neighbours and the big powers of the world cannot ignore what happens in China and India. In Southeast Asia, the Association of Southeast Asian Nations (ASEAN) has been managing the impact of globalisation studiously over the years. To grow economically, ASEAN needs peace and stability. ASEAN believes that the relations among the big powers will determine the future of peace and prosperity in Asia. In response, ASEAN has developed customised mechanisms to engage these powers purposefully. In the process, ASEAN has evolved the regional architecture and is recognised as having a central role in developing the architecture. The East Asia Summit (EAS) is one of the mechanisms established by ASEAN to manage the complex patchwork of cultural, economic, ethnic, historical and political relationships in the region. Indeed, there were armed conﬂ icts, prolonged distrust and continuous friction among the regional countries. The rapid economic growth of China and India has exacerbated the underlying tension. The growing eco-

Downloaded by [University of Defence] at 01:36 24 May 2016 nomic inﬂ uence of Northeast Asia and the Indian subcontinent in the global order has raised the strategic signiﬁ cance of Asia vis-a-vis the status quo powers of Europe and North America. ASEAN’s unique geography, nestled strategically between major trading and transportation networks and being in the middle of rising India and China, has given the Southeast Asian grouping a distinct advantage in managing stakeholders’ interests in the region which is critical to the maintenance of peace and stability in Asia and beyond. The mechanisms developed by ASEAN have institutionalised the East Asia Summit 47

habit of consultation and cooperation among the stakeholders. The process started with the ASEAN Regional Forum (ARF) in 1994. This was followed by the ASEAN plus Three Summit fi rst convened in 1997 and held annually since then. It culminated in the inauguration of the annual EAS in 2005. Such meetings have inculcated bureaucratic cooperation and coherence across a wide range of issues. Various concrete activities and projects to foster mutual confi dence and trust have been developed. Some of these have been implemented, for example, joint exercises by the security forces, emergency and natural disaster management, market and trade liberalisation, and information sharing to tackle security threats and improve effi ciency of public administration. Every year new areas of cooperation have been added. The EAS has brought the ASEAN member countries as well as China, Japan, the Republic of Korea (RoK), India, Australia and New Zealand into a big strategic forum. However, the EAS is still a fl edgling organisation. Yet, collective activities in energy, security, fi nance, health, pandemics, education, natural disaster management and environment protection have started to give concrete form to the vision of regional dialogue and cooperation. ASEAN has a Free Trade Agreement (FTA) with each of the EAS partners, namely, China, Japan, the RoK, India, Australia and New Zealand. Experts have completed their studies for a region-wide FTA through the Comprehensive Economic Partnership of East Asia (CEPEA). The Economic Research Institute for ASEAN and East Asia (ERIA) is headquartered in Jakarta, alongside the ASEAN Secretariat there. The EAS leaders, at their fourth summit in Hua Hin, Thailand in 2009, have agreed to rationalise the CEPEA and the East Asian FTA deliberated earlier under the ASEAN plus Three Summit into a Track One process. They are determined to move quickly on this initiative as it will signal their resolve to push for deeper economic

Downloaded by [University of Defence] at 01:36 24 May 2016 integration, thereby progressing more purposefully into East Asian community building. In Hua Hin, the EAS leaders also agreed to strengthen the connectivity of the EAS countries through road, rail, aviation, maritime, IT and telecommunication links. Such improved linkages will stimulate more efforts towards a region-wide FTA and foster a stronger sense of community among the EAS nations as the connectivity will facilitate the movement of people across Asia. Natural disasters like earthquakes, ﬂ oods, cyclones or typhoons, and bushﬁ res have created 48 Ong Keng Yong

havoc across the EAS countries. Hence, the EAS leaders have laid down the modalities for more cooperation on disaster management, particularly in capacity building and development of capabilities to help one another. Climate change initiatives are the next area of cooperation which the EAS leaders have identifi ed and more projects are expected to be rolled out in the coming months. In essence, the EAS ideal is no longer a mere slogan or vague notion. This engagement of China and India in a regional setting enriched by the presence of Australia and New Zealand created by the 10 Southeast Asian nations, which represent no threat to the interests of Beijing and New Delhi, is unprecedented. Many issues of regional concern can be addressed at the EAS. Given ASEAN’s substantial ties with Europe, Canada, Russia and the USA, interaction among the EAS partners, ASEAN member states and non-EAS countries has increased, auguring well for multilateralism in Asia. ASEAN has been in the driver’s seat of regional architectural development. Many experts have ridiculed ASEAN’s work in setting up relevant processes and mechanisms for multilateral engagement in the region. Yet, it is a fact that other similar efforts by non-ASEAN parties have not yielded signifi cant success. What underpins ASEAN’s relative success in a rising Asia is its exceptional ability to manoeuvre amongst the big powers of the world and bring them together for a credible discourse with each other. The ingenuity of ASEAN is its skilful use of its strategic geography and engagements with those who matter for the region. Other powers feel confi dent with ASEAN and trust it to deliver relevant initiatives which are not inimical to their respective interests. Recently, new ideas and proposals have been advanced for the regional architecture. There is the Australian Prime Minister’s proposal of an Asia–Pacifi c Community (APC). The Japanese Prime Minister has also envisioned a model of an East Asian community.

Downloaded by [University of Defence] at 01:36 24 May 2016 China, Japan and the RoK have organised a Trilateral Summit for themselves and its second meeting took place in Beijing, China in October 2009. At the international level, the G-20 has superseded other smaller groupings and the G-20 is destined for still bigger responsibilities and tasks in managing the problems of the world. Several derivative sub-groupings from the G-20 have already been mooted. All these moves will affect ASEAN’s position in the regional architecture. Some experts have even announced prematurely the beginning of the end for ASEAN’s centrality in the regional architecture. East Asia Summit 49

ASEAN centrality has been good for all stakeholders in the region. ASEAN has played a constructive role and has enabled different parties to engage each other in a non-threatening environment. To retain this role, ASEAN will need to strengthen and develop its cohesiveness, effectiveness and relevance. Historically, ASEAN has been most successful when both the small and big member countries in the grouping have rallied around a specifi c cause, especially if there has been a perceived common external threat. This has been witnessed in ASEAN’s response to globalisation, and during the Cambodian crisis of the 1980s, the Asian fi nancial crisis of 1997–98 and the SARS crisis in 2003. The detractors of ASEAN might have been too carried away by the very thing they like to throw at the Southeast Asian organisation, namely, hubris. For now, let us examine only one aspect, i.e., the viability of the EAS. The EAS is designed to be a leaders’ strategic forum. There is hardly any offi cial or accompanying delegation except for the Secretary-General of ASEAN, the few personal interpreters and a pair of assistants staffi ng the ASEAN Chair, who is Chairman of the EAS. There is a general agenda of broad themes, and specifi c projects for regional cooperation will be subsumed under each of these themes. Some of the leaders are designated ‘Lead Speakers’ to sketch out the big picture and stimulate discussion. The close group dynamics is remarkably conducive to forge frank exchanges and mutual persuasion. The leaders learn from one another and seek to help each other in tackling specifi c problems or common challenges. Accordingly, the EAS is a unique gathering. There is no other similar mechanism. The leaders value such interactive opportunity. Friendships are built, mutual trust is developed, and the leaders rally around an issue or agree to give more time and space for their counterparts for further deliberation. The potential of this strategic forum has not been fully appreciated by the market and by most bureaucrats

Downloaded by [University of Defence] at 01:36 24 May 2016 who tend to be clinical and nationally focused. For the leaders, they seem to savor the élan of this ‘retreat-like’ encounter. ASEAN will evolve the EAS, notwithstanding the lure of the dividends from the ASEAN plus Three framework. ASEAN member states have put the ASEAN Charter into force. ASEAN’s community building is ongoing although some quarters have chosen to look at the imperfections to deny the slow but steady progress. The reality is that all ASEAN countries need a convenient platform and ﬁ g leaf to conduct their relations with the big powers, especially those who are 50 Ong Keng Yong

immediate neighbours. The EAS affords such a device. At the same time, the major powers and players also need such a venue to interact strategically and to demonstrate relevant diplomatic initiatives. Therefore, the EAS is a concept, an instrument and a process. ASEAN has posited the EAS on a wider pedestal, without the customary ASEAN prefi xes. The EAS characterises the region’s openness and inclusiveness. It has defi nite membership criteria, a format of deliberative exchange under a clear chairmanship and a regular meeting schedule. Such formalities are tempered with a fl exible approach to content development though the outcome of each summit is not without consistency and continuity. The respective takeaways may be different but there is one common feeling: Know each other better regarding the future of the region and take it from there. Hence, an EAS participant may think twice about proceeding on a zero-sum initiative through that forum. Another may go back to the drawing board to refashion a region-wide initiative, which blatantly serves only that country’s interests. Some may decide to go slow on evolving the EAS as other irons are in the fi re. The ASEAN member states may wish to adopt opportunistic or tactical moves to strengthen their grouping as a whole or to go for individual gains instead of sticking together for tenuous common returns. The creative participants can derive more benefi ts from the EAS deliberations while those preoccupied with other priorities may simply waste the chance to get more out of the EAS. In the ultimate analysis, the EAS is an architectural form which does not conform readily to what is known in the market or what the bureaucracy wants. It is a product of default in policy manoeuvres. It is an instrument to help organise disorganised foreign-policy construction and buy time in the aftermath of domestic change and upheaval. It is a process which allows time for adjustment and re- Downloaded by [University of Defence] at 01:36 24 May 2016 fi nement. The EAS can cover every issue and subject as it is up to each leader to table items for discussion and resolution. The current untidiness about the overlapping coverage with other regional mechanisms and how to bring in new participants must not cloud the value and virtue of this innovative body. In the end, it is the political will to achieve a desired outcome which determines the success or failure of a regional mechanism. The EAS leaders have shown a will to let the EAS evolve and to use it meaningfully. East Asia Summit 51

It has been speculated that China may not be keen to evolve the EAS. The Chinese offi cials are said to favour the ASEAN plus Three mechanism where their infl uence is a clear advantage. China has openly supported Russian participation in the EAS. The Chinese offi cials are described as not keen on having the USA in the EAS ostensibly because including the Americans would mean a weaker case to exclude the Europeans and these offi cials’ view is that EAS membership should be more geographically confi ned. Whatever China’s position on evolving the EAS, it is important for those already in the EAS to substantiate the potential of the forum. A good track record of implementing useful programmes and projects through the EAS will strengthen its foundation and increase its contribution to regional cooperation and dialogue. Japan has committed fi nancial assistance to build up the ERIA in Jakarta. Australia and New Zealand are active in various sectors of cooperation already identifi ed. India is a participant in the EAS from the beginning and it has given intellectual and practical inputs in developing this fl edgling body. There is much more that India can offer. For example, the Nalanda project under the EAS is an unprecedented venture for inter-civilisational dialogue and exchange. Many more region-wide educational initiatives, especially in the area of language, science and technology, can be generated from the Nalanda enterprise. Currently, the EAS agenda ranges from energy conservation/effi ciency to public health and from trade and investment facilitation to transportation and technology links. These are all areas of interest to India. More importantly, the EAS is an inexpensive multipurpose regional forum enabling India to groove with its strategic neighbours, reach out to a diverse canvass for securing its own interests and construct a viable regional architecture for a peaceful and prosperous future. Downloaded by [University of Defence] at 01:36 24 May 2016 52 D. S. Rajan

4 Regional Security Architecture: Indian and Chinese Positions

D. S. Rajan

Against the background of the Asia–Pacifi c region lacking an overall institutional framework capable of dealing with the economic, political and security challenges facing it, the concerned nations have been discussing for some years now about the formation of a suitable regional architecture to fi ll the gap. In this connection, the proposal of Japan for forming an ‘East Asian Community’ (EAC) made at the Fourth East Asia Summit (EAS) (Thailand, 25 October 2009) as well as the one initiated (July 2008) by the Australian Prime Minister Kevin Rudd for an ‘Asia Pacifi c Community’ (APC) look very signifi cant; while further debates on the proposals can surely be expected in the coming years, the construction of a regional security architecture to realise confl ict resolutions in East Asia has already emerged as an integral part of the overall community building in the region. The centrality of the rapidly rising global player China to the construction of regional security architecture comes out clearly. Beijing’s emerging views on the subject, as expected, are closely linked to its own security perceptions; so is the case with other stakeholders like the US, Japan, ASEAN, Australia and India. Convergence or divergence of views therefore appears normal. What follows is an

Downloaded by [University of Defence] at 01:36 24 May 2016 attempt to trace various positions and analyse their likely implications for the evolution of a regional security mechanism which can accommodate diverse interests. Taking the case of India, its declared position is that an ‘open and inclusive’ and ‘pluralistic and polycentric’ security order based on a ‘cooperative approach’, ﬂ exible enough to accommodate the diversity and conditions prevailing in the region is a must; under this order, each participant will have ‘equal stake and responsibility’. Further, Asian security cannot be looked at in isolation from the region’s Regional Security Architecture 53

broader political and economic aspects. There should be no transplant of ideas from other parts of the world and any sub-regional security arrangements that are narrow and ultimately ineffective should not be created. New Delhi believes that the building blocks for the new framework could be dialogue forums like the ASEAN Regional Forum (ARF), Comprehensive International Cooperative Association (CICA) and Shanghai Cooperation Organization (SCO).1 The formulations of the People’s Republic of China (PRC) on the whole aim at creating a ‘Multilateral Security Dialogue and Cooperation Mechanism’ in the region, taking into account the factor of ‘regional variety’. They seek to encourage the establishment of security cooperation mechanisms at different levels and in different areas with an ‘open and inclusive approach’ and consider that consultations should be open and based on equality and mutual respect, addressing the need to ‘seek common ground while reserving differences’; a ‘cooperative security concept’ needs to be developed under which there will be ‘no exclusive alliances’ and ‘no enlargement of existing post-Cold War alliances’, with proper consideration to ‘vital and signifi cant security interests of each country.2 Beijing specifi cally views that there should be no deployment of missile defence system in the region and that ‘missile defence partnership in some areas would be detrimental to strategic balance, confi dence building and regional stability’.3 The PRC also stresses the connectivity between regional security and its ‘new thinking’ on security, based on ‘mutual trust, mutual benefi t, equality and coordination’.4 It is for according ‘due role’ to the ARF Security Policy conferences and development of the existing regional and sub-regional cooperation mechanisms, in parallel to efforts to create cooperation mechanisms.5 In strategic terms, Beijing thinks that ‘peace is a product of parity, balance of

1 Speech by Pranab Mukherjee, India’s Minister for External Affairs, Peking

Downloaded by [University of Defence] at 01:36 24 May 2016 University, 6 June 2008, http://www.indianembassy.org.cn/Press/20080611- 3.htm, accessed 11 June 2008. 2 Speech by Lt Gen. Ma Xiaotian, Deputy Chief of PLA General Staff, 8th Asia Security Summit (Shangri-La Dialogue), Singapore, 31 May 2009. 3 Speech by Lt Gen. Ma Xiaotian, Deputy Chief of PLA General Staff at the 7th International IISS Shangri-La Dialogue, Singapore, 31 May 2008. 4 President Hu Jintao’s speech at Boao Forum, Hainan, 12 April 2008, Xinhua, 13 April 2008. 5 Speech by Chen Xiaogong, Assistant Chief of PLA General Staff, ARF Security Policy conference, Singapore, Xinhua, 8 May 2008. 54 D. S. Rajan

power and offensive and defensive strengths’ and believes in the ‘non-exclusive’ nature of regional cooperation and in drawing on the development practices of other regions.6 Japan accepts the need for a ‘multilateral collective defence security mechanism’ in the Asia–Pacifi c region, similar to the North Atlantic Treaty Organisation (NATO) in Europe. Tokyo at the same time, citing the ‘diversity in the region’s political and economic systems, cultures and ethnicities’, prefers a short-term approach aimed at ‘strengthening the existing multi-layer frameworks for bilateral and multilateral dialogue, while securing the presence and engagement of the US in the region’.7 It gives emphasis on the synergy between the Japan–US security alliance and Tokyo’s ‘Asian diplomacy’. Japan also feels that the ‘balance of power’ factor could be signifi cant in the changing regional security environment, but reaching ‘mutual understanding’ among the countries concerned is essential. Tokyo does not treat China as a threat to Japan, but wants Beijing to enhance the transparency of its military capabilities and their purpose.8 Basically, the government of Hatoyama in Japan appears to maintain the position above, notwithstanding its tendency to become less dependent on the US and look more towards Asia. The ASEAN views itself as the ‘centre’ of the regional security architecture. It visualises three attributes in the regional security architecture. It should be ‘open and inclusive’, providing space to both big and small nations; be fl exible enough to accommodate an overlapping web of bilateral and multilateral networks as well as formal and informal structures; and should have ASEAN at its fulcrum, considering its strategic location and capacity to be a neutral interlocutor for powers whose interests intersect in Asia.9 ASEAN also wants the architecture to operate at three levels — through multilateral pan-regional security organizations like Shangri-La Dialogues and the ARF, sub-regional groups like ASEAN, EAS and

Downloaded by [University of Defence] at 01:36 24 May 2016 SCO, and functional groups with more focused memberships for addressing speciﬁ c challenges.10

6 Ibid. 7 Japan Diplomatic Blue Book, 2008. 8 Speech by Japanese Defence Minister, Shigeru Ishiba, at the 7th IISS Security Summit, Singapore, 31 May 2008. 9 Speech by Teo Chee Hean, Deputy Prime Minister, Singapore, National Defence College, Vietnam, 9 September 2009. 10 Speech by Teo Chee Hean, Shangri-La Dialogue, Singapore, 29 May 2009, www.iiss.org, accessed 31 May 2009. Regional Security Architecture 55

Australia stands for the creation of an ‘Asia–Pacifi c Community’ (APC) by 2020, a body similar to the European Union, to span the entire region including itself, the USA, Japan, China, India, Indonesia and other regional powers; it visualises ASEAN as the core of the APC, with a charter, engaging in ‘a full spectrum of dialogue, cooperation and action in economic and political matters and future challenges relating to security’. The APC proposal has two premises — global economic and strategic weight is shifting to Asia and existing forums like ASEAN were not designed to promote cooperation across the entire region, due to the ‘greater diversity’ in the region’s political systems and economic structures.11 It fi nds a remedy to the situation in the proposed APC, which could ‘enhance’ the region’s ‘fragmented’ security and political cooperation as well as help resolve a number of regional confl icts, including on Taiwan, Kashmir and North Korea.12 The US accepts the ‘provisional’ nature of efforts to fi nd a new Asia–Pacifi c security architecture and welcomes ASEAN leadership to such efforts. While discussions on a new security architecture progress further, Washington seeks to institutionalise the various existing forums to deal with the ‘region-specifi c’ problems and depend on its ‘time-tested’ architecture involving ‘alliances’ (with Japan, South Korea, Philippines and Thailand) and ‘partner-nation capacity building’ (with India and Vietnam). As per the declared US benchmarks for building a new security architecture, that process should not be a ‘zero sum game’ and exclusion of any single country would mean ignoring the reality of Asia’s security today. Besides, ‘the entire region should be treated as a single entity and that there should be no separate East Asian order’.13 Analysis of Positions

Downloaded by [University of Defence] at 01:36 24 May 2016 A comparative analysis of the positions of major Asia–Paciﬁ c players on the regional security architecture reveals divisions among them on the following issues:

11 Australian Prime Minister Kevin Rudd’s speech at Asia Society Australasia Centre, Sydney, 5 June 2008. 12 The China Post, quoting Australian Prime Minister Rudd, 6 June 2008. 13 Speech of US Defence Secretary Robert Gates at the IISS Shangri-La Dialogue, Singapore, 31 May 2008. 56 D. S. Rajan

Multilateralism While China and the rest of the regional powers including India, in varying degrees, favour the evolution of a ‘multilateral’ regional security mechanism, there appear to be some differences in their perceptions on this count. First, Beijing seems to think that only a regional security order led by it can protect its geopolitical interests; India, on the other hand, seems to emphasise the ‘pluralistic and polycentric’ character of the future regional order. Second, China’s preference to establish ‘security cooperation mechanisms at different levels and in different areas’ distinguishes its stand from that of the rest; India, in particular, is against ‘ineffective’ sub-regional mechanisms. Behind such China’s positions lies its ‘new thinking’ on security, which implies the need being felt by it for creating a structure leading to ‘multi-polarity’ in East Asia;14 Beijing may think that in this way, regionally, US pre-eminence can be weakened and several ‘equal’ powers can emerge. Participation of the US China, unlike other stakeholders as India, Japan, Australia and ASEAN nations, desires to exclude the US from participating in the regional integration process, speciﬁ cally from groupings like the East Asia Summit, SCO, etc. Powers other than China welcome Washington’s role in the region on the basis of their common interests in balancing ties with China with the help of the US presence. Prime Minister Kevin Rudd has categorically included the US in his APC vision and, similarly, Japan’s Prime Minister Hatoyama has said that the US will be consulted on his EAC proposal. The ASEAN, by insisting on ‘collective responsibility of all states that have a stake in the region’s security’, has indicated its approval to US involvement. Malaysia, in particular, has commented that any future Asia-wide community must engage the US.15 India’s line too does not have any Downloaded by [University of Defence] at 01:36 24 May 2016 such anti-India connotation. China, on its part, has not publicly declared its opposition to the US joining the regional integration and security mechanisms, but its

14 John Lee, ‘Why China Wants Multilateralism in Asia’, Henry Jackson Society, London, 14 July 2008. 15 Malaysian Prime Minister Razak’s interview in Bangkok Post, 26 October 2009. Regional Security Architecture 57

implied anti-US thinking is not diffi cult to discern. It feels that in the EAS, the ASEAN should be in ‘driver’s seat’ but with China giving ‘long-term and strategic guidance’ and outsiders like India, Australia and New Zealand only playing a secondary role there. On the Japan-proposed EAC also, Chinese offi cial media reports have opined that it should consist of south and northeast Asia nations only, besides questioning Prime Minister Hatoyama’s inclination to admit the US.16 They have in particular criticised the views of Singapore’s Minister Mentor Lee Kwan Yew favouring the US maintenance of its regional presence so as to balance China’s rise.17 They have argued in this connection that China’s rise does not signal a US retreat from the Asia–Pacifi c region and the two nations are not playing a zero-sum game.18 At the same time, there appears to be a slight movement in China’s position on the US role. Beijing has already supported, albeit at its own terms, the Australian APC proposal, which includes the US. Its symbolic backing to the US with respect to Japan’s EAC has also surfaced. The Chinese Ambassador to ASEAN, Xue Hanqin, has remarked that the US could be a participant in the EAC.19 Does this herald a real change in China’s position on the US role in the Asia–Pacifi c? Is China shedding its goal, so far maintained, of checking US power regionally? One has to wait for an answer. The US itself is against exclusion of any country from the regional processes. It may not be happy with its existing non-inclusion in regional bodies like the EAS, SCO and the India–China–Russia trilateral dialogue. By signing the Treaty of Amity and Cooperation, a pre-condition to join the EAS, Washington is already showing signifi cant fl exibility on its East Asia policy. It is in fact re-engaging Southeast Asia and showing a more positive attitude towards China. In early April 2009, at the sidelines of the G-20 meeting, US President Obama and his Chinese counterpart Hu Jintao pointed to the US–China ‘positive, Downloaded by [University of Defence] at 01:36 24 May 2016 16 ‘No Clear Vision for Japanese Proposal for East Asian Community’, Xinhua, Hua Hin, 24 October 2009. 17 Li Hongmei, ‘Nothing to be Fretted about’, People’s Daily, 6 November 2009. 18 Li Hongmei, ‘China has to Break through Neighborhood Dilemma’, People’s Daily, 30 November 2009. 19 Joel Rathus, ‘Squaring the Japanese and Australian Proposals for an East Asia and Asia–Pacifi c Community: Is US In or Out?’ 4 November 2009, www.eastasiaforum.org, accessed 4 November 2009. 58 D. S. Rajan

cooperative and comprehensive’ relationship; use of such terminology is unprecedented. A two-track Sino–US Strategic and Economic Dialogue is now in operation. The US Secretary of Defence Robert Gates stated in the Shangri-La 2009 dialogue that it is essential for the US and China to cooperate wherever possible. Despite such positive US signals, Beijing continues to be suspicious of Washington strategically, for instance, the Chinese delegate to the Shangri-La Dialogue 2009, General Ma Xiaotian stuck to China’s old charges that the US is building alliances in East Asia against China. Also, on the North Korean and Iran nuclear issues, China and the US still differ to a great extent. Who should Lead the Architecture? India’s ‘polycentric’ approach intrinsically denies domination of any power in the East Asian security architecture. In comparison, ASEAN tends to stress its own ‘centrality’ in the architecture; Chinese formulations are silent on the subject; however, their mention of ‘parity’, ‘equality’ and ‘balance of power’ and the prescription that the security of one nation should not be sacriﬁ ced while ensuring the security of others, reveal Beijing’s mind on the security order — the PRC should play a central role. Beijing is taking the stand that East Asian regional integration should be based on ASEAN Plus Three (China, Japan and South Korea) cooperation,20 grudgingly conceding a secondary place for ‘outsiders’ like India, Australia and New Zealand. On the Japan-proposed EAC, Beijing’s stand is that it would only be a ‘long-term’ goal. It gives the following reasons — East Asian nations have different economic and social systems; political issues like the US factor remain obstacles to a uniﬁ ed Asia; mutual trust is lacking in China–Japan–South Korea ties; and differences on the scope of EAC membership like those on admission of non-Asian

Downloaded by [University of Defence] at 01:36 24 May 2016 nations persist. China, at the same time, believes that the EAC should come with ASEAN Plus One mechanism as its basis and ASEAN Plus Three as its major channel.21 As mentioned earlier, China also feels that the EAC should include only countries in Northeast and Southeast Asia initially, but can be expanded later. India, along with

20 Xinhua, ‘In Search of Truly Regional Community’, 28 October 2009. 21 Xinhua, ‘Chinese Premier attends East Asia summit on Regional Cooperation’, 25 October 2009. Regional Security Architecture 59

Japan, on the other hand, supports ASEAN Plus Six as the main force in building the EAC; Beijing rejects it by saying that the 10+6 grouping is not truly an East Asian Community.22 As New Delhi sees it, the EAS, which includes India, can be the building bloc for the EAC.23 Some Southeast Asian scholars however see in EAC another version of Japan’s ‘Great East Asia Co-prosperity Sphere’.24 Asian Economic Community New Delhi’s stress is on the formation of a broader Asian Economic Community (AEC). It believes that Asian economic integration should be accomplished by coalescing FTAs among member Asian countries into an Asian Regional Trade agreement as a pivotal step towards integration of Asia into a common unit, leading to the creation of a broader Asian Economic Community.25 New Delhi considers that India’s engagement with ASEAN is the key element of its vision of an Asian Economic Community.26 China and other East Asian nations have so far not mentioned the Indian proposal for AEC; Japan’s EAC concept, however, seems to be close to what India thinks. Learning from Other Models Sino–Indian divergence is apparent on this subject. In matters of regional cooperation, China is in favour of ‘drawing on development practices of other regions’; India’s stand, on the other hand, is to build an architecture taking into account the conditions in Asia, without any transplant of ideas from other parts of the world. Sub-regional Security Arrangements India is against the creation of any ‘ineffective sub-regional security arrangements’. China, on the other hand, prefers mechanisms at different levels and in different areas, implying differences with India

Downloaded by [University of Defence] at 01:36 24 May 2016 on this account.

22 As in 18 above. 23 The Hindu, ‘No Asia without us, India reminds ASEAN and Japan’, 25 October 2009. 24 Li Hongmei, ‘China has to Break through Neighborhood Dilemma’. 25 Prime Minister Manmohan Singh’s statement on 4th East Asia Summit, PM’s Ofﬁ ce, New Delhi, 25 October 2009. 26 Manmohan Singh’s speech, 7th India-ASEAN Summit, Huahin, 25 October 2009. 60 D. S. Rajan

Threat Perceptions It is undeniable that threat perceptions are a deciding factor in the formulation of visions on regional security architecture by each country. India’s profi le in the Asia–Pacifi c region is increasing as a result of its Look East Policy, the scope of which now stands extended to the wider East Asia and Pacifi c basin. New Delhi feels that this, coupled with growing inter-dependence between the nations, has widened India’s responsibility in the region. In its view, the nature and scope of trans-border threats are rising and issues relating to climatic change, food and energy security are also becoming important.27 To meet the main challenges of border, maritime security and energy security, India is building its own leverages in the region; it is taking active steps like holding talks on the border with China, conducting active maritime diplomacy and carrying out energy cooperation. The fact that India has become a factor in the Asia–Pacifi c balance of power cannot be disputed; however, a competition between New Delhi and Beijing seems implicit in this process. Herein may reside the real meaning of New Delhi’s ‘polycentric’ approach to regional security architecture. China’s role is key to the setting up of a regional architecture. Its regional security concerns, as can be seen from various offi cial documents and pronouncements, relate to ‘still not properly solved territorial and maritime disputes, the Taiwan issue, the ‘three evils’ of terrorism: ethnic separatism, religious extremism and threats to sea lanes of communication. Beijing also sees challenges in the US alliances and deployment of missile systems in the region, weaponisation of outer space and nuclear proliferation. It looks with strong suspicion at the US role in the region, particularly its ties with Japan and India as refl ecting attempts to ‘contain’ China. The quadrilateral concept of ‘alliance of democracies’ (Japan, Australia, the US and India) and the joint ‘Malabar’ military exercises by these Downloaded by [University of Defence] at 01:36 24 May 2016 nations have been the principal Chinese targets. Beijing also thinks that the Indo–US civil nuclear cooperation agreement is against the interests of the international non-proliferation regime and that India’s nuclear programme is a security threat for China. India’s regional cooperation policy is being criticised by China for its alleged aim

27 Manmohan Singh’s speech, Combined Commanders Conference, New Delhi, 24 October 2007. Regional Security Architecture 61

to control the Malacca straits.28 The PRC is also deeply suspicious of the anti-China contents of the 2008 India–Japan Declaration on Security Cooperation.29 Such Chinese perceptions undoubtedly determine their attitude to the regional integration process including on security. On India, Beijing’s hesitation to give it a leading status in integration mechanisms is coming out clearly. This runs counter to what President Hu Jintao said in India (November 2006): ‘Both China and India positively view each others’ participation in Asian inter-regional, regional and sub-regional cooperation process.’ Taking the case of Japan, its perception of the US alliance as key to face threats from China (mainly military modernisation, resource development in the East China Sea), from Russia (unsettled territorial issue) and from North Korea (nuclear weapon programme) provides the underpinning for its vision of a regional order. ASEAN, too, mostly sees in the US a security guarantor against impact from China-related potential confl icts (South China Sea territorial disputes) and a balancing factor to China’s rise. Seoul’s East Asia strategy aims to cope with the changing security environment on the Korean peninsula as well as in Northeast Asia. It now supports a diversifi ed approach to regional integration, which includes upgrading the alliance with the US to a ‘strategic alliance’, developing a ‘strategic cooperative partnership’ with China and promoting a multilateral security mechanism in Northeast Asia. South Korea’s policy, though it appears to comprise contradictory elements, is being perceived as more realistic than before so as to deal with the possible North Korean contingency and the question of Korean unifi cation. The South Korea–China–Japan trilateral agreement (Beijing, 10 October 2009) has expressed the commitment of the three nations to the ‘development of an East Asia community based on the principles of openness, transparency, inclusiveness as a long term goal, and to regional cooperation, while maintaining Downloaded by [University of Defence] at 01:36 24 May 2016 increased trilateral communication and coordination on regional and international affairs’.

28 James Holmes, US–China Economic and Security Review Commission, US Naval War College, 14 June 2007. 29 ‘Japan and India Forge Military Alliance to attack China from both Front and Rear’, China Radio International, World News (Chinese), 30 October 2008. 62 D. S. Rajan

The US perceptions of a global and regional security order are linked with its views on the emerging world and Asia–Pacifi c security scenarios. In this regard, the challenges being perceived by Washington concern Iran, Iraq, Afghanistan and Russia globally, and China, Myanmar and North Korea regionally. The 2008 ‘US National Defense Strategy’ identifi es terrorism (Iraq and Afghanistan) as the main global threat and as a shift from the strategy adopted so far to deal with it, focus has been given to the use of both ‘hard’ and ‘soft’ power. China and Russia have been listed as powers which have the ‘potential’ to challenge the US-led international order. The US will strive to establish partnership with the two. But Washington will ‘hedge against Beijing’s growing military modernisation and impact of its strategic choices on international security’. US interaction with China will be multidimensional and for the long term.30 In Asia–Pacifi c, the stated goal of the USA is to form ‘a new Asia–Pacifi c Democratic Partnership’.31 From the foregoing, the existing conceptual differences between China and other regional powers including India, on the East Asian political and security order, are easy to see. They naturally seem to emanate from the distinct security perceptions of the sides involved. Beijing’s motive is defi nitely to restrict US dominance over the region; as mentioned above, its objective seems to be replacing the same with a system consisting of nations enjoying ‘equal’ powers. Conclusion Asia–Pacifi c regional security architecture is still evolving. Beijing apparently feels that its concerns can effectively be dealt with only by a security order dominated by it; this is despite its ‘rhetoric’ on ‘equality and parity’ in the order. In this regard, it sees the US as the principal challenger. Japan and nations in Southeast Asia (especially Malaysia, Singapore, Thailand and the Philippines, which have strong

Downloaded by [University of Defence] at 01:36 24 May 2016 military ties with the US) are, on the other hand, looking at the US for balancing China’s rise and stabilising regional security.32

30 Peoples Daily, 6 August 2008. 31 White House Press Secretary, 7 August 2008. 32 Singapore’s Lee Kwan Yew has warned the US that it risks losing global leadership if it strays from Asia to ‘balance’ China’s rising military and economic might (speech, US-ASEAN Business Council, 27 October 2009). Regional Security Architecture 63

To counter this trend, China is actively wooing ASEAN nations. Beijing’s announcement of a US$10 billion ‘China-ASEAN Fund on Investment Cooperation’ to support infrastructure development in the region and its agreement for China-ASEAN Free Trade Area which was put in place in 2010 are examples. India, on its part, is giving equal importance to conﬁ dence building with China and strengthening its partnership with the US, besides getting closer to other regional powers with clout, like Japan, ASEAN, etc. Its initiatives towards developing security cooperation with Japan in 2008 and reaching a ‘Trade-in-Goods’ Agreement with ASEAN in August 2009 are major steps. India, however, does not want to be seen as belonging to any anti-China grouping, but it is clear that Beijing suspects New Delhi’s pro-US tilt. What is being witnessed, in the ultimate sense, is a Sino–US competition, complicating the geopolitics in East Asia. Sufﬁ ce to conclude by saying that all the stakeholders involved — the US, China, Australia, Japan and India — should play a constructive role in creating the much needed regional security architecture, which can serve the interests of all. Downloaded by [University of Defence] at 01:36 24 May 2016 64 John W. Garver

5 The Emerging International China–India Division of Labour and India’s Quest for Status Parity and Security with China

John W. Garver

The thesis of this article is that the emerging economic division of labour between India and China in the global economy will exacerbate India’s status rivalry and security dilemma with China. India is emerging as a supplier of raw materials and semi-processed industrial inputs for China’s powerful manufacturing sector, and as a supplier of labour-intensive, low-tech goods to global markets, increasingly in developing countries. China is emerging as a producer of increasingly high-tech goods that go increasingly to developed countries. This conclusion is substantiated by the analysis of (a) the composition of India–China trade; (b) the structure of Chinese and Indian trade with third countries; (c) a comparison of service exports of the two countries; and (d) the ﬂ ow of FDI to the two countries. This emerging division of labour is linked to state status and security via the intervening variable of hard power. The argument is made that manufacturing and high technology (which is substantially derivative of manufacturing) are closely linked to the generation of advanced military power, and that India will very probably continue to lag behind China in this crucial area because, in part, of the fundamental structure of the international division of labour that Downloaded by [University of Defence] at 01:36 24 May 2016 has emerged, and continues to emerge, between the two. This, in turn, will stimulate Indian concerns over India’s achievement of a status position equal to China in the hierarchy of states and security for India in the midst of expanding Chinese presence. Hard Power, Manufacturing, and Services Burgeoning trade between India and China over the past decade is often taken as a harbinger of a new and cooperative relation between Emerging India–China Division of Labour 65

those two countries. A recent book heralded the ‘near-complete transformation of the economic relationship between China and India’ created by the fact that the two economies are ‘becoming rapidly intertwined’. This growing India–China economic relation was creating a ‘radically different world’. While the stress of the two authors was on economic opportunities created by growing economic cooperation between China and India, they also saw the new period as recapturing ‘a mutually harmonious relationship going back at least 2,000 years’.1 This article advances a starkly different view: that the particular international division of labour emerging between India and China raises deep problems for important Indian political and security objectives and is, therefore, unlikely to completely eliminate, and perhaps not even substantially reduce, rivalry between the two countries.2 The thesis of this article is that a distinctive international division of labour is emerging between India and China and, more pro- vocatively, that this particular division of labour presents problems for India’s quest for parity with China in the state order and security in the shadow of a rising China. China has emerged as a global manufacturing centre, with capital, technology and resources from around the world ﬂ owing into China to produce ‘Made in China’ goods for world markets. India has become part of this global support system for China’s manufacturing sector, and expanded supply of inputs for Chinese manufacturing industry will probably become steadily more important to Indian economic growth. Moreover, efforts by the Chinese government to move Chinese manufacturing up the value-added ladder from labour-intensive and low-tech to capital and knowledge-intensive, middle- and high-technology

1 Anil Gupta and Haiyan Wang, Getting India and China Right, New York:

Downloaded by [University of Defence] at 01:36 24 May 2016 John Wiley and Sons, 2009 reprised in ‘Economic Integration between China and India’, Global Bookshelf, 7 August 2009. 2 At this point, it might be useful to say that the author is in no way connected with the US government and is an ordinary professor at Georgia Institute of Technology, Atlanta. Those familiar with this author’s other writings on India– China relations will know that he has written for many years about India–China rivalry and may, therefore, have an intellectual ‘vested interest’ in the continuation of that rivalry. That line of argument is, however, quite literally a logical fallacy — an ad hominem argument directed at the person making an argument rather than at the logic or evidence of the argument itself. 66 John W. Garver

manufacturing have been successful to a signifi cant degree. India’s niche in the global economy, on the other hand, lies in a relative narrow range of services, what Singapore’s Lee Kuan Yew called an ‘outsourcing service center, fi rst in call centers and now moving to more sophisticated business process operations and clinical research activities of global corporations’.3 India’s global strengths are simply not, at least not yet, in manufacturing for world markets. The concern of this article is not the purely economic rationality of this emerging India–China division of labour in the global economy. From a purely economic point of view, such a specialisation is desirable. Increased complementarity creates enhanced opportunities for trade between the two economies. As Adam Smith pointed out in his The Wealth of Nations, when nations specialise in different things, they produce high-quality goods very cheaply and both sides benefi t when they exchange their different products, whether goods or services. This is perhaps why economic analysts of the new, emerging India–China relation are so optimistic about the transformation of that relation. The critique developed in this article is, rather, political, and has to do with India’s status and security. Regarding India’s status, manufacturing is the crux of generation of hard power which is a major determinate of both the hierarchical order of states and of the relative security of states vis-à-vis one another. The link between the status of states and their hard-power capabilities, especially, is not a proposition that may be discussed in polite company. But rather like the role of sex in human society, it is a gritty reality that scholars must recognise. The following discussion will fi rst state the case for the important role of hard power in determining the hierarchy of states, and of industrial manufacturing for determining hard power. The link between hard power and security is probably less controversial. Here, the argument of this article is that China’s decisive lead in industry and, derivatively technology and military power will exacerbate Downloaded by [University of Defence] at 01:36 24 May 2016 the Indian fear of ‘China’s creeping encirclement’ in the lands and waters around India. I understand that the central thesis of this article (i.e., manufacturing leads to hard-power leads to status in the community of states) may be controversial, and so will lay out in clear logical fashion at

3 Keynote speech at ofﬁ cial opening of the Lee Kuan Yew School of Public Policy, 4 April 2005, in David A. Kelly, Ramkrishen S. Rajan and Gillian H. L. Goh (eds), Managing Globalization: Lessons from China and India: Inaugural Conference of the Lee Kuan Yew School of Public Policy, New Jersey: World Scientiﬁ c, 2006, p. vi. Emerging India–China Division of Labour 67

least the bare bones of the syllogism. The article will then investigate the particular specialisations being developed by China and by India in the global economy by looking at: (a) the composition of the burgeoning India–China trade; (b) Indian and Chinese trade with third country, i.e., global, markets; (c) Chinese and Indian service exports; and, ﬁ nally, (d) foreign investment in the two countries. In each area, the argument presented is that the data substantiates, if sometimes only weakly, the emergence of a specialised division of labour: China as an increasingly sophisticated manufacturer, and India as supplier of resources and semi-processed inputs to China, and of labour-intensive goods and a range of services to global markets. The concluding section of the article will then consider the implications for India of the power implications of the emerging international division of labour. The Syllogism: Hierarchy, Nationalism, Hard Power, and Manufacturing Each of the propositions in this section can be challenged. Each proposition needs to be carefully substantiated by empirical evidence and rigorous logic. This is not done here because of limi-tations of time. Yet a clear, bare-bones exposition of the argument is necessary to give meaning to evidence regarding the China–India division of labour presented in the next section. As a roadmap for the reader, Figure 5.1 outlines the overall logical structure of the argument regarding international division of labour, generation of hard power and the relative status and security of states. A premise of the argument is that human beings are intensely hierarchical creatures, with an acute and innate ability to measure their own social status against that of others. This combines with an equally powerful propensity of people to identify with groups, to mean that sensitivity to hierarchy applies to groups with which individuals identify. People tend to think of themselves as members

Downloaded by [University of Defence] at 01:36 24 May 2016 of this or that group, and to rank the status of their own group against that of others. Clearly, this sensitivity to status hierarchy can be modifi ed by culture and ideas; otherwise racial and religious intolerance would not be weaker in some societies than in others. Yet, the underlying tendency to render judgements of relative status remains unchanged. Homo sapiens are, after all, primates, and primates are social animals evolved over millions of years and which regulate their interactions via such judgments of relative status. Each of the propositions in this paragraph can be challenged, but will serve as an undefended premise of the following argument. A very good way to refute an argument is to rebut its premise. 68 John W. Garver na growing Indian apprehension or growing Chinese ‘creeping encirclement’ Indian efforts to alter purely market-based development of economy superior Chinese military capabilities emerging division of labour between China and India elite ‘parabellum’ mindset role of hard power in determining relative status of states scal rapid technology development strong foreign currency earnings and fi capabilities for status Downloaded by [University of Defence] at 01:36 24 May 2016 cation human propensity for group identifi Level 2: Argument regarding security of India strong manufacturing base judgments state rivalry Level 1: Argument regarding Relative Status of India human propensity for hierarchical judgments state International Division of Labour, Hard Power and Indian Quest for Parity with, Security from, Chi Figure 5.1 : Emerging India–China Division of Labour 69

Nation states are a basic form determining the contours of human society today and over the past century or two, and a basic group with which people identify (at least in some countries and to greater and lesser degrees). The formation of national identities and con- sciousnesses, of nationalism, has been an important dynamic of recent history. Both Indians and Chinese have undergone this nation- forming process, and tend to strongly identify with ‘their nation’ and aspire to its ‘rise’ in the community of states. While part of that desire for a ‘rise’ can be attributed to a desire for improved material living standards, part of it also arises out of a desire for respect and esteem, both by others and by oneself, with self-respect being partially measured, in circular fashion, by what others think of one. Simply stated, Chinese and Indians want ‘their’ nation to be recognised as great — as superior to, or at least not inferior to, the other. Hard power is an important factor in determining the status of states. Realist theorists outline a number of factors contributing to state power: size and level of education of population, size and technological prowess of the economy, morale and diplomatic skill, and so on. But a critical step, according to these theorists, is the translation of these potentialities into genuine power, into military power, into the ability of a state to coerce and/or impose their own will on other states. War is not always the outcome, though it has been fairly frequent. But even peace in the state system is often based on two sides preparing for war in accord with the ancient Roman maxim ‘sic vis paxem para bellum’ (‘he who desires peace, prepares for war’). China understands this logic very well — even though it publicly favours the language of peace and non-threat, especially when dealing with countries that might feel unease in the face of China’s hard power.4 Analyses of China’s approach to relations with other powers clearly indicate that those approaches are underpinned by substantial Chinese power.5 India too has come to accept this

Downloaded by [University of Defence] at 01:36 24 May 2016 harsh reality. 1962 still stands as a pivotal lesson in this regard, and the 1998 decision to openly and fully develop nuclear weapons was a further embrace of this unpleasant but realistic principle.

4 An inﬂ uential exposition to the ‘para bellum’ approach to politics in China’s tradition is Alastair Iain Johnston, Cultural Realism, Strategic Culture and Grand Strategy in Chinese History, Princeton, NJ: Princeton University Press, 1995. 5 See, for example, John Wilson Lewis and Litai Xue, China Builds the Bomb, Stanford, CA: Stanford University Press, 1988; and Imagined Enemies, China Prepares for Uncertain War, Stanford, CA: Stanford University Press, 2006. 70 John W. Garver

None of this denigrates the role of soft power in interstate affairs. Soft power — the ability to persuade people or induce desired behaviour by other than coercive means — is extremely important. US soft power, for example, is very important; this includes fi lms, music, dance, cuisine, clothing, universities, publishing and the Internet. The fact that American power is often associated with individual freedom and democracy, or alternately with scientifi c advance, is also hugely important. But all of these operate within the framework of US hard power, military power and alliances. Even a cursory review of the ‘major powers’ over the last 200 years produces a list of states with a lot of hard power, or at least an aspiration to such hard power: Great Britain, France, Japan, Russia and the Soviet Union, Germany, Italy, China, the USA. In the real world of states, renouncing military power is tantamount to renouncing major power status. Two aspiring powers that consciously rejected ‘power politics’ for much of post- World War II period, Japan and India, have, over the last decade or so, fi nally accepted this elemental reality and begun laying greater stress on military and other types of hard, coercive power. Finally, manufacturing is an important determinant of the hard power of states. Since the onset of the Industrial Revolution, it is a truism that rapid industrialisation coincided with a nation’s emergence as a great power, including the generation of hard power. Britain rode its lead in industrialisation to world Empire and paramountcy. Germany, the USA and Japan harnessed very rapid industrialisation to expand national power and status. Is it possible to fi nd examples of high-status powers in the modern era (i.e., since the beginning of the Industrial Revolution) whose position was not based on powerful industry? The contemporary USA might offer an example and will be considered below. There seem to be two links between industrial manufacturing and national power. Both operate via the intervening variable of tech-

Downloaded by [University of Defence] at 01:36 24 May 2016 nology. Industrial production gives rise to vigorous technological advance; technological innovation is linked to solving technical problems, saving time, money or resources by doing things a new way, or producing entirely new types of goods.6 These technological

6 Japan, which has shifted much of its manufacturing capacity to lower-cost sites in China, Korea or Taiwan, has attempted to address this problem by keeping in Japan ‘mother factories’ in various sectors that can serve as generators of and test-beds for new technologies. Emerging India–China Division of Labour 71

innovations increase productivity, generating more wealth. Industry driven by proﬁ t-seeking managers generates a strong demand, and potentially generous reward, for such technological advances. It may also lead to what Joseph Schumpeter called ‘creative destruction’ — the destruction of whole industries by making them obsolete and the emergence of whole new industries in their place (e.g., replacement of the buggy and livery industries by the automobile industry or of typewriters by computers). Technological innovation thus leads to greater wealth which may then be taxed by the state to purchase the material wherewithal of hard power — ﬂ eets, soldiers, weapons, surveillance and communications systems, training, etc. The second link is simpler. Technological advances, especially those producing a qualitative advantage over rivals in the state system, can be translated into a decisive military advantage. Quantum leaps in military technology can produce what are called Military Technological Revolutions (MTR), classic examples of which would be Germany’s use of the railways for rapid mobilisation and redeployment in the late 19th century, or its integrated use of internal combustion engines in airplanes, tanks, and trucks to produce the ‘blitzkrieg’ 70 years later. But what of the contemporary USA, whose increasingly post-industrial and service-based economy underpins a position of global supremacy? It may be too soon to say. The USA did not rise to power as a post-industrial country, but as a country leading the world in industrialisation. US industrial production far exceeded any other country until very late in the 20th century. The test may come as post-industrial, service-based USA confronts a more industrial nation, perhaps China, in a major, protracted contest. The US position in the world certainly will not last forever, and the route to US decline and fall as a great power may yet derive from its relative de-industrialisation. China–India International Division of Labour Downloaded by [University of Defence] at 01:36 24 May 2016 Table 5.1 depicts the growth of Sino–Indian and total trade for both countries over the past 17 years. As Table 5.1 indicates, China–India trade has expanded steadily and rapidly. By 2008, China was India’s largest trading partner.7 In that year, India was China’s 8th largest

7 ‘China Becomes India’s Largest Trade Partner’, 29 July 2009, Articlesbase. http://www.articlesbase.com, accessed 27 August 2009. 72 John W. Garver millions U.S. dollars) ( 1991 1992 1993 1994 1995 1996 1997 1998 1999 28.4% 103.8% 29.2% 30.2% 21.8% 29.5% 4.9% 3.3% * Downloaded by [University of Defence] at 01:36 24 May 2016 Growth of China–India and Total China India Trade Table 5.1 : PRC global exportsPRC global importsPRC’s global tradePRC exports to IndiaPRC imports from Indiatotal bilateral PRC–India tradeIndia’s global exports 71,940India’s global imports 63,855India’s global trade 85,492 135,795 264bilateral as % China’s total trade 81,843 167,335 91,611bilateral as % India’s total trade 120 144 103,552 195,163 120,822rate of growth bilateral trade 0.19% 115,629 339 236,451 17,873 148,892rate of growth China’s total trade 132,063 0.71% 181 19,509 158 0.20% 151,093 280,955rate of growth India’s total trade 138,949 18,500 290,042 182,917 0.81% 691 142,163 23,227 0.35% 37,382 325,080 20,259 183,589 436 255 140,305 1.67% 194,936 21,225 323,894 0.38% 41,727 165,718 24,106 893 360,654 25,477 1.80% 0.41% 41,484 23.2% 321 572 30,537 11.6% 1,163 34,484 1.79% 0.49% 49,583 32,325 16.6% –0.6% 36,055 2.07% 1,417 398 765 0.56% 65,021 35,289 21.2% 19.5% 38,911 2.47% 68,380 1,835 0.59% 33,437 18.8% 719 698 31.1% 49,980 74,200 35,922 0.55% 2.31% 1,924 47,901 3.2% 2.37% 5.2% 83,417 897 938 1,988 12.1% 83,823 8.5% 1,016 –0.4% 908 12.4% 1,162 11.3% 826 0.5% Emerging India–China Division of Labour 73 1,484,000 , yearbooks and quarterlies, various years. 0.61% 0.71%46.4% 0.80%31.5% 23.8% 0.89%10.9% 7.6% 37.3% 1.18% 12.1% 21.7% 53.5% 1.32% 37.0% 79.1% 5.4% 1.42% 35.7% 37.6% 22.8% 1.73% 23.2% 29.8% 33.9% 2.07% 23.8% 32.8% 54.4% 32.8% 27.1% 42.7% 19.5% 30.2% 21.3% 2000 2001 2002 2003 2004 2005 2006 2007 2008 ∗ Downloaded by [University of Defence] at 01:36 24 May 2016 = (year 2 - year 1)/ 1 Direction of Trade Statistics

PRC global exportsPRC global importsPRC’s global tradePRC exports to IndiaPRC imports from Indiatotal bilateral PRC–India trade 249,208India’s global exports 225,175 266,709India’s global imports 243,567 2,911 325,744 474,383India’s global trade 295,400 1,350 438,364 1,561 510,276bilateral as % China’s total 3,603 412,836 593,358 621,144trade 1,700 561,422 1,903 851,200 762,337 42,626bilateral as % India’s total trade 4,947 1,154,780 660,218 1,422,555 50,336 969,000rate of growth bilateral trade 1,761,000 3.13% 2,274 2,673 45,228 1,282,000 792,000rate of growth China’s total 7,595 2,238,000 59,025 92,962 2,674,000 50,996 3.46%trade 4,251 3,344 956,000 13,604 104,253 58,912rate of growth India’s total 1,190,000 61,054 4.50% 109,908trade 18,717 7,677 5,927 73,965 135,019 75,385 5.63%Source: 99,835 25,057 175,220 9,780 8,937 ∗ 97,918 7.76% 134,690 232,608 38,695 122,354 10,469 14,588 186,618 8.05% 308,972 152,691 55,219 249,576 14,659 402,267 24,036 8.11% 187,405 300,539 487,944 22,857 32,362 9.62% 11.32% 74 John W. Garver

trading partner — behind (in decreasing cardinal order) Japan, Hong Kong, South Korea, Taiwan, the USA, Malaysia and Germany, and coming just ahead of the Philippines.8 The rapid growth of India–China trade suggests the complementarity of the two economies. This is further suggested by the composition of that trade. In 2008 and 2009 China’s major imports from India were: iron and other mineral ores, primary and semi- fi nished iron and steel, raw cotton, cotton yarn and fabric, organic and inorganic chemicals, precious stones and metals, plastics and linoleum, and machinery and instruments. India major imports from China were: electrical machinery, organic chemicals, iron and steel, fertilisers, and mineral fuels.9 This particular composition of trade refl ects China’s specialisation in medium- and high-tech electrical and India’s specialisation in production of labour and resource- intensive goods used as inputs for further value adding to the Chinese manufacturing industry. The hypothesis that an increasingly specialised division of international labour is developing between the Chinese and Indian economies is further substantiated by an analysis of the structure of India–China trade. Table 5.2 and Table 5.3 list trade items listed by the Chinese customs annual yearbook for 2005 as exported to or imported from India and valued at US$30 million or more. These big-ticket trade items (as they will be called in the following discussion) provide a sample of the overall trade relationship. Closely related categories listed by the yearbook (i.e., agglomerated and non-agglomerated iron ore) have not been confl ated, since leaving them distinctly as listed sometimes conveys a sense of the amount of processing and value addition in one or the other country. The most marked difference between the two ledgers is the large number and value of sophisticated electronic goods supplied by China to India. Such goods constitute 34 per cent by total value of China’s

Downloaded by [University of Defence] at 01:36 24 May 2016 big-ticket exports to India. There is nothing comparable in India’s

8 ‘Jairam Ramesh, Minister of State for Commerce’, ‘India Taking All Necessary Steps for Diversifying Trade Basket’, Department of Commerce, Government of India, 11 October 2008, http://commerce.nic.in/pressrelease/, accessed 31 August 2009. 9 Ibid. Also, G. K. Pillai, Commerce Secretary, ‘Need to Strengthen Trade between India and China’, Department of Commerce, Government of India, 19 March 2009, http://commerce.nic.in/pressrelease, accessed 31 August 2009. Emerging India–China Division of Labour 75 x x x x x x x x x goods Extractive Intermedidate goods End-use (Items with export value of over US$30 million; listed in cardinal order) (China Customs Statistical Almana, 2005), Beijing: China Service. c gravity > .94 x at-rolled iron & steel, coated x Downloaded by [University of Defence] at 01:36 24 May 2016 at-rolled stainless steel, 600 mm or over at-rolled, iron and steel, not clad or coated at-rolled stainless steel products x x x China’s Big-ticket Imports from India, 2005 Zhongguo haiguan tongji nianjian, 2005 : Table 5.2 : Value, US$ millions4,815,568,869409,124,266357,288,698 Item description310,814,342 non-agglomerated iron ore 266,825,442 agglomerated iron ore 233,896,806 aluminium oxide 217,794,489 miscellaneous fl 173,499,950 ferro-chromium alloy143,965,411 chromium ore and concentrates123,231,955 polyethylene w/ specifi 111,793,608 crude or roughly trimmed granite 103,605,137 fl 79,275,176 polypropylene 71,348,469 copper bar for wire55,539,729 ethylene glycol 54,452,73151,564,537 salts 51,029,192 High tech fl 43,750,809 cotton yarn of certain decitex39,245,042 castor oil 38,533,011 human hair for wigs37,277,193 ferro-alloy w/ over 4% carbon35,493,933 7-aminocephalosporianic acid (organic chemical)30,070,068 fl oil cake from agricultural waste Source hydroformer vessels naphtha buta-1,3 diene and isoprene; acyclic hydocarbons x x x x x x x x x x 76 John W. Garver X X xX xX x x x x x x x High End-use Intermediate (Items with export value of over US$30 million; listed in cardinal order) Downloaded by [University of Defence] at 01:36 24 May 2016 nished products of iron and non-alloy steel certain type x ce machine parts and accessories x lature silk India’s Big-ticket Imports from China, 2005 Table 5.3 : Value, US$ millions Item description367,679,215217,913,580205,805,905203,388,567 cell phones176,497,617 laptop computers160,282,018 cell phone transmission stations122,499,021 coke and semi-coke 107,258,991 unbleached woven fabrics98,887,651, coal 87,571,845 offi 84,274,358 miscellaneous antibiotics 83,812,048 nylon tire cord fabrics 80,832,113 mobile communications switching systems80,719,709 dyed woven fabrics 64,494,135 yarn spun from noil 62,895,143 fi 59,029,852 imitation leather 56,638,604 coal 52,779,286 Tech printers 51,738,119 x miscellaneous heterocyclic compounds (organic chemical) 50,168,364 Item molybdenum silver miscellaneous nucleic acids and their salts Goods x x semi-fi x Extractive x x x Emerging India–China Division of Labour 77 x x x x (China Customs Statistics Yearbook, 2005), Beijing: China Service. Downloaded by [University of Defence] at 01:36 24 May 2016 Zhongguo haiguan tongji nianjian, 2005

49,768,02348,874,23147,074,06446,484,687 steel structures of certain type45,167,416 lead acid electrical accumulators45,063,732 imitation leather 43,568,790 miscellaneous coated textile fabrics38,674,547 bars and rods 37,509,473 video-recording equipment37,003,813 parts for radio, radar, telephone, broadcasting, etc. equipment36,725,047 miscellaneous sugars 34,737,335 Erythromycin and its derivatives 34,057,526 optical communication equipment 33,273,250 tubes and pipes 31,861,469 printers 31,481,650 bus and truck tyres31,190,031 photographic paper and paperboard30,543,624 miscellaneous metal foundry equipment30,507,097 yellow phosphorus Source: miscellaneous parts for radio, radar, navigation, etc., apparatuses electrical apparatus for line telephony x miscellaneous heterocyclic compounds (organic chemical) x x x x x x x x x x x 78 John W. Garver

exports to China. None of India’s exports to China can be considered high tech. Instead, most of India’s exports to China are products of metallurgical and chemical industries based on 1950s and 1960s technology. Most of China’s electronics goods exports can be considered high-technology items with multiple spillover effects for possible increases in effi ciency in various economic sectors, and for military capabilities in the era of information warfare. A further difference as regards the role of extractive sector exports: Six of India’s big-ticket sales to China are extractive: iron ore, aluminum oxide, chromium, copper, granite, and salts. These items constitute 77 per cent of the total value of Indian big-ticket exports to China. Only four of China’s big-ticket sales to India are extractive: coke, coal, molybdenum, silver and phosphorus. These items constitute 16 per cent of China’s big-ticket sales to India. The two countries also differ in the provision of semi-processed metals for industrial use in the other country. Measured as a percentage of the total big-ticket export value, China imports nearly three times as much semi-processed metal from India as India does from China. 12 per cent of China’s imports from India are semi-processed metals (coated and uncoated fl at-rolled iron and steel; ferro-chromium alloy, heavy fl at rolled stainless steel, high-carbon ferro-alloy). By contrast, only 4.3 per cent of India’s big-ticket imports from China are semi-processed metals (steel structures, semi-fi nished iron and non-alloy steel, bars and rods, tubes and pipes). A still further difference as regards whether the goods are end-use or intermediate-use items. End-use goods go to meet the demands by customers for goods and services, while intermediate goods are used to produce goods and services for further sale. Many of the electronics goods sold by China to India are end-use items. In this regard, nearly none of China’s large-ticket imports from India are end-use goods, while about 24 per cent of China’s exports to India (i.e., cell phones,

Downloaded by [University of Defence] at 01:36 24 May 2016 laptops, printers, video-recording equipment and large tyres) are ﬁ nal-use items. It would be going too far to conclude that China’s end-use items carry higher value added; many of China’s electronics industries are intensely competitive and are little more than labour-intensive assembly operations. Yet it does seem safe to conclude that India serves as a supplier of inputs for China’s industry, at least to a much greater extent than the other way round. It may be useful to put these differences in tabular form, as is done in Table 5.4. Emerging India–China Division of Labour 79

Table 5.4: Comparisons of China–India Imports from the Other (Percentages of ‘big ticket’ import items)

China India Extractive sector goods 77 16 Semi-processed metals 12 4.3 High-technology goods 0 34 End-use goods 0 24

The proposition of an increasingly specialised division of labour is further substantiated through a detailed study by Mahvash Qureshi and Guanghua Wan. Qureshi and Wan calculate two indicators of the extent to which Chinese and Indian exports compete: (a) the extent to which the two countries specialise in export of the same good; and (b) the extent to which the trade structure of the two countries is similar.10 They fi nd a high degree of competition between Chinese and Indian exports going back to the mid-1990s, but also fi nd (and this is what suggests increasing economic complementariness) that the level of competition was decreasing rapidly as China’s production structure shifted to increasingly high-tech goods, while India continued to produce low-tech goods as textiles, clothing and leather goods. The increasingly discrete national sets of exports was refl ected in the listing of the top 10 export sectors for India and China in 2005 — a listing presented in Table 5.5 (taken from Qureshi and Wan). The overlap of textile clothing is signifi cant. Qureshi and Wang fi nd that competition between Chinese and Indian clothing, textiles and leather goods was intense. In other areas, the level of competition had decreased over the last 10 years, and probably would continue to decrease as China’s production structure shifted further toward medium and high tech.11 China’s main competitors in its leading export sectors, according to Qureshi and Wang, are Hong Kong, South Korea, Mexico, Malaysia and Thailand. India’s are Turkey,

Downloaded by [University of Defence] at 01:36 24 May 2016 Sri Lanka, Morocco and Pakistan.12 Qureshi and Wan also ﬁ nd that India and China export to increasingly distinct sets of countries (Table 5.5). The share of China’s

10 Mahvash Saeed Qureshi and Guanghua Wan, ‘Trade Expansion of China and India, Threat or Opportunity’, Research Paper No. 2008/08, United Nations University, February 2008. 11 Ibid., p. 14. 12 Ibid. 80 John W. Garver

Table 5.5: Top 10 Export Sectors for China and India, 2005 (listed in cardinal order of export value)

China India statistical machines cards or tapes diamonds, not industrial, set, or strung telecommunications equipment clothing of textile, not knitted or crocheted clothing of textile, not knitted or iron ore and concentrates, ex-roasted crocheted iron pyrites clothing accessories, knitted or gold, silver, platinum, jewellery crocheted ofﬁ ce machines clothing and accessories, knitted or crocheted phonographs and tape and other sound medicaments recorders thermionic valves and tubes, articles made of textile materials transistors, etc. foot wear organic chemicals furniture rice children’s toys, indoor games, etc. coated iron or steel plates under 3 mm Source: Mahvash Saeed Qureshi and Guanghua Wan, ‘Trade Expansion of China and India, Threat or Opportunity’, p. 6.

exports going to the rich, developed (i.e., OECD — Organization for Economic Cooperation and Development) countries is increasing, while the share of Chinese exports going to poorer, developing countries is decreasing. China’s exports to OECD countries grew from 35 per cent in 1990 to 52 per cent in 2006. India’s situation is the reverse. The share of Indian exports to OECD countries dropped from 55 per cent to 44 per cent over the same period, while its share of exports to developing country markets increased. China’s main export markets in 2006 were the United States (21 per cent of all China’s exports), Hong Kong (20 per cent of total exports)13 and Europe (6 per cent of total exports).14 India’s major export markets were

Downloaded by [University of Defence] at 01:36 24 May 2016 the US (17 per cent), the Middle East (15 per cent) and China (8 per cent). The expansion of Chinese exports to OECD markets, and the squeezing out of Indian goods to those markets — as determined by Qureshi and Wang — are indicated by Table 5.6, showing the share

13 In the US view, a large portion, perhaps most, of these ‘Hong Kong’ exports are forwarded to ﬁ nal markets in the USA. 14 Mahvash Saeed Qureshi and Guanghua Wang, ‘Trade Expansion of China and India, Threat or Opportunity’, p. 3. Emerging India–China Division of Labour 81

of Chinese and Indian exports in the US, EU and Japan. While the share of Indian exports to Japan stagnated, India’s export share in Europe declined precipitously, and India’s export share of the US market showed only very modest growth while Chinese export share in all three rich markets skyrocketed upward.

Table 5.6: Share of Imports to OECD Markets Supplied by China and India (Per cent of total imports) China India USA EU Japan USA EU Japan 1980–84 0.8 1.0 3.8 0.6 1.5 0.8 1985–89 1.8 2.1 5.0 0.7 1.7 1.0 1990–94 4.7 2.0 7.4 0.7 1.2 1.0 1995–99 7.3 1.6 12.3 0.9 0.7 0.8 2000–2006 12.3 4.0 18.8 1.0 0.5 0.8 Source: Mahvash Saeed Qureshi and Guanghua Wang, ‘Trade Expansion of China and India, Threat or Opportunity’, p. 4

Qureshi and Wan conclude that China and India increasingly specialise in the production of differing types of goods. Production of statistical, telecommunications, ofﬁ ce and consumer electronic equipment increased as a share of China’s total exports from 6 per cent in 1995 to 25 per cent in 2005. During the same period, the share labour-intensive, low-tech goods such as shoes, clothing, etc. fell.15 China’s export structure is increasingly shifting toward medium- to high-technology and capital-intensive products. India continues to specialise in low-technology goods. The two countries increasingly produce different types of goods for different markets. Joseph Chai and Kartik Roy reach conclusions similar to those of Qureshi and Wan.16 Between 1985 and 1998, the portion of Chinese industrial production classiﬁ ed as medium tech rose from 12 per cent

Downloaded by [University of Defence] at 01:36 24 May 2016 to 20 per cent, and the portion classiﬁ ed as high tech rose from 5 to 20 per cent. India lagged far behind. China’s movement up the technological ladder was reﬂ ected in the growing success of Chinese high- and medium-tech exports in global markets. Indian exports,

15 Ibid. 16 Joseph C. H. Chai, Kartik C. Roy, Economic Reform in China and India: Development Experience in a Comparative Perspective, Cheltenham: Edward Elgar, 2006. 82 John W. Garver

on the other hand, were increasingly low-tech goods. These trends are presented in Table 5.7. In part, the data presented in Table 5.8 merely refl ects the greater importance of exports to China in contrast to the dominance of the domestic market for Indian development. But this data also indicates that Chinese industry is moving rapidly up the value-added and technology ladder. Chai and Roy also fi nd that the medium- and high-tech sectors of the Chinese economy are not confi ned to a foreign-operated and invested enclave, as is the case in some developing countries. In the mid-1990s, 55 per cent of China’s high-tech exports were produced by Chinese, not foreign, fi rms — a ratio that compared favourably with Singapore and Malaysia.17 Again, the conclusion seems to be that Chinese industry is moving successfully up the technological and value-added ladder, leaving Indian industry producing at a distinctly lower technological and value-creating level. From an economist’s point of view this is good. Increasingly ‘complementary’ economies mean increased prospects for trade. India should buy Chinese computers and telecommunications equipment, while China should buy more Indian mineral resources, chemical inputs for industry, steel and agricultural goods. China’s industrial technological level would speed ahead with its exports to the OECD countries, while India’s would move more slowly up the value-added ladder though, it must be noted, India will still move up that ladder. From one perspective, this increasingly distinct division of labour in exports is a natural and mutually benefi cial process. The developmental process underlying the exceptionally rapid post-1950 development of the East Asian ‘high-performing’ or ‘miracle’ economies involved a similar specialisation in which the ‘early industrialiser’, Japan, supplied technology to ‘late industrialisers’ South Korea, Taiwan, Singapore and Hong Kong, while the latter in turn added the

Downloaded by [University of Defence] at 01:36 24 May 2016 value of their cheap labour and resources to Japan’s more advanced (valuable) inputs. The result: Sales of Japanese brands on global markets expanded rapidly. By the 1980s, the process was replicated with South Korea, Taiwan, Singapore and Hong Kong now supplying technology and managerial know-how to China for mixture with China’s cheap labour, land and other resources. The Japanese industry initially joined in this process, but increasingly carved out

17 Ibid., pp. 102–105. Emerging India–China Division of Labour 83 , p. 104. Economic Reform in China and India Downloaded by [University of Defence] at 01:36 24 May 2016 1985 1998 1985 1998 1985 1998 1985 1998 Global Market Share of Indian and Chinese Exports in Various Sectors : Joseph C. H. Chai and Kartik Roy, Table 5.7 : Resource-basedChinaIndiaSource Low-tech 2.9 3.2 9.5 Medium-tech 4.5 4.1 4.1 High-tech 30.2 45 1.7 1.4 13.3 1.5 1.4 1.1 11.5 0.6 84 John W. Garver

a niche for itself as supplier of high-tech capital goods, machinery, equipment and innovation for the middle-tier producers Korea, Taiwan, etc. Now, may this author humbly suggest, this process is repeating itself with India emerging as a new tier (the third?) supplier of cheap labour and resource inputs for China, and a consumer of China’s higher-technology and value-added ﬁ nal manufactured goods. International Service Sales As suggested by the comments by Lee Kuan Yu earlier in this article, India’s emerging international niche in the global economy is as a provider of computer and information services. Table 5.8 lays out data comparing the international service sales in various sectors of China and India. This data does indeed show that India’s sales of computer and information services have grown very rapidly, from about US$4.7 billion in 2000 to US$29 billion in 2006, and totalling over US$100 billion for the seven years 2000–2006. China’s cumulative sales of US$9.5 billion of computer and information services during the same period were less than one-tenth of India’s earnings. Yet in terms of total, global sales of services, China’s cumulative seven-year total (2000–2006) was 69 per cent larger than India’s (US$543 billion compared to India’s US$322 billion). China sold more services than in India in transportation (2.25 times India’s), construction (4.3 times India’s), royalties and licenses (2.3 times India’s) and insurance (1.4 times India’s). China’s lead was greatest in sales of ‘travel services’ (tourism, I believe), with US$238 billion in sales amounting to 3.9 times India’s sales in that sector. China’s sales of ‘travel services’ for the seven-year (2000–2006) period were nearly 2.4 times India’s earnings for sales of computer and

Downloaded by [University of Defence] at 01:36 24 May 2016 information services. Congruence with the overarching thesis of this article (that a powerful manufacturing sector is a decisive factor producing hard power) requires linking China’s lead in international service sales to its dynamic industrial manufacturing sector. There seems to be a plausible link in three areas: transportation, construction and license fees. Regarding transportation service sales, China’s economic planners decided on a major expansion of the ship-building industry in the early 1970s.18 This continued throughout the post-1978 period, Downloaded by [University of Defence] at 01:36 24 May 2016

Table 5.8: Foreign Sales of Services by Service Category, China and India

USD at current prices in millions 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 CHINA Total services .. .. 2,512 2,479 2,811 3,055 3,827 4,437 4,858 4,603 Transport .. .. 1,313 1,341 1,253 1,302 1,315 1,345 2,062 1,734 Travel .. .. 703 767 922 979 1,227 1,693 1,797 1,488 Other services .. .. 496 371 636 774 1,285 1,399 999 1,381 Communications .. .. 27 22 32 13 15 12 24 118 Construction ...... Insurance .. .. 202 203 224 196 229 252 345 332 Financial services ...... Computer and information services ...... Royalties and license fees ...... Other business services .. .. 231 133 352 435 826 931 493 780 Personal and recreational services ...... Government services n.i.e. .. .. 36 13 28 130 215 204 137 151 Memo item: Commercial services .. .. 2,476 2,466 2,783 2,925 3,612 4,233 4,721 4,452 INDIA Total services 2,971 2,797 2,933 3,290 3,232 3,384 3,228 3,363 3,791 4,140 Transport 446 456 444 437 498 515 533 635 864 850 Travel 1,552 1,279 1,190 1,172 735 897 1,157 1,343 1,407 1,449 Other services 973 1,063 1,299 1,681 1,999 1,971 1,538 1,386 1,520 1,841 Communications ...... Construction ...... Insurance 37 38 38 41 43 42 46 53 71 110 Financial services ...... Computer and information services ...... Royalties and licence fees .. 0 1 1 0 00111 Other business services 826 863 1,155 1,516 1,851 1,819 1,400 1,235 1,375 1,683 Personal and recreational services ...... Government services n.i.e. 110 162 104 123 104 110 92 98 72 48 Memo item: Commercial services 2,861 2,635 2,828 3,167 3,128 3,274 3,136 3,266 3,719 4,092 (Table 5.8 continued) Downloaded by [University of Defence] at 01:36 24 May 2016

(Table 5.8 continued) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

CHINA Total services 5,855 6,979 9,249 11,193 16,620 19,130 20,601 24,569 23,895 26,248 Transport 2,706 2,011 2,079 1,930 3,079 3,352 3,070 2,955 2,300 2,420 Travel 1,738 2,346 3,530 4,683 7,323 8,730 10,200 12,074 12,602 14,098 Other services 1,411 2,622 3,640 4,580 6,218 7,048 7,331 9,540 8,993 9,730 Communications 159 221 349 471 706 756 315 272 819 590 Construction ...... 590 594 985 Insurance 227 342 486 452 1,700 1,852 123 174 384 204 Financial services ...... 27 27 111 Computer and information services ...... 84 134 265 Royalties and license fees ...... 55 63 75 Other business services 918 1,944 2,664 3,456 3,546 3,740 6,859 8,263 6,941 7,410 Personal and recreational services ...... 10 15 7 Government services n.i.e. 107 115 141 201 266 700 34 65 16 83 Memo item: Commercial services 5,748 6,864 9,108 10,992 16,354 18,430 20,567 24,504 23,879 26,165 INDIA Total services 4,625 4,925 4,934 5,107 6,038 6,775 7,238 9,111 11,691 14,509 Transport 959 975 1,035 1,242 1,714 1,890 1,989 1,942 1,773 1,844 Travel 1,558 1,842 2,295 2,159 2,272 2,582 2,831 2,890 2,949 3,010 Other services 2,107 2,109 1,604 1,706 2,052 2,303 2,418 4,279 6,970 9,656 Communications ...... Construction ...... Insurance 123 107 150 141 145 170 210 229 230 238 Financial services ...... Computer and information services ...... Royalties and licence fees 1 1 1 0 0 1 7 12 19 23 Other business services 1,967 1,981 1,412 1,491 1,899 2,120 2,142 3,852 6,096 8,892 Personal and recreational services ...... Government services n.i.e. 15 20 41 73 7 11 59 185 624 503 Memo item: Commercial services 4,610 4,905 4,893 5,034 6,031 6,763 7,179 8,926 11,067 14,006 Downloaded by [University of Defence] at 01:36 24 May 2016

2000 2001 2002 2003 2004 2005 2006 1990–2006

CHINA Total services 30,431 33,334 39,745 46,734 62,434 74,404 91,999 543,419 Transport 3,671 4,635 5,720 7,906 12,068 15,427 21,015 96,344 Travel 16,231 17,792 20,385 17,406 25,739 29,296 33,949 238,122 Other services 10,529 10,907 13,639 21,421 24,628 29,682 37,035 208,953 Communications 1,345 271 550 638 440 485 738 9,126 Construction 602 830 1,246 1,290 1,467 2,593 2,753 12,950 Insurance 108 227 209 313 381 549 548 8,279 Financial services 78 99 51 152 94 145 145 929 Computer and information services 356 461 638 1,102 1,637 1,840 2,958 9,475 Royalties and license fees 80 110 133 107 236 157 205 1,221 Other business services 7,66 3 8,448 10,419 17,427 19,952 23,283 28,973 161,905 Personal and recreational services 11 28 30 33 41 134 137 447 Government services n.i.e. 285 433 363 359 379 495 579 4,620 Memo item: Commercial services 30,146 32,901 39,381 46,375 62,056 73,909 91,421 538,800 INDIA Total services 16,684 17,337 19,478 23,902 38,281 55,831 75,354 321,820 Transport 1,979 2,050 2,473 3,022 4,373 5,720 7,629 42,609 Travel 3,460 3,198 3,102 4,463 6,170 7,493 8,934 61,207 Other services 11,245 12,089 13,903 16,417 27,738 42,618 58,791 218,004 Communications 599 1,104 779 969 1,094 1,973 2,191 8,709 Construction 502 65 231 276 516 1,009 403 3,002 Insurance 257 282 332 408 842 929 1,116 5,909 Financial services 276 306 598 367 341 1,469 2,071 5,428 Computer and information services 4,727 7,407 8,889 11,876 16,344 22,005 29,186 100,435 Royalties and licence fees 83 37 20 24 53 131 112 526 Other business services 4,148 2,349 2,699 2,229 8,153 14,634 23,198 89,263 Personal and recreational services ...... 46 146 218 409 Government services n.i.e. 654 538 353 269 350 323 297 4,323 Memo item: Commercial services 16,030 16,799 19,125 23,633 37,931 55,508 75,057 317,497 Source: International Monetary Fund. 88 John W. Garver

with China eventually emerging as a leading ship manufacturer, at least in low-end ships. The labour-intensive and meta-intensive nature of that industry gave China major competitive advantages, and China’s exports of ships grew steadily. A large number of these ‘made-in- China’ ships were added to China’s own commercial ﬂ eet, and began selling their services to foreign as well as domestic customers. Regarding construction services, China’s construction industry emerged during the pre-1978 era, concentrating on building the industrial facilities favoured by Mao’s metallurgical and military– industrial-oriented economic planners. The focus of construction shifted after 1978, but industrial construction boomed as new factories and whole new manufacturing cities sprouted in China’s East- Coast cities. Infrastructure construction (housing, highways, energy, airports) associated with China’s manufacturing-driven development also boomed. Early in the reform period, China’s large, capable and now proﬁ t-seeking construction companies began seeking markets abroad. Regarding licensing fees, the amounts involved are far smaller and the logical link to manufacturing perhaps a bit more tenuous, but a substantial portion of these licensing fees arose from Chinese success in innovations in manufacturing machinery, technology and processes. On the other hand, in the crucial area of ‘travel service’ sales, there seems to be little link to ‘manufacturing’. Here, the serendipity of weather and climate may be an important factor. Much of foreign tourism to China presumably happens during the summer months when schools and universities are closed for the break and families often take vacations and students travel. During those months, China’s tem- perate temperatures compare very favourably with India’s tropical temperatures. Competition for Foreign Direct Investment?

Downloaded by [University of Defence] at 01:36 24 May 2016 The relative ﬂ ow of FDI to China and to India further supports (perhaps only weakly) the hypothesis of an increasingly specialised international division of labour between those two countries. Foreign investment has absolutely driven China’s post-1978 economic rise and has gone overwhelmingly into labour-intensive manufacturing.

18 Bruce Swanson, Eighth Voyage of the Dragon: A History of China’s Quest for Seapower, Annapolis: Naval Institute Press, 1982, pp. 266–68. Emerging India–China Division of Labour 89

Foreign investment in India has been much less than in China, and has gone overwhelmingly into information technology services. Between 1996 and 2008, China received a cumulative US$880 billion in FDI, compared to US$131 billion for India. In other words, FDI in India has been about 15 per cent of that in China. Table 5.9 and Figure 5.2 show, in tabular and graph form, the ﬂ ow of FDI into China and India.

Table 5.9: Chinese and Indian In-bound FDI (US$ million)

China in-bound India in-bound 1995 35,849 2,145 1996 40,180 2,523 1997 44,237 3,619 1998 43,751 2,633 1999 38,753 2,168 2000 38,399 3,585 2001 44,241 5,472 2002 49,308 5,627 2003 47,077 4,323 2004 54,937 5,771 2005 79,127 7,606 2006 78,095 19,662 2007 85,430 22,950 2008 95,370 34,000 Source: Economist Intelligence Unit

Figure 5.2: Chinese and Indian In-bound FDI Displayed as Line Chart Downloaded by [University of Defence] at 01:36 24 May 2016 90 John W. Garver

For the critical ﬁ rst decade of China’s post-1978 economic reform, India did not actively seek foreign investment. It was during that period that earlier East Asian modernisers (Japan, Hong Kong, Taiwan, South Korea), who were facing global competitive pressures and looking for ways of cutting manufacturing costs, discovered China as a low-cost production base. During this period, China began building the manufacturing agglomeration effect that would become the most powerful magnet for FDI by the 1990s and 2000s. It was not until the mid-1990s that Indian leaders and economic planners embraced FDI and its multiple advantages. Until that point it is not accurate to say that the two countries competed for foreign investment. Indian leaders simply were not interested in attracting FDI. Since the mid-1990s, however, there has been a degree of competition. Analysts list a number of comparative advantages of India and China in attracting FDI. These comparative advantages are summarised in Table 5.10.

Table 5.10: Comparative Advantages of India and China in Attracting FDI

India China Lower labour costs Flexible labour markets Lower political risk Localities add incentives More positive attitude toward private More positive attitude toward foreign business investment Stronger IPR protection Better infrastructure Agglomeration effects in IT software Agglomeration effects in manufacturing Marketised capital system Large government investment in key projects Developed market regulatory systems Developed trade with East Asia & OECD countries Good return on assets High savings rate and fast capital accumulation Larger domestic market Downloaded by [University of Defence] at 01:36 24 May 2016 Undervalued currency Source: Penelope B. Prime, Mercer University, Atlanta, Ga.

Once India became interested in attracting FDI, its rivalry with China was greatly mitigated by the fact that different sorts of foreign businesses found one or the other country more attractive. FDI into China goes primarily to manufacturing, especially labour-intensive manufacturing such as textiles, clothing, food processing and furniture. FDI into India goes primarily into what John W. Henley termed Emerging India–China Division of Labour 91

‘dematerialised production’ in IT and IT-enabled services and R&D.19 Only 17 per cent of FDI coming into India between 1991 and 2000 went into manufacturing, of which only 1.44 per cent went into labour-intensive industries like textiles. During the same period, 60 per cent of FDI into China went into manufacturing, half of which (30 per cent of the total) went into labour-intensive industries. About 25 per cent of FDI into India went to power generation, while 18.5 per cent went to mobile phone companies and 10 per cent to electrical equipment, mainly software.20 In both China and India, powerful agglomeration affects are now operating that create a strong inertia for FDI to continue along the existing specialisation outlined above (manufacturing versus IT services). According to Henley, the single-most important factor attracting FDI to a particular economic sector in a particular location is the presence of a wide and diverse array of fi rms active in the particular sector of interest to the new investor. In Henley’s words, foreign investors fi nd attractive ‘a diverse manufacturing base has already been established … where all kinds of private investment — foreign and domestic — is growing vigorously’. In the case of India, ‘This is most likely to result in further strengthening of the high-growth IT and R&D clusters in Bangalore, Chennai, Delhi, Hyderabad, and Mumbai.’21 Growing investment, foreign and domestic, in these regions will give those local governments the fi scal wherewithal to invest in infrastructure, making the area still more attractive to investment. A similar process will be underway in China, but in manufacturing. By the 2000s, China was transiting from low-cost, low-technology manufacturing to high- and middle-technology, more capital- and knowledge-intensive manufacturing. China, in other words, was treading the path worn by Japan, South Korea, Taiwan and Hong Kong decades earlier, of shifting its industrial manufacturing structure up the value-added ladder. To the extent that China accomplishes Downloaded by [University of Defence] at 01:36 24 May 2016 this shift, fl ow of FDI to low value-added manufacturing in India will not compete with — and may even facilitate — China’s projected economic rise.

19 John W. Henley, ‘Chasing the Dragon: Accounting for the Under- performance of India by Comparison with China in Attracting Foreign Direct Investment’, Journal of International Development, 16, 2004, pp. 1039–1052. 20 Ibid., p. 1043. 21 Ibid., p. 1048. 92 John W. Garver

Manufacturing and Hard Power How does one substantiate a postulated link between manufacturing and hard power? Perhaps by postulating international reserves as an intervening variable and foreign weapons purchases as an operationalisation of hard power. Table 5.11 compares the foreign currency reserves of China and India. In 2006, China’s reserves were 6.3 times larger than India’s, while the cumulative value of China’s reserves between 1990 (when India began opening) and 2006 was 5.2 times that of India’s. Most of China’s foreign currency earnings came from sale of goods rather than services. China chose to spend a substantial portion of its foreign currency earnings from sales of goods and services, to purchase advanced foreign weapons systems. Table 5.12 presents data from the Stockholm International Peace Research Institute (SIPRI) on Chinese and Indian purchases of foreign weapons. Between 2001 and 2007, China’s purchases totalled US$19.3 billion, while India’s amounted to US$11.6 billion. China’s purchases exceeded India’s by 66 per cent. Import of foreign weapons typically raises the technological level of military forces. In the case of China, its imports focus on anti-ship, anti-submarine, anti-aircraft, anti-network and anti- satellite capabilities that would be necessary in a war with the USA. In the words of an authoritative study: ‘China’s investment into a modern information infrastructure is nothing short of revolutionary. Purchasing some of the world’s most advanced telecommunications technology, China is installing a dizzying array of terrestrial and satellite network’ that would allow the PLA (People’s Liberation Army) to wage offensive and defensive information warfare.22 Conclusion China’s continuing lead over India in industry, technology and hard military power will lead to continuing rivalry for status between Downloaded by [University of Defence] at 01:36 24 May 2016 those two countries. First, in terms of status in the global state order:

22 Mark A. Stokes, China’s Strategic Modernization: Implications for the United States, Strategic Studies Institute, U.S. Army War College, September 1999, p. 45. A recent study of PLA preparations to use highly sophisticated mine warfare to counter the USA or other navies, see, Andrew Erickson, et al., Chinese Mine Warfare; A PLA Navy’s “Assassin’s Mace” Capability, Naval War College, China Maritime Studies Number 3 June 2009. Emerging India–China Division of Labour 93 (USD million at current prices) Downloaded by [University of Defence] at 01:36 24 May 2016 International Reserves Excluding Gold: China and India : International Monetary Fund Table 5.11 : YearChina 1977India 2,345 1978 4,872 1,557 1979Year 6,426 2,154 1980China 7,433 2,546 1992 20,620India 1981 6,944 22,387 1993 5,059 5,757Source 52,914 11,349 1982 4,693 1994 10,199 75,377 14,987 107,039 19,699 4,315 142,763 1983 1995 17,366 17,922 149,188 12,729 157,728 4,937 1996 20,170 1984 168,277 11,453 215,605 24,688 5,842 291,128 16,305 1997 1985 408,151 27,341 18,541 614,500 6,420 821,514 32,667 1986 17,960 1998 1,068,493 6,396 37,902 29,586 1987 45,871 1999 6,454 67,666 43,674 1988 4,899 2000 98,938 126,593 1989 3,859 131,924 2001 170,737 1,521 1990 2002 2003 3,627 1991 2004 2005 2006 94 John W. Garver 3 28 73 Downloaded by [University of Defence] at 01:36 24 May 2016 Total Value of Arms Imports by China and India, 2001–2007 Table 5.12 : CHINAFranceGermany 13IsraelItalyRussiaSwitzerland 11UKUkraine 2001Uzbekistan 13Total 46 2002 28 3,037 25 8 2003 3 48 2,429 67 2004 34 17 44 8 3,234 1,996 2005 64 13 2,735 73 73 4 2,636 2006 8 3,132 2,068 5 5 2007 75 4 8 3,498 2,906 35 Total 97 49 1,290 30 3,346 8 18,115 84 3,719 48 30 1,424 8 123 383 30 19,333 8 43 30 421 53 162 Emerging India–China Division of Labour 95 8 52 2001 2002 2003 2004 2005 2006 2007 Total Downloaded by [University of Defence] at 01:36 24 May 2016 SIPRI Arms Transfers Database INDIA FranceGermanyIsraelItalyKyrgyzstanNetherlandsPolandRussiaSlovakiaSouth Africa 32 13UKUkraineUSA 28 19Uzbekistan 9Total 21 18Source: 43 727 64 26 8 33 25 9 Generated: 13 November 2008 1,424 Figures are SIPRI Trend Indicator Values (TIVs) expressed in US$ m. at constant (1990) prices. 17 20 95 Figures may not add up due to the conventions of rounding. 155 26 14 For more information see http://www.sipri.org/contents/armstrad/output_types_TIV.html, accessed 13 November 2008. 76 2,166 7 924 159 50 113 14 1,556 13 18 27 14 129 1,613 32 3 762 77 22 13 2,870 25 11 131 340 989 88 25 2,331 3 14 112 170 41 4 1,182 913 193 400 3 109 126 1,404 646 8,538 5 89 1,318 3 425 11,642 58 71 53 76 152 79 408 199 510 143 96 John W. Garver

Political leaders around the world typically have astute antennae to estimate the power capability of various actors including states, and including the military capacity of states. Most world leaders will recognise China, as possessing greater hard power than India, will treat the two powers accordingly. It may well be that Indian leaders themselves now recognise this unpleasant reality. India’s late-1990s determination to acquire nuclear weapons and a nuclear retaliatory triad, along with its recent accelerated space activities can be seen as attempts to close the gap with China in hard power capabilities for reasons of prestige and status. In terms of security, what is likely to be China’s substantial and continuing lead in hard power will cast a dark light for India’s leaders on China’s growing presence in the lands around India. In Myanmar, Bangladesh, Nepal, Pakistan, Sri Lanka, Iran, the Seychelles and Mauritius, Chinese trade, investment and political inﬂ uence is likely to grow commensurate with China’s growing economy and diplomatic activity. This will occur against the background of China’s growing military capabilities, and this conjuncture will, in turn, generate Indian fears of ‘creeping Chinese encirclement’. India will seek ways of countering, diluting or offsetting China’s growing presence. Indians will probably feel deeply ambiguous about accepting the purely economic logic of the complementary division of labour between India and China. In terms of development strategy, this feeling of unease may cause India to attempt to break out of its emerging role in the global division of labour — supplier of low-cost, labour- intensive goods to the world and resources and cheap inputs for China’s industry. India will probably search for ways of accelerating India’s industrial development and moving Indian industry toward higher levels of technological sophistication, motivated in part by the concerns relating to China. It is not clear exactly what policies an Indian search to ‘break out’ of its emerging global niche might

Downloaded by [University of Defence] at 01:36 24 May 2016 look like. Quite possibly, New Delhi might use its new ‘strategic partnership’ with Japan to accelerate India’s industrialisation and technological development. It is not the intention of this argue to argue mono-causality. There are reasons other than security and status concerns having to do with China for India to seek accelerated industrialisation and technological development. Providing a decent standard of living and modern conveniences for the Indian people are powerful motives. Yet it does seem, and the data presented in this article does suggest that ‘China’ Emerging India–China Division of Labour 97

is another factor. There is good reason for India to fear that lagging behind China in industrial and technological development will undermine India’s long quest for equal standing with China in the international order and diminish Indian security vis-à-vis China. References Chai, Joseph C. H. and Kartik C. Roy. 2006. Economic Reform in China and India: Development Experience in a Comparative Perspective. Cheltenham: Edward Elgar. Andrew Erickson, et al. 2009. ‘Chinese Mine Warfare: A PLA Navy’s “Assassin’s Mace” Capability’, China Maritime Studies No. 3. Naval War College. June. Gupta, Anil and Haiyan Wang. 2009. Getting India and China Right. New York: John Wiley and Sons. Reprised in ‘Economic Integration between China and India’, Global Bookshelf, 7 August 2009. Henley, John W. 2004. ‘Chasing the Dragon: Accounting for the Under- performance of India by Comparison with China in Attracting Foreign Direct Investment’, Journal of International Development, 16, pp. 1039–1052. Johnston, Alastair Iain. 1995. Cultural Realism, Strategic Culture and Grand Strategy in Chinese History. Princeton, NJ: Princeton University Press. Qureshi, Mahvash Saeed and Guanghua Wan. 2008. ‘Trade Expansion of China and India, Threat or Opportunity’, Research Paper No. 2008/08. United Nations University, February. Smith, Adam. (1776) 2000. The Wealth of Nations. New York: Modern Library Classics. Swanson, Bruce. 1982. Eighth Voyage of the Dragon: A History of China’s Quest for Seapower. Annapolis: Naval Institute Press. Wilson Lewis, John and Litai Xue. 1988. China Builds the Bomb. Stanford, CA: Stanford University Press. ———. 2006. Imagined Enemies, China Prepares for Uncertain War. Stanford, CA: Stanford University Press. Yew, Lee Kuan. (2005) 2006. Keynote speech at ofﬁ cial opening of the Lee Kuan Yew School of Public Policy, 4 April, in David A. Kelly, Ramkishen S. Rajan and Gillian H. L. Goh (eds), Managing Globalization, Lessons from China and India, p. vi. New Jersey: World Scientiﬁ c. Downloaded by [University of Defence] at 01:36 24 May 2016 98 Fu-Kuo Liu

6 China’s Strategy in Asian Regional Cooperation: Towards Multi-layered Engagement

Fu-Kuo Liu

China has borders with 14 countries. With historical border disputes and unpleasant memories of conﬂ ict, this complicated geography gives rise to China’s strategic concerns with its long land borders. As a peaceful environment is a prerequisite for the rise of China, unsettled border disputes become the most pressing issue for China to cope with. China has desperately needed to keep its surrounding environment in peace so that its economic development would not be hampered and its national development would continue on the course planned. Over the past few decades, China has been concentrating on developing its economy as a way to improve national power. It is unquestionable that the top agenda of China’s strategy will focus on engaging with its neighbours peacefully. China’s regional strategy is of course at the centre of its grant strategy.1 By keeping the line, over the past two decades China has fundamentally changed its policy approach with more constructive thinking toward the international community. To ensure its peaceful rise and stable environment for domestic economic development, China has, for the last two decades, been very successful in winning friendship. China’s foreign policy strategy Downloaded by [University of Defence] at 01:36 24 May 2016 focuses on two parallel soft landing tracks: keeping the progress of active involvement in multilateral institutions and building partnership with major powers. China sees that multilateralism, as a way of assuaging regional fear of rising threat, serves its geopolitical interest

1 Shiping Tang and Zhang Yunling, ‘China’s Regional Strategy’, in David Shambaugh (ed.), Power Shift: China and Asia’s New Dynamics, Berkeley: University of California Press, 2006. China’s Strategy in Asian Regional Cooperation 99

and major power partnership can help enhance China’s overall interest balance up possible challenges. During the 1990s, China learned a hard lesson: that multilateral platforms did not necessarily work against its interest as it used to perceive their negative effect and gradually changed its attitude toward multilateralism. Multilateral diplomacy provides important forums for China to engage with the outside world. Through multilateral forums, China could show its international responsibility, extend its infl uence, engage well with its neighbours and, most importantly, help claim its regional leadership. Today, the centre of promoting the ‘harmonious world’ aims at developing a peaceful environment for the rise of China and effectively eliminating suspicion from neighbouring countries. The key feature of it highlights open-mindedness and advocacy of multilateralism. The top priority is thus to facilitate harmony with its neighbouring countries and fully refl ects China’s consistent effort on regionalism. While China is advancing through various regional institutions and mechanisms, it also keeps engaging with major powers in different regions based on clear strategic calculation. China’s regional strategy can be refl ected in the effort of regional economic and security cooperation. This article tries to examine how China utilises multilateralism in shaping its peaceful image and thus gains a superior position in international and regional issues. In addition, it also focuses on analysing the implications of China’s strategy for the new direction of regional and sub-regional cooperation. China’s Transformation of National Strategy China used to take ideology as a basic principle for its foreign and security policy. After the launch of the reform and open-door policy in 1979, China began to reshape its foreign policy based more on its strategic interests. China was nevertheless isolated in the international community as an aftermath of the Tiananmen Square crackdown in 1989. Its relations with the major powers — the USA, Japan and Downloaded by [University of Defence] at 01:36 24 May 2016 European countries as well as western countries — deteriorated. During that period, it was common for Beijing to suspect that multilateral institutions served as useful playgrounds for the dominant powers to criticise and restrain China. It was interesting to learn that China’s relations with developing countries, especially Southeast Asian countries, were not affected and even improved a lot during that time. China managed to develop diplomatic relationship with Indonesia, Singapore and Brunei in the early 1990s. It even tried hard to normalise the relationship with Vietnam. On the fi eld of 100 Fu-Kuo Liu

regional multilateral mechanism, China formally accessed to the Asia–Paciﬁ c Economic Cooperation (APEC) in 1991 and later, in 1993, China became one of the founding members of the ASEAN Regional Forum (ARF). Since the mid-1990s, China has begun to work through the process of regional cooperation with its neighbouring countries and in 1996 became the dialogue partner with ASEAN. It was perhaps fortunate for China to convert its negative image in the international community, when the Asian ﬁ nancial crisis erupted in 1997. China grasped the opportunity to shoulder the burden by holding up the value of its currency, Reminbi, and contributed US$4 billion through the International Monetary Fund (IMF) and bilateral cooperative schemes. In that critical period, China did not resort to the traditional beggar-thy-neighbour policy to take advantage of its neighbors’ weakness. The message successfully got through to the region. Southeast Asian countries were very appreciative of China’s timely backing by holding up the pressure of depreciating its currency and allowing most of regional countries to avoid being struck twice. With this generous effort, China also managed to shift its negative image in the region and won friendship thereafter. In many parts of Southeast Asia, toward the end of the last century China became a favourable partner in the region. The rise of China serves more as an opportunity than a threat to them. Especially after China decided to advance into the region with real strategic consideration, which emphasises areas leading to fostering common interest and plays down controversy between them, China directly proposed to ASEAN for establishing a bilateral free trade area and made a reconciled gesture in the South China Sea issues. Since then, ASEAN and China relations have been rapidly warming up and the image of China was almost quickly changed in the region. Checking on a global image survey released in 2008, China gained a relatively

Downloaded by [University of Defence] at 01:36 24 May 2016 favourable image in the world, as compared to the decline of the USA image under the Bush administration. The views of China from its neighbours show that, for example, Pakistan has 76 per cent of its citizens in favour of China, Indonesia 58 per cent, Australia 52 per cent, South Korea 48 per cent, India 46 per cent and Japan 14 per cent.2

2 Pew Research Center, ‘Global Public Opinion in the Bush Years (2001– 2008’, The Pew Global Attitude Project, 18 December 2008, http://pewglobal. org/reports/pdf/263.pdf. China’s Strategy in Asian Regional Cooperation 101

Although the survey could not represent the attitude of all of China’s neighbours, it does show a general rising trend of support to China in the region. It also reﬂ ects how successfully China has developed its strategy of engaging with related countries. Good Neighbour Policy and China’s Strategic Deliberation Since its establishment in 1949, China has developed a more ‘macro- political and overall approach of diplomacy in increasing interactions with the world …’.3 China’s grant strategy of diplomacy is principally ‘to provide Chinese modernization with an international environment in favor of peaceful development’.4 In the long nation-building process, China was struggling with internal political strife and was too preoccupied with its inward-looking strategy. It was undoubtedly lagging far behind the development levels of most of the regional countries. It is obvious that Chinese leaders often emphasise the importance of peaceful development to China’s domestic audience and the region, as Chinese modernisation could only be made possible in a peaceful and friendly context. The good-neighbour policy was derived from its strategic calculation, which deliberates that China’s surrounding areas should be fully secured before it can really move forward towards modernisation. This has been very much so at the centre of China’s strategy till date. As being described by many in the West, China’s recent advancement in the region relies more on its soft power, mainly economic means.5 On the aspect of strategic signiﬁ cance, China manages its good- neighbour policy through means of soft power including foreign aid, mutual trade, direct investment, economic diplomacy and cultural means. Most recently, on the occasion of the Forum on China–African Cooperation (FOCAC), Chinese Premier Weng Jiabao announced a US$10 billion package of ‘concessional loans to African countries Downloaded by [University of Defence] at 01:36 24 May 2016

3 Jiemian Yang, ’60 Years of New China’s Diplomacy’, Global Review, 1 (1): 17, July–August 2009. 4 Zicheng Ye, ‘China’s Grand Diplomacy: Change of Conﬁ guration, Interest and Environment’, Global Review, 1 (1): 31, July–August 2009. 5 Joseph Nye, ‘The Rise of China’s Soft Power’, Wall Street Journal Asia, 29 December 2005, http://belfercenter.ksg.harvard.edu/publication/1499/rise_ of_chinas_soft_power.html. 102 Fu-Kuo Liu

without any political strings attached’.6 Different from the prevailing norms, China’s model for development, which has also been regarded as ‘the Beijing consensus’, or lately being identiﬁ ed by the western media as ‘the China model’, also gradually comes into the picture of its diplomacy. Even if China’s model does not fully comply with the norms set by the western-dominated institutions, its policy of no obligation on foreign aid has received widespread popularity among developing countries. Among all others, China’s good-neighbour policy was especially successful in some corners of Southeast Asia. Politically, China tried to diminish security concerns that Southeast Asian countries have retained for years by making the gesture to settle differences on the South China Sea. It went further the following year to sign the Treaty of Amity and Cooperation with ASEAN in 2003. Economically, China manages through signing the Free Trade Agreement with ASEAN. When the ASEAN-China FTA Starts Rolling the Ball Analysts have suggested that China’s effort carries a dual purpose: ‘to dispel any concerns among ASEAN states of a “China threat”, and to maintain a peaceful and stable regional environment in which the PRC can pursue its goal of strategic economic development’.7 It is true that all China’s effort is based on its strategic calculation and long- term interest in the region. Regarding regional cooperation in the context of establishing an East Asian community, China’s approach is very focused on promoting its regional leadership and expanding inﬂ uence in the region. How does the region interpret China’s advance into the region? First, the major focus of China’s strategic advancement is to make sure security in the surrounding areas would be manageable and would by no means interrupt its effort of the national modernisation process. Thus, attempts to settle border dis- Downloaded by [University of Defence] at 01:36 24 May 2016 putes were highlighted as the top agenda in the good neighbour policy. Second, according to the record of China’s recent diplomatic advancement in the region, economic means of promoting regional

6 Shereen El Gazzar, ‘China to Lend Africa $10 Billion’, The Wall Street Journal, 9 November 2009, p. A15. 7 Michael Chambers, ‘China and Southeast Asia: Creating a Win–Win Neighborhood’, Asia Special Program Report, no. 126, Washington, DC: Woodrow Wilson Center for Scholars, January 2005. China’s Strategy in Asian Regional Cooperation 103

cooperation is always prioritised as a key element of its foreign policy. What China has shown to the world regarding its effort in emerging Asian regionalism is based on a belief that active engagement in regional multilateral mechanisms is the right way forward. Obviously there are several diplomatic means toward active engagement: direct participation (the APEC, ARF and ASEAN Plus Three and ASEAN Plus One); bilateral reconciliation (on the South China Sea); and establishment of new regional bodies (Shanghai Cooperation Organisation). In short, China’s advocacy of the good neighbour policy clearly aims at those countries with which China still has unsettled issues. It shows that on the strategic level, China always stands fi rm to push for its increasing interests in the region so as to claim for a regional leadership. Especially after the global fi nancial tsunami hit the world and the region, it becomes more salient to see China’s infl uence on all fronts of the progress of East Asian regionalism. With an emerging big market, China has made the promise of the ASEAN–China Free Trade Agreement a strategic facilitator. Over the last decade, whatever the region has seen of the emergence of regionalism is driven by China’s successful diplomacy and its strategic vision. So, who is really on the driver’s seat of East Asian regionalism? China’s Soft Power and Strategic Advancement Over the past two decades, China’s deep involvement in the region is prevailing in almost every corner. Unlike the early years of China’s image as a fomenter of communist sabotage and revolution, today China’s diplomacy, propelled by an increase of comprehensive national power, is advancing by economic means and the soft-power approach. Increases in trade, investment, economic aid, infrastructural project bids, economic development plans and even free trade agreements have dramatically linked China with the Southeast 8 Downloaded by [University of Defence] at 01:36 24 May 2016 Asian region and changed the regional perception of China. Indeed, as China’s economic growth becomes an engine of regional economic development, almost the entire region has borne fruit from trading with China. The region has witnessed serious battering of two fi nancial crises during the last decade or so. It shows that China

8 Tyler Marshall, ‘How China is Winning the Soft Power Battle across East Asia’, The National Interest, issue 85, 1 September 2006b, http://www. nationalinterest.org/Article.aspx?id=11938. 104 Fu-Kuo Liu

serves as the central force for offsetting regional and global fi nancial challenges for the region. Unlike the regional suspicion towards China that happened during the 1997 Asian fi nancial crisis, this time China has been seen as ‘the principal hope for recovery, and the major economic locomotive’.9 In addition, China has conducted a new way of foreign aid supply to poor Asian countries without setting any requirements and penalties attached. It has reduced diffi culties for those who are in need and previously could apply only to western- dominated international fi nancial institutions for aid. For some in the West, China’s expansion of supplying foreign aid to developing countries is considered as competition with the West. However, the most important trend is that China is going through those aid projects which focus mainly on building infrastructure to further integrate the regional trade network.10 With strategic intent, China and Vietnam recently looked beyond transportation links in accelerating a joint venture on ‘two corridors and one belt’ across their border areas (Xinhua 2006). This construction project will not only develop industry, trade and tourism but also, more importantly, deliver strategic advantages for China. Observing this developing trend, regional analysts have begun to predict that ‘Beijing will eventually develop a position of dominance with the countries of Southeast Asia similar to U.S. relationship with Latin American states’.11 In accordance with its good neighbour policy China focuses on extending economic benefi ts, in which it also shares. In 2002, after several rounds of negotiation, China and ASEAN agreed to sign a Declaration on the Conduct of Parties in the South China Sea, which solved the fi rst stumbling block in their relations. The following year, China was the fi rst dialogue partner to accede to the ASEAN Treaty of Amity and Cooperation. China and ASEAN relations have since entered into an era of full speed ahead. China’s acceptance by ASEAN has dramatically broadened the

Downloaded by [University of Defence] at 01:36 24 May 2016 landscape of regionalism.

9 Hal Hill, ‘The Financial Crisis and What’s in Store for Southeast Asia’, East Asia Forum, 18 April 2009, http://www.eastasiaforum.org/2009/04/18/the- ﬁ nancial-crisis-and-whats-in-store-for-southeast-asia/. 10 Jane Perlez, ‘China Competes with Westin Aid to its Neighbors’, New York Times, 18 September 2006. 11 Tyler Marshall, ‘China Poised to Dominate Inﬂ uence in Asia’, Boston Sunday Globe, p. A10, 13 August 2006a. China’s Strategy in Asian Regional Cooperation 105

China’s outreach to ASEAN is best considered to be part of the larger charm offensive. China values the ASEAN regional integration effort and adheres to it with keen commitments such as the ASEAN– China Free Trade Agreement (ACFTA). China perceives that ASEAN is a weaker player in international politics, but its pivotal role in pushing regional groupings does give China a better launch pad to the region.12 ASEAN’s central role in regional multilateral cooperation is emerging again after its earlier peak in the 1990s. The new trend toward regionalism repositions ASEAN at the centre of regional development. Even with competition between Japan and China for leadership of the regionalism effort, ASEAN’s unique position makes it an indispensable actor at the time of political compromise. Further, despite its internal differences and China’s ambitions, the organisation managed to launch the ASEAN Plus Three and Plus One series, and the East Asian Summit. Through these efforts, ASEAN has helped instil its own values of consensus (‘the ASEAN way’) into the regional institution-building process. ASEAN’s characteristics and its active role dilute possible inﬂ uence by power rivalry in the region. Even though the US and others may not consider such a move to be harmful to any third party’s interest, many believe that based on a long-term strategic view, China’s strategic advance into the region would result in the transformation of the geopolitical landscape in Asia. It would have profound implications for the USA and Japan. It is understood in the region that ‘China’s motive is not just the direct trade beneﬁ ts, but also a strategic consideration: to assure countries which feel threatened by China’s growth, and anchor good long-term relations with them’.13 On the contrary, by real business thinking the US does not see much difference with or without an ASEAN Free Trade Agreement (AFTA) in place. Many Americans often view multilateral institutions such as ASEAN as useful ‘talk shops’ only. Over the last few years, a common

Downloaded by [University of Defence] at 01:36 24 May 2016 view expressed by US ofﬁ cials on pursuing a regional FTA suggests that the USA always prefers bilateral FTAs to a regional one, because

12 John Lee, ‘An ASEAN Bloc — A Convenient Fiction’, On Line Opinion (Australia’s e-journal of social and political debate), 16 May 2006, http://www. onlineopinion.co.au/print.asp?article=4466. 13 Hsien Loong Lee, ‘Speech by Lee Hsien Loong, Prime Minister, at the 6th International Institute of Strategic Studies’ Asia Security Conference’, Shangri-La Hotel, 1 June 2007, http://www.iiss.org. 106 Fu-Kuo Liu

a regional FTA may not make any real business sense. After President Barack Obama took over, the US perspective towards ASEAN and Asian regionalism has become different. In October 2009, ahead of Obama’s Asian trip, Senator Dick Lugar, the Republican leader in the Senate Foreign Relations Committee, proposed a resolution to urge the President to develop a comprehensive strategy toward engaging ASEAN in discussing the FTA. He pointed out that ‘China, India, Australia, New Zealand and South Korea have already fi nalised FTAs with ASEAN and are sharpening a competitive edge over the US in Southeast Asia’.14 On his Asia tour in November 2009, President Obama gave a strong message to regional leaders that the US is willing to start talks on the Pacifi c trade pact.15 It is believed that the US feels a mounting pressure from its regional allies and business leaders to catch up with China’s effort in the region. Dynamic Approach toward Multi-layer Cooperation Since the late 1990s, China has systematically developed new sphere of infl uence around it in Asia by all policy means. China’s growing infl uence stretches out to the region by way of developing regional mechanisms for cooperation and fully engaging with regional players through existing multilateral mechanisms and bilateral ties. China’s attempt to build favourable regional mechanisms expands its comprehensive strategic weight in the region and the world.16 Over the years, it shows that China has put in tremendous efforts in making a favourable environment for China and building a multi- layer mechanism with clear leadership in the region. On issues of strategic importance, China would quickly make concession on short- term gains in order to craft long-term advantages. There are some useful interpretations for arguing reasons as to why China could take such a venture into the region successfully and make regional Downloaded by [University of Defence] at 01:36 24 May 2016 cooperation a multi-layered system:

14 Reuters, ‘Senator Calls for US–ASEAN Free Trade Agreement’, Taipei Times, 11 October 2009, http://www.taipeitimes.com/News/biz/archives/200 9/10/11/2003455712. 15 Tom Wright and Jonathan Weisman, ‘US agrees to Talks on Paciﬁ c Trade Pact’, The Wall Street Journal, 16 November 2009, p. 4. 16 Hung De Santis, ‘The Dragon and the Tigers: China and Asian Regionalism’, World Policy Journal, 22 (2), Summer 2005. China’s Strategy in Asian Regional Cooperation 107

First, based on China’s centralised political system which the central government completely controls, the direction of policy and decision making does not need to be scrutinised by the legislative branch. In all kinds of international negotiation, China would be willing to give concession for a long-term gain at the expense of its short-term interest, if it considers it necessary for national interest. In China, the government is not bound by domestic political balance, which would normally look for short-term political interest. Thus, its policy approach would of course be more ﬂ exible and decisive. Second, as competition of economic development mounted in all parts of China, many provinces expanded their economic planning across the border lines to include economic activities with neighbouring countries based upon existing prosperous border trade. Encouraged and later endorsed by the central government, provincial governments of China have been able to tie their neighbouring regions closely into their economic dynamism by initiating conceptual frameworks of sub-regional cooperation, e.g., economic sphere, economic corridors, economic circle, etc. It has become usual to look into what those regional development programmes are delivering. Transportation network links on roads, railways and rivers across the borders have steadily transformed the regional landscape from several remote areas to an integrated region where people can interact more frequently. If the China–ASEAN Free Trade Agreement (CAFTA) would establish a framework of cooperation on the regional level, programmes for sub-regional cooperation would inevitably lead to several dynamic circles of development, strengthening ties among neighbours at the grassroots level. So far, there are a few programmes which are obvious examples of involvement in neighbouring regions — Greater Mekong Sub-regional Cooperation; Two Corridors and One Wing (North–South Economic Corridor) between Guanxi and Northern Vietnam; Pan Beibu Bay Economic Cooperation between coastal Guanxi and Vietnam; and Special Economic Zone on the Downloaded by [University of Defence] at 01:36 24 May 2016 West Coast of the Taiwan Strait, mainly between Taiwan and Fukien Province.17

17 Further to this initiative of special economic zone (SEZ), China and Taiwan are currently discussing the way to proceed with signing the Economic Cooperation Framework Agreement (ECFA) and the negotiation started on 26 January 2010. As political leaders from China and Taiwan were in the afﬁ rmative, many believed that the ECFA would be signed sometime by mid-2010. During the 5th round of the SEF-ARATS Talk, ECFA was signed on 29 June 2010. Since then, the cross-strait relations have been promoted to a completely new level of cooperative era. 108 Fu-Kuo Liu

Third, China’s booming market has been the regional power house of economic dynamism. On the real ground, the two-way trade between China and ASEAN skyrocketed. ASEAN has already tied into China’s market. Chinese offi cial data showed ‘trade between China and ASEAN totaled 105.88 billion U.S. dollars in 2004, and rose to 231.07 billion U.S. dollars in 2008’.18 Currently, China and ASEAN are the fourth largest trade partners to each other. Economic interdependence has risen to an all time high. Fourth, for years, China has also become the fi nancial centre in the region. Through the Chiang Mai Initiative framework, China has further strengthened its leading role in fi nancial cooperation with ASEAN countries. The global fi nancial crisis has since 2008 further reinforced such a developing trend. Especially in times of fi nancial crisis, the Chinese Renminbi, boosted by huge foreign exchange reserves, becomes a decisive currency for many regional countries to rely on. Many ASEAN countries now count on the exchange rate with the Renminbi rather than the greenback. The new situation with the Renminbi prevailing in the region will arrive soon, after ACFTA formally took effect in January 2010. The process of regional integration will of course quicken the Renminbi to be a regionalised currency.19 As economies of the United States and the European Union are in a serious fi nancial problem, RMB has began the process of becoming international key currency. In February 2009, the 12th ASEAN Plus Three fi nancial ministerial meeting was to strengthen regional fi nancial cooperation. The Renminbi’s credit and infl uence was widely recognised. It will be regarded as a future core currency in the region to be dependent upon. 13 countries reached an agreement on the details of the regional reserve pool known as the Chiang Mai Initiative Multilateralisation (CMIM). The total size of the CMIM goes up to US$120 billion with ASEAN contribution at 20 per cent and the Plus Three countries (China, Japan and Korea) at 80 per cent. China’s contribution Downloaded by [University of Defence] at 01:36 24 May 2016 has reached the level Japan has promised to contribute at US$38.4 billion to the pool, while South Korea contributes US$19.2 billion.20 With its increasing fi nancial power, China endorses

18 Xinhua, ‘China–ASEAN FTA to accelerate RMB Regionalization’, Xinhuanet, 23 October 2009b, http://news.xinhuanet.com/english/2009-10/23/ content_12308041.htm. 19 Ibid. 20 Erije Zhou, Xu Lingui and Wang Jingzhong, ‘ASEAN+3 Finalize Details of Regional Reserve Pool to Cope with Crisis’, China View, 3 May 2009, China’s Strategy in Asian Regional Cooperation 109

the structure of ASEAN Plus Three to be the core for managing the future of ASEAN regionalism. Furthermore, China is actively pushing a new regional agenda. During the ASEAN Plus One (China) summit in January 2007, China and ASEAN leaders signed an agreement on trade in services which would mark substantial progress toward building the ACFTA. Earlier, a similar agreement on trade in goods was signed to launch the fi rst step of the bilateral FTA process. In order to strengthen the China–ASEAN strategic partnership, Chinese Premier Wen Jiabao in 2007 made fi ve proposals to his ASEAN counterparts in which he emphasised strengthening mutual political trust, upgrading economic and trade relations, cooperating in the fi elds of non-traditional security matters, supporting ASEAN integration process and enriching social, cultural and personnel exchanges.21 Obviously, through this warming process, China is taking the lead in initiating deeper and more comprehensive cooperation. In October 2009, Chinese Premier Wen Jiabao during the 2nd trilateral summit in Beijing called for China, Japan and the Republic of Korea (RoK) to deepen trilateral cooperation from the strategic perspective. China is pushing a trilateral free trade agreement and Japanese Premier Hatoyama is also hoping to speed up the trilateral FTA.22 It is a usual strategy which delivers well — to call upon neighbouring countries for economic and strategic cooperation. In January 2007, during the ASEAN Plus Three Summit, China invited the 10 ASEAN members to participate in joint military exercises for peacekeeping training and disaster-zone management and reconstruction, to take place in July 2007. This invitation marked a fundamental shift of China’s regional strategy ‘with China moving toward more limited multilateralism rather than its historical unilateralism to advance its regional security interest’.23 The region Downloaded by [University of Defence] at 01:36 24 May 2016 http://news.xinhuanet.com/english/2009-05/03/content_11306037.htm; ASEAN, ‘The Joint Media Statement of the 12th ASEAN Plus Three Finance Ministers’ Meeting, ASEAN Secretariat, Bali, Indonesia, 3 May 2009. 21 Wen Jiabao, ‘Wen Jiabao’s Speech at the 10th China–ASEAN Summit’, Xinhuanet, 14 January 2007, http://big5.xinhuanet.com/gate/big5/news. xinhuanet.com/world/2007-01/14/content_5604871.htm. 22 Xinhua, ‘China, ROK, and Japan Pledge to Further Trilateral Ties’, Xinhuanet, 11 October 2009a, http://www.daylife.com/topic/xinhua. 23 David Fullbrook, ‘China’s Strategic Southeast Asian Overture’, Japan Focus, 6 March 2007, http://japanfocus.org/products/topdf/2372. 110 Fu-Kuo Liu

perceives that China at fi rst promoted the regional economic cooperation process through trade and investment linkages to strengthen its relations with regional countries. It also tries to deepen its relationship with its neighbours by constructing transportation networks across the borders. Now, it is gradually moving the regional agenda toward security matters, with an emphasis on defence cooperation and confi dence building among different militaries. Conclusion Regional cooperation has entered a new era with multi-facets, and the strategic transformation between the great powers highlights specifi c features of regionalism in Asia. As the rise of China is the fulcrum on which the regional dynamics turns, that dynamics has undoubtedly become China-driven and China-centred. The geographic focus of regional efforts has shifted from trans-Pacifi c relationships to intra- Asian regional architecture. It has become clear that as a result of China-driven regional efforts, the US is implicitly pushed out of regional games. It is understandable that unless the new regional efforts formulate clear goals and undertake specifi c actions, the US will remain anxiously watchful, from outside, of regional groupings. For this, the Obama administration has taken the Asia policy more seriously than the previous administration. In part, the perception of the USA’s declining infl uence in Asia is exacerbated by the impact of the 2008 global fi nancial tsunami. The questions now are: As the US declines, what would China gain? What does it mean when China can actively manage its strategic picture through ways of regional cooperation? Would the trend at the end lead to a clear power shift in the international community? It is important to note that the new China-driven regionalism will infl uence both the direction of economic cooperation and regional security. Nevertheless, mistrust between China and Japan remains

Downloaded by [University of Defence] at 01:36 24 May 2016 the main obstacle in developing overarching regional cooperative mechanisms. At least Japan and China would have to develop and sustain their momentum of economic cooperation leading to working with other neighbouring countries. More broadly, the Sino–US relationship is also critical to the future development of regional integration. What is more signiﬁ cant for the US is that for the ﬁ rst time in regional history, the future direction of Asian regionalism is not for the US to decide. Rather, it would be very much in Beijing’s reins or the outcome of competition/cooperation between China’s Strategy in Asian Regional Cooperation 111

Tokyo and Beijing, though ASEAN will be safe in the driver’s seat. The ASEAN FTA has become the centre of regional integration, but the ACFTA is a benchmark of regional integration. It has become more salient that if there would be a possibility of an East Asian FTA or even East Asian Community (EAC), it would have to be built on the success of the ACFTA. From practices of promoting regional cooperation in the cases of the Shanghai Cooperation Organization, ASEAN–China cooperation, China–Taiwan relation and even trilateral summits among China, Japan and Korea, China not only manages to push the regional agenda forward, but also tries to engage bickering parties within regional multilateral context. This leads to a clear understanding that the continuing process of building a pan-regional community, under substantial Chinese infl uence, is becoming irreversible. It is important to note that China has managed well not only through bilateral economic cooperation but also by initiating sub- regional cooperation and even actively participating in multilateral economic mechanisms. In contrast, the region has also observed the rapid decline of US infl uence in all related policy areas. Especially on various joint statements announced by regional countries on occasions of regional multilateral forums, China postures itself with more confi dence and a much fi rmer position in initiating new cooperative proposals and leading the way of regional cooperation. In effect, regional economic and political interdependence between China and ASEAN countries is emerging, though the degree of ASEAN dependency on China is fast accelerating, especially for those ASEAN members which are immediate neighbours of China. Through various development projects of sub-regional cooperation, China is quickly developing solid connections and transportation networking at the grassroots level with its partners around the region. What lesson has the current global fi nancial tsunami brought to

Downloaded by [University of Defence] at 01:36 24 May 2016 regional cooperation in Asia since 2008? Today, all eyes are looking at China as if China, with its continuous impressive economic growth and increasing ﬁ nancial weight in the global market, would become the most hopeful leader to cope with the global ﬁ nancial crisis.24

24 Pieter Bottelier, ‘China and the International Financial Crisis’, in Ashley Tellis, Andrew Marble and Travis Tanner (eds), Strategic Asia 2009–2010: Economic Meltdown and Geopolitical Stability, Seattle and Washington, DC: The National Bureau of Asian Research, 2009, pp. 75–76. 112 Fu-Kuo Liu

Over the last two decades, the region has witnessed China’s successful advances toward China-led regional community building by means of soft power rather than hard power comprehended by conventional wisdom. While China is soundly chanting regional cooperation in the region to fulﬁ l its strategic needs, it has also stimulated momentum for further regional groupings with either a cooperative or competitive nature. The USA’s recent new effort to make a hard comeback to Asia shows exactly the sort of anxiety as regards China coming to lead the way of regional groupings without the US. The most important implication of China’s leadership for the region is that China’s strategic vision and a stable US–China relationship would make the way for the arrival of an Asian community. References ASEAN. 2009. ‘The Joint Media Statement of the 12th ASEAN Plus Three Finance Ministers’ Meeting’, ASEAN Secretariat. Bali, Indonesia. 3 May. http://www.aseansec.org/22536.htm. Accessed 26 December 2009. Bottelier, Pieter. 2009. ‘China and the International Financial Crisis’, in Ashley Tellis, Andrew Marble and Travis Tanner (eds), Strategic Asia 2009–2010: Economic Meltdown and Geopolitical Stability. Seattle and Washington, DC: The National Bureau of Asian Research. Chambers, Michael. 2005. ‘China and Southeast Asia: Creating a “Win-Win” Neighborhood’, Asia Special Program Report, no. 126. Washington, DC: Woodrow Wilson Center for Scholars. January. Fullbrook, David. 2007. ‘China’s Strategic Southeast Asian Overture’, Japan Focus. 6 March. http://japanfocus.org/products/topdf/2372. Accessed 23 December 2009. Gazzar, Shereen El. 2009. ‘China to Lend Africa $10 Billion’, The Wall Street Journal, A15. 9 November. Hill, Hal. 2009. ‘The Financial Crisis and What’s in Store for Southeast Asia’, East Asia Forum. 18 April. http://www.eastasiaforum.org/2009/04/18/ the-financial-crisis-and-whats-in-store-for-southeast-asia/. Accessed 20 December 2009.

Downloaded by [University of Defence] at 01:36 24 May 2016 Lee, John. 2006. ‘An ASEAN Bloc — A Convenient Fiction’, On Line Opinion (Australia’s e-journal of social and political debate). 16 May. http://www. onlineopinion.com.au/print.asp?article=4466. Accessed 15 December 2009. Lee, Hsien Loong. 2007. ‘Speech by Lee Hsien Loong, Prime Minister, at the 6th International Institute of Strategic Studies’ Asia Security Conference’, Shangri-La Hotel, Singapore. 1 June. http://www.iiss.org. Accessed 10 December 2009. Marshall, Tyler. 2006a. ‘China Poised to Dominate Inﬂ uence in Asia’, Boston Sunday Globe, p. A10. 13 August. China’s Strategy in Asian Regional Cooperation 113

Marshall, Tyler. 2006b. ‘How China is Winning the Soft Power Battle across East Asia’, The National Interest, issue 85. 1 September. http://www. nationalinterest.org/Article.aspx?id=11938. Accessed 15 December 2009. Nye, Joseph. 2005. ‘The Rise of China’s Soft Power’, Wall Street Journal Asia. 29 December. http://belfercenter.ksg.harvard.edu/publication/1499/rise_ of_chinas_soft_power.html. Accessed 26 October 2009. Perlez, Jane. 2006. ‘China Competes with Westin Aid to its Neighbors’, New York Times. 18 September. Pew Research Center. 2008. ‘Global Public Opinion in the Bush Years (2001–2008)’, The Pew Global Attitude Project. 18 December. http:// pewglobal.org/reports/pdf/263.pdf. Accessed 26 December 2009. Reuters. 2009. ‘Senator Calls for US–ASEAN Free Trade Agreement’, Taipei Times. 11 October. http://www.taipeitimes.com/News/biz/archives/2009/1 0/11/2003455712. Accessed 26 November 2009. Hung De Santis. 2005. ‘The Dragon and the Tigers: China and Asian Regionalism’, World Policy Journal, 22 (2). Summer. Tang, Shiping and Zhang Yunling. 2006. ‘China’s Regional Strategy’, in David Shambaugh (ed.), Power Shift: China and Asia’s New Dynamics. Berkeley: University of California Press. ‘US Eyes Free Trade Pact with ASEAN’. 2009. channelnewsasia.com. 10 October. http://www.channelnewsasia.com/stories/afp_asiapacific_ business/view/1010470/1/.html. Accessed 2 December 2009. Wen, Jiabao. 2007. ‘Wen Jiabao’s speech at the 10th China–ASEAN Summit’, Xinhuanet. 14 January. http://big5.xinhuanet.com/gate/big5/news.xinhuanet. com/world/2007-01/14/content_5604871.htm. Accessed 26 October 2009. Wright, Tom and Jonathan Weisman. 2009. ‘US agrees to Talks on Paciﬁ c Trade Pact’, The Wall Street Journal, p. 4. 16 November. Yang, Jiemian. 2009. ‘60 Years of New China’s Diplomacy’, Global Review, 1 (1): 17. July–August. Ye, Zicheng. 2009. ‘China’s Grand Diplomacy: Change of Conﬁ guration, Interest and Environment’, Global Review, 1 (1): 31. July–August. Xinhua. 2006. ‘Vietnam, Guangxi Eye Faster Construction of Economic Corridors, Better Trade’. 15 April. http://english.people.com.cn/200604/15/ eng20060415_258509.html. Accessed 10 December 2009. ———. 2009a. ‘China, ROK, and Japan Pledge to Further Trilateral Ties’, Downloaded by [University of Defence] at 01:36 24 May 2016 Xinhuanet. 11 October. http://www.daylife.com/topic/xinhua. Accessed 26 October 2009. ———. 2009b. ‘China–ASEAN FTA to accelerate RMB Regionalization’, Xinhuanet. 23 October. http://news.xinhuanet.com/english/2009-10/23/ content_12308041.htm. Accessed 26 December 2009. Zhou, Erjie, Xu Lingui and Wang Jingzhong. 2009. ‘ASEAN+3 Finalize Details of Regional Reserve Pool to Cope with Crisis’, China View. 3 May. http:// news.xinhuanet.com/english/2009-05/03/content_11306037.htm. Accessed 2 January 2010. This page intentionally left blank Downloaded by [University of Defence] at 01:36 24 May 2016 Emerging China-centrism 115

Part II Engaging China Downloaded by [University of Defence] at 01:36 24 May 2016 This page intentionally left blank Downloaded by [University of Defence] at 01:36 24 May 2016 Emerging China-centrism 117

7 Emerging China-centrism: Prospects for Epistemic Partnership in the Divided Sino-phone World

Chih-Yu Shih

Recent disputes in Korean literature over the cultural ownership of the Dragon Boat Festival, as well as the Gugoryeo relics located in Chinese Manchuria, challenge the long established myth of the centre role dominated by mainland China in East Asian History. A Chinese rumor further claims that even soy milk, one of the most popular Chinese breakfast beverages, could be declared in Korea to be the invention of Korean ancestors. While most Chinese may laugh with disbelief when hearing about the Korean origins of ‘their’ cultural legacy, we must be reminded that this is not the ﬁ rst time that similar contentions have occurred. Huang Chun-Chieh, a leading Confucian scholar of National Taiwan University, studies with curiosity the issue of how and why pre-modern Japanese intellectuals in the 17th century advocated the view that Japan is the real China.1 It has not occurred to him that, from the perspective of puzzling bystanders, his home country of Taiwan had — for over four decades — also insisted that Taipei was the real capital of China since 1949. How should and could China be represented? The answer depends on who wants to represent it. That is why views arguing studies of

Downloaded by [University of Defence] at 01:36 24 May 2016 China should be China-centred instead of Euro-centred, US-centred or Japan-centred, still exist separately. The scholars giving birth to

1 Chun-Chieh Huang, ‘The Idea of “Zhongguo” and its Transformation in Early Modern Japan and Contemporary Taiwan’ (lun zhongguo jingidan zhong ‘zhongguo’ gainian de hanyi ji qi zai jinshi riben yu xiandai Taiwan de zhuanhua), Taiwan Journal of East Asian Studies (Taiwan dongya wenming yanjiu xuekan), 3 (2), 2006, pp. 91–100. 118 Chih-Yu Shih

the notion are not Chinese writers, but English and Japanese ones.2 In Taiwan, for example, there was the call for the establishment of a Chinese social science in the 1980s. These efforts seek to ameliorate the bias in the universal claim of ‘western’ behavioural pattern by supplying a ‘Chinese’ perspective which is epistemologically different. Applying the Chinese perspective allegedly enhances the universality of knowledge.3 However, no China-centrism could be fully China- centred when its primary purpose is to improve the universality of social science, which is dear to western academics. It is the recent Korean challenge to China’s centrality that ﬁ nally shifts people’s attention to a different, contending representation of China that aims for something other than the bettering of social science. Accordingly, the thinking process of China-centrism involves a decision between identity and image. The choice of an individual’s identity is about achieving a perspective on ‘China’ that establishes his or her difference from either ‘China’ or the ‘West’, hence Korea- centrism, Singapore-centrism, Vietnam-centrism, India-centrism and so on. The choice of image, in contrast, is about how well this added perspective on China contributes to a reﬂ exive ‘western’ social science, so it is an image of being universal rather than being different. To receive a better image is therefore to evaluate China-centrism against the self-criticism of ‘western’ social science, nevertheless aimed to enhance universality, hence ultimately epistemological Eurocentrism. For most Chinese social scientists,4 the image problem is of utmost importance, while the identity problem takes a backseat. Paradigms in contemporary Sino-phone China studies are copies of

2 Paul A. Cohen, Discovering History in China: American Historical Writing on the Recent Chinese Past, New York: Columbia University Press, 1984; Harry Harding, ‘The Study of Chinese Politics: Toward a Third Generation of Scholarship’, World Politics, 36 (2), 1984, pp. 284–307; Yuzo Mizoguchi,

Downloaded by [University of Defence] at 01:36 24 May 2016 Hobo tosibteno Chugoku (China as Method), Tokyo: The University of Tokyo Press, 1989. 3 For example, Yang Kuo-shu (‘Why Do We Want to Establish Chinese Indigenous Psychology?’ [women weisheme yao jianli zhongguoren de bentu xinlixue], Indigenous Psychology (bentu xinlixue), 1 [6], 1993, pp. 6–88) and his group endeavor to develop an indigenous psychological agenda that eventually lead to a truly universal discipline of psychology. 4 ‘Chinese’ are those who consider themselves as Chinese or designated by western scholars as such, willingly or unwillingly. Jeremy Barme argues that Sino-phone scholars usually belong to the category of ‘the Chinese’. Emerging China-centrism 119

western paradigms.5 In the study of Chinese foreign policy, for example, one sees the familiar (or copied) division among realism, idealism and constructivism. Sino-phone International Relations scholars simulate the debate by providing either the Chinese ‘case’ (when con- ﬁ rming a theory) or the Chinese ‘anomaly’ (when denying one). While more and more Chinese social scientists are developing their career in Anglophone academics (so they would need to care for their image), most Chinese obviously do not appreciate the Korean representation of ‘their’ cultural heritage. The Korean challenge creates an identity dimension for the Chinese social scientists, predominantly also China experts, because the China they want to present to their Korean colleagues is not the same one they want to present to the Anglophone world. The Korean challenge or, along the same lines, the Vietnamese, Indian, Singaporean or perhaps simply the Asian challenges, all provide an incentive for the Chinese intellectuals to look away from the Anglophone world; instead, it redirects them toward a self-knowledge that comes from within. Only then is an epistemic community embedded in Chinese China-centrism possible. The excitement that the ‘Tianxia’ (literally all under heaven) rhetoric has taken on some momentum in the past few years is a clear indicator of this trend.6 With the exception of the once predominant debate on the Siniﬁ cation of Marxism in China,7 signs of Chinese China-centrism in the non-Marxian social sciences in China can be traced back to the mid-1990s.8 However, the awareness of a need for a transnational China-centric epistemic community has been far from reality. These domestic traces were largely responses to the challenge of re-presenting

5 Yongjin Zhang, ‘The “English School” in China: A Travelogue of Ideas and their Diffusion’, European Journal of International Relations, 9 (1), 2003, pp. 87–114. 6 Downloaded by [University of Defence] at 01:36 24 May 2016 Tingyang Zhao, The All-under-heaven Tixi (tian xia tixi). Nanjing: Jiangxu Education Press, 2005. 7 The debate has ended since Deng Xiaoping’s decision that there should be no more debate on ideology in order to clean the road for reform to begin. Instead pragmatism, together with the method of trial and error, composed the new spirit of socialism with ‘the Chinese characteristics’. 8 One noticeable attempt is Shoude Liang, ‘Stepping into the 21st Century and Exploring the Principles of Chinese External Relations’ (maixiang 21 shiji de shijie yu zhongguoren duiwai jiaowang yuanze de tantao), presented at the conference on ‘The Chinese Stepping into the 21st Century’, Taipei, 12 May 1996. 120 Chih-Yu Shih

China in the Anglophone world. Note that before the nascent Asian challenges, the stage predominantly centred upon the China threat and the clash of civilisations discourses in the aftermath of Tienanman in 1989. There was also the unresolved civil war between Beijing and Taipei; as the rivalry entered a fresh stage of peaceful competition, intellectual representation of China became a point of contention between the two sides — as well as for forces within Taiwan. These occurrences prompted self-reflection amongst Chinese social scientists. This article will show how these early traces may or may not serve as the foundation for a China-centric epistemic community in the future. Without such a foundation, it would be diffi cult for Chinese social scientists to make an effective adjustment to the Asian challenges or the China threat discourse. Put differently, this article will examine how an image problem for the Chinese social scientists to become universal has a chance of evolving into a quest for pursuing an entirely different identity. Non-aligned Sino-phone Experts on China Unlike their Indian, Latin American or African colleagues, Chinese scholars rarely join forces to challenge Eurocentrism in social science. Most of the other non-European academics imported social science disciplines from their former colonial masters. Dominated by a consciousness best described as ‘resisting’, it later led to the rise of dependency theory, the assertion of Asian values and the crusade featuring the principles of postcolonialism/Orientalism. In contrast to the majority of former colonies, the colonisation attempt in China was never complete, and neither did a single colonial power manage to conquer the entire country. The difference felt between China and its invaders was understood as one against a diffusive, inconsistent (but often attractive) West. The Chinese intellectuals were not enthusiastic about treating social science as a battleground for resistance, as they did 9 Downloaded by [University of Defence] at 01:36 24 May 2016 not have a specifi c colonial master to resist. This provides a partial explanation as to why Chinese social scientists have yet to become an integral part of western scholarship. The same probably applies to Japanese, Korean and Taiwanese academics. Compared with the confi dence in facing the mainstream scholarship amongst either

9 Chih-yu Shih, ‘A Postcolonial Approach to the State Question in China’, The Journal of Contemporary China, 17 (7), 1998, pp. 125–39. Emerging China-centrism 121

dependency theorists or postcolonial/Orientalist critics, accordingly, the intellectual task for the Northeast Asian academics remains to be mimicking rather than resisting.10 Their style of scholarship used to be one of image, rather than being one of identity. Even today, the overseas Chinese social scientists typically go about their social science debates in the same fashion as American academics would. The ability to keep up with the developments in the ﬁ eld distinguishes one’s scholarship from their domestic counterparts. The anomaly that prompts the shift of paradigm in social science in the West could lead to a similar shift in the world of overseas Chinese academics. In other words, there is no indigenous Chinese ‘anomaly’ that contributes to the evolution of universal social science disciplines. Harry Harding once wished that a new generation of China experts could detect a certain origin of theorisation from their Chinese ‘anomaly’.11 This is a wish spawning from within the circle of western academics, but nevertheless simultaneously an assign- ment that overseas Chinese social scientists are usually given and expected to achieve. This further reinforces a particular mindset among overseas Chinese scholars, convincing them to see themselves accepted as informants to social scientists. The quest for a different identity for Chinese China studies in the western academy is simply out of question. The alignment among Chinese scholars has thus been of no relevance, lest such relevance should obstruct one’s quest for recognition in western academics. Despite the call for integration of China Studies and social science disciplines among the English writers 45 years ago),12 the process is still far from being complete. American and British China experts have a conscious choice to make when applying for professional promotion; they need to decide whether they should arrange to have their work reviewed by China experts or disciplinary scholars. Interestingly, few overseas Chinese scholars feel the tension between

Downloaded by [University of Defence] at 01:36 24 May 2016 the area identity and the disciplinary identity, since they are usually ready to be reviewed by both perspectives. As an area expert, one is expected to use literature written in Chinese, ﬁ eld studies conducted

10 Ge Sun, The Dilemma of Takeuchi Yoshimi (zhunei hao de beilun), Beijing: Beijing University Press, 2005. 11 Harry Harding, ‘The Study of Chinese Politics’. 12 Symposium, ‘Symposium on Chinese Studies and the Discipline’, Journal of Asian Studies, 23 (4), 1964, pp. 505–38. 122 Chih-Yu Shih

in China, as well as historical analysis. In contrast, to be a disciplinary scholar, one should employ generalised theory and operational methods that use China as a case to confi rm or revise selected universal behavioural patterns. Chinese China experts are skilful in enlisting both original materials and scientifi c methods.13 Most of the time, the Chinese origin of their career is usually enough to convince Anglophone area experts to accept overseas Chinese China scholars as China experts. They are well trained in social science skills too. Many of them collect Chinese material at ease, allowing them to confi rm or revise general theories according to their theoretical position at the time. This is not different from their domestic counterparts in using one theory or another to justify a policy platform. Despite the fact that the theoretical identity of most Sino-phone China experts is far from determined and usually open to change, few have experienced the kind of struggle that once tormented the late Ray Huang, the author of bestsellers such as 1587, A Year of No Signifi cance: The Ming Dynasty in Decline,14 China: A Macro History15 and Broadening the Horizons of Chinese History: Discourses, Syntheses, and Comparisons.16 Huang lacked the same kind of methodological training as received by the latecomers after the 1990s and was infused with a sense of resistance, factors which are rarely present among contemporary overseas Chinese scholars. Huang engaged in two kinds of defence at the same time. The fi rst kind was his defence of Chiang Kaishek’s leadership and his rule through the Kuomintang to the effect that he appeared to his colleagues to be speaking for the regime.17 Indeed, his scholarly fi ndings suggested that the familiar criticisms accusing Chiang’s rule lacked

13 Andrew G. Walder, ‘The Transformation of Contemporary China Studies, 1977–2002’, in David L. Szanton (ed.), The Politics of Knowledge: Area Studies and the Disciplines, University of California Press/University of California International and Area Studies Digital Collection, Edited Volume #3, 2002, Downloaded by [University of Defence] at 01:36 24 May 2016 http://repositories.cdlib.org/uciaspubs/editedvolumes/3/8. 14 Ray Huang, 1587, A Year of No Signiﬁ cance: The Ming Dynasty in Decline, New Haven: Yale University Press, 1982. 15 Ray Huang, China: A Macro History, Armonk, NY: M. E. Sharpe, 1988. 16 Ray Huang, Broadening the Horizons of Chinese History: Discourses, Syntheses, and Comparisons, Armonk, NY: M. E. Sharpe, 1999. 17 Hsiang-jui Meng, Writing Chinese Macro-history for the “West”: Ray Huang’s Micro-career and his China Sudies Community (dao xifang xie zhongguo da lishi: huang renyu de weiguan jingyan yu ta de zhongguo xue shequn), Taipei: Department of Political Science, National Taiwan University, 2009. Emerging China-centrism 123

suffi cient empathy with the Chinese conditions in which Chiang assumed his leadership. For example, on the issue of corruption charges, Huang was able to provide a theory on why public and private fi nancing often had to mingle under the circumstance of the time, by choosing an indigenous approach to China’s fi nancial system. This specifi c argument actually led to his theoretical contribution to explaining Chinese economic history.18 Unfortunately, each time he submitted his manuscript, Huang invariably faced overwhelming criticism from disciplinary reviewers in the discipline of economics. Later in his career he was laid off by his college, along with other historians who taught classes on areas other than Europe or America.19 This incident caused him to feel an enormous sense of shame. Huang consciously chose not to subscribe to disciplinary methods, which he denounced as the cause of American scholars’ inability to take an overview on China.20 He was involved in defending his association with the defeated KMT even as he developed his academic career. This distanced him from his mentors and colleagues both academically and socially, including John King Fairbanks and William Theodore de Bary.21 The contemporary overseas Chinese scholars, born mostly in China, do not share the same KMT background or the stance of resistance against American scholarship. In contrast, there has been a shared tendency for the new generation of scholars to shake off the legacy of the Cultural Revolution by embracing ‘western’ methodology. The fact that some of them gave thought to issues such as their position in the American academic establishment and their expertise in the disciplinary method showed that they had an easier time adapting to academic politics than Huang. It is the familiarity with the disciplinary methodology and the intellectual capacity to adapt that sets apart contemporary overseas Chinese scholars from their predecessors. However, the same faculty also reduces the need of overseas Chinese scholars to form alliances: Downloaded by [University of Defence] at 01:36 24 May 2016

18 Ray Huang, Taxation and Governmental Finance in Sixteenth-century Ming China, Cambridge: Cambridge University Press, 1975. 19 Ray Huang, Narrating the Past and the Contemporary between the Earth in the North and the Heaven in the South (di bei tian nan xu gu jin), Taipei: Lien Ching, 1991, p. 81. 20 Ray Huang, Taxation and Governmental Finance in Sixteenth-century Ming China (shiliu shiji zhongguo de caizheng yu shuishou), Taipei: Lien Ching, 2001, p. 572. 21 Ibid., pp. 285–86, 307–11, 499–506, 563–71. 124 Chih-Yu Shih

they are always concerned about accommodating various seemingly contradictory theories over the long haul of their career, some even simultaneously. Here again is an example of the aforementioned image approach that allows them to maintain a good image before their colleagues. In other words, decisions concerning the choice of theoretical position are not purely academic. They are also social decisions since decisions will affect their relationship with their mentors. Even after acquiring tenure, they do not feel comfortable with refuting their teachers with whom they may have developed disagreements as they advance in their careers. After all, theoretical pursuits are short and limited, while the relationship with their teachers might last for a lifetime. Since academic and social decisions are not separable, their adherence to specifi c disciplinary methods or a theory does not seem justifi able. All these contribute to their academic positioning which is fl exible and constantly susceptible to changes. Individual efforts that revise (and some go as far as negating) mainstream theories do not always win respect from their colleagues, especially in situations where they do not carefully adopt the disciplinary discourse. Huang decided to turn to high school students and college freshmen as a way of shunning tedious peer reviews that usually worship disciplinary methodology. He likewise sought alliances back in Taiwan but received only a lukewarm response (Huang 2004).22 He has more people buying his books than conversing with him. For contemporary overseas Chinese scholars, their occasional critical refl ections do not cause serious problems to their career because they have, at the same time, publications that are well within the academic dialogue. As long as one survives well, it makes no sense to form alliances that reveal one’s non-scientifi c identifi cation by openly associating with other Chinese scholars. Collusion between overseas Chinese China experts and mainstream English writers when they theorise about China does not mean that there is no critical refl ection

Downloaded by [University of Defence] at 01:36 24 May 2016 by the former, but that such reﬂ ections are highly individualised and private, contingent upon the choice of survival strategy, other per- sonalised conditions and the relationship with China. National Conditions as China-centrism A highly individualised survival stratagem is the reason why the non-aligned overseas Sinophone China experts have yet to respond

22 Ray Huang, The Grand History Will Not Atrophy (da lishi buhui weisuo), Taipei: Lien Ching, 2004. Emerging China-centrism 125

to the call for China-centrism that is critical of the mainstream discipline. Ironically, this lack of response is a sign that they are not interested in improving universalism. To the extent that their concern is not about improving universalism, theirs is not Euro-centric either. Their ability to adapt to and reconcile different theoretical propositions further suggests that these people are not enthusiastic about judging theories as much as they are sensitive to good social relationships. This disinterest in theoretical identity is not uniquely Chinese; Japanese scholar Akira Iriye describes his own scholarship as ‘centrist’ and Korean academic Samuel Kim characterises his as ‘synthetic’.23 To fi nd merit in each of these contending theories and take advantage of each of their strengths refl ects a kind of research style foreign to the majority of their American colleagues.24 The implicit image approach in their writings on China similarly is incompatible with Eurocentrism. As a result, while many of them are neither consciously reserved about Eurocentrism nor are oriented toward China-centrism, there are still indicators in their scholarship that show promises of becoming China-centric. Perhaps it was in 1997 that the fi rst attempt at alignment among Sino-phone scholars came about. Sponsored by the Taiwanese Current Foundation and under the leadership of Hu Fu who is both a long- time student of behavioural political science and an admirer of the legendary Chinese liberal Hu Shih, overseas Chinese political scientists met with scholars from China, Taiwan and Hong Kong at the University of Maryland, College Park. A clear division of consciousness separated the Chinese visitors from their brethren in the US, with the former pushing for some kind of China-centrism which entailed a lukewarm response from the latter in light of their mission to discover a universal behavioural pattern.25 A subsequent meeting

23 For Samuel Kim’s recollection of his scholarship see http://politics.soc.ntu. edu.tw/RAEC/act02.php (interviewed on 6 May 2006. Synthetic scholarship is

Downloaded by [University of Defence] at 01:36 24 May 2016 best exempliﬁ ed by his edited volumes. See, for example, Samuel Kim, China and the World: Chinese Foreign Policy in the Post-Mao Era, Boulder: Westview Press, 1984, 1989, 1994, 1998. 24 Samuel Kim (1984) once derided his own writing by saying that those who do not produce theories writer literature review. See Samuel Kim, China and the World. 25 The end result of this meeting was a collective volume coming out ﬁ ve years later in traditional Chinese printed in Taiwan. See Shaoguang CHU Wang and Quansheng Zhao (eds), Theory and Practice of Indigenous Political Science in Chinese Societies (huaren shehui zhengzhi xue bentu yanjiu de lilun yu shijian), Taipei: Laurel Press, 2002. 126 Chih-Yu Shih

was held in Hong Kong two years later, followed by workshops at smaller scales in Tokyo. The result was a seeming reduction in aligning attempts balanced by a paradoxical rise in China-centric consciousness. One of the scholars from China who has managed to establish a successful career in the US since 1990 is Zhao Quansheng. It is not surprising that Zhao does not appreciate being engaged in pundit debates. He is able to group together theoretical perspectives intended to be distinctively unique in explaining Chinese foreign policy. I recall a conversation between Zhao and a French colleague at the American Political Science Association in San Francisco in 1990 that characterises different styles of scholarship.26 After Zhao explained that the context of ‘principle’ in Chinese foreign policy was something not amendable by situations, his audience challenged him for being circular. Indeed, he might have appeared circular as he advised the audience to look at the foreign policy behaviour of the Chinese government in order to judge if a particular matter involved a principle issue. Zhao would not be circular if he was able to move away from the social science discourse. Zheng Yongnian also encountered the same predicament as well. Zheng gave Chinese political reform a label: ‘incrementalism’.27 It suggests both the necessity to engage in reform to ensure the survival of the regime and the necessity to control the pace of reform to maintain domestic stability. He encountered a challenge by Hsu Su-Chien, a Taiwanese political scientist, for actually being a ‘minimalist’ — someone willing to accept reform as little as possible.28 Zheng explained that the situation faced by the Chinese leaders was very complicated. It was so difﬁ cult that because they had to balance different forces at once, it was unlikely that there would be room to set up a platform for reform. This explanation echoes Zhao’s understanding of ‘principle’. For Zhao, the Chinese leaders had to

Downloaded by [University of Defence] at 01:36 24 May 2016 judge the intention of the opponent to decide if there was a matter

26 Quansheng Zhao presented a paper titled ‘Achieving Maximum Advantage: Rigidity and Flexibility in Chinese Foreign Policy’, 1 September 1990. 27 Zheng Yongnian, Discovering Chinese Nationalism in China: Modernization and International Relations, New York: Cambridge University Press, 1999a. 28 Su-Chien Hsu was the discussant of Zheng’s paper. Later, Hsu touched upon his criticism again (‘Debate on China’s Reform: A Literature Review’ [zhongguo dalu ahengzhi gaige de zhengyi: yige wenxian de huigu], Mainland China Studies (zhongguo dalu yanjiu), 47 [1], 2004). Emerging China-centrism 127

of principle. For example, if the opponent is willing to subscribe to anti-hegemonism in an open statement, there would be no need to test the intention in later encounters. It would be a matter of principle that could block ongoing processes if the intention to violate the principle has been detected. How much is needed to declare mal- intention depends on individual judgement. A phenomenon which either the French colleague or Hsu failed to empathise with was how the factor of ‘judgement’ fared in social science theorisation. Judgment — in accordance with the national goals and conditions of the time — sabotages universalism because real judgement is premised upon the inability to make a prediction on choice; hence, no pattern is sufﬁ ciently predictive. An analyst is vulnerable to coincidence, to the extent that the incurrence of a diplomatic principle or nationalism remains stuck in a state of indecision. Chinese leaders have to balance all the goals and conditions they perceive to be relevant. Among all these, the priority in the age of reform, according to Zheng, is placed on economic development, given the constraints posed by the institutional legacy of socialism and the lure of market opportunity. The fall of belief in socialism demands the use of nationalistic appeals, yet the need for stability necessitates its control. Zheng29 explains the rise and fall of nationalist cycles in China ﬁ rst by treating it as a response to western imperialism (which even Wang Fei-ling, a disciple of scientism, would agree with)30 and as a tool of the grand strategy of development. In fact, the same appreciation of China’s national conditions should have promoted Zheng to propose his incrementalism in explaining political reform. According to incrementalism, political reform is unavoidable in the facilitation of socialist reform but again, stability is also a requirement that must be met before socialist reform can succeed. There is no ‘rule’ other than human judgement when the Chinese leader is torn between the need for stability and the use Downloaded by [University of Defence] at 01:36 24 May 2016

29 Zheng Yongnian, Discovering Chinese Nationalism in China. 30 In the Maryland workshop, Wang was among the most ardent defenders of social science universalism. See his defence of Chinese nationalism (Wang Fei-ling, ‘Self-Image and Strategic Intentions: National Conﬁ dence and Political Insecurity’, in Deng Yong and Wang Fei-ling [eds], In the Eyes of the Dragon: China Views the World, Lanham, Boulder, New York and London: Rowman & Littleﬁ eld, 1999, pp. 21–46). 128 Chih-Yu Shih

of nationalism for the sake of legitimacy (or the use of political reform for the sake of socialist transformation). While most political scientists see the Chinese Communist Party’s political judgement as a refl ection of the regime’s interest in maintaining political control, Zheng argues that the ultimate interest is actually the quest for development. The development-driven interest suggests a kind of thinking beyond universalism because whatever explains the pace of reform must also factor in the element of judgement. One might wonder if Chinese leaders should actually place their priority on political stability, thereby challenging Zheng to back up his theory of development being the ultimate motivation with evidence. However, exactly this challenge indicates a common research agenda that fi rst studies the problems that Chinese political leaders believe most urgent in China. Since political reform could still be useful to development, incrementalism does not have to lead to the criticism of minimalism. Following the same mindset, few people can make a generalisation to the question on how much nationalism is good for development. Yang Dali, another leading political scientist who falls in the ‘overseas Chinese’ category and someone few would regard as a believer of China-centrism, similarly subscribes to the methodology of national condition (albeit implicitly) when revising North’s famous theory of path dependency. In his earlier work, Yang fi nds that the most successful reform in China took place in the areas hardest hit by the commune movement in 1958 — hence path rupture, to contrast the Nobel winner’s theme of path dependency. While he appears to have revised North’s theory of path dependency by using China as a case study, his revisionism is harboured upon a peculiar mode of historiography. Note that the rupture he witnessed at the beginning of the reform is actually a return to the practices predating 1949. A longer historical perspective would suggest that the rupture came about in 1949 when the socialist experiment began. The experiment

Downloaded by [University of Defence] at 01:36 24 May 2016 fi nally failed in 1978, and its demise confi rmed North’s theory. The year 1978 should actually be regarded, accordingly, as a case of path dependence. Zheng’s historiography refl ects that of Yang’s, since the former also roots China’s special need in development in the socialist legacy that has no pre-1949 presence. The historiography that assumes history began in 1949 is usually called ‘revolutionary historiography’ in the English literature. However, neither Yang nor Zheng show active interest in justifying the socialist revolution of 1949. The agenda of their works points to Emerging China-centrism 129

the future, preoccupied with the national strategy of development, to depart from rather than celebrate the socialist revolution. This departure from socialism has received some mention in the English literature; it is likewise diffi cult for non-socialist China experts to appreciate in both Zheng’s and Yang’s comprehension of post- 1949 national conditions being more important than the pre-1949 historical context. Leadership serves this national condition of diminishing socialism, not to control the nation for its own political benefi t. Yang’s work shows how the party did not have total control; Zheng’s analysis goes a step further by showing how the party retains suffi cient control for the nation to carry on anyway. In addition, the sensitivity toward post-1949 national conditions is not required to glue itself to revolutionary historiography. Rather, attention to Chinese national conditions can be represented horizon- tally. Zhao Suisheng, for example, skilfully juxtaposes contentions concerning Chinese nationalism and political reform.31 It is done in a way that it makes all related parties appear to have a justifi able rationale. Acknowledging that his scholarship is not one of position- taking,32 Suisheng is able to introduce argumentation that either echoes the offi cial Chinese Communist Party’s position or defends it in a way not completely compatible with offi cial lines by enlisting writings from Chinese critics of western social science. Suisheng never fails to invite or quote liberal critics at the beginning of many of his books, nor does he ever forget to incorporate rebuttals on behalf of China or the Chinese Communist Party toward this end. By providing balanced and well-rounded views from both sides, his treatment is by far the kindest for those speaking in favour of China could receive among English language publications. Needless to say, Suisheng’s engagement in Euro-liberalism and ahistorical scientifi c theory likewise leads to a research agenda oriented toward a future- looking perspective on the contemporary national conditions.

Downloaded by [University of Defence] at 01:36 24 May 2016 To accept development and to move away from using either revolutionary or command socialism as the starting point seem to

31 Zhao Suisheng, A Nation-State by Construction: Dynamics of Modern Chinese Nationalism, Stanford, CA: Stanford University Press, 2004; and Debating Political Reform in China: Rule of Law vs. Democratization, Armonk, NY: M. E. Sharpe, 2006. 32 In reply to an invitation for interview on 27 August 2006, Zhao indicated that he had no speciﬁ c theoretical preference. 130 Chih-Yu Shih

be the values shared by all overseas Sino-phone China experts despite the difference in their discipline or theoretical proposition. This particular agenda coincides with that of the Chinese Communist Party. Therefore, they are heavily inclined to a standpoint that enables them to appreciate the challenges of indecision on the part of Chinese leaders. Their Anglophone counterpart often lacks the same kind of sympathy that is critical to reaching such standpoint. Granted that the two Zhaos (Zhao Quansheng and Zhao Suisheng), Zheng and Yang conduct their research in an English environment, show little hostility toward Eurocentrism or concern over China-centric epistemology, and are well versed in the disciplinary literature, ulterior traces of China-centrism are detectable nevertheless. Culture and History as China-centrism Knowledge transcending revolutionary or socialist historiography began to emerge in the 21st century. Such is the case of domestic scholar Zhao Tingyang’s philosophy of ‘all under-heaven’ or tianxia, which reconnects China with the Confucian legacy dating back 2,500 years.33 Even Hu Jintao, the national chairman, enlist the notion of ‘harmony’ against the post-1949 platform of class struggle.34 Harmony, one of the conceptual components of the tianxia system, is also the keyword to the psychoanalysis of Chinese political culture by Lucian Pye and his disciples.35 The signiﬁ cance of the reconnection with cultural legacies which existed before 1949 is the acknowledgment that those perspectives were not the descendants of contemporary national conditions. Moreover, this alternative approach toward historiography reconnects Chinese scholarship with China experts from Hong Kong and Taiwan.

Downloaded by [University of Defence] at 01:36 24 May 2016 33 Zhao Tingyang, The All-under-heaven Tixi (tian xia tixi). 34 HU Jingtao ﬁ rst raised the notion of ‘harmonious world’ in April 2005 while attending an Asian–African summit meeting in Jakarta. A joint statement between Beijing and Moscow in July of the same year speciﬁ cally includes the term. Two months later, HU gave a speech at the United Nations to elaborate on the idea of harmonious world. See http://big5.xinhuanet.com/gate/big5/news.xinhuanet. com/ziliao/2006-08/24/content_5000866.htm, accessed 13 March 2008. 35 Lucian Pye, The Spirit of Chinese Political Culture, Cambridge: MIT Press, 1968; Richard Solomon, Mao’s Revolution and the Chinese Political Culture, Berkeley: University of California Press, 1971. Emerging China-centrism 131

Michael Ng-quinn36 and Victoria Tin-bor Hui,37 both Hong Kong natives, share the same epistemological strategy where they painstakingly demonstrate that in Chinese classic history, those behavioural patterns considered to be universal today in accordance with European modern history have already existed. The implication is that China belonged to the universal long before Europe entered the scene. Alastair Iain Johnston concurred with this historiography by discovering European realism in the culture of the parabellum in the Ming Dynasty.38 This is not unlike modern Japanese intellectuals of the Meiji period who tried to show why Japan could be truly universal through reinterpretation of its cultural past.39 Even if China could not beat Europe in terms of the extent of universalism, the slumbering giant regained its reputation nonetheless since China had entered the universal behavioural pattern earlier than Europe. It is not a coincidence that Johnston, Ng-quinn and Hui rely on pre- socialist historiography since none of them grew up in socialist China or politically identify with the nation. It would be hypocritical if their China complied with the national conditions in which the socialist reformist party wields the authority to make judgement calls. If being outside of post-socialist conditions is conducive to sensitivity towards cultural and historical legacy, then the Kuomintang’s and its people’s lingering sense of loss and the continued involvement in the context of the Chinese Civil War should have rooted their knowledge of China in pre-socialist history. In fact, China studies conducted in Taiwan demonstrated that these characteristics indeed guided the establishment of Taiwan’s self-knowledge before the Taiwan independence mentality replaced those dominated by the continuation of China’s civil war. Shih, for example, claims that, in almost all social science disciplines,40 Chinese culture is far removed from the intellectual spectrum

36 Downloaded by [University of Defence] at 01:36 24 May 2016 Michael Ng-quinn, ‘China and International Systems: History, Structures and Processes’, PhD dissertation, Cambridge, MA: Harvard University Press, 1978. 37 Victoria Tin-bor Hui, War and State Formation in Ancient China and Early Modern Europe, Cambridge: Cambridge University Press, 2005. 38 Alastair Iain Johnston, Cultural Realism, Princeton: Princeton University Press, 1995. 39 Stefan Tanaka, Japan’s Orient: Rendering Pasts into History, Berkeley: University of California Press, 1993. 40 These disciplines include anthropology, political economy, national defence, political culture, comparative politics and international relations See Chih-yu Shih, 132 Chih-Yu Shih

of contemporary social science epistemology, thus producing dramatic different senses of Chinese behaviour when compared to those introduced by social science. He has been consciously China-centric. This is a radical way of defending China, when compared to the aforementioned strategy of emphasising China’s universal nature long before western nations discovered this concept. In short, under this mode of analysis, the European behavioural pattern should never be a legitimate criterion in either explaining or evaluating behaviour based on Chinese cultural rationality. Zhao Tingyang’s cultural sensibility is the Chinese (mainland) counterpart of the Taiwanese Civil War epistemology. Emerging from cultural and historical perspectives, both endeavours seek to defend China from social science’s universalistic appropriation. In the English literature, Zhao Tingyang won the reputation of being an engineer of soft power41 while his theory is actually an attempt to move away from the logic of realist power calculation. On the contrary, few readers (or even the author) are aware that the cultural sensibility in Shih’s work had realpolitik implications for the Kuomintang during the Civil War. It is the sharp contrast with the post-1949 historiography imbedded in the concern over the national conditions — something shared by overseas Sino-phone China experts — that exposes the hidden civil war epistemology within Shih’s works. To him, Chinese history seemingly ended in 1949, the year the Kuomintang left mainland China; to him, none of the national conditions after 1949 were of any epistemological signiﬁ cance if they did not conform to a rationale derived from cultural contexts (primarily Confucian). Against the background of the Great Leap Forward in 1958 and the Cultural Revolution of 1966, the Kuomintang dexterously resorted to its role as a representative of Chinese culture, hoping to compensate for the loss of the political representation in the aftermath of the Civil War. As a result, internal migration, reform of national enterprise, village Downloaded by [University of Defence] at 01:36 24 May 2016

State and Society in China’s Political Economy: The Cultural Dynamics of China’s Socialist Reform, Boulder: Lynne Rienner, 1995; Collective Democracy: The Political and Legal Reform in China, Hong Kong: The Chinese University of Hong Kong Press, 1999; and Autonomy, Ethnicity and Poverty in Southwestern China: The State Turned Upside Down, London: Palgrave, 2007. 41 William A. Callahan, ‘Chinese Visions of World Order: Tianxia, Empire and World Order’, International Studies Association (ISA) Annual Conference paper, Chicago, 4 March 2007. Emerging China-centrism 133

democracy and even war behaviour are all matters of Confucianism for Shih. Despite Hong Kong-based social psychologist Yang Chung-fang’s warning against the use of collectivism in explaining China due to the nation’s notorious association with fascism and authoritarianism,42 Shih deliberately labels Confucianism as cultural collectivism. He does so for the purpose of denying the relevance of socialist collectivism and provoking anxiety of the liberal West. In this regard, one can sense the shadows of Ray Huang between Shih’s lines. Although the KMT’s contention for China’s cultural representation is not essentially very different from the alleged Korean claim of cultural ownership over soy milk, the pursuit by the Chinese nationalists is much deeper, psychologically speaking. In Taiwan, ‘Bandit Studies’ (the name given to China Studies right after the Civil War) assumed that the Chinese Communist Party would cease to exist eventually as it destroys Chinese culture. They were particularly wary of the Kuomintang legacy and baggage regarding the reclamation of the mainland. Although collecting intelligence was their thrust, scholars of Bandit Studies were different from Anglophone Pekinology in the sense that the latter are interested only in establishing a convenient method of differentiation between radicals, moderates or conservatives — as if in Third World Studies during the War when western observers were focused on the expedient division of the pro-western, pro-Soviet and middle camps for the sake of policy makers. The Civil War-oriented China experts in Taiwan were experts in detecting the networking among communist leaders at different levels. Epistemologically being illiterate in China Studies in English and determined to represent China culturally, the Civil War generation in Taiwan and their future descendents may have been the most conscious China-centrists ever. Re-appropriation of Eurocentrism Downloaded by [University of Defence] at 01:36 24 May 2016 Similar to the overseas Sino-phone China experts who improve social science theory by conﬁ rming or revising the laws on the universal behavioural pattern, contemporary Taiwanese China experts have also devoted themselves to achieving a similar mission. Yu-shan Wu,

42 Chung-fang Yang, ‘Are Chinese Really Collectivistic?’ (zhongguoren zhenshi jiti zhuyi ma?), in YANG Kuo-shu and YU An-bang (eds), Values of Chinese Societies II (zhongguoren de jiazhi guan 2), Taipei: Guiguan, pp. 321–434. 134 Chih-Yu Shih

former director of the National Science Council and current head of the political science division at Academia Sinica, Taiwan has defi ned the mission of China experts exactly in terms of their contribution to social science.43 This awareness did not emerge from an empty void. In fact, his father Chun-tsai Wu, who was once the leader of the sole institute of China Studies in Taiwan, though with the name of East Asian Studies, and Director, Cultural Affairs for the Kuomintang, represented a completely different (though most of the original members have been replaced by now) generation in China Studies. Chun-tsai represented a generation that experienced the Civil War in person; these people are capable as well as confi dent in empathising with their communist counterpart to the extent that very few people today could claim to know any better.44 China scholarship narrated in English was of little use or signifi cance to their mission of reclaiming the mainland. This mission called for an understanding of China that was useful to the evaluation of the military capacities of the People’s Liberation Army, factional realignment within the close circle of the CCP Central Committee, the degree of legitimacy the CCP enjoyed amongst the rank and fi le in general and personal characteristics of leaders relevant to determining their judgement and policy choice. With personal knowledge and intellectual sensitivity acquired earlier in their political career, their analysis relied largely on hunches that — notwithstanding the lack of clear methodology — often predicted with a precision that would make contemporary social scientists jealous. This obvious ignorance regarding theorisation appears extremely sharp in contrast with the generation that Yu-shan has led since the early 1990s. What concerns the discussion of this article is that strong alienation toward the Euro-centric theorisation of these earlier Taiwanese China experts has no longer existed in Taiwan. Not surprisingly, those belonging to this early generation were interested in sustaining the

Downloaded by [University of Defence] at 01:36 24 May 2016 Chinese-ness of Taiwan to support the validity of representation by the KMT over the whole of China. Faint shadows of China-centrism

43 Wu Yu-shan, Wen-cheng Li and Shui-ping Chiang, The Impact of Post-Deng Period on Mainland China and Taiwan (hou deng shiqi dui dalu ji Taiwan de zhengdang), Taipei: Tung-ta, 1995. 44 Tai-chun Kuo and Remon H. Myers, Understanding Communist China: Communist China Studies in the United States and the Republic of China, 1949–1978, Stanford: The Hoover Institution Press, 1986. Emerging China-centrism 135

were noticeable in response to the series of campaigns beginning with the Great Leap Forward in 1958, through the Cultural Revolution in 1966, and continuing through the conclusion of the Vietnam War in 1975. Vietnam existed in the remote background at best for the China scholarship in Taiwan; yet, it proved to be critical in 1975. It was the end of the Vietnam War that prompted changes to the American global strategy and witnessed the shift of the East–West divide into one that stressed the Pacifi c Rim,45 where Taiwan was not a base to contain China but a show of success. It was both a denial of dependency theory and a separate identity, outside of China and belonging to the nascent category of the NICs (Newly Industrialised Countries). Communist Vietnam’s victory became a failure when the countries compared with Vietnam were the NICs. For the KMT, whose claim of representing China was running out of steam, the new identity as a development model for China promised to be an appealing alternative. Playing the Soviet card is only meaningful when Taiwan remains a separate entity instead of a part of China. During the Cold War era, its alliance with the USSR was an absolute political anathema. Tsai Chen-wen was the fi rst to mention this possibility in the beginning of the 1980s, indicating an intellectual shift that enabled the emergence of standpoints from orientations outside of China.46 He is intellectually indebted to Raymon Aron’s thesis of a loose bi-polar system where smaller powers are able to fi nd space to manoeuvre in between.47 Additionally, the fact that neo-Marxism quickly became a fad in Taiwan during the 1980s was no coincidence. A certain sense of distance from China was actually created in the curiosity toward an emerging Chinese ‘other’. One could only appreciate the subsequent turn toward quantitative political science in the 1990s

45 Downloaded by [University of Defence] at 01:36 24 May 2016 Bruce Cummings, ‘Boundary Displacement: Area Studies and International Studies during and after the Cold War’, Bulletin of Concerned Asia Scholars, 29 (1), 1997, pp. 6–27. 46 Cheng-wen Tsai, ‘Properly Using the Concept of Balance of Power, Adjusting the Foreign Policy of Our Nation’ (shan yong quanli pingheng gainian, tiaozheng wo guo duiwai celue), United Daily, 8 (25), 1992, 2. 47 Aron’s legacy is quoted everywhere in his ﬁ rst book (Cheng-wen Tsai, ‘The Characteristics of International Relations in the Nuclear Age: System, Peace, and War’ (hezi shidai guojia guanxi de tezhi: tixi, heping, zhanzheng), unpublished, 1977). 136 Chih-Yu Shih

under this context. The first serious debate took place at the Political Science Department of Soochow University when pro- independence professors pushed for the abolishing of history and philosophy courses.48 In the place of these subjects, they proposed new requirements of intermediate and advanced statistics for political science majors. The KMT’s self-therapy by enlisting scholarship on NICs to sustain its representation as China’s best possible future underwent re-appropriation. Consequently, the NICs’ discourse enabled the epistemological reconstruction of a Taiwan that was ready to take a universal position observing an underdeveloped and yet objective Chinese other. This presumed universal position reinforced the pro-independence turn in politics. Politically, the pro-independence President Lee Teng-hui began his 12-year rule in 1988 and pushed forth with the reformation/abandonment of the constitutional framework created in China. While the pro-independence turn re-appropriated the scientiﬁ c study of China, it also foreshadowed the further re-appropriation by those who would like to resolve the confrontation caused by the rising consciousness against China. The pro-independence scholarship evaluates China in light of its difference with the universal/Euro- centric perspectives.49 To defend one’s study of China from political harassment, calls for truly objective scholarship began to emerge. This explains why the methodological procedure has become the dominant mode of communication. Many of the contemporary leading social scientists on China are actually children of the Civil War generation, who presumably feel the strongest pressure exerted by the pro- independence turn. Under their leadership new review procedures, which are strictly anonymous, emerge to avoid politicisation of scholarship or publication. This means one should not use the identity of China experts to judge the merit of the scholarship, a proposition well rooted in Karl Popper’s adherence to the epistemology of

Downloaded by [University of Defence] at 01:36 24 May 2016 falsiﬁ cation and opposition to totalitarianism.

48 You Ying-long, the launcher of the course reformation, later joined the pro-independence cabinet to serve as Deputy Mainland Chinese Affairs Council Chairman. 49 Culture would be an inappropriate point of analysis since it obscures the difference between Taiwan and China (Shiow-duan HWANG, ‘Book Review’, Taiwan Democracy Quarterly [Taiwan minzhu jikan], 5 [2], June 2008, pp. 181–86). Emerging China-centrism 137

From the politically motivated adoption of scientiﬁ c study of China to a scientism that shields individual scholars with Euro-centric universalism, China scholarship in Taiwan has experienced epistemological disarray. It may look as if Euro-centric theorisation has increased its domination over China scholarship in Taiwan since the 1980s. Ironically, this disarray actually reveals a peculiar kind of China-centrism. Underneath the appropriation and re-appropriation of this Euro-centric theorisation of China, there has been an ulterior and yet ubiquitous China-centrism; after all, it is always about the relationship with China that gives meaning to the adoption of the Euro-centric pursuit of grouping China as something that could be explained by the universalised law of behaviour. For the pro- independence scholars on China, membership to the Euro-centric circle is enough to prove Taiwan’s separation from China. For others, Eurocentrism is a shield to exempt themselves from scrutiny by pro-independence reviewers. This most recent re-appropriation of Euro-centric scientism in Taiwanese China studies is likely foreign to overseas Sino-phone China experts. Moreover, their allegedly common commitment to the improvement of universal theory with China Studies conceals their otherwise shared alienation from Eurocentrism, to the extent that everyone consciously feel that they are neither European nor Western. Possibility of China-centrism Realigned Once they have their tenure, some overseas Chinese experts are willing to think more independently and deviate from the mainstream scholarship, of which they once strove for membership. At this stage, the image of being scientiﬁ c which they tried to maintain in the early stages of their career no longer seem as germane as it was before. A certain sense of difference that compensates alienation from their subject of research, which used to be simply home, could lead

Downloaded by [University of Defence] at 01:36 24 May 2016 some to look for realignment in China. Similar reﬂ ections used to take place among diasporic postcolonial Indian scholars. However, in comparison, overseas Chinese China experts seem to enjoy a warmer reception by domestic colleagues. The scholarship embedded in the post-1949 historiography has made possible a joint agenda between the overseas and the domestic Sino-phone China scholars. Together, they conducted research on reform socialism, an area in which western social scientists have traditionally been weak. The meeting between successful reform and the frustrated yet assertive 138 Chih-Yu Shih

overseas Chinese scholarship on reform likely goes along with a fear of China amongst some Anglophone circles, raising more alarms of a possible China threat. The typical Sino-phone response is to convince observers that China is not a threat, both in terms of capacity and intention. Once an overseas Sino-phone China expert takes up defence position on behalf of China to ﬁ ght off accusations of the China threat, a potential alignment with domestic colleagues shows itself on the horizons, further aggravating the anxiety of some Anglophoe China watchers. The nascent attention to the Confucian notion of all under heaven suggests an alternative.50 This alternative has an even stronger potential of expanding the China-centric circle because ‘all under heaven’ has its origin in pre-1949 historiography, hence a potential realignment with China scholars in Hong Kong and Taiwan. At a time Eurocentrism in Taiwan loses intellectual productivity due to repeated re-appropriation that reduces it to no more than a matter of political technicality, Confucianism could be attractive. Confucianism’s cultural sensibility may further facilitate a non-Euro- centric realignment with other East Asian China experts in Japan and Korea who increasingly conceive of Confucianism respectively as their forefathers’ legacy. Most importantly perhaps is that when realignment of this sort alerts western China watchers who typically consider Confucianism a disguise of soft power, and yet adherence to Confucianism does not lead to any deliberate response, then a non-Eurocentrism that does not target Eurocentrism may eventually come into being. In contrast, the advocacy of Asia as a method of China Studies (which deserves a separate article), especially popular in Japan and Korea, competes with the all-under-heaven perspective in exchange for a wider realignment among Japanese, Korean and Taiwanese scholars. To see China as part of Asia would mean to divide national

Downloaded by [University of Defence] at 01:36 24 May 2016 China based on regions, sectors and ethnicities, thus implying transcendence beyond statehood sovereignty that reproduces confrontational identities in East Asia.51 The motivation is to shy

50 Zhang Feng, ‘The Tianxia System: A World Order in a Chinese Utopia’, Global Asia, 4 (4), January 2010, pp. 108–12. 51 As, for example, Yuzo Mizoguchi, Hobo tosibteno Chugoku (China as Method); and Takeuchi Yohimi, ‘What is Modernity?’ in idem, Writings of Takeuchi Yohimi, ed. and trans. Richard F. Calichman, New York: Columbia University Press, 2005. Emerging China-centrism 139

away from tianxia is high since tianxia continues to value forms of hierarchy, order and relationships — albeit in harmony.52 In comparison, to conceive of China as part of Asia would celebrate the characteristics of ambiguity, ﬂ uidity and reconstruction. Once accepting the narrative of Asia, scholars avoid the embarrassing controversy over historical understanding of war responsibility that troubles Japanese China scholars ever since the end of World War II. Taiwanese scholars, divided between ones who agonise over the loss of the Chinese Civil War and others struggling with the pro-independence and anti-China proposition, could similarly skip cross-Taiwan Strait relations when studying China. Implicit in the promotion of Asia as a method is additionally a hope for non- Eurocentrism, but so far this endeavour does not outright oppose Eurocentrism. In the coming decade, the promotion of Asia as a method will probably compete with the all-under-heaven perspective for disciples of East Asian China scholars, who would like to look for ways to escape Eurocentrism without really having to resist it. References Callahan, William A. 2007. ‘Chinese Visions of World Order: Tianxia, Empire and World Order’, International Studies Association (ISA) Annual Conference paper. Chicago. 4 March. ———. 2009. ‘Tianxia, Empire and the World: Soft Power and China’s Foreign Policy Discourse in the 21st Century’, in William A. Callahan and E. Barabantseva (eds), China Orders the World?: Soft Power, Norms and Foreign Policy. Washington, DC: Woodrow Wilson Center Press. Cohen, Paul A. 1984. Discovering History in China: American Historical Writing on the Recent Chinese Past. New York: Columbia University Press. Cummings, Bruce. 1997. ‘Boundary Displacement: Area Studies and International Studies during and after the Cold War’, Bulletin of Concerned Asian Scholars, 29 (1): 6–27.

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52 William A. Callahan, ‘Tianxia, Empire and the World: Soft Power and China’s Foreign Policy Discourse in the 21st Century’, in William A. Callahan and E. Barabantseva (eds), China Orders the World?: Soft Power, Norms and Foreign Policy, Washington, DC: Woodrow Wilson Center Press, 2009. 140 Chih-Yu Shih

Hsu, Su-Chien. 2004. ‘Debate on China’s Reform: A Literature Review’ (zhongguo dalu zhengzhi gaige de zhengyi: yige wenxian de huigu), Mainland China Studies (zhongguo dalu yanjiu), 47 (1). Huang, Chun-Chieh. 2006. ‘The Idea of “Zhongguo” and its Transformation in Early Modern Japan and Contemporary Taiwan’ (lun zhongguo jingdian zhong ‘zhongguo’ gainian de hanyi ji qi zai jinshi riben yu xiandai Taiwan de zhuanhua), Taiwan Journal of East Asian Studies (Taiwan dongya wenming yanjiu xuekan), 3 (2): 91–100. Huang, Ray. 1975. Taxation and Governmental Finance in Sixteenth-century Ming China. Cambridge: Cambridge University Press. ———. 1982. 1587, A Year of No Signiﬁ cance: The Ming Dynasty in Decline. New Haven: Yale University Press. ———. 1988. China: A Macro History. Armonk, NY: M. E. Sharpe. ———. 1991. Narrating the Past and the Contemporary between the Earth in the North and the Heaven in the South (di bei tian nan xu gu jin). Taipei: Lien Ching. ———. 1999. Broadening the Horizons of Chinese History: Discourses, Syntheses, and Comparisons. Armonk, NY: M. E. Sharpe. ———. 2001. Taxation and Governmental Finance in Sixteenth-century Ming China (shiliu shiji zhongguo mingdai de caizheng yu shuishou). Taipei: Lien Ching. ———. 2004. The Grand History Will Not Atrophy (da lishi buhui weisuo). Taipei: Lian Ching. Hui, Victoria Tin-bor. 2005. War and State Formation in Ancient China and Early Modern Europe. Cambridge: Cambridge University Press. HWANG, Shiow-duan. 2008. ‘Book Review’, Taiwan Democracy Quarterly (Taiwan minzhu jikan), 5 (2): 181–86. June. Johnston, Alastair Iain. 1995. Cultural Realism. Princeton: Princeton University Press. Kim, Samuel (ed.). 1984, 1989, 1994, 1998. China and the World: Chinese Foreign Policy in the Post-Mao Era. Boulder: Westview Press. ——— (ed.). 1989. China and the World: New Directions in Chinese Foreign Relations. Boulder: Westview Press. ——— (ed.). 1994. China and the World: Chinese Foreign Relations in the Post- Cold War Era. Boulder: Westview Press. ——— (ed.) 1998. China and the World: Chinese Foreign Policy Faces the New Downloaded by [University of Defence] at 01:36 24 May 2016 Millennium. Boulder: Westview Press. ———. 2006. ‘Oral History’. http://politics.soc.ntu.edu.tw/RAEC/act02.php (interviewed on 2006.06.06~10). Accessed 11 September 2009. Kuo, Tai-chun and Remon H. Myers. 1986. Understanding Communist China: Communist China Studies in the United States and the Republic of China, 1949–1978. Stanford: The Hoover Institution Press. Liang, Shoude. 1996. ‘Stepping into the 21st Century and Exploring the Principles of Chinese External Relations’ (maixiang 21 shiji de shijie yu zhongguoren duiwai jiaowang yuanze de tantao), presented at the conference on ‘The Chinese Stepping into the 21st Century’. Taipei. 12 May. Emerging China-centrism 141

Meng, Hsiang-jui. 2009. Writing Chinese Macro-history for the “West”: Ray Huang’s Micro-career and his China Studies Community (dao xifang xie zhongguo da lishi: huang renyu de weiguan jingyan yu ta de zhongguo xue shequn). Taipei: Department of Political Science, National Taiwan University. Mizoguchi, Yuzo. 1989. Hobo tosibteno Chugoku (China as Method). Tokyo: The University of Tokyo Press. ———. 2001. ‘A Search for the Perspective on the Studies of East Asia: Centering on Chinese Studies’, Sungkyun Journal of East Asian Studies, 1: 7–15. Ng-quinn, Michael. 1978. ‘China and International Systems: History, Structures and Processes’, PhD dissertation. Cambridge, MA: Harvard University. Pye, Lucian. 1968. The Spirit of Chinese Political Culture. Cambridge: MIT Press. Shih, Chih-yu. 1995. State and Society in China’s Political Economy: The Cultural Dynamics of China’s Socialist Reform. Boulder: Lynne Rienner. ———. 1998. ‘A Postcolonial Approach to the State Question in China’, The Journal of Contemporary China, 17 (7): 125–39. ———. 1999. Collective Democracy: The Political and Legal Reform in China. Hong Kong: The Chinese University of Hong Kong Press. ———. 2007. Autonomy, Ethnicity and Poverty in Southwestern China: The State Turned Upside Down. London: Palgrave. Solomon, Richard. 1971. Mao’s Revolution and the Chinese Political Culture. Berkeley: University of California Press. Sun, Ge. 2005. The Dilemma of Takeuchi Yoshimi (zhunei hao de beilun). Beijing: Beijing University Press. Symposium. 1964. ‘Symposium on Chinese Studies and the Discipline’, Journal of Asian Studies, 23 (4): 505–38. Takeuchi, Yohimi. 2005. ‘What Is Modernity?’, in idem, Writings of Takeuchi Yohimi. Ed. and trans. Richard F. Calichman. New York: Columbia University Press. Tanaka, Stefan. 1993. Japan’s Orient: Rendering Pasts into History. Berkeley: University of California Press. Tsai, Cheng-wen. 1977. ‘The Characteristics of International Relations in the Nuclear Age: System, Peace, and War’ (hezi shidai guojia guanxi de tezhi: tixi, heping, zhanzheng). Unpublished. ———. 1992. ‘Properly Using the Concept of Balance of Power, Adjusting the Foreign Policy of Our Nation’ (shan yong quanli pingheng gainian, tiaozheng Downloaded by [University of Defence] at 01:36 24 May 2016 wo guo duiwai celue), United Daily, 8 (25): 2. Walder, Andrew G. 2002. ‘The Transformation of Contemporary China Studies, 1977–2002’, in David L. Szanton (ed.), The Politics of Knowledge: Area Studies and the Disciplines. University of California Press/University of California International and Area Studies Digital Collection, Edited Volume #3. http://repositories.cdlib.org/uciaspubs/editedvolumes/3/8. Accessed 30 December 2003. Wang, Fei-ling. 1999. ‘Self-Image and Strategic Intentions: National Conﬁ dence and Political Insecurity’, in Deng Yong and Wang Fei-Ling (eds), In the 142 Chih-Yu Shih

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8 China’s New Patterns of Relationship with East Asia

John Wong and Sarah Y. Tong

The Chinese economy, since 1978, has experienced a spectacular performance on account of its successful economic reform and open- door policy. The average annual economic growth for the period of 1978–2008 was 9.8 per cent. After its WTO accession, China chalked up double-digit rates of growth for fi ve years in a row, at 10.8 per cent a year on average between 2003 and 2007. This is truly phenomenal; especially as such ‘hyper-growth’ took place amidst a low annual infl ation rate, mostly below 3 per cent, for the whole period. The rapid growth since 2001 was far more signifi cant than that of the 1990s, not just because it achieved a double-digit rate of growth, but also because growth occurred on a much larger base. China’s GDP in 2008 more than doubled its 2001 level. When Deng introduced reform and the open-door policy in December 1978, China’s GDP was only ¥365 billion. By 2008, the GDP increased to ¥30,067 billion or about 82 times more in normal terms. In 1978, China’s GDP per capita was only ¥381. In 2008, it increased 60-fold to ¥22,698 or about US$3,200 at the year’s average exchange rate. While many dynamic East Asian (EA) economies like Japan, Korea, Taiwan and Singapore had sustained similar high growth for two to three decades before, between the 1960s and the 1980s, they

Downloaded by [University of Defence] at 01:36 24 May 2016 had never registered double-digit growth for ﬁ ve consecutive years. China’s recent growth is therefore unprecedented, even in the context of past high-performing EA economies. Even during the 1997 Asian ﬁ nancial crisis which brought down many EA economies, China’s economy was hardly affected as it continued to grow at 9.3 per cent in 1997 and 7.8 per cent in 1998. In 2003, despite disruptions caused by SARS and the global economic recession, China still chalked up a hefty 10 per cent growth. In fact, China’s hyper-growth in 144 John Wong and Sarah Y. Tong

recent years has been unexpected even by China’s own economic policy makers. In the country’s 11th Five-Year Programme (2006–2010), economic growth was estimated to be around 7–8 per cent. Not surprisingly, the Chinese government was initially quite concerned about the possible ‘over-heating’ of the economy. Starting from 2003, various administrative as well as macro-economic measures, including quantitative restriction on bank lending and increases in reserve requirement ratio for banks and bank lending rate, were put in place in an attempt to cool the high growth. While many commentators predicted an imminent ‘hard landing’, the Chinese economy nonetheless continued to grow, and at higher rates, reaching 13 per cent in 2007, until the global economic crisis hit in late 2008. The Economic Rise of China By 2008, China became a huge economy of US$3.9 trillion at the market exchange rate and displaced Germany to become the world’s third largest economy.1 In PPP (purchasing power parity) terms, China has long been the world’s second largest economy after the USA.2 China’s foreign trade has grown even more rapidly over the past three decades, averaging at 17.4 per cent. In 1978, China’s total exports amounted to only US$9.8 billion or 0.6 per cent of the world’s share. By 2008, China’s exports increased 147 times in nominal terms to US$1.4 trillion, accounting for 8.9 per cent of the world’s total merchandise exports. In particular, China’s exports have grown at a phenomenal rate of 24 per cent a year since its accession to the WTO in 2001. As exports have for many years grown faster than imports,3 China has accumulated a huge trade surplus which, in 2008, amounted to US$295 billion, or about 8 per cent of the GDP. Moreover, China has been the world’s most favoured destination

Downloaded by [University of Defence] at 01:36 24 May 2016 for foreign investment among developing countries since the early

1 The World Bank, World Development Indicators, 2009. 2 It should be noted that the PPP measure often tends to over estimate the size of the economy, particularly for non-tradable service activities. The World Bank has recently revised downward China’s PPP-based GDP substantially. Nonetheless, China still ranked as the world’s second largest economy in PPP terms. 3 Between 1990 and 2008, China’s merchandise export and import grew by 19 per cent and 18.5 per cent a year, respectively. China’s New Patterns of Relationship with East Asia 145

1990s, and has often captured more than half of all FDI in Asia.4 Between 1990 and 2008, China attracted a total of over US$700 billion in FDI. Due to its strong external balance as a result of the persistent ‘twin surpluses’ in both its current and capital accounts, China’s total foreign exchange reserves by 2008 soared to US$1.9 trillion to be the world’s largest. This led to mounting international pressures on China to revalue its RMB. Indeed, the much anticipated revaluation of China’s currency took place on 21 July 2005, when the RMB offi cially went off the US-dollar peg for a process of gradual appreciation. By mid-2008, the RMB had appreciated nearly 20 per cent against the US dollar, while it had depreciated about 10 per cent against the Euro and somewhat less against the Japanese Yen.5 Since early 2002, the meteoric rise of China’s economy has become a ‘hot’ topic in the international and regional media.6 Initially, many Asian economies were concerned about the potential displacement effect of China becoming the factory of the world. Even the Japanese were quite worried by China’s dynamic industrial expansion.7 At fi rst, some pointed fi ngers at China for exporting defl ation to the world because of its massive exports of low-priced manufactured products.8 In 2007 and 2008, China was accused of ‘exporting infl ation’.9 In the early 2000s, China was mostly referred to as a rising regional economic power. In recent years, especially after 2005, China’s

4 China received more than half of all FDI in Asia in the years 1991–98 and 2001–2005. Over 80 per cent of the world’s 500 largest companies and its top 100 information technology ﬁ rms have already set up businesses in China (‘Investors Keep Eyes Peeled on Dragon”, Beijing Review, 48 (22), 2 June 2005. 5 Since mid-2008, there has been little movement in RMB’s exchange against the US dollar, while the Yuan appreciated again the Euro and depreciated further against the Japanese Yen. 6 According to one observer, ‘everything is China, China, and China’ at the

Downloaded by [University of Defence] at 01:36 24 May 2016 World Economic Forum in Davos (‘The Talk of the Town at Davos: China’, International Herald Tribune, 26 January 2004). 7 The noted Japanese economist Kenichi Ohmae used a sensational title ‘Asia’s Next Crisis: “Made in China”’ to talk alarmingly about the rise of China (Straits Times (Singapore) 2 August 2001). 8 For example, Stephen Roach referred to Asia as ‘an exporter of deﬂ ation to the rest of the world. And China is leading the way’ (‘The China Factor’, Morgan Stanley Global Economic Forum, 14 October 2002). 9 See, for example, David Barboza, ‘Costs Rising, China to Export Inﬂ ation’, New York Times, 31 January 2008. 146 John Wong and Sarah Y. Tong

economy has reached a new plateau whereby its domestic production, consumption and foreign trade has started to carry signiﬁ cant global ramiﬁ cations. Indeed, as a huge and diverse economy, every item of production and consumption in China inevitably becomes a ‘jumbo number’. China is now the world’s top producer of coal (2.8 billion tonne), steel (501 million tonne) and cement (1.4 billion tonne), and the world’s second largest producer of electricity (3,467 billion kwh) (Table 8.1). Likewise, China is the world’s top consumer of a wide variety of mineral resources and primary commodities from iron ores to oil and gas, and from palm oil to timber. China’s rising demand for these products had driven up their world prices. Indeed, the recent oil price hike was attributed to China’s increased demand for oil as it has now become the world’s second largest consumer of oil (about 9 per cent of the world total in 2007). Worse still, as the world’s leading producer of these basic industrial products, China has also become the world’s leading polluter, being the world’s largest emitter of the GHG (greenhouse gas), overtaking the USA in 2007.10

Table 8.1: Production of Major Industrial Products, 1978–2008

1978 2008 2008 over 1978 % Coal (million tonne) 618 2,793.0 451 Crude Steel (million tonne) 22 500.9 2,277 Cement (million tonne) 65 1,400.0 2,154 Electricity (billion kwh) 257 3,466.9 1,349 Automobiles (million units) 0.15 9.3 6200 Colour TV Sets (million units) ∗ 90.3 – Refrigerators (million units) 0.03 47.6 – Air Conditioners (million units) ∗ 82.3 – Personal Computers (million units) 0.08 (1990) 136.7 – ∗ Output just a few hundred

Downloaded by [University of Defence] at 01:36 24 May 2016 The fact that China, in 2008, was producing 9.3 million of automobile and 137 million units of PCs not just signiﬁ es China’s mammoth manufacturing and technological capacities but also points to its enormous productivity potential. Any producer, in turning out such a large volume of output, will naturally enjoy the economies

10 International Energy Agency, CO2 Emissions from Fuel Combustion Highlights 2009, http://www.iea.org/co2highlights/CO2highlights.pdf, accessed 27 July 2011. China’s New Patterns of Relationship with East Asia 147

of scale, with low average cost and near-zero marginal cost. Such is also China’s inherent comparative advantage for a wide range of manufactured products, particularly vis-à-vis its much smaller neighbouring economies in East Asia. More signifi cantly, China’s economic rise can be attributed to the dynamic combination of speed with scale. Human history has never before experienced such a massive scale of industrialisation proceeding at such break-neck speed as is now taking place in China. Hence, the operation of China’s economy inevitably carries signifi cant regional and global ramifi cations. Growth and Integration in East Asia East Asia as an economic region is conventionally defi ned to comprise Japan, China, the four East Asian newly industrialising economies (NIEs) of South Korea, Taiwan, Hong Kong and Singapore, and other Southeast Asian economies of ASEAN. Politically, this corresponds to the current regional concept of ‘ASEAN Plus Three’. Many EA economies have registered dynamic growth for a sustained period until 1997 when they were hit by the regional fi nancial crisis.11 Rapid economic growth in EA has also brought about greater economic integration among the economies, mainly through market-driven trade and cross-border investment. Historically, the EA growth process is marked by three waves. Japan was the fi rst non-western country to become industrialised. Its high growth dated back to the early 1950s and lasted till the 1970s. Japan’s economic growth was initially based on the export of labour- intensive manufactured products. But it was soon forced, by rising wages and increasing costs, to shed its comparative advantage for labour-intensive manufacturing in favour of the four NIEs, which started their industrial take-off in the 1960s. These four NIEs were arguably the most dynamic economies in Asia, as they had sustained near double-digit rates of growth for three decades, from the early 1960s to the 1980s, which constituted the second wave of the region’s Downloaded by [University of Defence] at 01:36 24 May 2016 growth. By the early 1980s, high costs and high wages had also caught up with these four NIEs, which had to restructure their economies towards more capital-intensive and higher value-added activities after passing their comparative advantage in labour-intensive production

11 The World Bank, in its well-known study, referred to EA’s high growth phenomenon as the ‘East Asian Miracle’ (The East Asian Miracle, New York: Oxford University Press, 1994). 148 John Wong and Sarah Y. Tong

to the latecomers — China and the four ASEAN economies of Indonesia, Malaysia, Thailand and the Philippines — and thereby spreading economic growth to the latter. In this way, China and some ASEAN economies were able to achieve high growth through the 1980s and the 1990s, which constitutes the third wave of high growth (Table 8.2 and Figure 8.1).12 Furthermore, the EA region has already developed a high level of intra-regional trade, although the ongoing economic crisis does have some impact on the regional trade. As shown in Table 8.3, the EA region in 2008 absorbed 47 per cent of Japan’s total exports (22 per cent in 1980); 36 per cent of China’s total exports; 49 per cent of Korea’s (24 per cent in 1980); 49 per cent of Taiwan’s; 60 per cent of Hong Kong’s (48 per cent in 1980); 59 per cent of Singapore’s (40 per cent in 1980); and 46 per cent of the average of the ASEAN-4 (51 per cent in 1980).13 The sharp rise in intra-regional trade over the past over two decades for Japan, Korea, Hong Kong, Singapore and Taiwan is undoubtedly due to the rise of China.14 Apart from intra-regional trade, intra-regional FDI fl ows have also operated as a powerful integrating force for the EA region, especially since much of the regional FDI is trade-related. Indeed, both China and ASEAN have devised various incentive schemes to attract FDI, which is generally treated not just as an additional source of capital supply but, more importantly, as a means of technology transfer and export development. More importantly, an increasing share of EA’s FDI fl ows originates from the region itself. This points to the ongoing process of EA’s growing economic interdependence. The Regional Impact of China’s Rise Challenges for Japan In post-war Asia, Japan played a leading role in EA’s economic growth and integration, as its sustained high growth spilled over fi rst Downloaded by [University of Defence] at 01:36 24 May 2016

12 Many Japanese scholars like to depict this pattern of development in Asia as the ‘fl ying-geese’ model. The ‘fl ying-geese’ concept was coined by a Japanese economist, Kaname Akamatzu (‘A Historical Pattern of Economic Growth in Developing Countries’, Developing Economies, No.1, March–August 1962). 13 ASEAN-4 denotes Indonesia, Malaysia, the Philippines and Thailand. 14 There is a decline in the regional share for China and for ASEAN-4, due probably to their high trade orientation towards the USA and the EU as well as their global trade diversifi cation. China’s New Patterns of Relationship with East Asia 149 GDP (US$ bn) Average Annual Growth of GDP (%) GDP per-capita (US$, ppp) GDP (US$) per-capita Downloaded by [University of Defence] at 01:36 24 May 2016

(Mn) 2008 2008 2008 2008 1960–70 1970–80 1980–90 1990–2001 2000–2005 2006–2008 Population East Asian Economies : Performance Indicator ChinaJapan 128NIEs 38,559South KoreaTaiwan 34,100 1328Hong KongSingapore 4,924 49 3,315ASEAN-5 Indonesia 19,505 10.9 5,963 23 7MalaysiaPhilippines 27,647 5 17,040 30,755 4,402Thailand 4.3Vietnam 228 38,972 30,881 43,811 947For comparison 5.2 27 4.1 90 51,142India 2,246 8.6 393 216 66 8,141 5.5 1,866 1.3 3,987 86 182 10.0 10.1 14,072 9.2 4,115 10.3 3,546 1,190 1,040 512 8.8 1.5 8.9 8,225 9.3 222 9.7 9.7 169 2,784 1,016 3.9 8.3 6.9 273 5.7 6.5 2.6 7.9 2,762 5.1 90 9.3 7.2 6.7 8.4 3.8 7.9 1,210 5.7 4.6 6.0 6.1 10.7 - 7.4 7.1 5.3 3.4 3.9 1.0 3.4 4.1 3.8 7.6 3.4 - 3.6 6.5 3.3 5.0 3.3 4.8 5.8 3.8 5.2 - 4.4 4.4 5.5 5.9 5.0 7.3 5.5 5.4 6.3 3.9 7.4 8.3 7.8 Table 8.2 : 150 John Wong and Sarah Y. Tong

Figure 8.1: East Asia Economic Growth, 1960s–2008: The Flying Geese Pattern

Source: IMF World Economic Outlook; China Statistical Yearbook; Hong Kong Statistics; Korea Statistical Yearbook; www.stat.gov.tw;www.singstat.gov. sg; Japan Statistical Yearbook.

to the four NIEs and later to some ASEAN economies and China. Due to its ability to provide the needed capital and technology, Japan’s economic presence was most prominent for decades and had rendered the EA region economically oriented towards Japan. However, Japan’s strong economic presence in the region has been slowly and steadily eroded by the rise of China. While initially China’s dynamic economic growth complemented well and even reinforced Japan’s leading role, China started to pose a challenge as its rapid economic growth was sustained and Japan’s economy was trapped in a prolonged recession. Since the pattern of China’s recent economic growth differs from

Downloaded by [University of Defence] at 01:36 24 May 2016 that of Japan’s in the past, their regional impacts are substantially different. To begin with, China’s economic growth process is more ‘inclusive’, and has therefore produced more extensive regional impact. In fact, China’s rise also embraces Japan, helping Japan pull itself out of its economic doldrums. Furthermore, China’s economic rise is occurring in a much more globalised world. As the world’s foremost manufacturing powerhouse, China is a centre to various regional and global production networks, which operate to integrate manufacturing activities in East Asia. Thus, China’s economic growth has China’s New Patterns of Relationship with East Asia 151 ) continued Table 8.3 ( –– –– – – 1.5 4.6 23.5 – – 24.1 2.3 4.3 53.0 Share of Regional Exports Designated For (%)

3.9 4.1 – 3.7 3 7 21.7 Japan China Korea Taiwan Hong Kong Singapore ASEAN-4 EA SUM

Downloaded by [University of Defence] at 01:36 24 May 2016 (US$ Million) Total Exports 198019882000 130,4412004 264,856 479,249 1980 565,67519882000 18,0992004 47,5402008 249,2031980 593,439 1,428,6861988 22.3 3.62000 16.9 6.3 17,505 16.72004 13.1 60,696 12.42008 172,268 5.8 8.1 1980 253,845 6.4 7.8 419,981 17.4 5.419.8 11.9 7.5 – 7.4 8.5 – – 4.5 6.4 4.4 10.7 – 4.7 5.7 5.2 6.319.6 2 25.4 3.1 – 2.3 4.3 – 3.2 2.2 4.9 17.9 38.4 17 9.5 13.4 4.7 9.1 – 1.6 27.2 2.3 3.9 3.1 39.7 2.1 3.1 46.9 2.3 6.2 5.9 – 3.7 7.1 2.8 4.1 3.8 4.4 3.3 2.2 47.1 61.2 2.2 42.6 35.5 4.2 7.2 2.8 5.8 44.0 5.7 32.3 47.1 48.6 Origins and Destinations of East Asian Intra-Trade Table 8.3 : Origin of Regional Exports Year Japan 2008China 781,412 Korea 16.0Taiwan 1988 7.6 2000 2004 60,667 2008 148,321 6.0 182,370 240,448 11.2 5.2 – 7.6 19.3 16.9 3.4 3.7 19.9 13.1 2.6 8.8 3.1 – 5.5 47.0 21.1 18 0.6 – 3.7 3.7 2.0 7.4 – 7.4 62.9 8.1 – 59.7 48.6 – 152 John Wong and Sarah Y. Tong 51.0

∗

20.8 39.7

2.6 0.5 48.1

Share of Regional Exports Designated For (%) , IMF; UN ComTrade; ADB Key Indicators 2009 Japan China Korea Taiwan Hong Kong Singapore ASEAN-4 EA SUM Downloaded by [University of Defence] at 01:36 24 May 2016 (US$ Million) Total Exports ) 1980 19,73019801988 6.12000 19,3752004 39,3062008 137,804 34.91980 179,6151988 338,176 8.12000 1.5 47,100 8.62004 7.5 80,0802008 269,099 6.4 1.6 334,108 2.5 5.0 3 597,816 34.5 3.9 19.5 8.6 1.5 16.0 9.3 15.0 3.6 2 1.1 13.1 4.1 2.2 3.4 – 3.7 6.8 1.7 6 10.5 2.8 2.8 4.6 3.7 1.4 7.7 2.9 4.0 – 7.9 6.2 2 9.8 4.2 10.5 3.5 3.3 1.9 4.2 2.9 5.1 11.8 3.9 12.6 24.9 20.3 21.7 9 10.4 29.0 10.7 53.8 42.9 55.2 58.9 44.1 43.7 38.4 45.5 ASEAN-4 denotes Indonesia, Malaysia, the Philippines and Thailand. Direction of Trade Statistics Yearbook 2007 ∗ : Table 8.3 continued Origin of Regional Exports Year ( Hong Kong 1988 2000 2004 63,163 2008 201,860Singapore 259,314 370,242 5.2 5.5 5.3ASEAN-4 4.2 34.4 34.6 44 48.2 1 1.9 Source 2.2 1.9 2.5 2.5 2.4 0.4 Taiwan’s data is obtained from Bureau of Foreign Trade’s website. Regional Export for Indonesia’s export to Hong Kong not available 2008. 2.3 2.3 2.2 2.0 0.5 0.3 3.3 3.5 47.3 45.7 59.4 60.2 China’s New Patterns of Relationship with East Asia 153

generated far-reaching spillover effects and not only serves as a new engine of growth, but also increasingly takes on the role of integrating EA’s economic activities for the global outreach. If China’s economy were to continue its present pace for a decade or more, China would eventually dwarf Japan’s leading role in EA as the major force for growth and integration, simply because of China’s size and diversity on the one hand and Japan’s ageing population on the other. There is, of course, a great deal of uncertainty pertaining to the exact pattern of future economic relationship of China and Japan vis-à-vis the rest of EA. Economic relations between powerful states are complicated and may operate in a win–win situation. Japan has already developed a new economic symbiosis with China to each other’s benefi t, and both economies can thrive on such economic relationship, e.g., both being a leading trade partner of each other. China’s rise may gradually change the geopolitics and geo- economics of the EA region, but Japan is likely to maintain its high level of economic presence in the region and stay on as one of the key development partners for a long time to come. In the meanwhile, the region is actually blessed with two engines of economic growth. China as the ‘Dragon-head’ for the EA Economies China’s economic growth actually fi ts in quite well with the overall EA growth patterns. As the EA region absorbs around 36 per cent of China’s exports and supplies about 57 per cent of China’s FDI, it is not hard to explain why China’s rapidly growing economy has impacted signifi cantly on many EA economies. However, the impact has been quite uneven and China’s dynamic growth has produced both positive and negative effects for individual EA economies. From the outset, Japan and the four NIEs have been able to benefi t greatly from China’s open-door policy by trading with China and investing in China. The policy presented Hong Kong, Taiwan and South Korea Downloaded by [University of Defence] at 01:36 24 May 2016 a great opportunity to upgrade their manufacturing industries by shifting their labour-intensive production to China. In the process, they also forged close economic linkages with China, which has become their leading trade partner. In contrast, China and the ASEAN economies initially tended to be much less complementary. China’s dynamic economic growth exerted strong competitive pressures on the ASEAN economies, which are vying for FDI and competing directly with China’s manufactured exports in 154 John Wong and Sarah Y. Tong

the developed country markets. Figure 8.2 does show some prima facie evidence for this view, even though the actual situation is less straightforward.15 Initially, China’s success in economic reform and development produced little impact on the ASEAN countries, because Sino-ASEAN trade was very small. For FDI, it had soon become apparent that China and ASEAN were not directly competing with each other.16 Indeed, it is suggested that China ‘appears to be crowding in rather than crowding out FDI in the region’.17

Figure 8.2: ASEAN-5 and China Competing for FDI, 1990–2008

Source: Foreign Investment Database, UNCTAD.

Still, many ASEAN economies were apprehensive about China’s economic rise, particularly in the aftermath of the 1997 fi nancial crisis. While many ASEAN countries were plagued by persistent economic diffi culties and domestic political instability, China continued its pursuit of economic modernisation, adding to ASEAN’s fears that Downloaded by [University of Defence] at 01:36 24 May 2016 15 For further discussion see Prakash Loungani, ‘Comrades or Competitors? Trade Links between China and Other East Asian Economies’, Finance & Development, June 2000. 16 Even by the late 1990s, when massive FDIs began to fl ow into China, there was no clear-cut evidence that China had ‘sucked’ in a lot of capital from the ethnic Chinese in Southeast Asia (John Wong, ‘Southeast Asian Ethnic Chinese Investing in China’, EAI Working Paper 15, 23 October 1998). 17 ‘China is Not crowding Out FDI from the Rest of East Asia, Experts Say’, Information Note (Press Information 2005), UNCTAD/PRESS/IN/2005/007, 7 March 2005. China’s New Patterns of Relationship with East Asia 155

they might eventually be left behind by China’s relentless rapid growth. More signifi cantly, China’s recent spurt of growth since its WTO accession transformed the pattern of economic relations in EA. In only a few years, China’s economic growth and export expansion have started to alter the region’s trade patterns and FDI fl ows. China has become the top trade partner of most of its neighbours. Its unique pattern of trade imbalance with its major trading partners has been the major driving force behind the region’s economic growth in recent years. As shown (Figure 8.3), China in 2008 continued to run substantial trade defi cits with its neighbours, including Japan, Korea, Taiwan, ASEAN-4 and Australia. China turned around by incurring a large trade surplus with the USA and the EU. Its trade defi cits with its neighbours also suggest that it has opened up its vast domestic market for their exports, thereby operating as an engine for their growth.

Figure 8.3: China’s Trade Balance with Selected Countries (US$ Bn)

Source: China Monthly Customs Statistics.

The economic implications of China’s trade pattern for both its

Downloaded by [University of Defence] at 01:36 24 May 2016 trading partners and the overall surplus can be even more profound. Since most of China’s exports are processed products or ﬁ nal products generally with low domestic value added and low domestic contents,18 China must import in order to export. Furthermore, over half of China’s foreign trade is handled by its foreign-invested

18 In 2008, processed products accounted for 47 per cent of the total export, a drop from 53 per cent in 2006. The decline was due to weaker demands from the US and EU markets due to the economic crisis, which greatly affected China’s processing trade). 156 John Wong and Sarah Y. Tong

enterprises (FIEs),19 particularly those from Japan, Korea, Taiwan and Hong Kong. Accordingly, China’s foreign trade has become a critical link in the East Asian supply chains and an important force for regional economic integration (Figure 8.4). It imports raw materials, intermediate products, machinery and equipment, and services from different EA economies, converting ‘Made-in-Asia’ into ‘Made-in-China’ products for exports. In this way, China operates as an important ‘integrator’ of regional and global manufacturing activities. Consequently, ASEAN’s old fears that the rising China would replace ASEAN’s manufactured exports and divert FDI from ASEAN have largely dissipated. As EA economies have become increasingly integrated into various international supply chains, the resultant new global trade–FDI–technology linkages will further bring economic growth to the region as a whole. China’s Regional Initiatives with ASEAN The increasing regional impact of China’s economic growth has been largely market driven. But such market-based economic integration has been further reinforced by Beijing’s far-sighted diplomatic policies,

Figure 8.4: China at the Centre of Global and Regional Production Networks Downloaded by [University of Defence] at 01:36 24 May 2016

Source: Authors.

19 In 2008, about 55 per cent of China’s total trade was conducted by FIEs. The proportion was signiﬁ cantly higher for IT products. China’s New Patterns of Relationship with East Asia 157

thereby lending strong institutional support to further forge China’s economic integration with the EA region. Mindful of ASEAN’s worries over the possible disruptive effects of its rapid economic rise, China has been under mounting pressure to dispel the ‘China threat’ fears by improving its overall relations with its ASEAN neighbours. The process started in 1992 when China formally became a “Dialogue Partner” of ASEAN. Prior to this, China took steps to defuse the issue related to the Spratly Islands in the South China Sea by agreeing to joint consultation and joint development with the relevant ASEAN states. During the 1997 Asian ﬁ nancial crisis, Beijing’s steadfast refusal to devalue its RMB was much appreciated by ASEAN as such a move could have further aggravated the region’s ﬁ nancial woes. But the single-most important step undertaken by China to upgrade its long-term relations with ASEAN is China’s FTA initiative. At the ASEAN–China Summit in November 2001, former Chinese Premier Zhu Rongji proposed the creation of a free trade area between China and ASEAN within 10 years. On 4 November 2002, China and the ASEAN countries signed a framework agreement to establish an FTA by 2010.20 On 29 November 2004, China and ASEAN formally concluded the Agreement on Trade in Goods of the Frame- work for tariff liberalisation under the China–ASEAN Free Trade Area (CAFTA).21 On 20 July 2005, China and ASEAN started to cut tariffs on more than 7,000 commodity items.22 China’s average tariff on ASEAN products was reduced from 9.9 per cent to 8.1 per cent in 2005 and further to 6.6 per cent in 2007. By 2010, 93 per cent of ASEAN products are expected to be tariff-free when the CAFTA is fully implemented.23

20 The Framework Agreement on Comprehensive Economic Cooperation, signed by the 11 nation states in Cambodia, set out a roadmap for trade liberalisation in goods and services for most countries by 2010 and for the less Downloaded by [University of Defence] at 01:36 24 May 2016 developed ASEAN nations (Cambodia, Laos, Myanmar and Vietnam) by 2015. On 1 January 2004, China further initiated the Early Harvest Programme with some ASEAN countries to cut tariffs on 500 agricultural products. 21 According to the Agreement, tariff liberalisation would be under a ‘normal track’ and a ‘sensitive track’. Duties on many commodity items under the normal track would be eliminated by 2010 (‘ASEAN Tariff-Cut Steps towards Free Trade’, China Daily, 30 November 2004. 22 ‘China–ASEAN FTA Necessary and Beneﬁ cial’, China Daily, 27 October 2006a. 23 ‘China, ASEAN Speed Up Tariff Reduction Process’, China Daily, 11 October 2006b. 158 John Wong and Sarah Y. Tong

The formation of the CAFTA signiﬁ es the creation of an economic region of nearly 2 billion consumers with a combined GDP of more than US$6 trillion upon its inception in January 2010. It offers an effective means for smaller ASEAN states to overcome their dis- advantage of smallness by pooling resources and combining markets. This would lead to greater economic integration between China and ASEAN and growth potential for both sides,24 turning the much touted ‘economic threat’ of China into an opportunity for ASEAN. In the short run, however, ASEAN has to deal with the initial risks of a potential trade diversion and related structural adjustment.25 With China continuing its growth, opportunities will certainly arise for ASEAN countries to exploit China’s vast growing market. Apart from its primary commodities, ASEAN’s resource-based products will be in great demand in China. The recent years have witnessed an upsurge of ASEAN’s exports of natural-resource products to China to satisfy the voracious demands of its manufacturing sector. Moreover, China is such a vast and differentiated market that different regions within China can offer different opportunities to different ASEAN producers.26 The two-way trade between China and ASEAN reached US$190 billion in 2007, with both ASEAN and China being the fourth-largest trade partner with each other.27 As the CAFTA scheme is gradually phased in, multinationals in the region will gradually restructure their supply chains and rationalise

24 For further discussion, see John Wong and Sarah Chan, ‘China–ASEAN Free Trade Agreement: Shaping Future Economic Relations’, Asian Survey XLIII (3), May–June 2003a. 25 Trade diversion occurs when members of a free trade grouping trade more among themselves than with other countries due to the lowering of trade barriers within the FTA. Structural adjustments occur because when intra-regional barriers are dismantled, industries will expand in some countries and contract

Downloaded by [University of Defence] at 01:36 24 May 2016 in others as they relocate in response to differences in factor endowments. FTA schemes generally lead to an uneven distribution of costs and beneﬁ ts across industries, sectors and different members of the FTAs. 26 Besides merchandise trade, the FTA also promotes trade in services. While China may have strong comparative advantage in manufacturing, its service activities are much less competitive relative to those in ASEAN, which would beneﬁ t many ASEAN exporters (see John Wong and Ruobing Liang, ‘China’s Service Industry (II): Gearing Up for WTO Challenges’, EAI Background Brief No. 163, 28 July 2003). 27 In 2008, Sino-ASEAN trade was US$231 billion in 2008. China’s New Patterns of Relationship with East Asia 159

their production networks by taking China and ASEAN together as a single market. This will lead to a redistribution of the regional FDI fl ows. In short, both trade and FDIs in the region should continue to grow under the impact of the CAFTA, which would be mutually benefi cial. As the fi rst of its kind, China’s FTA initiative with ASEAN had also created new impetus for the region to revitalise its integration process. Indeed, the CAFTA had exerted tremendous pressures on Japan and Korea to follow suit. Accordingly, in the wake of the CAFTA, Japan had to take action by signing a Framework for Comprehensive Economic Partnership with ASEAN.28 Korea has also taken a similar step. EA economies were virtually scrambling to set up bilateral FTAs or Economic Partnership Arrangements with each other or with countries outside the region.29 China, too, did not stop at the CAFTA. In June 2003, China signed the Comprehensive Economic Partnership Arrangement (CEPA) with Hong Kong (and subsequently with Macau).30 Prior to this, China had agreed to initiate a joint study with Japan and Korea on possible Northeast Asian economic cooperation. In October 2003, Premier Wen Jiabao attended the 9th ASEAN Summit in Bali, where he signed the Joint Declaration on the Promotion of Tripartite Cooperation of China, Japan and Korea.31 Of equal importance, Premier Wen Jiabao at the Summit also signed the Treaty of Amity and Cooperation (TAC) with ASEAN to express China’s goals of establishing a strategic partnership with

28 Technically, the Japan–ASEAN Framework is not an FTA but it can comprise Japan’s bilateral FTA arrangements with individual ASEAN member countries. 29 See JETRO homepage (http:www.jetro.go.jp/indexj.html, accessed 27 July 2011) for a list of FTAs in the region. 30 Downloaded by [University of Defence] at 01:36 24 May 2016 The CEPA is obviously aimed at the eventual integration of these Greater China economies after the inclusion of Taiwan in future (John Wong and Sarah Chan, ‘China’s Closer Economic Partnership Arrangement [CEPA] with Hong Kong: A Gift from Beijing?’ EAI Background Brief No. 177, 12 December 2003b). 31 This tripartite cooperation is not just for the promotion of economic cooperation and peace dialogue in Northeast Asia, but is also aimed at strengthening the process of ASEAN economic integration with other EA economies, i.e., a more concrete way of accelerating the realisation of the greater East Asian economic integration through the ASEAN Plus Three process. 160 John Wong and Sarah Y. Tong

ASEAN for ‘peace and prosperity’.32 The TAC’s most important principle is the provision that requires all parties involved to renounce the use of force in the settlement of any dispute. In concluding this treaty, China signalled its acceptance of ASEAN’s norms and values, and its willingness to play by the rules. ‘China wants to be seen as a responsible member of the international community.’33 Since India also followed China by concluding a similar TAC with ASEAN, Japan was once again under tremendous pressure of following suit. Besides the CAFTA initiative, China has also undertaken several sub-regional cooperation schemes to facilitate economic integration with relevant ASEAN countries. In 2006, Guangxi province took the initiative to develop the ‘Pan Beibu Gulf’ economic cooperation, which sought to promote a wide area of cooperation between China’s three provinces of Guangxi, Guangdong and Hainan and eight ASEAN states, including Vietnam, Cambodia and Thailand. In March 2008, Premier Wen Jiabao attended the Third Greater Mekong Sub- region (GMS) Summit, endorsing China’s active participation in the GMS development.34 In summary, China’s drive for globalisation and regionalisation goes hand in hand. Regionally, it places greater priority on cooperation with ASEAN, partly because of history and geography and partly to meet China’s speciﬁ c geopolitical needs. China’s rapid economic rise has been perceived as disruptive by some, giving rise to the ‘China-threat’ perception. In response, Beijing put forth its ‘peaceful- rise’ argument. It is making use of Southeast Asia as its best diplomatic space to demonstrate that China’s rise is indeed peaceful and benign. Towards a Sino-centric East Asian Economic Grouping? China’s economic rise has radically transformed the region’s growth

Downloaded by [University of Defence] at 01:36 24 May 2016 pattern and its landscape for trade and investment. What is the

32 Indeed, China is the ﬁ rst country to accede to ASEAN’s TAC, which is a distinctive regional code of conduct governing state-to-state relations within ASEAN (‘ASEAN, China Forge Strategic Partnership’, 10 August 2003, www.chinaview.cn, accessed 27 July 2011). 33 Isagani de Castro, ‘China Snuggles up to Southeast Asia’, http://www.atimes. com, accessed 27 July 2011. 34 For a further discussion of this topic, see LIM Tin Seng, ‘China’s Active Role in the Greater Sub-Region: A Win–Win Outcome?’ EAI Background Brief No. 397, Singapore, 6 August 2008. China’s New Patterns of Relationship with East Asia 161

future shape of China’s changing economic relations with the EA region? While talking about ‘China’s rise’, we are referring to China’s economic growth and its consequences for both China and other countries. For a more realistic projection of the future scenario, two immediate questions need to be answered: Is China’s dynamic growth sustainable? How will its neighbouring economies respond and adapt? Sustainability of China’s Dynamic Growth To begin with, China’s future growth cannot be consistently at double-digit rates. Much bigger and more mature, the Chinese economy cannot continue to grow at such speed without getting over- heated or running into physical and structural constraints. The more sustainable levels of long-term growth should be at the warranted rate of around 8 per cent, which is still high by all accounts. China’s high growth over the past three decades essentially stemmed from its exceedingly high levels of domestic investment, at over 40 per cent of the GDP, and equally high levels of domestic savings. For domestic investment, China will continue to have enormous need for infrastructural investment in transportation, communication and power plants. Take the railways as an example. While its network in 2007 amounted to 78,000 km, China’s target is to extend the total railway length to 100,000 km. Big cities like Beijing, Shanghai and Guangzhou are also building high-speed rails for inter-city links. Furthermore, many cities including Beijing, Shanghai, Guangzhou, Tianjin, Chongqing, Shenyang, Wuhan and Xi’an are busy expanding their subway systems. China also needs to invest a lot for environmental protection in the years to come. Moreover, with rapid urbanisation, there will be a growing demand for social infrastructure like housing, schools and hospitals. Thus ﬁ xed assets investment will continue to be a signiﬁ cant source of growth for

Downloaded by [University of Defence] at 01:36 24 May 2016 China at least up to 2020. China’s future growth should also be boosted by rising consumption. Rapid income growth, particularly for the urban population, has created a fast growing xiaokang (moderately afﬂ uent) society, with a rising middle class of over 200 million. Their appetite for durable consumption goods like automobiles is enormous. When the urban elites have satisﬁ ed their basic material consumption needs, they will go for consumption in services like travels and entertainment. Above all, by considering the historical patterns of EA economic growth, where countries had enjoyed decades of high growth, we can 162 John Wong and Sarah Y. Tong

be easily optimistic about China’s future growth potential. China’s present run of high growth has just reached 30 years, and it could continue for another one or two decades. China is a much larger and more diverse economy, and it should thus have much more internal dynamics to sustain higher growth for a longer period. Such powerful historical argument provides a simple but convincing support to China’s high-growth thesis. Even trying to maintain a more sustainable rate of around 8 per cent, China needs to strengthen its growing-inducing forces by stepping up its remaining market reform and structural adjustment efforts. In the long run, economic growth has to come from productivity improvement, i.e., by boosting efﬁ ciency. China’s industrial development has indeed reached a critical point whereby its manufacturing sector is badly in need of upgrading and restructuring from labour-intensive industries into more skill-intensive and higher value-added activities. Recently, there have been frequent reports of the shutting down of labour-intensive factories in the Pearl River Delta region and their removal to interior China because of rising wages, rising costs and RMB appreciation. As costs rise, some foreign enterprises have pulled out of China and moved to its neighbouring economies with lower labour costs such as Vietnam and Indonesia.35 Beyond growth in terms of GDP increases, China also needs to ‘ﬁ x’ many of its ‘growth problems’ in socio-economic areas such as unemployment, income equality and environmental degradation. Solving those problems may actually improve the prospects for future growth. A more fundamental issue is how far the Chinese economy needs to be structurally rebalanced. This means changing China’s basic growth strategy to base more on domestic demand, particularly domestic consumption, and less on exports, which have been hotly debated. But changes have been slow and gradual.

Downloaded by [University of Defence] at 01:36 24 May 2016 Responses from other EA Economies The challenges for other EA economies are also very important. Needless to say, these economies have to embrace China’s continued rise, politically and economically. It is also imperative for them to adapt and respond to China’s rise. Economically, this means that

35 ‘As Costs Soar, a “China Plus One Strategy”’, International Herald Tribune, 18 June 2008a. China’s New Patterns of Relationship with East Asia 163

these economies too have to step up their own structural adjustment not just to sustain growth, but also to capture greater beneﬁ ts of China’s dynamic growth. An IMF study warns that with China’s growth, its trade patterns will change and the China-based international and regional supply chains will also have to be changed. As China continues to upgrade its manufacturing activities, it will move away from simple assembly operations towards production with greater scope for using more domestic inputs, either through industrial upgrading or by extending backward linkages into interior China. Indeed, the government has already taken measures to discourage simple processing trade activities. Eventually, China would be less dependent on imported parts and components for its industrial production.36 Rising energy costs and the concomitant rising shipping costs will also affect the future pattern of production networks. Factories will be forced to outsource to nearby suppliers as far as possible and try to integrate the production linkages more domestically rather than internationally to cut down transport costs.37 In the years ahead, though, China will continue to import natural resources and primary commodities from Southeast Asia. But some ASEAN economies need to develop their own niches, e.g., moving into more resource-based activities, and upgrade their industries so as to stay competitive. More developed EA economies too need to step up their economic restructuring by constantly upgrading the technological sophistication of their industries to stay relevant, i.e., being part of the China-based production networks; by giving up low-tech manufacturing activities; and by moving into more service- oriented activities, particularly tradable services like ﬁ nance and banking, as well as economic and technological consultancies. Even tourism, community services, education and health services could be future sources of economic growth and regional cooperation.

Downloaded by [University of Defence] at 01:36 24 May 2016 An East Asia Economic Condominium? As China sustains its high growth, it is set to develop an even closer economic symbiosis with other EA economies so that the region as a

36 Li Cui, ‘China’s Growing External Dependence’, Finance and Development, September 2007. 37 ‘Rising Shipping Costs Alter Calculus of Trade’, International Herald Tribune, 4 August 2008b. 164 John Wong and Sarah Y. Tong

whole will continue to beneﬁ t from China’s economic rise. Economic activities in the region will then increasingly gravitate towards China, giving rise to a Sino-centric economic grouping in the region. Historically, dynasty China had long been a dominant player in the region. In the words of John K. Fairbank, China, through successive dynasties, used to perceive itself as the ‘centre of the world’ and imperial China had never treated its neighbours as equals.38 When China was weak, its neighbours invaded China or encroached on Chinese territory. When it became strong, it treated its neighbours as tributary states who were obliged to acknowledge China’s predominance by regularly sending tributes to Beijing. Will such a ‘Middle-Kingdom’ syndrome return? To begin with, for any regional grouping today, it is nearly impossible for any member to exert political and economic dominance over others. The emerging EA grouping may be ‘Sino-centric’ in an economic sense, but it is not to be dominated by China, politically or economically.39 Moreover, future economic integration will continue to be open and market-driven. It may further be argued that Japan will continue to be economically powerful and technologically advanced to signiﬁ cantly offset China’s growing predominance. It must also be emphasised that China is economically powerful only in the masses. Even when China’s total GDP surpasses that of the USA to become the world’s largest, Chinese per capita income will remain low by the standards of the developed world. China has to maintain its growth and development to cope with a whole range of domestic economic problems. Politically, the Chinese leadership will be mostly preoccupied with maintaining social stability and national unity. A great deal of energy of the Chinese central government is necessarily absorbed in coping with problems from the local governments. This means that

Downloaded by [University of Defence] at 01:36 24 May 2016 38 John K. Fairbank (ed.), The Chinese World Order, Cambridge, MA: Harvard University Press, 1968. 39 Even in imperial China, one may argue that the tributary relations between China and its smaller neighbours were actually a way of conducting formal diplomacy without real physical domination by China. In fact, the tribute- bearing missions in the past were, as noted by Fairbank, often a convenient ‘cloak for trade’ (John K. Fairbank, Trade and Diplomacy on the China Coast, Cambridge, MA: Harvard University Press, 1953). See also John Wong, The Political Economy of China’s Changing Relations with Southeast Asia, London: Macmillan Press, 1984. China’s New Patterns of Relationship with East Asia 165

politically, China as a country will remain inward-looking. At most, China will become more assertive on certain regional and global affairs along with the rising scale of its economic infl uence. All in all, the future architecture of the Sino-centric EA regional grouping is more likely to be a kind of economic condominium with China occupying a huge unit at the centre, whose activities at home affect all the other neighbours. But at the same time, other units would remain free to interact with the outside and continue to cultivate other sources of growth from outside the region. China’s economy may be the most important engine for the region’s economic growth, but it is not the only one for every EA economy. Such a pattern of regional growth may indeed be more viable and acceptable. New Paradigm in China’s Relations with EA Post-Financial Crisis? Since 2008, a worldwide fi nancial crisis has spread across the globe to give rise to the worst economic crisis since the 1930s. In October 2009, the IMF estimated that the global growth had moderated from 5.2 per cent in 2007 to 3 per cent in 2008. It is projected that the world economy will contract by 1.1 per cent in 2009 but resume a positive growth of 3.1 per cent in 2010, whereas advanced economies are expected to perform considerably worse than emerging economies.40 Countries in EA, including China, are far from immune to the negative shock especially due to their heavy reliance on external demand from the developed world. Indeed, China’s growth slowed down markedly to 9 per cent in 2008, from 13 per cent in 2007.41 The issue is whether the crisis will in any considerable way alter the making of China’s economic relations with EA countries. This seems unlikely. If anything, the crisis will accelerate the process of economic integration in EA and China’s rise in relative signifi cance. To begin with, China during the past year has fared better than other Downloaded by [University of Defence] at 01:36 24 May 2016 40 Source: ‘World Economic Outlook October 2009’, IMF. In 2008, advanced economies grew by 0.6 per cent while emerging economies by 6 per cent. The IMF also projected that advanced economies will contract by 3.4 per cent in 2009 and grow by a modest 1.3 per cent in 2010. Emerging economies, however, are expected to grow by 1.7 per cent and 5.1 per cent in 2009 and 2010, respectively. 41 It should be noted that other EA economies performed far worse than China. In the last quarter of 2008, Japan and the four NIEs all recorded negative GDP growth. 166 John Wong and Sarah Y. Tong

economies in and beyond the EA region and is expected to come out stronger when the world recovers from the economic doldrums. This is due in part to the quick and decisive responses China’s government put in place since November 2008, including an ambitious stimulus package of RMB 4 trillion. There have been various measures by both the central and local governments: focus on infrastructure investment, encouragement of domestic consumption, as well as assistance to export industries. As a large economy whose dynamic growth has based mainly on domestic demand, China also has much more room to absorb external shocks due to its size and diversity. Indeed, China’s economy is well on the way to full recovery as its growth reached 8.9 per cent in the third quarter of 2009, on a yearly basis, up from 6.1 per cent in the ﬁ rst quarter and 7.9 per cent in the second. The global crisis is also likely to accelerate the process of EA regional integration. As the advanced world is expected to have a slow recovery, governments in advanced economies are facing growing domestic challenges and thus there is an increasingly looming danger of rising trade protectionism. For the mostly open economies in EA, closer economic integration and interdependence has become essential to a strong economic future. Indeed, we have seen not only renewed commitment and concerted efforts to speed up regional integration initiatives, but also now proposals to tighten the regional grouping, such as the concept of the EA Community. Much remains uncertain, including China’s ability to sustain growth, its relations with other EA countries and its future role on the global stage. That China will be a more signiﬁ cant player is without doubt, as shown, for example, by the inclusion of China and other emerging economies in the G20 meeting and the proposed increase in voting rights by emerging economies in the World Bank and IMF. China has to prepare itself for such a role while the rest

Downloaded by [University of Defence] at 01:36 24 May 2016 of the world has to adapt and adjust. References Akamatzu, Kaname. 1962. ‘A Historical Pattern of Economic Growth in Developing Countries’, Developing Economies, No. 1. March–August. Barboza, David. 2008. ‘Costs Rising, China to Export Inﬂ ation’, New York Times. 31 January. China Daily. 2004. ‘ASEAN Tariff-Cut Steps towards Free Trade’. 30 November. China’s New Patterns of Relationship with East Asia 167

China Daily. 2006a. ‘China–ASEAN FTA Necessary and Beneficial’. 27 October. ———. 2006b. ‘China, ASEAN Speed Up Tariff Reduction Process’. 11 October. China View. 2003.‘ASEAN, China Forge Strategic Partnership. 10 August. www. chinaview.cn. Accessed 27 July 2011. de Castro, Isagani. ‘China Snuggles up to Southeast Asia’. http://www.atimes. com. Accessed 27 July 2011. Fairbank, John K. 1953. Trade and Diplomacy on the China Coast. Cambridge, MA: Harvard University Press. ——— (ed.). 1968. The Chinese World Order. Cambridge, MA: Harvard University Press. International Energy Agency. CO2 Emissions from Fuel Combustion Highlights 2009. http://www.iea.org/co2 highlights/CO2highlights.pdf. Accessed 27 July 2011. International Herald Tribune. 2004. ‘The Talk of the Town at Davos: China’. 26 January. ———. 2008a. ‘As Costs Soar, a China Plus One Strategy’. 18 June. ———. 2008b. ‘Rising Shipping Costs Alter Calculus of Trade’. 4 August. Li Cui. 2007. ‘China’s Growing External Development’, Finance and Development. September. LIM Tin Seng. 2008. ‘China’s Active Role in the Greater Sub-Region: A Win–Win Outcome?’ EAI Background Brief No. 397. Singapore. 6 August. Ohmae, Kenichi. 2001. ‘Asia’s Next Crisis: “Made in China”’, Straits Times. Singapore. 2 August. Roach, Stephen. 2002. ‘The China Factor’, Morgan Stanley Global Economic Forum. 14 October. UNCTAD. 2005. ‘China is Not Crowding out FDI from the Rest of East Asia, Experts Say’, Information Note (Press Information 2005). UNCTAD/PRESS/ IN/2005/007. 7 March. Wong, John. 1994. The Political Economy of China’s Changing Relations with Southeast Asia. London: Macmillan Press. ———. 1998. ‘Southeast Asian Ethnic Chinese Investing in China’, EAI Working Paper 15. 23 October. Wong, John and Sarah Chan. 2003a. ‘China–ASEAN Free Trade Agreement: Shaping Future Economic Relations’, Asian Survey, XLIII (3). May–June. Downloaded by [University of Defence] at 01:36 24 May 2016 ———. 2003b. ‘China’s Closer Economic Partnership Arrangement (CEPA) with Hong Kong: A Gift from Beijing?’ EAI Background Brief No. 177. 12 December. Wong, John and Ruobing Liang. 2003. ‘China’s Service Industry (II): Gearing Up for WTO Challenges’, EAI Background Brief No. 163. 28 July. World Bank. 1994. The East Asian Miracle. New York: Oxford University Press. ———. 2009. World Development Indicators. 168 Phung Thi Hue

9 China’s 21st-century Status and Challenges

Phung Thi Hue

China has undergone almost 30 years of reforms with outstanding achievements in many fi elds. It has gained impetus for its successful implementation of the ‘three-step’ development strategy in order to fulfi l its goal to build a comprehensive well-off society by 2020. It is affi rmed today that China has been rising, changing and developing unceasingly in the past 30 years. In that process, China has been expanding its international relations, and has become an important economic and political partner with many countries in the region and in the world. It is said that China will rise much more dramatically in the initial decades of the 21st century and become a strong economic and political competitor in the international arena. However, the last 30 years of transformation have also generated enormous challenges for Beijing, stemming from domestic diffi culties as well as relations with its immediate neighbours. It is in this context that this article seeks to examine how past successes and diffi culties are exposing China now to its next great mission and responsibility for presenting to the world its emerging status as a world superpower and obtaining world endorsement for this status. China’s Past Achievements The crucial decisions of the Third Plenary Session of the 11th Central Committee of the Communist Party of China (CPC) in 1979 opened Downloaded by [University of Defence] at 01:36 24 May 2016 a new development era for China. The reforms in the past 30 years have fundamentally changed the outlook and all aspects of life of this most populous country. China’s reforms have recorded many impressive achievements, the most notable of which including the following: Adjusting to a New Development Model Adjusting and evolving a new development model are the factors that have determined China’s successes. China has gradually shifted from China’s 21st-century Status and Challenges 169

a state-subsidised, centrally planned economy to a market economy with Chinese characteristics. The development doctrine of China has been accomplished step by step by testifi ed theories — from Deng Xiaoping’s theory, Jiang Zemin’s important ‘Three Represents’ Thoughts, to Hu Jintao’s scientifi c outlook on development. China has recognised progressive factors, indispensable rules of the market economy; emphasised the liberalisation and development of productive resources; approved a multi-ownership and multi-sector economy; and practised the multiple-income distribution regime, etc. This is an important breakthrough which has dramatically turned China from stagnation to dynamism, and helped China to integrate rapidly and intensively into the global economy and become a full member of the World Trade Organization (WTO) in 2001. China, therefore, has proved its increasingly important role in trade relations with other countries, especially in the Asian theatre. On the basis of the renovating development model, China has transformed the state functions from ‘economic management’ to ‘public service’. In the fi rst phase of the reforms, economic management was the most important function of the state apparatus for the emphasis was merely on economic development. The State held overwhelming power over the whole society in the mode of the ‘omnipotent state’. Meanwhile, the functions of social service and management were not properly performed. In 2002, in the Political Report of the 16th Central Committee of the Communist Party of China, four functions of the State were mentioned: economic regulation, market supervision, social administration and public service. In 2003, in the 5th administrative reform, China stated clearly that it would shift the functions of the state from ‘omnipotent’ to ‘limited’, from ‘intervening’ to ‘serving’. In the ‘Decisions by the CPC Central Committee on Building Harmonious Society of Socialism’, approved by the 6th plenum of the 16th Central Committee (8 October 2006), China defi ned the Downloaded by [University of Defence] at 01:36 24 May 2016 goal to build ‘a service state’ model, emphasising the demands for strengthening the social management and service functions of governments at all levels. This is regarded as the factor promoting the stable and healthy development of China’s society. Some Major Socio-economic Development Achievements It is apparent that economic development is the greatest achievement in China’s reforms. The annual GDP growth rate in 30 years (1979–2009) 170 Phung Thi Hue

averaged 9.82 per cent. China’s total GDP and import–export volume ranked the fourth and third in the world, respectively. Its foreign exchange reserves are the highest in the world, reaching US$2.13 trillion by the end of June 2009, increasing 17.84 per cent year on year. As a result of the economic development, the people’s living standards have been signifi cantly improved. The number of poor people in China decreased from 250 million in 1978 to 29 million in 2008. According to China’s offi cial statistics, its GDP per capita in 2008 reached US$3,300, ranking 100th among 200 countries and territories. This is an impressive fi gure in the economic development process of the world’s most populous country. In 1978, the GDP per capita of China was only US$224, one-tenth of that of the world (US$2,158); in 2007, the GDP per capita was US$2,590, one-third of that of the world (US$9,181).1 Although China remains a middle- income country in a certain aspect, its GDP per capita has proved that it is gradually emerging as a well-off country in the world. Along with economic achievements, China has better attended to the goal of balancing economic growth and people’s wellbeing. People’s wellbeing is of prime importance in China’s socio-economic development, as emphasised in the 17th National Congress of the Communist Party of China (2007). The important contents of people’s welfare reform are to train and foster human resources to meet the demands of national development; create jobs and stable income for employees; gradually restore fair income distribution and development opportunities; guarantee social welfare for all social strata; and maintain social security and order to guarantee a secure life for the people. This is the ultimate goal in the development process, which facilitates the goal of building a well-off society in an all- round manner in China by 2020. In the last 30 years, the quality of life of the majority of Chinese people has been signifi cantly improved.

Downloaded by [University of Defence] at 01:36 24 May 2016 The social climate and prospects are healthy and more stable than before 1978. This is a very important factor for China’s emergence and development. China’s Role and Status in Asia For its dynamic rise, China has enjoyed an ever-more important and indispensable status in relations with other countries in the region

1 http://blog.ifeng.com/article/3122325.html, accessed 9 March 2009. China’s 21st-century Status and Challenges 171

and in the world. It has established diplomatic relations with 38 nations in East Asia, South East Asia, South Asia and West Asia. These relations have been strengthened by political trust and by tight, comprehensive economic cooperation. China’s Economic and Trading Status in Asia With its economic potential, China has increasingly accelerated and expanded its economic and trade cooperation with other Asian nations. The goal that China has pursued is to make full advantage of its partners and to enhance its trade and economic status in the region. This can be reﬂ ected in the following aspects: First, comprehensive cooperation mechanisms have been established. It can be afﬁ rmed that China’s economic strength and potential have enabled China to accomplish its economic and trading cooperation mechanisms with Asian countries. Over 30 years of reform, China has signed more than 50 dialogue mechanisms, bilateral and multilateral economic and trade negotiations with Asian nations. These include the 10+1 cooperation mechanism (ASEAN+China), 10+3 (China, Japan, South Korea+ASEAN); a bilateral economic committee; and a bilateral investment cooperation mechanism. Besides, China has signed the FTA, and medium-term and long-term economic and trade development plans with many countries and associations such as ASEAN, Japan, South Korea, Pakistan. These mechanisms and plans have become factors guaranteeing the continuous and stable development of the bilateral and multilateral economic and trading cooperation between China and other Asian countries. Second, investment and trade cooperation has been accelerated. In the last 10 years, an increasing number of Asian countries have paid special attention to promoting investment and trade cooperation with China, regarding China as an important partner. The total import–export turnover between China and Asian nations increased Downloaded by [University of Defence] at 01:36 24 May 2016 from US$7.4 billion in 1978 to US$757.9 billion in 2007, accounting for more than one-third of China’s total trade volume.2 In 2008 alone, the total trade volume between China and Asian reached US$1,360 billion, increasing by 149 per cent compared to that in 2007. Exports reached US$663 billion, increasing by 16.6 per cent compared to that

2 http://www.scio.gov.cn/zt2008/gg30/06/200812/t248811.html. 172 Phung Thi Hue

in 2007; the import value was 703 billion, increasing 13.3 per cent compared to that in 2007.3 The largest trading partners of China in the last decade include Japan, ASEAN, South Korea and India. Moreover, China has long been an attractive market to Asian investors, especially those from South Korea, Japan and Singapore. The investment of Asian countries in China in 1982 was just US$180 million, which increased 66-fold in 2007 to US$12 billion. By the end of 2007, China attracted 120,000 investment projects from Asia, with the total contracted value of US$297.2 billion, and the actual investment volume of US$149 billion, increasing by 19.1 per cent and 19.5 per cent respectively. In terms of investment overseas in general and in Asia in particular, China made quite a late start. However, China’s investment has increased rapidly and dramatically in the recent years. According to offi cial statistics, its investment in Asian nations reached US$1.16 billion in 2002. In 2007, it was US$8.65 billion, increasing six-fold in just fi ve years. Especially, China’s actual investment in Asia in 2007 was US$2.44 billion, increasing by 252.5 per cent compared to that in 2006. Pakistan, South Korea, Singapore, Iraq, and Vietnam are the largest investment partners of China. In short, China’s role and infl uence in the regional economic cooperation has been rising. Most Asian countries are trying to fi nd opportunities to establish and expand trade and economic relations with China since China has not only a distinct market advantage but also great potential to develop vigorously as a result of its great achievements in reform and economic liberalisation. China is also more conscious of its increasing role and status in regional and global economic life. China’s Diplomatic and Political Status in Asia China’s global diplomatic strategy is developed from four fundamental Downloaded by [University of Defence] at 01:36 24 May 2016 axes: neighbouring diplomacy, regional diplomacy, superpower diplomacy and multilateral diplomacy, of which regional diplomacy is regarded as the fulcrum to promote China’s political status in the international arena. It is necessary to emphasise the following two most important aspects of China’s foreign relations with Asia.

3 http://yzs.mofcom.gov.cn/aarticle/g/date/i/200902/2009020602. China’s 21st-century Status and Challenges 173

Renovation of Foreign Policy has Promoted China’s Status in the Region Compared to Mao’s era, China’s foreign policy and strategic thinking under Deng and post-Deng leadership have undergone fundamental changes. With its ‘leaning-to-one-side’ (either the Soviet Union or the USA) policy, China has actively introduced a multilateral foreign policy. Its goal is to take full advantage of the support and cooperation of other countries to promote its development and enhance its status on the international stage. China has advocated ‘improving and developing relations with developed countries, strengthening the friendship relations with neighboring countries, strengthening the solidarity with the third-world countries, actively participating in multilateral diplomatic activities, and promoting China’s role in the United Nations’.4 Responding to the world concern regarding ‘China threat’, China’s leadership proposed the ‘China Peaceful Rise’ view (then renamed the ‘China Peaceful Development’ view), to build a ‘harmonious world’. According to Shiyin Hong, ‘China Peaceful Rise’ is the ﬁ rst and foremost in the region; the most important forum is Asia, especially East Asia, then Central Asia and South Asia, etc. This forum aims to create opportunities for China to participate in the ‘multilateral security mechanism in some fundamental sub- regions, as well as the multilateral economic cooperation mechanism in Asian sub-regions’.5 The concept of ‘harmonious world’ proves both China’s peaceful diplomatic thinking and its idea to establish a new world order. Therefore, China certainly has to prove its role as a superpower in international relations, primarily its role in the region. The renewal of foreign policy and thinking has enabled China to assert its increasingly important role regionally and globally. China has organised and maintained regular high-ranking forums and dialogues with regional and international institutions such as Downloaded by [University of Defence] at 01:36 24 May 2016 the Shanghai Cooperation Organization, China–EU Dialogues, China–ASEAN Summit, etc. Dialogues between a big country and a group of countries are peculiar in international relations; this shows the indispensable status of China in the international arena.

4 Political Report at the 16th National Congress in 2002, Beijing: People Publisher, 2002. 5 Shi Yinhong, The Fundamental Characteristics of World Politics and China’s Strategy in Early 21st Century, China People’s University Publisher, 2006. 174 Phung Thi Hue

Extending China’s Infl uence in the Region It can be said that China’s diplomacy has the status of a superpower, and China has exerted ever greater infl uence on countries in the region and in the world. China not only takes every opportunity to expand and improve its relations with other countries but also actively establishes new channels to enhance its status among other countries as well as groups of countries. Since the last decade of the 20th century, China and Japan have been competing for status and infl uence in the region. As a result, the Sino–Japanese relationship has been characterised as ‘hot economy and cold politics’ in the fi rst years of the 21st century. Due to changes in Japanese politics in September 2006 and mutual efforts, the Sino–Japanese relationship is now defi ned as ‘Partnership, Friendship and Cooperation for Peace and Development’. However, the competition for political roles in Asia is still pressing in the Sino–Japanese relationship. In fact, although China’s economy in many aspects is still weaker than Japan’s economy, China’s political status has surpassed that of Japan. The Sino–Indian relationship has not yet achieved any important breakthrough, and has been lukewarm and not well established on mutual trust. Entering the 21st century, China has actively established a ‘future-oriented cooperative partnership’ with India, while maintaining a traditional close relationship with Pakistan. When India gains impetus as a powerful nation, China considers promoting and maintaining a friendship and cooperative relationship with India. Obviously, the two countries are striving to improve their relationship, especially positively building a peaceful and stable borderline. In the Northeast Asia, China is an important player in its relationship with other nations. China always plays a positive role in the six-party round talks on the North Korea’s nuclear issue. China has strengthened and improved its relations with South Korea with

Downloaded by [University of Defence] at 01:36 24 May 2016 the motto of ‘strategic cooperative partnership relations’. It attempts to consolidate and improve its relations with both South Korea and North Korea, and plays the role of a moderator in the relations between the two countries. The role and status of China in Southeast Asia, in its bilateral and multilateral relations with ASEAN countries, is even more striking. With the goal of taking advantage of mutual relations, since 1997, China and ASEAN have established the ‘China–ASEAN partnership of good neighbourliness and mutual trust’ toward the 21st century. On its side, China has actively and positively proposed the 10+1 China’s 21st-century Status and Challenges 175

mechanism (in the framework 10+3); exerted great efforts to establish the China ASEAN Free Trade Area (CAFTA), participated in the ASEAN Regional Forum (ARF), etc. At present, China has defi ned well its important role in the economic, political and cultural cooperation with ASEAN. At the same time, China has also defi ned bilateral relations with ASEAN member countries. For example, China and Vietnam, since 1999, have established a relationship with the ‘16-word’ motto ‘friendly neighbourliness, comprehensive cooperation, durable stability and future-oriented vision’. Since 2008, the Sino–Vietnam relationship has developed into a ‘strategic cooperative partnership’, following the ‘16-word’ motto and ‘four- good’ spirit (good neighbours, good friends, good comrades and good partners).6 Since 2007, China has been positively and actively developing the plan to establish the ‘Pan-Tokin Gulf Economic Zone’ in order to foster comprehensive and intensive cooperation relations with ASEAN nations. The most strategic goal of China is to reach out and fully employ the advantages of ASEAN nations, asserting its leading role and status in this potential dynamic region. There has been strong evidence that China has recorded many optimistic achievements in its comprehensive multilateral multidimensional relations with ASEAN. In short, with the ‘mutual benefi t, win–win’ spirit and its great potential, China has reaped many achievements in international relations, especially in its relations with Asian nations. In a certain aspect, although China has to compete with regional countries such as Japan, India and South Korea, it is increasingly asserting its role, status and power in its relations with each country as well as with the whole region. Its strong development has facilitated its expansion and the promotion of foreign relations; on the other hand, comprehensive, intensive and extensive multilateral cooperation between China and

Downloaded by [University of Defence] at 01:36 24 May 2016 the region and the world has given impetus to stronger and more stable development. These two factors contribute to raising China’s status in the international arena. Challenges of Development and Integration China has entered a new stage of development with overwhelming advantages and an increasingly important role and status. However, in the coming development stage, together with many unprecedented

6 ‘Vietnam–China Statement’, People Daily, Vietnam. 176 Phung Thi Hue

favourable opportunities, China has to face a number of diffi culties and hard problems which challenge the reform and open-door policy, urging China to seek timely measures to address and overcome these problems. Domestic Aff airs Social Problems Thanks to vigorous economic development, people’s living standards have been signifi cantly improved. However, the gap between the rich and the poor is still a pressing problem for China in the coming time. There is also a huge development gap between different parts of the country, especially between the eastern region and the western region, between the urban and the rural areas. The average personal income in cities is three, four or even fi ve times as high as that in the countryside; people’s quality of life in the western region is much lower than that of people in the eastern region, especially that of coastal cities such as Shanghai, Shenzhen, Guangzhou, etc. This has created prospective China as ‘One Country, Two Societies’. It means that in the same country, there are two contrastive living standards and social development levels: a prosperous and well-off society versus a backward and poor one. This also results in the development and existence of an inappropriate social stratum structure, currently known as the ‘pyramid’ model in China. According to the model, the poor lower class far outnumbers the middle class; the majority of labourers, especially farmers and low-income workers with unstable jobs, are poverty-stricken. These problems certainly generate certain confl icts which are not easy to moderate among the social strata, threatening social stability and even hindering the next reform stage. It is questionable whether the achievements of reform are just for one section of the Chinese population. So, how is the service of the poor labourers rewarded? The rich–poor gap is common and Downloaded by [University of Defence] at 01:36 24 May 2016 undeniable in every economy. For a large country like China with 1.3 billion people, this problem becomes even harder to solve. Facing this situation, the 17th National Congress of the Communist Party of China stressed the ultimate importance of the view of ‘scientifi c’ development to build a harmonious society of equitable interests. However, bridging the income gap seems a faraway goal for China in the future. According to some specialists of Chinese Studies, some abnormal phenomena occur in China’s society: increasing confl icts between China’s 21st-century Status and Challenges 177

different social strata, unstable income of labourers, insecure jobs, and unsecured healthcare; incomplete old-age medicare; and social insecurity. Therefore, the social development of China is subject to higher cost.7 A number of public-opinion polls in China show that social insecurity is of prime concern of all potential risks in China.8 It is urgent to address some pressing social problems. This is also the toughest challenge to the ongoing modernisation in China. Problems in the Administration and Operation of the State Apparatus In the reform process, China has taken a very important step, that of state administration reform. The goal of the reform is to narrow business management functions and expand the social service functions of the state apparatus. The criterion is to shift the power of the state from ‘omnipotent power’ to ‘limited power’, from ‘intervening’ to ‘serving’, in order to enhance the capacity and effi ciency of state governance. However, there remain a number of problems to be solved. First, the level of bureaucratic intervention in business and production is still high, especially in the operation of state-owned enterprises (SOEs). This is the remnant of the centrally planned mechanism which is far from easy to be eliminated as it is related not only to the old work habits and manners but also to the interests of certain offi cials in the state apparatus. Second, due to the prevailing economic management function, China has not properly attended to the social service function of the state. This results in ineffi cient and insuffi cient social policies. For example, despite its reform achievements, China’s welfare system, especially public utilities, is far from comprehensive. Third, the state administrative management is still cumbersome and ineffi cient. Currently, China is still regarded as one of countries

Downloaded by [University of Defence] at 01:36 24 May 2016 which do not have modern public administration. Administrative procedures are complicated and burdensome; and management policies, especially the ﬁ nancial management, are not tight enough, and legal loopholes provide good chances for prevalent fraud and corruption. Moreover, the state supervision remains weak,

7 Hu Angang, Roadmap of China’s Rising, Beijing University Publisher, 2007. 8 Phung Thi Hue, ‘Some Issues about the Social Development Model and Social Development Management in China’, Chinese Studies Review, No. 4, 2007. 178 Phung Thi Hue

while social supervision encounters several mechanism obstacles. Therefore, authorities and citizens fail to check and uncover negative phenomena in administration in a timely fashion. This is one of the causes of the increasingly serious and complicated issue of corruption. Problems in Agriculture, Rural Areas and Farmers (‘Tam nong’) China’s rural areas have improved in leaps and bounds, and the poverty has been largely solved. However, China has still been facing challenges in its rural development and modernisation process. As mentioned above, there is a big gap between the quality of life, development level in rural areas and that in urban areas. Most rural areas in China, especially the western and the central regions, are still backward and underdeveloped. Rural social welfare, especially the public healthcare system, is insuffi cient, and farmers have to face many hard-to-solve problems such as ‘unaffordable examination and expensive treatment’. Education investment and quality in rural areas is generally low, and is unable to meet the demand for human resources in developing modern rural life. Moreover, due to low incomes and unstable jobs, the rural-to-urban migration for employment is increasing. This generates two problems: the lack of main force labour in agricultural production, and the stratifi cation in rural population. Under the negative infl uence of the ongoing global economic crisis, many Chinese farmers who fail to keep their jobs in cities return to the countryside where their farmland has been transferred to others. Rural life has, therefore, become more diffi cult and insecure. The situation results from a variety of factors, particularly the slow modernisation of agriculture and rural areas, unchanged dualistic mechanism and large proportion of agriculture in China’s employment structure. It can be argued that this is a huge, diffi cult challenge facing China in its development and integration, especially when China has Downloaded by [University of Defence] at 01:36 24 May 2016 to meet an increasing number of regulations of the WTO. Foreign Aff airs The role and status of China in the last decade of the 20th century and in fi rst years of the 21st century has improved unprecedentedly. Most countries and regions are interested in establishing and expanding their cooperation with China in various aspects. However, China will still face undeniably high pressure in the coming time. China’s 21st-century Status and Challenges 179

Gaining and Building Trust of Other Nations and Regions The ‘China threat’ theory was once the centre of worldwide heated debate. Currently, when China has established many strategic partnerships with Asia, Europe, Africa and America, the debate has somewhat thawed. Especially after China declared the building of a ‘harmonious world’, other countries feel more secure about the ‘emergence’ of China. However, these countries do not place absolute trust in China. There is a question of common concern: How will they beneﬁ t or suffer from a ‘Rising China’, among those countries which have direct interests with this great power. Therefore, gaining and building trust in a ‘Peaceful Rising China’, which contributes to building a ‘harmonious world’, is an urgent task and a great responsibility for China. Creating a True Image of China It can be said that China has made a much better impression than ever before. A rising country full of potential has gradually become a considerable counterbalance with all superpowers in the world. It is reckoned that a new world order, in which China plays a leading role, may be created. Yet, China still cannot avoid some historical events or arising problems in its relations with neighbouring countries. They include the nuclear issue with North Korea, sea border and resource disputes with Japan, island and resource disputes with some ASEAN countries in the South China Sea, and border disputes with India. Other countries, especially some small ones, always expect China’s right and proper behaviour with the status of a superpower. It is a legitimate demand of other countries as well as a responsibility of China. It is a high-powered job for China, because China has to seek ways to satisfy its own interests and those of other countries according to the criteria of peace, mutual beneﬁ ts and win–win situations. The failure to do the job may make it hard for China to establish and

Downloaded by [University of Defence] at 01:36 24 May 2016 enhance its image and status in the international stage. Addressing International Factors in Taiwan Issue Since the Guomindang (Kuomintang) regained its power in the Taiwan political arena in 2008, the relations between two sides of the Taiwan Strait have been adjusted and improved unprecedentedly. Direct dialogues between the Chinese mainland’s Association for Relations across the Taiwan Straits (ARATS) and Taiwan’s Straits Exchange Foundation (SEF) have paved the way for and consolidated 180 Phung Thi Hue

mutual relations. However, in the long term, Taiwan is still a sensitive matter in the relations between China and other countries, especially in the Sino–US relations. China insists on the unifi cation of Taiwan in the ‘One Country, Two Regimes’ principle. However, the question of when and how to realise it are not determined (because China once stated that it would not exclude violent measures if Taiwan declares independence or delays unifi cation).9 It can be said that Taiwan is still a problem that may hinder China in its competition with the US and Japan on the international stage. This is considered as a great challenge to China in its competition for international status. Conclusion Changes in national development policies and foreign policies as well as achievements in the past 30 years of reform have raised China’s status and role unprecedentedly at the international stage. The world today recognises and endorses the fact of the rising of China. Together with economic growth, China has fully employed favourable opportunities to establish and expand its cooperative relations with other countries in various aspects. With the role of a superpower, China has promoted comprehensive and effective international cooperation relations in the ‘win–win’ principle. Almost all nations are keen to expand and promote their relations with China. However, China could not have avoided some of the major challenges that it has faced in its domestic life and foreign relations. These challenges include some obstacles to China’s reform and modernisation process, infl uencing the image of a major country like China. As the world takes increasingly greater interest in studying the development potential of China and experts work hard to crystal- gaze and predict China’s future role in the 21st century, China has come to be an extremely important enterprise for every nation, every region and the world as a whole since its potential and international

Downloaded by [University of Defence] at 01:36 24 May 2016 status exert direct impacts on the foreign policies of other countries, especially countries in the region. The most important challenge for China, therefore, is to create its true image and build the trust of the world. And other nations need to understand China fully thoroughly so as to develop long-term and efﬁ cient cooperation relations.

9 Political Report at the Chinese Communist Party’s 16th National Congress in 2002, Beijing: People Publisher, 2002. China’s 21st-century Status and Challenges 181

References A Collection of Speeches on Forum on Pan–Beibu Gulf Economic Cooperation 2007. 2007. Guangxi Normal University Press. Center for Political Research, Shanghai Academy of Social Sciences. 2007. The Political Development Process in China (China in 2007). News Publisher. Hu Angang. 2007. Roadmap of China’s Rising. Beijing University Publisher. http://blog.ifeng.com/article/3122325.html. Accessed 9 March 2009. http://www.scio.gov.cn/zt2008/gg30/06/200812/t248811.htm. http://yzs.mofcom.gov.cn/aaticle/g/date/i/200902/2009020602. Hujintao. 2007. Political Report at the Chinese Communist Party’s 17th National Congress in 2007. Beijing: People Publisher. Jiangzemin. 2002. Political Report at the Chinese Communist Party’s 16th National Congress in 2002. Beijing: People Publisher. Liu Tongchang. 2007. Harmonious Philosophy. Tsingdao Publisher. Liu Yingjie (ed.). 2008. Study Documents on China’s Development Strategy and National Fundamental Policies. The Central Party School Publisher. Phung Thi Hue. 2007 ‘Some Issues about the Social Development Model and Social Development Management in China’, Chinese Studies Review, No. 4. Political Report at the Chinese Communist Party’s 16th National Congress in 2002. 2002. Beijing: People Publisher. Political Report at the 16th National Party Congress of Chinese Communist Party. 2003. Hanoi: National Political Publisher. Shi Yinhong. 2006. The Fundamental Characteristics of World Politics and China’s Strategy in early 21st Century. China People’s University Publisher. Vo Dai Luoc (ed.). 2004. China’s Accession into WTO: Opportunities and Challenges. Hanoi: Social Sciences Publisher. ‘Vietnam–China Statement’, People Daily. Vietnam. Xu Ningning (ed.). 2003. China–ASEAN Free Trade Area. Hongji Publisher. Yu Changjing (ed.). 2002. China after the 16th Congress. People Publisher. Zhang Qin. 2008. Studying the Development of Civil Society Organizations in China. People Publisher. Zhu Huayou. 2006. Why China Reforms Successfully? Chinese Economic Publisher. Downloaded by [University of Defence] at 01:36 24 May 2016 182 Tomohiko Taniguchi

10 China’s Rise: Changing Contours of Japan’s Foreign Policy

Tomohiko Taniguchi

The Yukio Hatoyama government in Japan, inaugurated on 16 September 2009, has explicitly embarked on the strengthening of friendly relations with China. Japan’s foreign policy in recent years, cautious lest a rising China should close in on Japan’s strategic space, has sought to take safeguards against this by uniting with maritime democratic powers. Here lies the reason why under the Junichiro Koizumi and Shinzo Abe administrations Australia and India emerged as Japan’s de facto allies. However, logically, the diminishing of such apprehension towards China in the Hatoyama-led Democratic Party of Japan (DPJ) administration necessarily undermines the position in which a risk hedge against China is regarded as necessary. This has given rise to concerns that the strategic value that India holds for Japan will also diminish accordingly. The summer of 2007, when visiting Prime Minister Shinzo Abe, in a speech to the Indian Parliament, resoundingly afﬁ rmed the closeness of Japan and India to exuberant applause and a standing ovation is already a distant memory. The track towards the formation of a Japan–India strategic alliance, which had gained temporary momentum, is for all practical purposes in danger of being shelved under the DPJ government, which is likely to push pro-Beijing

Downloaded by [University of Defence] at 01:36 24 May 2016 elements further to the forefront than ever before. At any rate, it will most certainly be historically ground-breaking that in the autumn of 2009 Japan realised a change of government, entrusting the administration of the country to political forces seeking relationships with the USA and China at the same degree of distance (see Figure 10.1). Maintaining relations with the USA and China, both important countries for Japan, at the same degree of distance seems at ﬁ rst glance to be based on a reasonable and rational notion. However, the ways in which such a move would transform the current Changing Contours of Japan’s Foreign Policy 183

Figure 10.1: Relationships

Source: Author. situation — that is, what sort of revisionism this would entail towards the status quo — can be readily understood by means of the simple fi gures above. The triangle on the left depicts the current state of affairs. With one side shorter than the others, this represents the alliance between Japan and the US and the closeness of their relations. In contrast, the triangle on the right is virtually equilateral. It is this fi gure that illustrates the relations with the US and China sought by the DPJ and its supporters. As these fi gures show, pursuing relations with the US and China at an equal distance will, fi rst of all, lead to increased distance between Tokyo and Washington in relative terms compared to the current state of affairs. Thus, a foreign policy that makes the US and China equidistant can in fact only be another name for a policy of increasing the distance between Japan and the US. At sometime in the near future, Asia will experience a notable intellectual–historical event. This is when China will oust Japan from its position as the largest economy in Asia and second-largest economy in the world (in terms of nominal GDP), a position Japan has held for the past 40 years. This can be referred to as an intellectual– Downloaded by [University of Defence] at 01:36 24 May 2016 historical event inasmuch as, in the eyes of the non-Asian world, no other development represents Japan’s ebb and China’s rise in fortune in Asia so symbolically. In the subjective senses of self held by the Japanese and the Chinese, this event will be a turning point having even greater signifi cance. If it were the case that ever since the modern era arrived in Asia, one of the factors supporting the self-image of the Japanese has been pride in themselves as unmistakably the lead runner in Asia, then the implication of fi nally losing to China its position of ascendancy with regard to scale of the economy is one 184 Tomohiko Taniguchi

that must be regarded as ranking high within the context of not only Japanese post-war economic history, but also in modern Japan’s development overall. It would also be signifi cant as such an event would signify a ‘squaring of accounts’ after some 100 or 150 years within the subjective perspective of the Chinese, who regard the modern era as one of humiliation, beginning with the 1842 Treaty of Nanking and the 1894 defeat in the Sino–Japanese War and loss of Taiwan. There are those whose self-image will defl ate — that is, the Japanese — and at the same time those whose self-image will infl ate — namely, the Chinese. How will the actions of Japan appear from the perspective of the latter, as Japan seems poised to pursue a distancing from the US and greater closeness to China now, at exactly the time that the rise of China is about to reach one of its highest points? It can be imagined that these actions will appear as if Japan spontaneously applied for membership at an exclusive club that China was managing. Upon refl ection, it will be recalled that from ancient times, Imperial China had been grounded in the ‘pre-Copernican’ interpretation of the world that it was an immobile centre around which other celestial entities revolved. It came to hold a mindset in which China itself sat at the centre of gravity and peripheral countries and peoples were regarded as satellites. As subsequent sections of this article will explore, it was Japan that maintained its independence while opposing such Chinese notions, and Japan was virtually the only such anomaly in Asia in that regard. In light of this history, Japan’s orientation of distancing itself from the USA while growing closer to China has the potential to trigger nothing less than a ‘Copernican’ revolution in both the history of Japan and the history of Sino– Japanese relations. Introducing the conclusion of this article here on the basis of the outline given above, Japan as seen from India is even now on the verge 1

Downloaded by [University of Defence] at 01:36 24 May 2016 of becoming ‘lost’ to it. India should not look on from the sidelines, but rather intensify an approach of actively drawing Japan closer. The relationship eagerly awaits vigorous initiatives by India, including summit-level diplomacy and frequent mutual visits at the ministerial level and conducting closer and regularised Japan–India joint maritime training exercises, or incorporating the US and

1 This refers to the ‘Who Lost China?’ debate that took place in the USA after the end of World War II. Changing Contours of Japan’s Foreign Policy 185

Australia, proposing summit talks or working-level meetings among the four great maritime democratic powers of Australia, India, Japan and the US. Economic relations between Japan and India have long had ample room for development. Fortunately, even under the DPJ government, the image of India among the Japanese political leadership is not bad. Active approaches from India will make it possible to expand the outlook of the Hatoyama administration and make it strategic, while also engendering a desirable balance vis-à-vis the policy of growing closer to China. This sets forth the conclusion of this article in advance of the main text. I This article will hereinafter (a) once again discern the basso continuo in Japanese perceptions of China and confi rm that Japan was consistently an ‘outlier’, so to speak, in the East Asian order centred on Imperial China, then (b) analyse the infl uence that China as a revisionist power has on Japan, and fi nally (c) trace the manner in which Japan and India forged a closer relationship over several years after roughly 2005. In particular, this discussion will examine the course to be pursued under the concept of the ‘Arc of Freedom and Prosperity’ formulated within Japanese foreign policy during Taro Aso’s tenure as Foreign Minister and reconfi rm the importance of India taking on that concept. The conclusion laid forth earlier will appear naturally evident once this analysis is completed. In other words, the course down which Japan and India are advancing together can only be one-way, and therefore a deepening of relations across all fi elds, from foreign policy to military affairs to the economy, should be pursued. I worked for the Ministry of Foreign Affairs of Japan for three years beginning

Downloaded by [University of Defence] at 01:36 24 May 2016 in the summer of 2005, making a transition from my original work as a journalist. During that time, I crafted numerous speeches on foreign policy for Foreign Minister Taro Aso, Prime Minister Shinzo Abe, and others, including the speech mentioned earlier in which the concept of the ‘Arc of Freedom and Prosperity’ was put forth. It will go without saying that this article is not intended to represent or suggest in any way the institutional viewpoints, whether past or present, of the Ministry of Foreign Affairs of Japan or the Japanese government. Moreover, this article does not represent the positions 186 Tomohiko Taniguchi

of any sort of organisation or institution with which I am currently afﬁ liated. The contents of this article are my responsibility alone, including errors in accounting for various likelihoods. References to sources have been kept to a minimum, in keeping with the nature of this article as seeking to be a contribution to polemics. Footnotes, instead, provide explanations to supplement the main text. The Basso Continuo of Japan’s Perceptions of China The Japanese are amongst the earliest practitioners of what modern day political scientists would call an act of ‘identity politics’ vis-à-vis China. It was in circa 607 AD when Prince Regent Shôtoku on the Japanese Emperor’s behalf sent the Emperor of China’s Sui Dynasty ofﬁ cial correspondence, which memorably stated the following:

The Emperor ruling a country of the rising sun hereby sends a letter to the Emperor of a country of the setting sun, enquiring of his well being.

In so doing, the Japanese leader let it be known to his Chinese counterpart that in their East an emerging power unwilling to succumb to the Chinese imperial world order was in the making. The episode in the correspondence sent by Prince Shôtoku is widely remembered by the Japanese even in the present day, some 1,400 years later, as a de facto declaration to China of Japan’s independence. People who have memorised the language contained in that letter are also by no means uncommon amongst the average Japanese. Herein lies the crux of the issue. That is, the point worth noting is not so much the historical fact that in that era Prince Shôtoku sent such correspondence to the Sui, but rather that this episode has been handed down to the present day and makes up part of the collective

Downloaded by [University of Defence] at 01:36 24 May 2016 memory of this ethnic group and is a prevailing narrative in deﬁ ning who the Japanese are. This is because the Japanese have been, so to speak, warning themselves and continuously avoiding the inﬂ uence of China through retelling this episode and committing it to memory. In any event, the actions of Prince Shôtoku made a stark contrast to what Korea in the same century chose to do. In the 7th century the Koreans en masse willingly chose to adopt names à la Chinese. It brought about a tradition still unbroken in today’s Koreas to use one Chinese character for their surnames and two for their given Changing Contours of Japan’s Foreign Policy 187

names, a practice that has never taken root in Japan.2 Once again, the Prince Regent’s episode would constitute a narrative which even today makes a core part of Japanese self-image that ‘Japanese-ness’, whatever it could mean, can be defi ned by a simple belief that the Japanese are uniquely different from the Chinese. Pax Sinica, the hegemonic order of the Chinese civilisation, was not dissimilar to the solar system, with the Middle Kingdom being the sun and the ultimate source of both legitimacy and authority, and the peripheral nations planets that shine only when refl ecting the sun’s light. In that system it was as if Japan was the remotest Pluto, separated by rough waters. Like Pluto, it was very much open to question if Japan was a full-fl edged planetary being in Sino-centric orbit. The suzerain tributary relationship that was common between China and its peripheral nations did also take shape between China and Japan, but only for extremely limited time spans, at one time in the 5th century, the other for several decades in the 14th and 15th centuries.3 While its political power has fl uctuated, the Japanese imperial family has never ceased to exist, making it amongst the

2 I can share the following real-life experience. A young diplomat from China’s foreign ministry, taking a long look at the name printed on my business card, remarked, ‘This couldn’t possibly be your name.’ I, like many Japanese, have a surname and a given name, each comprised of two Japanese characters. The diplomat may have thought this impossible for countries in the sphere of Chinese historical inﬂ uence, but insofar as this provides proof of the opposite, namely that Japan is not in a pure sense a constituent part of that Chinese cultural sphere, this was an intriguing episode. 3 According to Takeshi Hamashita (Giovanni Arrighi, Takeshi Hamashita and Mark Selden, The Resurgence of East Asia: 500, 150 and 50 Year Perspectives, London: Routledge, 2003, p. 20), [I]n the China-centred order, tributary states sent periodic tribute missions to Downloaded by [University of Defence] at 01:36 24 May 2016 the Chinese capital, and each time rulers of tributary states changed, China dispatched an envoy to ofﬁ cially recognize the new ruler. In unsettled times, Chinese forces sometimes intervened to prop up or enshrine a ruler. Tribute relations were not only political but involved economic and trade relations as well. In exchange for the gifts carried to the Chinese court, tribute bearers received silk textiles and other goods from the emperor. Specially licensed traders accompanying the envoy engaged in commercial transactions at designated places in the capital. This is exactly what Japan did not do. 188 Tomohiko Taniguchi

oldest houses in the world. This also sets Japan quite apart from China. Numerous other accounts attest that throughout their history the Japanese have been a people of Sino-skepticism, making their nation a noticeable outlier in the order of Pax Sinica, a fact which gave them a source of collective pride while to the Chinese, a reason of contempt, for which the latter looks down upon the former even today. The greatest irony in East Asia’s modernity is that while the Middle Kingdom and its planetary tributaries failed to modernise, the outermost non-tributary country of Japan alone made it possible fi rst to industrialise itself, second to compete against the Russians and other western powers, third to annex Taiwan, which the Chinese viewed as a critical part of China, and fi nally to put the Middle Kingdom in a state of ultimate collapse. As can be understood from this attempt to explain this perception of China by the Japanese by bringing up a historical fact from 1,400 years ago, Sino–Japanese relations do not fi t neatly into analyses of modern international relations theory developed in the European context, as is the case in general when discussing China and its peripheral countries. First of all, international relations theory fi ctitiously postulates a system in which each nation of the world is equal as a sovereign state, yet the concept of peerage has most likely never been incorporated into the Chinese worldview. It has always been a hierarchical order, with China itself at the centre. In that sense, an imperial order has been a notion intrinsic to China. Second, as a consequence to that fact, it is diffi cult for the Chinese to have the idea of forming alliances with other countries. An alliance is a relationship formed by nations equal in terms of their fundamental might and world outlook. This runs counter to the Chinese way of thinking that emphasises hierarchy. The failure to understand this point suffi ciently, a situation often seen among western scholars,

Downloaded by [University of Defence] at 01:36 24 May 2016 makes it impossible to grasp the fact that a NATO-like framework is unattainable in Asia.4 The psychology behind the Chinese dislike

4 The Hatoyama-led DPJ administration in Japan calls for an East Asian community and an East Asian regional currency union, and it is for the very reason noted here that it has been unable to draw China’s interest. China will not consider creating a community or a currency union with Japan as an equal peer. Beijing will let Japan enter as a second-tier country into a framework in which China holds hegemonic power. This is regional framework building as seen through the eyes of Beijing. Changing Contours of Japan’s Foreign Policy 189

of their word for ‘Japan’ (written with Chinese characters meaning ‘the sun’s origin’, i.e., ‘the land of the rising sun’, exactly as Prince Shôtoku had used it), their penchant for adding the derogatory prefi x meaning ‘little’ to the word ‘Japan’ and other such points also fail to be adequately explained only by circumstances that have arisen since the 19th century. This is because the identity politics in fact fi nd its roots in the 7th century. Premised on this fact, it should come as no surprise that the more China demonstrated a rapid rise to the fore politically, economically and militarily in recent years, the more a sense of wariness towards China spread among the Japanese. The mass media covering this situation, particularly the US and British media, are inclined to want to view this within the context of Japan’s so-called drift towards the right and the reawakening of nationalism, but this is a phenomenon that must be considered across a much longer timeline. The Cabinet Offi ce of the Japanese government has, since 1978, conducted an annual survey of 2,000 Japanese, both in Japan and abroad, asking whether or not they feel an affi nity towards the Chinese. Not much time has passed since the restoration of diplomatic relations, and in the late 1970s to around 1987, when China was strongly oriented to looking to Japan as a mentor, the percentage of Japanese responding that they feel affi nity towards the Chinese hovered at around 70 per cent. After that time, for several years, people responded in the affi rmative and in the negative at roughly the same rate, and then since roughly 2003–2004 this trend has showed a complete inversion. People who ‘do not feel an affi nity’ increased dramatically, and in the most recent set of data (from 2008), people who ‘feel an affi nity’ dropped to 31.8 per cent of the survey respondents, while the percentage of people who ‘do not feel an affi nity’ has increased substantially to 66.6 per cent (cf. Figure 10.2).

Downloaded by [University of Defence] at 01:36 24 May 2016 What sort of implications can be extracted from what has been indicated thus far? First, it is necessary to appreciate that Japanese people’s perception of China is not something easily refashioned, being grounded in a long history that could be argued to sweep across some 1,400 years and not something acquired overnight. This understanding is important because Japan’s relations with the USA, India or any other third country (except for China) is deﬁ ned in no small measure by such a perception of China. The basso continuo of Japan’s perception of 190 Tomohiko Taniguchi

Figure 10.2: Aﬃ nity towards the Chinese

Source: Japan’s Ministry of Foreign Affairs. China constitutes one point of data with the potential to impact the future international order. Second, is the question of how to interpret the fact that the ratio of people responding that they do not feel afﬁ nity towards China has increased dramatically in recent years. One possible view is that this is a periodical ﬂ uctuation of limited duration caused by the short- term circumstances5 that have arisen in both countries. On the other hand, it is possible to view this as indicating long-term changes of an extended duration. It can be thought that for the Hatoyama-led DPJ government now seeking greater closeness to China, adopting the former of these two interpretations enhances the ability to achieve a further improvement of relations with Beijing. I, however, disagree. As explained earlier, in East Asia the curtain is about to be raised on a stage upon which a history-making change of political power

Downloaded by [University of Defence] at 01:36 24 May 2016 is unfolding, a change of monumental proportions. In my view, the numbers in the public opinion polls are instead the consequence of

5 Visits by Prime Minister Junichiro Koizumi to Yasukuni Shrine and China’s reaction to these visits; blistering heckling by China towards Japan’s athletic delegations in various sporting competitions and the reaction of young Japanese to this; and the development of the East China Sea gas ﬁ elds as decided unilaterally by China, and which appeared to be an attempt to make development a ‘done deal’, and the reaction within Japanese public opinion towards this; among other issues. Changing Contours of Japan’s Foreign Policy 191

the average Japanese perceiving some sort of major historical change and starting to think that they need to enhance their readiness. Moreover, taking this latter view enables a greater understanding of the strategic signifi cance contained in the attempt to deepen the relations of Japan and India. China as a ‘Revisionist Power by Omission’ and Japan’s Response I would like to emphasise fi rst off that this article will not explore philosophical arguments about whether China is a revisionist power or a status-quo power.6 However, I would like to mention three points regarding what sort of country modern day-China should be perceived as. The fi rst is that for China, rational actions involve behaving as a status-quo power in fi elds and domains in which China has expedient, vested interests and behaving as a revisionist power in those fi elds and domains in which it has nothing to lose and can only gain from here on. Its position as a permanent member of the United Nations Security Council (UNSC) is an oligopolistic advantage and a situation to be protected. In this area, China is working as a status-quo power to impede the accession of India, Japan and others. In contrast, prime examples of things which must be newly gained by China are Taiwan, control over sea lines of communication or mining concessions in remote locations. It is with regard to these things — things desperately sought by China and at present not entirely within its reach — that China becomes a revisionist power. From this it can be understood that China can be both a status-quo power and a revisionist power, maintaining the existing state of affairs or revising it to suit its national interests and choosing between the two based on what can be gained, selecting the ‘tastiest’ bits. Based on that, I would like to set forth a new concept, that of China as a ‘revisionist power by omission’, as my second point. Merely voicing Downloaded by [University of Defence] at 01:36 24 May 2016 objections to the current state of affairs as expression of the state’s intent while implementing proactive policies does not constitute a revisionist power. A major power as large as China in scale infl uences its surroundings simply by existing. There are presumably many

6 China dislikes being called a revisionist power and often emphasises that it is a country maintaining the current state of affairs. Rebuttals to China by scholars urging caution have been familiar intellectual sights over the past two–three years. 192 Tomohiko Taniguchi

cases in which political decision making is not explicitly involved in those actions, but regarding changes to the status quo we fi nd that the presence or absence of deliberate actions is, for the most part, immaterial. In more concrete terms, we can recall phenomena such as the following as the workings of a China that imparts a deep infl uence on the status quo even without deliberate actions. (a) The primary goods and agricultural products necessary to feed China’s growth have ballooned to an enormous amount, and thus China just by existing and growing infl uences the supply and demand for these products and impacts international market conditions and market prices. (b) Emissions from industrial activities and daily activities by households have increased to a tremendous amount, resulting in an inevitable degradation of the environment in China and the surrounding region, affecting both water and air quality. One prominent example of this is the dust and sandstorms that have increased in scale over the past years. (c) The fl ow of labourers, students, travellers and other people emerging from China affects the labour and education markets as well as the tourism businesses of the destination countries. That is to say, the physical movement of the Chinese cannot help but have an impact on the destination countries. (d) In addition to the above, while presumably there is ample leeway for the effects of various policy actions, we can cite the purchasing power of the Chinese market. Its purchasing power determines the range of policies towards China both by companies wishing to sell goods to China and by the countries in which these companies have their home markets. Furthermore, a third area that must be pointed out is that the country that will suffer the greatest impact from Chinese revisionism is none other than neighbouring power Japan, regardless of whether China’s actions are those of commission or omission. With regard to this point, after briefl y examining the policy Downloaded by [University of Defence] at 01:36 24 May 2016 items Japan and China have agreed upon to bring about a so-called ‘win–win’ relationship between them, the degree of execution of these items, and attempts by Japan to keep China’s revisionism under control to the greatest extent possible, this section will sketch out the meaning for Japan of China’s modernisation of its military capacities, which can be regarded as a prime example of China’s policy of revising the current state of affairs.

∗ ∗ Changing Contours of Japan’s Foreign Policy 193

Japan’s foreign policy towards China dealt with several issues in the period from 2005–2008. These included, fi rst of all, getting China to drop the ‘Be a good country or else we won’t play with you’ foreign policy it chose to pursue towards Japan in the last stage of the Junichiro Koizumi administration and establishing the custom of holding regular meetings at the summit level. This was deemed important also in terms of making the Japan–US alliance function. Issues for which Japan and the US will need to align themselves against China will increase in the future. At such times, it would be impossible for Japan and the US to present a united front if the relationship between Japan and China were to remain cold. This was not a desirable situation. Second, was to get China to halt its development of gas fi elds in the ocean area near or belonging to Japan’s exclusive economic zone (EEZ) in the East China Sea and have China consent to joint development by the two countries. The question of whether it will be Japan or China that exploits the resources is of only secondary or tertiary importance to the heart of this issue, at least from the Japanese standpoint. The essential point is where the boundary of the EEZ is to be drawn. In cases in which two coastal nations have overlapping territory upon extending a line in the ocean 200 nautical miles from their shorelines, as in this example, it is customary, under established international law, for the line to be drawn down the middle of the overlapping marine area. However, China adamantly refuses to accept this. If it were for argument’s sake to concede this, then it would be unable to develop these promising gas fi elds and moreover the Senkaku Islands would be on the Japanese side.7 Heretofore, the existence of the Senkaku Islands had been thought of bitterly as a natural barrier preventing the Chinese navy from advancing in the Pacifi c, so for Beijing, which has claimed (since when underwater gas fi elds were detected) that

Downloaded by [University of Defence] at 01:36 24 May 2016 these islands are its own territory, this would have been a difﬁ cult point to concede indeed. Third, was a series of problems epitomising China as a ‘revisionist power by omission’, including its responses (or the lack thereof) to

7 This is obvious, because the Japanese side counts the Senkaku Islands as the base point for measuring the 200 nautical miles offshore. Under the extension of the continental shelf argument put forth by China, China’s EEZ extends to just before the western edge of the Okinawa archipelago. 194 Tomohiko Taniguchi

the degradation of water quality in the East China Sea and the Sea of Japan because of the polluted water released by China, the safety of food contaminated with poisons, let alone agrochemicals, and China’s inaction toward the dust and sand blown over from China annually in the spring, which cause tremendous damage in western Japan. Japan had to press Beijing to rectify these problems. The result of this was the Joint Statement (of 7 May 2008) based on the talks held in Tokyo between Prime Minister Yasuo Fukuda and Chinese President Hu Jintao, which on its face showed admirable compromise and convergence. It was decided to move forward on the development of the gas ﬁ elds jointly, and through this fact, China indirectly presented the appearance of accepting Japan’s claims regarding the EEZ. In addition, in a rare departure, China offered words of praise for the overall path Japan has taken since the end of World War II, and even stated that it harboured expectations for Japanese action at the United Nations.8 Beyond this, in saying it would ‘develop greater understanding and pursuit of basic and universal values that are commonly accepted by the international community’,9 through this Joint Statement, China has at least on paper taken a form in which it has made signiﬁ cant concessions. All these developments during

8 See the Joint Statement between the Government of Japan and the Government of the People’s Republic of China on Comprehensive Promotion of a ‘Mutually Beneﬁ cial Relationship Based on Common Strategic Interests’, in which it reads, The Chinese side expressed its positive evaluation of Japan’s consistent pursuit of the path of a peaceful country and Japan’s contribution to the peace and stability of the world through peaceful means over more than sixty years since World War II. The two sides agreed to strengthen dialogue and communication on the issue of United Nations reform and to work toward Downloaded by [University of Defence] at 01:36 24 May 2016 enhancing common understanding with each other on this matter. The Chinese side attaches importance to Japan’s position and role in the United Nations and desires Japan to play an even greater constructive role in the international community. 9 Through this format, efforts by the Japanese side brought China to being just one step away from saying it would adopt an emphasis on human rights, the rule of law, and democratic procedures. However, as this article will address shortly, the Chinese side appears to have considered this type of language merely ornamental, with no intention of emphasising any of these from the very start. Changing Contours of Japan’s Foreign Policy 195

this period were Japan’s attempts at engaging with China as a rising revisionist power. The phrase ‘Mutually Benefi cial Relationship Based on Common Strategic Interests’ was originally coined to express the ‘win–win relationship’ discussed between Japan’s then Vice Minister for Foreign Affairs, Shotaro Yachi and Chinese Ambassador to Japan, Wan Yi. Since then, it has become a buzz phrase within Japan–China relations and it had been expected to sweep away the foul mood that had befallen Tokyo and Beijing. However, it would seem that the Chinese side essentially had no incentive to adhere to the Joint Statement as written. The actual situation in the East China Sea gas fi elds, the single greatest point of concern, seemed as if there had been no Joint Statement or other diplomatic developments at all. As a working-level resolution towards realising joint development failed to make any headway whatsoever, the Chinese side steadily continued with its independent development. Quite the contrary, the People’s Liberation Army Navy (PLAN) suddenly increased the frequency of its visits to the sea areas surrounding the Senkaku archipelago and other sea areas around Japan. The greatest reason that China as a revisionist power is problematic for Japan is that if China were to extend its command of the seas from the South China Sea to the East China Sea, the sea lines of communication, considered the lifelines of the Japanese economy, would fall under the control of China. More specifi cally, the expansion of China’s military power must be noted as the greatest problem for Japan’s security. The document that assesses the capabilities of the Chinese military in the greatest detail is the annual report submitted by the United States Department of Defense to the US Congress.10 The 2009 edition paints a picture of the Chinese military dramatically changing both its roles and capabilities and in the process of upgrading. If from this report we extract the critical elements that are relevant to Japan, the

Downloaded by [University of Defence] at 01:36 24 May 2016 following four points are worth emphasising. All have the ability to narrow Japan’s strategy space.

(a) Development of plans to build multiple aircraft carriers. Through their ability to intimidate, these aircraft carriers will likely become a symbol demonstrating China’s might to the surrounding area.

10 The most recent edition is downloadable at http://www.defenselink.mil/pubs/ pdfs/China_Military_Power_Report_2009.pdf, accessed 2 August 2011. 196 Tomohiko Taniguchi

(b) A marked improvement in submarine capabilities. The report notes a naval base on Hainan Island below the water’s surface accommodating nuclear-powered submarines. Japan’s Maritime Self-Defence Force has only 16 diesel-powered submarines. Japan will soon have a clear inferiority in both quality and quantity. (c) Improvement in the capacities of anti-ship ballistic missiles capable of directly targeting US Navy aircraft carriers deployed to Yokosuka Navy Base. This could become a serious impediment to the superiority of the capabilities of US naval forces in Japan. (d) The number of cruise missiles with a range capable of targeting any location in Japan and which are extremely difﬁ cult to capture on radar is already steadily increasing. Strategic offensive capability towards major cities in the continental USA is also being successfully expanded.

In possessing such capabilities, China’s increasing leverage against Japan is, put bluntly, the power of coercion. By continuing to increase its ability to intimidate, China intends to attempt to force Japan to listen to it. We can imagine that China also has designs on weakening the bonds of the Japan–US alliance and having Japan set adrift. It was because Japan sensed this situation that the policies Japan pursued were those of creating an ‘Arc of Freedom and Prosperity’ and growing closer to India. The next section will describe how those developments came about. The ‘Arc of Freedom and Prosperity’ and the Deepening of Japan–India Relations Picture now a map of the world from the Middle East to Japan. The Japanese archipelago is at the far end of long sea lanes, and the security of those sea lanes directly affects Japan’s own security. Strategically,

Downloaded by [University of Defence] at 01:36 24 May 2016 extreme vulnerability necessarily arises from those geographical conditions. This is equivalent to Japan being at the farthest point back in a cul-de-sac. Controlling the sea lanes would most certainly narrow Japan’s strategic space markedly. From the end of World War II until just recently, there was no need to elevate this vulnerability into the country’s consciousness. This was because marine security was under the US’ exclusive control and the US Navy sustained power that did not allow for other challengers or peers. Through the rise of China, this situation has already become Changing Contours of Japan’s Foreign Policy 197

impossible to be taken for granted. Moreover, as China comes to have an allure throughout the world as a result of its purchasing power, Japan has, for the fi rst time in the post-World War II era, perceived the need to hoist a ‘non-economic’ banner and market its own value to the world. The US has transferred its military assets from Europe to Asia and had been trying to continue to claim ownership of the security of Asia and the Pacifi c, yet at the same time it has been becoming gradually clear that the rise of China is no longer something that the US can confront single-handedly. The sudden shift in these circumstances pressed Japan to seek out two paths simultaneously. The fi rst of these was a reinvestment in the Japan–US alliance and enhancement of its durability. The other was — drawing on the analogy used above — the creation of a variety of exits from the cul-de-sac by expanding Japan’s strategic space and strengthening its relations with democratic powers other than the US. In order to achieve this, it became necessary within its foreign policy to hold high the banner of its strong commitment to the universal values of democracy, respect for human rights and the rule of law. The policy of creating an ‘Arc of Freedom and Prosperity’ was announced in a speech titled as such by Foreign Minister Taro Aso on 30 November 2006, as an outgrowth of this background and necessity. This policy in which Japan would spread its experience and knowledge, coupled at times with economic assistance, to countries in the process of transi- tioning to democracy had as its pillars the strengthening of assistance to such countries as Vietnam in the case of Asia and assisting the countries of East Europe, the Baltic states and Central Asia in this same way. Since there are limits to the amount that Japan alone can do, Japan also called for a strengthening of cooperation with countries sharing the same values. The ones underscored for that purpose were India,

Downloaded by [University of Defence] at 01:36 24 May 2016 Australia and the countries of Europe. At the same time, the policy under which the Arc of Freedom and Prosperity came into being also implied the establishment of another pillar of supporting the Japan– US alliance, albeit a detour from the main policy implications. This is because it was assumed that cooperation with the North Atlantic Treaty Organisation (NATO) would be an important element supporting this policy, as can be seen clearly in the foreign policy around the time in question. Moving towards the NATO means moving towards the NATO’s leader, the USA. Thus Japan, which had 198 Tomohiko Taniguchi

heretofore only engaged with the US across the Paciﬁ c Ocean, was attempting to encounter the US once more by way of Europe and the Atlantic, so to speak. This was the important unspoken implication of the policy of the Arc of Freedom and Prosperity. Figure 10.3 depicts this graphically. Using a map showing units of distance from Tokyo at the centre, we can understand Japan’s strategy at this time as having a four- pronged approach of axes with Australia, India and Europe, most of all the NATO, rather than a single axis with Washington as its ‘insurance policy’, so to speak. The Arc of Freedom and Prosperity refers to the section delineated by the white line in Figure 10.3. Efforts to stabilise the security environment surrounding Japan were the implications of the policy to create an Arc of Freedom and Prosperity. In this way, Japan ﬁ rst set about strengthening its relations

Figure10.3: The Arc of Freedom and Prosperity Downloaded by [University of Defence] at 01:36 24 May 2016

Source: Author. Changing Contours of Japan’s Foreign Policy 199

with India, taking advantage of the December 2006 visit of Indian Prime Minister Manmohan Singh. This was committed to paper in the Joint Statement ‘Towards Japan–India Strategic and Global Partnership’. Even within these extremely diverse and wide-ranging points of agreement, the explicit statement that Japan and India would strengthen their cooperative relationship with regard to the military as well as maritime security was important. The Statement did not use the phrase ‘military-to-military cooperation’ but rather ‘service-to-service cooperation’ and indicated the types of such cooperation to a high degree of detail. This was an approach with little precedent among Japanese government documents. The next step was taken shortly after, in March 2007, when Japan signed the Joint Declaration on Security Cooperation with Australia. Despite the wording, which tried to dilute any military tinges, this can be considered an agreement for a quasi-military alliance and indeed it was reported in this way in the international media at the time. The areas speciﬁ ed as those for deeper cooperation in the future spanned a broad range, including maritime and aviation security. Conclusion By tracing historically the Japanese people’s view of China, this article has attempted to elucidate the attributes of the incentives that ultimately necessitated relationships of strategic alliances with democratic countries. It then sketched out how China as seen by Japan could become a coercive power and likened Japan’s attempts to emerge from this situation to building alternate exits to a cul-de- sac. It also traced the circumstances under which Japan made efforts to create an Arc of Freedom and Prosperity, attempted over several years from roughly 2005, and to establish quasi-alliances with India and Australia, and reviewed the series of developments that took

Downloaded by [University of Defence] at 01:36 24 May 2016 place towards those ends. Here we come full circle, back to square one. The strategic space surrounding Japan is becoming increasingly narrow in relative terms along with the rise of China. There are no prospects for reversing this trend over the foreseeable future. When, despite this fact, powers not feeling any particular need for caution establish a government in Tokyo, should India consider this to be in its interests or to its detriment? The answer, I believe, virtually speaks for itself. In light of this, I hold high expectations for India’s efforts to strengthen its relations with Japan to provide the momentum to overcome 200 Tomohiko Taniguchi

this situation. Should a sort of club of maritime democratic powers that brings in Australia, the US, Canada and Singapore be created, would Japan not perceive this as appealing? We can imagine that it would be attractive indeed. India’s frequent alignment with China in the discussions regarding climate change can be considered less than desirable insofar as it may inhibit cooperation between Japan and India. Now, as Japan is being carried away by the impulse to dilute the Japan–US alliance and strengthen its relations with Beijing, this is a superb opportunity for Indian diplomacy to exercise its genius to ensure that Japan is kept ﬁ rmly on the side of India and other democratic powers and the idea of the Arc of Freedom and Prosperity extends its life. Reference Arrighi, Giovanni, Takeshi Hamashita and Mark Selden. 2003. The Resurgence of East Asia: 500, 150 and 50 Year Perspectives. London: Routledge. Downloaded by [University of Defence] at 01:36 24 May 2016 South Korea’s Relationship with India and China 201

11 Changing Patterns in South Korea’s Relations with China and India: The Way Forward

Chung-in Moon

Although contemporary South Korea has largely been conditioned by the Cold-War rivalry between the USA and the Soviet Union, newly emerging regional power structures have transformed its strategies in foreign policy. Just as Korea was liberated from Japanese colonial domination after the end of the Pacifi c War, the Korean peninsula was soon divided into North and South Korea. In the vortex of Cold-War bipolarity, South Korea was incorporated into the American bloc, while North Korea became an ally of the Soviet Union. The hegemonic rivalry between the two superpowers made South Korea rely solely on the alliance with the US and trilateral policy coordination with the US and Japan. Although South Korea normalised its diplomatic ties with China and the Soviet Union after the end of the Cold War in the early 1990s, the Cold-War relics of national division and inter-Korean military confrontation still remain intact. North Korea’s nuclear ambition has complicated geopolitical dynamics in the Korean peninsula all the more, while increasing power and infl uence of four major countries (the US, China, Japan and Russia) in the region, as evidenced by the Six-party Talks formula established to deal with the North Korean nuclear fi asco.1 South Korea’s preoccupation with four major powers, coupled with

Downloaded by [University of Defence] at 01:36 24 May 2016 geographic distance, prevented India from occupying any meaningful place in its foreign policy agenda. However, India has begun to attract South Korea’s attention for two reasons. One is the rise of the Indian economy. Over the past 10 years, India has emerged as one of most dynamic economic powerhouses in the world, thanks to its

1 See John Ikenberry and Chung-in Moon (eds), The United States and Northeast Asia, Lanham, MD: Rowman and Littleﬁ eld, 2008. 202 Chung-in Moon

abundant human resources, comparative advantage in information technology, large domestic market size and infl ow of foreign capital. A report by Goldman Sachs projected that India will emerge as the third largest economy in the world with a GDP size of $27 trillion by 2050, only next to China ($48.6 trillion) and the US ($37 trillion).2 Thus, the rise of Chindia no longer seems fi ctional, but has become more than real.3 As a trading state, South Korea is bound to have interests in India. The other is related to the rise of China. Since its inauguration in February 2008, the Lee Myung-bak (MB) government has emphasised the importance of South Korea’s bilateral alliance with the USA, and has upgraded its status to a strategic alliance which is based on common value, trust and global peacekeeping. It is the ‘value’ component that has opened new room for cooperation between India and South Korea. The MB government’s notions of value centre on freedom and prosperity where the former is assured by democracy and the latter by free market. The MB government’s emphasis on democracy has given an impression that as with the Bush administration and previous Liberal Democratic Party leadership in Japan, South Korea favours a coalition among democracies in order to balance the rise of China. With this in mind, this article attempts to look at how China and India factor in South Korea’s foreign policy and to elucidate South Korea’s likely policy choices. Comparing South Korea’s longer history of relations with China with its relatively more recent ties with India, I argue that despite India’s growing economic and political importance, China continues to be a critical factor in South Korea’s economic and strategic calculus. Moreover, it is misleading to assume any tradeoff relationship between China and India. South Korea has no intention or capability to pit one against the other and has nothing to gain by doing so. Good relations between the two countries will Downloaded by [University of Defence] at 01:36 24 May 2016 be benefi cial to South Korea and the world. Despite the geographic barrier, however, South Korea needs to recognise the power and infl uence of India in the international arena and seek a more active cooperation with India bilaterally, regionally and globally.

2 Ohmynews, 27 November 2006. 3 Pete Engardio (ed.), CHINDIA: How China and India Revolutionizing Global Business, New York: McGraw Hill, 2007. South Korea’s Relationship with India and China 203

China and South Korea: Strategic Partnership? China is one of only two countries which shares a border with the Korean Peninsula, the other being Russia. This geographical proximity has given rise to a love–hate relationship in the history of China and Korea relations. Before the late 14th century, the Korean Peninsula suffered from numerous Chinese and Mongolian (Yuan Dynasty) invasions and domination. It was after the founding of the Chosun Dynasty (1392) that Korea was placed under a more formalised Chinese tributary system. Chinese infl uence over Korea ended after the Sino–Japanese War (1894), after which Korea was annexed to Japan in 1910. After national independence in 1945, Korea was divided into North and South. Under the Cold-War system, South Korea became an ally of the USA, while China emerged as North Korea’s patron along with the Soviet Union. Over 1 million Chinese volunteer soldiers crossed the Yalu river and participated in the Korean War to aid North Korea. Consequently, South Korea began to treat China as its potential enemy. It was more so because anti-communism was South Korea’s governing ideology. South Korea normalised diplomatic ties with China in 1992 only after the end of the Cold War. The China–South Korea relationship greatly improved after diplomatic normalisation, resulting in deepening economic interdependence and widening socio-cultural interactions. China has been pursuing an equidistant diplomacy over the Korean Peninsula: it regards South Korea as an economic partner, while continuing its political ties with North Korea. Nevertheless, China and South Korea upgraded their relationship to that of strategic partnership on the occasion of President Lee Myung-bak’s visit to Beijing in 2008. In addition, the two countries’ leaders have been regularising their meetings through the Asia–Pacifi c Economic Cooperation (APEC), the East Asia Summit and China–Japan–South Korea tripartite summit. The most impressive aspect of China–South Downloaded by [University of Defence] at 01:36 24 May 2016 Korea relations lies in the economic domain. The two economies are mutually interconnected through dense production networks following the pattern of a ‘fl ying-geese’ model. China has been home to some of the most important offshore production sites for South Korean manufacturers since the early 1990s. As a result, bilateral trade has risen phenomenally. As can be seen in Table 11.1, South Korea experienced a trade defi cit of $1.68 billion with China by exporting $584 million and importing $2.2 billion in 1990. Beginning in 2004, however, China has become South Korea’s number-one 204 Chung-in Moon

Table 11.1: Korea–China Trade Relations (Unit: US$ 1,000,000)

Year Export Import Trade balance 1990 584 2,268 –1,684 1995 9,143 7,401 1,742 2000 18,454 12,798 5,656 2005 61,914 38,648 23,366 2006 69,459 48,556 20,903 2007 81,985 63,027 18,985 2008 91,388 76,930 14,458 Source: The Korea International Traders Association, http://stat.kita.net/, accessed 2 November 2009. trading partner, surpassing the USA and Japan, and has continued to be the primary source of trade surplus for South Korea. South Korea enjoyed a trade surplus of $14.4 billion in 2008 alone by exporting $91.3 billion and importing $76.9 billion. Given nearly the same amount of trade defi cits with Japan in the same year, trade with China has become crucial to the South Korean economy. Given China’s impressive growth rate of more than 8 per cent per year, the trade volume with China is expected to grow further in the future. South Korea’s direct investment in China also grew rapidly. As Table 11.2 shows, its direct investment in China was meagre, with only $16 million in 1990, but grew rapidly to $711 million in 2000. The fi gure shows a 10-fold increase in 2007, during which time investment reached $7.3 billion. As with trade, China emerged as South Korea’s number-one destination of overseas direct investment since 2005. However, South Korean fi rms’ direct investment in China decreased to $4.88 billion in 2008 due to the global fi nancial crisis and worsening investment climate in China. In fact, since 2003, a

Table 11.2: Korea–China, Korea–India Investment (Unit: US$1,000,000) Downloaded by [University of Defence] at 01:36 24 May 2016 Year Korea’s FDI to China Korea’s FDI to India 1990 16 0.96 1995 636 13.83 2000 711 15.01 2005 3,692 112 2006 4,603 151 2007 7,352 333 2008 4,881 282 Source: Samsung Economic Research Institute, http://www.seri.org/, accessed 2 November 2009. South Korea’s Relationship with India and China 205

growing number of South Korean fi rms have been either terminating their business operations in China or relocating their plants elsewhere. High wages, strengthened government regulation and stiff competition in the Chinese domestic market has forced South Korean investors to look for alternative investment places. Thus, a massive South Korean investment in China seems less likely, but China’s investment in South Korea is likely to grow in light of its new national wealth. Although South Korea’s economic dependence on China has increased, dense production networks linking China and South Korea make it diffi cult for the latter to diversify away from the former. The Chinese government has been trying to reverse chronic bilateral trade defi cits by proposing a bilateral FTA with South Korea. But South Korea has been reluctant to accept the proposal because of political opposition from the farming sector and relatively less salient gains in the manufacturing sector. Seoul wants to rectify its bilateral FTA with the USA fi rst, and then seek a China–Japan–South Korea sub-regional FTA. An FTA with China seems to be a low priority in South Korea’s policy agenda. As indicated above, however, informal production networks formed through market transactions are expected to continue to expand economic ties between the two countries, which would in turn expose South Korea to two major dilemmas. One is an increasing dependence on China, and the other is the advent of cut-throat competition with China. Nowadays, China and South Korea are fi ercely competing in similar items and export destinations. Unlike the economic domain, China and South Korea appear to be divergent in political and strategic interests, especially under the MB government. North Korea has become a key issue of contention between China and South Korea. Whereas China hopes to settle the North Korean nuclear problem through six-party negotiation, the MB government seeks to denuclearise North Korea through tough

Downloaded by [University of Defence] at 01:36 24 May 2016 sanctions, as mandated by UN Security Council resolutions 1874 and 1718. China has also been critical of South Korea’s ‘grand bargain’ proposal, which aims at achieving a ‘one-shot’ resolution of the North Korean nuclear issue through ﬁ ve-party coordination.4

4 See International Crisis Group, ‘Shades of Red: China’s Debate over North Korea’, Asia Report, 2 November 2009; Korea Institute of Uniﬁ cation Studies, Grand Bargain — One Shot Approach to the North Korean Nuclear Issue (in Korean), Seoul: KINU, 2009. 206 Chung-in Moon

More importantly, China and South Korea differ on the future of North Korea. China’s interest lies in ensuring stability and preventing the sudden collapse of North Korea, whilst the MB government implicitly expects and even anticipates the collapse of North Korea and eventually uniﬁ cation by absorption as in the case of Germany. China has openly expressed its concerns over the RoK–US joint efforts to deal with a contingency in North Korea through the operational plan 5029 that is predicated on military intervention of RoK–US combined forces to stabilise the situation in North Korea. Apart from the North Korea issue, a strategic discord has been emerging between Beijing and Seoul. The two previous progressive governments under Kim Dae-jung and Roh Moo-hyun pursued a more balanced approach to China and the US by attempting to transform the existing bilateral alliance into a multilateral security cooperation regime in Northeast Asia. But the MB government has emphasised instead the primacy of the bilateral alliance with the USA, as well as the importance of trilateral policy coordination involving Japan, South Korea and the USA. Moreover, it has given more attention to so-called common values, namely democracy and market economy. Such a move has left China with the impression that South Korea is seeking a strategy to balance its rise. South Korea’s renewed interests in missile defense (MD) with Japan and the US have triggered sensitive reactions from China. South Korea’s potential support of the US through the endorsement of strategic ﬂ exibility, especially in the case of the cross-strait crisis, has posed another source of strategic discord with China, but the issue has capsized with the advent of the MA government in Taiwan and the Obama administration in the US. When and if China and the US engage in hegemonic rivalry in the region, South Korea is most likely to be torn between the two great powers. History and identity have also become particularly contentious issues between China and South Korea.5 In early 2004, Beijing–Seoul

Downloaded by [University of Defence] at 01:36 24 May 2016 ties soured upon the completion of the Chinese government’s Northeastern Project (Dongbei Gongcheng). The Chinese Academy of Social Science and the Academy of Social Science in three northeastern provinces (Liaoning, Jilin and Heirongjiang) initiated a

5Chung-in Moon and Chun-fu Lee, ‘Reactive Nationalism and South Korea’s Foreign Policy on China and Japan — A Comparative Analysis’, Paciﬁ c Focus, 24 (3), December 2010. South Korea’s Relationship with India and China 207

project aimed at rewriting the ancient history of China’s northeastern area under offi cial endorsement and sponsorship of the central and provincial government in 1996. Its core objectives were to achieve ‘state unifi cation, national unity, and stability in China’s borderland areas’ by ‘incorporating all the historical events that happened in Chinese territories into China’s local history’.6 The project was a strategic move to legitimise China as ‘a unifi ed multi-national state’.7 What angered South Koreans was the article ‘Some Issues in the Study of Goguryo History’, which was published in a Chinese daily newspaper, Guangming Ribao on 24 June 2003 by Bian Zhong.8 Their claims were shocking to Koreans. They argued that ‘the history of the Goguryo dynasty was part of Chinese history and that Goguryo was a decentralized local government of China’.9 It was largely the Chinese claim over historical sovereignty of the Goguryo Dynasty that was responsible for the deterioration of the otherwise congenial bilateral ties. The Chinese government has also raised grievances over South Korea. Some nationalist forces in South Korea have attempted to organise a nation-wide campaign for ‘the Movement to Recover Gando (Jian dao)’ in today’s Manchuria.10 Proponents of this movement argue that the Gando area used to belong to Korea, but was illicitly transferred to the Q’ing Dynasty by the Japanese Empire in 1905 after placing Korea under its protectorate, and thus the area should be returned to Korea.11 Such a move precipitated immense protests from the Chinese government and people because for them, such claims by South Koreans are tantamount to violating Chinese

6 On the Northeast Project, refer to the homepage of the Center of China’s Borderland History and Geography Research, Chinese Academy of Social Sciences, http://chinaborderland.cass.cn/, accessed 10 October 2009. 7 See Kap-soo Choi, ‘Dongbuka Yoksaronjaenggwa Minjokjuui’ (The History

Downloaded by [University of Defence] at 01:36 24 May 2016 Debate in Northeast Asia and Nationalism), Jinbo Pyongron, 2005. 8Guangming Ribao, 24 June 2003. This article was authored under the pen name Bian Zhong, which represented three historians from the Research Center for the Historiography of the Borderland at the Chinese Academy of Social Science. 9Guangming Ribao, 24 June 2003. 10 ‘Gando’ has two meanings. In a narrow sense, it refers to today’s Yanji in the Jilin province, but in a broad sense, it refers to the entire Manchuria. See http://netizen.khan.co.kr/gando/sub_story.html, accessed 11 October 2009. 11 Chosun Ilbo, 10 September 2004. 208 Chung-in Moon

territorial sovereignty. Frictions over this historical and territorial sovereignty are not likely to disappear soon, and will undermine the future of bilateral relations. Based on the above observations, China has become indispensable to South Korea, warranting a strategic partnership. But there are several impediments that could potentially make the partnership unstable and difﬁ cult to achieve. India and South Korea: Emerging Partnership? Geographic distance has been the most critical divide between India and South Korea relations. Yet, historical records show that contacts between India and Korea dated back to the 1st century AD. It is known that an Indian princess from Ayodhya came to the Kaya kingdom, which was located in today’s South Gyungsang province, and became Queen Hur Hwang-ok by marrying King Kim Suro in the year 48 AD.12 Apart from this historical connection, India has long been a part of Koreans’ historical consciousness as the birthplace of Buddha since the 6th century, when Buddhism was adopted as the national religion for the Kingdom Shilla and the Koryo dynasty. Bringing Buddhist scriptures from India was regarded as an especially sacred enterprise. It was only after the Chosun Dynasty that Confucianism, as the governing ideology, replaced Buddhism. Nevertheless, India and Buddhism have deeply permeated in the minds of Korean people. The bitter memory of colonial subjugation also brought India and Korea closer. Nobel laureate Rabindranath Tagore’s poem on Korea is still cherished by Koreans because he inspired Koreans during their dark colonial period. In his poem from 1929, he writes: ‘In the golden age of Asia, Korea was one of its lamp bearers/And that lamp is waiting/To be lighted once again/For the illumination of the East.’ Koreans are so thankful to Tagore that Samsung Electronics Co. has

Downloaded by [University of Defence] at 01:36 24 May 2016 recently decided to sponsor the Tagore Award in cooperation with the Indian Ministry of Culture.13 Mahatma Gandhi is another Indian who is revered and remembered by Koreans because he became a role model for non-violence in South Korea’s democratic movement.

12 Ilyon, Samguk Yusa, Seoul: Euyumunhwasa, 2002. King Kim Suro is the ancestor of the Kimhae Kim family which has the largest in a single family name. 13 Yonhap News, 6 November 2009. South Korea’s Relationship with India and China 209

India was also deeply involved in the creation of the Republic of Korea (RoK). As the chair country of the nine-member UN Com- mission to administer and supervise general elections in South Korea in 1947, which was then under the UN trusteeship, India played a crucial role in paving the way to the founding of the RoK (1948). And it was through India’s proposal that the Korean War (1950–53) came to an end with the adoption of the Armistice Agreement in July 1953. But India–South Korea relations remained rather stalled, partly because of India’s leadership in the non-aligned movement. South Korea, being an ally of the US, received less attention from India. Nevertheless, India and South Korea entered consular relations in 1962, and both countries established full diplomatic normalisation in 1973. Since then, they have maintained a steady relationship. President Roh Moo-hyun’s state visit to India in October 2004 marked a signiﬁ cant milestone by upgrading the bilateral tie to ‘Long-term Cooperative Partnership for Peace and Prosperity’, which was reciprocated by President Rashtrapatiji’s visit to Seoul in February 2006, resulting in the launching of a joint task force to facilitate a bilateral Comprehensive Economic Partnership Agreement (CEPA).14 What prompted closer bilateral ties was economic complementariness between the two countries. Whereas South Korea has emerged as a potential source of FDI for India, India as a key member of BRICs became an attractive export market for South Korea. As Table 11.3 demonstrates, bilateral trade relations were relatively

Table 11.3: Korea–India Trade Relations (Unit: US$ 1,000,000)

Year Export Import Trade balance 1990 435 238 153 1995 1,125 282 211

Downloaded by [University of Defence] at 01:36 24 May 2016 2000 1,326 985 341 2005 4,598 2,112 2,486 2006 5,533 3,641 1,892 2007 6,600 4,624 1,976 2008 8,977 6,581 2,396 Source: http://ind.mofat.go.kr/kor/as/ind/economy/both/index.jsp and http://stat.kita. net/.

14 Indian Embassy in Seoul, South Korea, http://www.indembassy.or.kr/ IndKrRelation.aspx, accessed 2 November 2009. 210 Chung-in Moon

small until the 1980s. For example, South Korea’s exports to India were $435 million, whereas its imports from India were $238 million. By 2005, however, trade volume between the two countries rose considerably. South Korea enjoyed a surplus of $2.48 billion by exporting $4.59 billion and importing $2.11 billion. In that year, India was the 16th-largest trading partner for South Korea (the 11th- largest export market and 26th import source). Within less than three years, South Korea’s exports to India almost doubled to $8.97 billion in 2008. Imports from India also concurrently rose to $6.58 billion in the same year. As of 2008, South Korea became the 12th-largest trading partner for India, while India became the 10th-largest export destination and the 16th-largest import source. Cooperation in foreign investment has also been on the rise. As the data in Table 11.2 shows, South Korea’s investment in India was rather minimal until the early 2000s. In 1990, its investment in India was less than $1 million, but rose to $112 million in 2005 and $333 million in 2007. As of 2008, India has become the 15th- largest destination of South Korea’s overseas investment. Meanwhile, South Korea’s cumulative investment from 382 Korean companies for over 900 projects in India has reached $1.46 billion, making South Korea the fourth-largest investing country in India.15 South Korean ﬁ rms have invested in the areas of transportation, energy, consumer electronics, including computer software, chemicals and so on. Investment by Hyundai Motors, Samsung Electronics, LG and Lotte Group are known to be quite successful. It is also noteworthy that Samsung Engineering has opened its Global Engineering Centre in New Delhi, and the Pohang Steel Corporation (POSCO), one of the largest steel manufacturers in the world, is planning to invest over $12 billion in constructing an integrated steel plant at Paradeep in Jagatsinghpur District of Orissa to produce 12 million tonnes of steel annually. This would be the single largest overseas investment 16

Downloaded by [University of Defence] at 01:36 24 May 2016 by RoK and also the single largest investment into India. FDI is no longer unidirectional. A growing number of Indian ﬁ rms have been investing in South Korea. For example, Tata Motors

15 For data, see http://www.seri.org/, http://www.buykorea.org/buykorea/, and http://www.mofat.go.kr/economic/economicdata/statistics/index.jsp, accessed 2 November 2009. 16 Samsung Economic Research Institute (SERI), ‘Issue Paper on Contents and Policy Implications of Korean-Indian CEPA’ (in Korean), Seoul: SERI, August 2009. South Korea’s Relationship with India and China 211

Limited, India, acquired the Daewoo Commercial Vehicle (DWCV) in Kunsan, South Korea for a total price of KRW 120 billion (approximately US$102 million) in March 2004. Aditya Birla group acquired over $600 million worth of stakes in Novellis Korea in the fi eld of aluminum. Additionally, during the fi rst three quarters of the year 2008, over 70 Indian investment proposals were made. India and South Korea signed a CEPA in August 2009. South Korea was the fi rst among its competitors such as China and Japan in reaching such an agreement. Although the CEPA is not deep and wide in its concessions, compared with South Korea’s other bilateral FTAs, it will certainly promote mutual benefi ts in commodity and service trade, investment and technological cooperation.17 As Indian Commerce Minister Anand Sharma stated at the signing ceremony, ‘the South Korean economy is an important model for India’s economic growth, and the CEPA will contribute to enhancing mutual complementariness of both economies’.18 Likewise, India and South Korea are expected to expedite bilateral cooperation in trade and investment. In comparison with China, South Korea’s strategic interest in India has been very much limited. India was once considered important because of diplomatic competition with North Korea during the Cold War era. Being one of leaders of the non-aligned movement that started with the Bandung Asia-African Bloc meeting in 1955, India was supportive of North Korea which did not have any military alliance. Moreover, India supported resolutions favouring North Korea in the UN that called for the withdrawal of American forces from South Korea in the 1960s. It was in this context that Seoul was desperate to win Indian support. As the Korean issue was no longer debated in the UN since early 1973, however, India’s strategic importance waned. On the occasion of the inauguration of the Lee Myung-bak government in 2007, however, India’s strategic value was rekindled within

Downloaded by [University of Defence] at 01:36 24 May 2016 the larger context of concern over China’s rise. As noted before, the MB government has been seeking a strategic alliance with the US, which is based on common values, trust and global peace-building.19

17 Indian Embassy in Seoul, South Korea, http://www.indembassy.or.kr/ IndKrRelation.aspx, accessed 2 November 2009. 18 Munhwa Ilbo, August 8, 2009. 19 Cheong Wa Dae, Global Korea: The National Security Strategy of the Republic of Korea, Seoul: Cheong Wa Dae (Ofﬁ ce of the President), 2009. 212 Chung-in Moon

India, being the largest democracy in the world, was an ideal partner for the MB government in forming a new coalition of democracies. In fact, when Lee Myung-bak visited India in April 2007 as a presidential candidate, he suggested the possibility of strategic cooperation with India for the promotion of common values. It is for this reason that South Korea, along with Japan and Singapore, expects India to take a more active role in the East Asian summit. However, the Lee government has recently been rather dithering in the pursuit of its common-value idea. China’s implicit protest, the end of the neo-conservative era in the US, and, most importantly, the advent of Democratic Party of Japan cabinet in Japan, have made the MB gov-ernment’s balancing of China through the coalition of democracies rather obsolete and imprudent. India is thus now regarded as being an important economic partner under the Lee government’s new Asian diplomatic initiative. South Korea actively sought Indian support for the G-20 meeting that was held in Seoul in 2011. China, India, and the South Korean Choice A major asymmetry can be detected in South Korea’s relations with China and India. Whereas South Korea has maintained strong historical and cultural ties with China, geographic distance has blocked its access to India. China is now the number one economic partner of South Korea, surpassing the US and Japan. Given China’s economic dynamism, Seoul’s economic dependence on Beijing is likely to continue. India is also an important economic partner for South Korea, but it cannot compete with China. There seem to be rather weak substitution effects between China and India for South Korea’s destination of trade and investment. South Korea is more likely to seek a parallel approach to both China and India because of their respectively large domestic market sizes.

Downloaded by [University of Defence] at 01:36 24 May 2016 From a strategic point of view, China is critical to South Korea’s national security. Being a signatory to the armistice agreement of the Korean War, China is entitled to be a legal party to whatever forms of peace regime are established in the Korean Peninsula. Moreover, China is chair of the Six-party Talks that is an indispensable vehicle for resolving the North Korean nuclear dilemma. Cross-strait relations, intra-regional arms race and strategic instability surrounding China’s rise could also profoundly affect the geopolitics of the Korean Peninsula. Judged on historic and cultural ties, economic South Korea’s Relationship with India and China 213

interdependence and strategic entanglement, China is bound to have a continuing and even growing infl uence over South Korea, while India does not. For South Korea, China is not a matter of choice, but part of a geopolitical and geo-economic necessity. While India is a distant but friendly country, China is a country of near distance, but with enormous complexities. This asymmetry makes it somewhat inappropriate for South Korea to choose between the two. There are some areas of potential confl ict between China and India.20 The two countries have not yet resolved their border disputes, and potential clashes cannot be ruled out. India has shown some concerns over China’s growing infl uence in the Indian Ocean. China’s rise and power projection in Asia could also precipitate some worries among Asian countries. But none of these issues are likely to affect South Korea’s policy on China and India. As the Obama administration has been pursuing a new China policy based on ‘strategic reassurance’, the Lee government’s earlier attempt to participate in an alliance based on common value to balance China has lost its rationale and appeal. As long as South Korea does not regard China as a real or potential threat, its policy on China and India would not entail any tradeoff outcomes. In view of the above, South Korea’s choice then seems rather clear and straightforward. First, South Korea should maintain good and friendly relations with both China and India. Although the tradeoff effects seem minimal, their uneasy relationship can undermine South Korea’s national interests. Second, friendly and cooperative ties between China and India are in the interests of South Korea. Peaceful resolution of any pending disputes is good for not only themselves, but also the entire world, including South Korea. Their strategic cooperation within the framework of BRICs can signifi cantly contribute to improving global economic conditions.

Downloaded by [University of Defence] at 01:36 24 May 2016 Third, any efforts to isolate and contain China in light of its rise could be self-defeating for all. Given the gravity of China’s economic size and dynamism, such efforts seems not only inconceivable, but also damaging to all. In the wake of the global ﬁ nancial crisis, the Chinese economy has become vital to economic recovery in both advanced industrial and developing countries.

20 Shalendra D. Sharma, China and India in the Age of Globalization, Cambridge: Cambridge University Press, 2009, pp.164–84. 214 Chung-in Moon

Fourth, South Korea should seek a win–win outcome by forging dense bilateral cooperation with China and India. Pitting one country against the other will be self-defeating. Seeking bilateral, regional and global cooperation with these two countries will be most benefi cial for South Korea. Finally, South Korea needs to make strong efforts to reduce the asymmetric gap between China and India. In this regard, India deserves more attention from South Korea not only because of its economic dynamism and rich human resources, but also because of its international leadership. Political, diplomatic and social exchanges and cooperation should be further promoted in tandem with the CEPA. References Choi, Kap-soo. 2005. ‘Dongbuka Yoksaronjaenggwa Minjokjuui’ (The History Debate in Northeast Asia and Nationalism), Jinbo Pyongron. Dae, Cheong Wa. 2009. Global Korea: The National Security Strategy of the Republic of Korea. Seoul: Cheong Wa Dae (Offi ce of the President). Engardio, Pete (ed.). 2007. CHINDIA: How China and India are Revolutionizing Global Business. New York: McGraw Hill. Ikenberry, John and Chung-in Moon (eds). 2008. The United States and Northeast Asia. Lanham, MD: Rowman and Littlefi eld. International Crisis Group. 2009. ‘Shades of Red: China’s Debate over North Korea’, Asia Report. 2 November. Korea Institute of Unifi cation Studies (KINU). 2009. Grand Bargain — One Shot Approach to the North Korean Nuclear Issue (in Korean). Seoul: KINU. Moon, Chung-in and Chun-fu Lee. 2008. ‘Reactive Nationalism and South Korea’s Foreign Policy on China and Japan — A Comparative Analysis’, paper presented at the annual convention of International Studies Association. 26–29 March. Sharma, Shalendra D. 2009. China and India in the Age of Globalization. Cambridge: Cambridge University Press. Samsung Economic Research Institute (SERI). 2009. ‘Issue Paper on Contents and Policy Implications of Korean–Indian CEPA. Seoul: SERI. August. Downloaded by [University of Defence] at 01:36 24 May 2016 Zhong, Bian. 2003. ‘Some Issues in the Study of Goguryo History’, Guanming Ribao. 24 June. Malaysia’s Strategic Options and Outlook 215

12 In the Midst of the Major Powers: Malaysia’s Strategic Options and Outlook

S. M. Tang

Asia is witnessing a momentous transformation with the re-emergence of two historical powers — China and India — stepping forth to reclaim their rightful place in the region. Malaysia is strategically sandwiched between the two major powers. On the eastern front, the magnetic pull of China’s vast market and its phenomenon economic growth has transformed the regional and global power grid. With China poised to overtake Japan as the second largest economy in the world, Beijing’s political and strategic inﬂ uence is set to grow in tandem. On the western front, India is touted by some pundits as the ‘new China’. Notwithstanding the fact that India’s potential is tempered with a myriad of socio-economic challenges, New Delhi’s power and standing is all set to grow. Against this backdrop, Malaysia needs to skilfully navigate between the interests of the two major powers, while striving to preserve and further its national interest. This article contends that Malaysia views developments in China and India positively, and its interests lie in co-opting Beijing and New Delhi’s interest into the larger regional framework, with emphasis on multilateral cooperation. The challenge for Malaysia is to create the space and opportunities in the Southeast Asian region for both powers to pursue their interests peacefully and to avoid

Downloaded by [University of Defence] at 01:36 24 May 2016 marginalising either of the powers. Overview of the Strategic Landscape The end of the Cold War had profound implications on global affairs and effectively changed the strategic balance between the two erstwhile superpowers — the US and the Soviet Union. It also led to the realignment of politics in Europe, with numerous former Warsaw Pact members such as Poland and the Czech Republic joining the EU. 216 S. M. Tang

In Asia, the post-Cold War rapprochement is mixed. On the one hand, relations were characterised by a new drive for regional cooperation. While cooperation had — in the main — focused on less contentious issues such as trade and economics, it was also notable that security cooperation is gaining momentum. One example of the embryonic security multilateralism is the ASEAN Regional Forum (ARF). It stands as the only platform linking all the near and immediate actors that has a bearing on the region’s security stability. Today the ARF is a diverse group 23 sovereign nations, plus the United Nations Development Program (UNDP). The ‘talk-shop’ nature of the ARF has oft been criticised as devoid of substance and political will to realistically address outstanding security concerns. However, the confi dence-building utility of the ARF cannot be ignored or underestimated. The morbid pace and performance of the ARF is nevertheless a reminder of the infl uence and clout the major powers have on regional affairs. While a distant memory in other parts of the world, the shadow of the Cold War looms large in East Asia. The tension-fi lled Korean Peninsula and the division of the Korean nation bear testimony to the relevance of Cold War politics in contemporary East Asian affairs. In a similar vein, US military presence in the region continues to be an important — albeit increasingly less welcome — feature of the East Asian strategic landscape. South Koreans had, in the years following the end of the Cold War, been vocal in protesting US military presence in their country. Their northern brethren had persistently argued that US troops in South Korea was the source of the division of the Korean peoples. Notwithstanding the rhetoric and propaganda by the Pyongyang regime, the US, in consultation with its South Korean ally, had agreed to a gradual reduction of US military footprint in South Korea. The troop reduction agreement fi nalised in June 2004 saw a 33 per cent; reduction of US troops when the redeployment Downloaded by [University of Defence] at 01:36 24 May 2016 exercise was completed in 2008. The US Forces in Japan (USFJ) is 47,000 strong, including the George Washington carrier battle group based at Yokosuka. The George Washington task force is the only US carrier group home ported outside the US. In recent years, Washington and Tokyo had worked in earnest to streamline their security relations. The Japan–US Joint Declaration on Security: Alliance for the 21st Century signed by Premier Hashimoto Ryutaro and President Bill Clinton in 1996 Malaysia’s Strategic Options and Outlook 217

was a reaffi rmation of the close security relations between the two countries. The declaration also clarifi ed bilateral security roles and commitments in the post-Cold War strategic environment. The ‘Revised Guidelines’ were announced in 1999 to implement the 1996 declaration caused a maelstrom, in particular the phrasing of ‘situations in areas surrounding Japan’. China took the words to include Taiwan and the Formosa Straits and the concomitant possibly of Japanese involvement in any future military confl icts involving China and Taiwan. In recent years, US–Japanese military cooperation had improved markedly. The Koizumi administration reacted fi rmly to ‘show the fl ag’ and joined the ‘alliance of the willing’ in the US call on the war against terrorism. Despite of the ongoing tension between Tokyo and Washington on the relocation of US troops in Okinawa and the ‘appearance’ of the Hatoyama government for a more independent line, the US is likely to remain a feature in Japan’s security posture and planning in the immediate and medium term. China’s experiments with capitalism had brought enormous payoffs to Beijing and the region in general. Economic growth had also provided the Chinese government the wherewithal to upgrade and improve the outmoded People’s Liberation Army (PLA). It has augmented its air power by purchasing advanced fi ghter aircrafts from Russia, including the Su-30MKK and Su-30MK2. In addition, Beijing is producing the Su-27SK, under a licensed co-production with Russia — a move that would decrease China’s military dependency. China has taken delivery of two Russian-made SOVREMENNYY- class guided missile destroyers, equipped with advanced anti-ship cruise missiles and ship-borne air defense systems. With two additional SOVREMENNYY destroyers and eight KILO-class submarines on order, the PLA navy is fast becoming a force to be reckoned with in maritime Asia. China’s military modernisation is a rational move to replace the old inventory designed to match the modern and advanced Downloaded by [University of Defence] at 01:36 24 May 2016 fi repower possessed by some of its neighbours, most notably Japan. Although China has repeatedly stressed its benign and non-hegemonic intentions, the fact remains that China — given the quantity and improving quality of the PLA — will also be an important variable in regional security. Three major issues dominate East Asia’s strategic landscape. First, North Korea’s persistent interest in developing a nuclear weapons programme is unsettling, to say the least. Concern of an erratic and 218 S. M. Tang

unpredictable nuclear-armed Pyongyang brought about the unprecedented cooperation among China, Japan, Russia, South Korea and the US to keep North Korea from proliferating. The Six-party Talks thus far provided a mechanism for these fi ve countries to engage North Korea in a constructive dialogue aimed at persuading Pyongyang to abandon its nuclear weapons programme. The results are, however, mixed. In 2005, Pyongyang had declared that it had acquired a limited number of nuclear warheads and recent diplomatic efforts are aimed at damage limitation and to prevent North Korea from increasing its nuclear stockpile. However, it appears that these efforts had made little headway as North Korea conducted an underground nuclear test in May 2009, further exacerbating regional concerns. The second issue concerns China’s strained relations with Taiwan. At the recent 10th National People’s Congress, China passed into law the Anti-Secession Law, which authorises the use of force on Taiwan if the latter were to declare independence. In short, war would ensue if Taipei were to realise its ambitions of statehood. The PLA’s deployment of some 700 mobile CSS-6 and CSS-7 short-range ballistic missiles opposite of Taiwan is an indication of the high stakes involved. On the opposite side of the Straits, Taipei perceives China’s show of force as a sign of aggressive design and reciprocated with its own military build-up. The amount of fi repower lined up on both sides of the Straits and the political commitment on the part of Beijing to defend what it perceives to be protection of its sovereign interest and Taiwan’s fl irtations with independence, the consequences for miscalculation or brinkmanship would be disastrous for both parties. The election of Ma Ying-jeou as president ushered in a new era of reconciliation between China and Taiwan. Direct fl ights were initiated as well as measures taken to deepen direct trade and economic ties. Downloaded by [University of Defence] at 01:36 24 May 2016 The third issue is one of long standing. Numerous states in the region are engaged in overlapping territorial claims that have in recent years strained diplomatic ties. The Senkaku/Diaoyu Islands are claimed by China (and Taiwan) and Japan. The Takeshima/Tokto and the Sea of Japan/East Sea disputes pit Japan and South Korea against each other. A bitter confl ict concerns the Northern Territories/ Kurile Island disputes between Russia and Japan. The Spratly Islands Malaysia’s Strategic Options and Outlook 219

are one of the most visible regional hotspots and pit six claimants. Sufﬁ ce it to state that these claims, if not handled properly, could impair bilateral relations and regional stability. Foundations of Malaysian Foreign Policy The pillars of Malaysian foreign policy are inﬂ uenced by history, geography and political circumstances. These pillars are (a) multilateralism; (b) regionalism; (c) Islamic solidarity; and (d) non-alignment. Size has not been an impediment for Malaysia to play an active role in international affairs. Rejecting Thucydides’ dictum that ‘the strong do what they have the power to do and the weak accept what they have to accept’, Malaysia astutely followed a multilateral approach to engage major and small powers alike. The country’s commitment to multilateralism could be seen from its strong support of the UN. Just three years after achieving independence and while fending off a strong communist emergency in the then Malaya, it answered the UN’s call for peacekeeping troops in the newly established country of Congo, where Malaysian troops served with distinction from 1960–63. This commitment to the ideals and vision of the UN continues today. The election of Tan Sri Razali Ismail as the President of the UN’s 51st General Assembly was an acknowledgement of Malaysia’s contributions to that body and to world affairs in general. Besides the UN, Malaysia is actively involved in other multilateral forums such as the Commonwealth and various other UN agencies. The regional appeal to Malaysia is a natural outgrowth of geography and history. Located in Southeast Asia, there has always been an impetus for Malaysia to forge stronger ties with its immediate neighbours. Malaysia’s early forays into regionalism included the Association for Southeast Asia (ASA, 1963), Malaysia, the Philippines and Indonesia (MAPHILINDO, 1963), and Association of Southeast Asian Nations (ASEAN, 1967). The latter brought together Indonesia,

Downloaded by [University of Defence] at 01:36 24 May 2016 Malaysia, the Philippines, Singapore and Thailand under a common institutional umbrella to foster closer political and economic ties. The ASEAN Free Trade Area (AFTA) is the vehicle to promote and enhance intra-regional trade. ASEAN is valued for many reasons. The ‘ASEAN way’ is major factor at preventing confl icts from fl aring into open confl ict. The consensual decision making, which virtually assigns a veto to every member, ensures Malaysia’s interests are not imperiled by stronger neighbours. Over the years, Malaysia 220 S. M. Tang

has found ASEAN to be an effective platform to pursue its national interests and an important vehicle for regional cooperation. In the words of Malaysia’s former foreign minister Datuk Seri Syed Hamid Albar, ‘ASEAN will remain the cornerstone of Malaysia’s foreign policy.’1 Islamic solidarity is an important component of Malaysia’s foreign policy. Not only has Malaysia linked up with other Islamic countries, most notably through the Organization of the Islamic Conference (OIC), it has taken up the role of spokesman on a host of issues involving Muslims worldwide. It is notable that Malaysia’s fi rst premier, Tunku Abdul Rahman, was given the marked honour of serving as the OIC’s fi rst secretary-general. In 2003, Malaysia hosted the summit conference in Putrajaya and held the OIC chairmanship for the next three successive years. In many regards, Malaysia is the voice of conscience for the Muslim world. It spoke out without fear or favour in defence of its fellow Muslims. The Mahathir administration’s tireless efforts to highlight the plight of Muslim Bosnians at the hands of Serbian aggression, while providing political and fi nancial support for their Bosnian Muslims, is one of many examples of Malaysia’s attention and concern for the Muslim brotherhood (ummah). In the wake of the 11 September 2001 terrorist attack on the US, Malaysia has received accolades and recognition as a moderate Islamic state that has successfully managed the tensions of a multi-ethnic and religious society with the pressures of globalisation and modernity. With strong ties and relations with the Muslim and non-Muslim world, Malaysia is poised to play a leading role in bridging the gap between the two communities. Malaysia strives to promote and enhance the understanding of Islam among non-Islamic states. However, it also needs to engage and speak with the ummah and the Muslim community on the fundamentals of coexisting with the non-Muslim world. The key to resolving religion-based terrorism is to speak and

Downloaded by [University of Defence] at 01:36 24 May 2016 reach out to both sides of the divide. The last pillar of Malaysian foreign policy — non-alignment — continues to remain a salient notwithstanding the persistent doubts of the Non-Aligned Movement’s (NAM) raison d’être. During the Cold War, participation in the NAM made an important statement of

1 Address delivered by Datuk Seri Syed Hamid Albar, ‘Malaysia’s International Direction in the Next Millennium’, INTAN: Kuala Lumpur, Malaysia, 12 August 1999. Malaysia’s Strategic Options and Outlook 221

Malaysia’s interest to avoid entrapment in the East–West ideological struggle. The NAM provided the political space for Malaysia and other like-minded states to move beyond the boundaries set by either the US or the Soviet Union. For sure, the Cold War had ended and non-alignment sounds passé. However, as chairman, Malaysia is actively involved in breathing new life into the organization. Issues such as bridging the income gap between the rich and poor nations, digital divide and development are gaining currency and importance as the NAM’s new foci. Evolving from an institution designed to avoid siding with any one superpower, it now fi nds it expedient to actively engage other great powers. As a leader among the developing countries, NAM is one of several international platforms for Malaysia to consult and reach out to other members. Managing Change in Era of Uncertainty The single-most important external factor affecting Malaysia’s foreign policy is the regional power shift between China and Japan. In the wake of the 1985 Plaza Accord on the value of the dollar, Japan played a pivotal role in Malaysia’s economic development and growth through FDI, aid and the provision of loans at attractive interest rates. Mahathir’s ‘Look East’ policy further cemented the nation’s ties with Japan. By the early 1990s, however, the Japanese economic juggernaut seemed to have lost steam. As a result, Japan is no longer numero uno in the region. Decades of stagnation and political malaise have weakened Japan’s international standing and infl uence. To be sure, Japan is and will remain in the near to medium term an important regional player, but its infl uence will be tempered by the seemingly unstoppable Chinese economic behemoth. China is now the third-largest trading nation in the world and is on track to overtake Japan soon. A study by the China Policy Institute of the University of Nottingham predicts China will overtake Japan as the world’s second largest economy either in 2009 or 2010. The Downloaded by [University of Defence] at 01:36 24 May 2016 effect of the Sino–Japanese power transition is clearly evident in the trade patterns of these two countries with Malaysia. In 2000, the value of Malaysia’s imports from Japan exceeded those from China by 17 per cent. By 2007, the value of Chinese imports into Malaysia grew on par with Japanese imports, with each country accounting for 13 per cent of Malaysia’s total. Similarly, by 2007 both Japan and China each accounted for the same proportion of Malaysia’s exports — 9 per cent. While bilateral trade between Japan and Malaysia has remained stable, China’s trade with Malaysia had 222 S. M. Tang

grown signifi cantly. In 2000, Chinese imports accounted for 4 per cent of Malaysia’s total imports, but by 2007 this fi gure had increased to 13 per cent. In the corresponding period, Malaysia’s exports to China increased three-fold from 3 per cent to 9 per cent of the total exports. Bilateral political relations have followed a similar path. In 2009 Malaysia and China marked the 35th anniversary of the normalisation of relations, and to underscore the importance of those ties to Malaysia, Prime Minister Najib made an offi cial visit to Beijing on 2 June. The rise of China has brought enormous economic gains for Malaysia and the region, and presented Malaysia with a strategic opportunity to harness its relationship with China to produce further benefi ts. China’s burgeoning middle class and vast potential as a market for Malaysian goods and resources such as palm oil allow Malaysia to reduce its dependence on traditional export destinations such as Japan and the US. If China fulfi ls its potential as the ‘sponge’ to absorb Asian exports, it would allow states like Malaysia to better weather economic downturns in the US. In short, China’s march toward a market economy and the resulting economic growth is the single most important factor impacting Malaysia’s external outlook in the past decade. This looks set to continue. Although China and Japan occupy a vast space in Malaysia’s strategic mindset, the fast-rising Indian economy cannot be ignored. Bilateral trade between Malaysia and India is small. Malaysian exports accounted for only 3 per cent of India’s total exports, while Indian imports accounts for 1 per cent of Malaysia’s total imports. These low fi gures belie the importance of India to Malaysia. In the past decade, Malaysian multinationals have made successful forays into the Indian market, especially in the construction sector. Among these companies are UEM, Ranhill, Maxis, Sunway and IJM. Diplomatically, India is an important player in the ongoing discourse on regional architecture.

Downloaded by [University of Defence] at 01:36 24 May 2016 Its inclusion into the East Asia Summit (EAS) is a radical change of the region’s geographical mindset, and provides India an opportunity to stake a voice — and indeed to become a stakeholder — in the discourse. As one of the region’s three ‘residential’ major powers, India’s inﬂ uence and interest cannot be ignored. Malaysia’s Strategic Interests China’s rise as an economic and political powerhouse brings the region into uncharted territory. Historically, the region has not Malaysia’s Strategic Options and Outlook 223

housed two ‘residential’ great powers. The decline of the Ching Dynasty was counterbalanced by the Meiji Restoration and Japan’s concomitant rise to great power status. In more recent times, Japan’s economic recovery in the post-war period was facilitated by US patronage and security protection. China’s preoccupation with internal affairs and relatively low international profi le effectively gave Japan a carte blanche to expand its economic and political infl uence in Southeast Asia. Its sustained military modernisation program is turning the PLA into a modern and powerful outfi t. In spite of the occasional diplomatic tensions between the two great powers, these fi ssures are unlikely to deteriorate into open warfare. Nevertheless, it is for certain that the two powers would contend for regional infl uence and would look southward to expand their infl uence. Southeast Asia is a strategic battleground for both China and Japan. International Relations theory prescribes two alternatives for Malaysia to deal with a rising China and ‘declining’ Japan: bandwagon and balancing. The fi rst option is a realistic one for small powers. When faced with the option of confronting stronger states, small powers usually bandwagon with the former as it is the least costly alternative. Furthermore, states pursuing this strategy often ‘bandwagon for profi t’. Siding with the stronger state brings benefi ts and gains. The downside to this strategy is that the smaller state is at the mercy and dictates of the stronger state. This could mean the loss of freedom and sovereign rights. Alternatively, small states can opt to pursue a balancing strategy which calls for the formation of alliances with like-minded states to contain and confront the threatening power. In other words, states balance against the stronger state, for it is the stronger state that threatens smaller powers. Both strategies are problematic for Malaysia. Bandwagon is not a viable option as it is unclear what Malaysia stand to gain by forging a

Downloaded by [University of Defence] at 01:36 24 May 2016 tight alliance with China. Furthermore, it is unclear what Malaysia could gain other than the beneﬁ ts it already enjoys. Bandwagon is also a high-risk strategy as it would isolate Japan and undermine the strong bilateral trade and cultural relations built up for the past three decades. Balancing is equally problematic. Malaysia does not see China or Japan as a security threat. Hence it begs the question, ‘Who is Malaysia balancing against?’ The absence of a clear and imminent threat complicates the implementation of a balancing strategy. 224 S. M. Tang

How to deal with China, India and Japan is a question of enormous importance to Malaysia. Bandwagon and balancing are ruled out as possible options. The most conducive outcome for Malaysia is to maintain equidistant relations with both powers, aimed at maintaining and enhancing existing ties. The cost of pursuing the bandwagon or the balancing strategy is prohibitively high and does not serve Malaysian national interest. Interdependency is a pivotal objective in Malaysia’s objectives toward Northeast Asia. Former Prime Minister Dato’ Seri Abdullah Ahmad Badawi’s repeated enunciation of the ‘prosper-thy-neighbour’ posture as a foundation to promote and enhance regional ties provides an important insight into Malaysia’s strategic objectives. The collaborative and peaceful nature of Malaysia’s strategic posture is shared by Japan and China, who in turn advocate the concepts of ‘working together, advancing together’ and ‘peaceful rise’ respectively. With bandwagon and balancing ruled out, Malaysia’s strategic objective vis-à-vis the major powers — including India — is to ﬁ nd a modus vivendi. The strategic puzzle for Malaysia is crafting an optimal strategy to engage the major powers in a constructive and mutually beneﬁ cial manner. To that end, it is important not to isolate or give cause for any party to adopt an aggressive stance toward Malaysia. In short, Malaysia’s present and future strategic options comprise of elements of engagement and assurance. Malaysia’s Strategic Puzzle Malaysia is in an envious position of not having an enemy. Theoretical ‘enemies’ abound but with the retreat of the ‘Red Tide’, Malaysia no longer faces an imminent military threat from its surrounding states. At face value, China presents a potential military threat to Malaysia. Beijing’s increasing and sustained military expenditure is a source of concern. From 1998 to 2007 ‘the average annual increase

Downloaded by [University of Defence] at 01:36 24 May 2016 of defense expenditure was 15.9 percent, while that of GDP was 12.5 percent’.2 However, it bears reminding that capability does not translate into intentions. Malaysia recognises and accepts that as a major power, China has legitimate reasons for boosting its military power. Nevertheless, China’s military build-up is watched with interest and followed closely by Malaysia and other regional states.

2 ‘Defence Expenditure’, The China Daily, http://www.chinadaily.com. cn/60th/2009-08/27/content_8623797.htm, accessed 30 August 2009. Malaysia’s Strategic Options and Outlook 225

China’s mantra of ‘peaceful rise’ and ‘peaceful development’ is com- forting but no state — including Malaysia — can be assured that China will not pursue hegemonic tendencies in the future. Herein lies Malaysia’s foremost strategic conundrum — strategic uncertainty. As a small state, Malaysia is highly vulnerable to shifts in regional distribution of power and is virtually defenceless against the hegemonic designs of major powers. To complicate matters, we are now witnessing a nascent major power contest between China and India. India concluded a 15-point Defence Assistance Agreement with Vietnam in 2000 and both navies had regular joint exercises. In April this year, INS Mumbai and INS Ranvir visited Haiphong. Given Vietnam’s long standing run-ins with China, it is expected that Hanoi will seek out like-minded allies to improve its strategic leverage. While cooperation with regional and extra-regional actors is welcome, there is a concern that these balancing overtures, if they continue to deepen and expand, will divide the region into camps analogous to that of the Cold War. In this regard, Malaysia holds dear ASEAN’s Zone of Peace, Freedom and Neutrality (ZOPFAN). The Straits of Malacca provide an illustration of Malaysia’s management of major powers. The Straits are one of the most strategic sea lines of communication (SLOC) and is the lifeline to regional states — China, India and Japan. Naturally, all states are eager to protect their maritime assets and to ensure the safe navigation and free usage of those waters, and this entails patrolling the Straits. In keeping with the ZOPFAN (and to uphold its sovereignty), Malaysia prefers the major powers to enhance the capacity of littoral states to patrol and safeguard the Straits, rather than opening the ﬂ oodgates for all major powers to have permanent presence in the Straits. Instructive in this modality is the imperative of working with all the major powers, without favouring any particular party. Inclusiveness is key. Malaysia understands that these major powers have legitimate concerns.

Downloaded by [University of Defence] at 01:36 24 May 2016 Community building and regional integration is an important thrust of Malaysia’s long-term strategy to ensure the region’s political and strategic stability. By anchoring the major powers in the collaborative web of economic cooperation and other political processes, it is hoped that the simmering distrust, suspicion and animosity between the regional states will dissipate. As a small country with limited means to balance against the might of China and Japan, Malaysia sees the community building as an avenue to embed itself within a structure that will enable it to protect and further its 226 S. M. Tang

national interests. Either on its own or as part of a larger grouping of ASEAN, Malaysia sees its ability to exercise its rights as a regional stakeholder best secured within a collaborative framework, rather than through unilateral means. The challenge for Malaysia — and indeed for the entire region — is to determine the modality and to construct the appropriate architecture that would foster such collaborative ventures. Conclusion Surrounded by three major powers — China, India and Japan — Malaysia is fortunate that none of these powers have demonstrated any hegemonic tendencies. Equally fortuitous is that there is no singular power that could impose its will on the region even if it so desires. We may well be witnessing a strategic stalemate. Pessimists may argue that China may just be well biding its time and has yet to demonstrate its true colours. Crystal-gazing is often a hazardous activity. Rather than err on the side of caution and to predicate our responses to the ﬂ uctuations of power shifts in the region in an alarmist manner, it would be better to harness the window of opportunity to bring the major powers into a productive, positive and cooperative framework. Malaysia is a member of the world’s most dynamic region, fuelled largely by the Chinese dynamo, with the maturing Japanese economy and the promise of a rising India playing a stabilising and supporting role. Still, economic success can also breed uncertainty as nations seek strategies to protect and further their relative power positions and to maximise their individual security. Against this backdrop, the future challenges and prospects for Malaysian diplomacy need to address the following:

(a) How to facilitate and sustain great power, interest and

Downloaded by [University of Defence] at 01:36 24 May 2016 commitment — chieﬂ y from the US, China and Japan — to regional security, stability and prosperity without putting Malaysia into a strategic straightjacket. The prospect of Malaysia being overwhelmed or sidelined by the great powers cannot be underestimated. Essentially, how can Malaysia avoid being relegated to a pawn in the great power game in its own backyard? The issue goes beyond considerations of sovereignty and involves the ability of Malaysia to be in the decision-making circles in shaping the future of the region. Malaysia’s Strategic Options and Outlook 227

(b) How should Malaysia respond to recent US overtures that appear to give ASEAN and Southeast Asia the attention and importance they rightly deserve? How should Malaysia respond to positive cues and recognition from President Barack Obama’s administration, which commended Malaysia as a prime example of a moderate Islamic nation? Despite the fact that the US is among Malaysia’s top three trade partners, US–Malaysia ties have been complicated by the US’s support for Israel — an issue that resonates strongly in Malaysia where half the population is Muslim. Also, would becoming closer to the US strategically and politically elicit suspicion from Beijing and undermine years of careful cultivation of Sino–Malaysian ties? (c) How to reinvigorate ASEAN and kickstart broader Asian community building? The ‘same-bed-different-dreams’ syndrome has plagued the East Asia community-building process. The ofﬁ cial line mandates the process to be ‘ASEAN- driven’. However, one school of thought prefers the process to be conducted via the EAS, while another school is more comfortable with the APT. This divide is evident among ASEAN states. Thus, Malaysia’s challenge is to negotiate and locate common ground within and among ASEAN states. Without such consensus, wider community building will be stillborn and a fragmented ASEAN would become susceptible to Balkanisation by external actors. Reference The China Daily. ‘Defense Expenditure’. http://www.chinadaily.com.cn/ 60th/2009-08/27/content_8623797.htm. Accessed 30 August 2009. Downloaded by [University of Defence] at 01:36 24 May 2016 228 Jean-Louis Margolin

13 China–Singapore Cyclical Relations in the Longue Durée: Some Lessons for the Future

Jean-Louis Margolin

Today’s Singapore is a city state where the Chinese make up the overwhelming majority of the population (73 per cent) and control most of the indigenous businesses. Furthermore, since 1997, China has become the fi rst investment destination for Singapore, with over US$25 billion invested in 2005 alone. Their two-way trade reached 8 per cent of Singapore’s total trade in 2003, making China Singapore’s fi fth-largest trading partner that year. In 2008, China jumped to second place (just behind neighbouring Malaysia), with 9.9 per cent (and an impressive 15.8 per cent if Hong Kong is included).1, 2 However, this prominence of China is a relatively new, and in many ways an exceptional situation in the island’s 700-year long history. In 1976 — the year Mao Zedong passed away — China only made 1.9 per cent of Singapore’s total trade (6.6 per cent, including Hong Kong), and 2.5 per cent as late as 1990 (7 per cent, including Hong Kong).3 Actually, Singapore’s relations with China have always been highly cyclical, with as many downs as ups. Singapore history itself has known several long eclipses. The island fi rst fl ourished as a major port in the 14th century as Temasik (also written Temasek) and then as Singapura, before slowly sinking back into relative obscurity, until Thomas Stamford Raffl es, in the name of the British East India Downloaded by [University of Defence] at 01:36 24 May 2016 Company, ‘founded’ it once again in 1819. ‘Nothing should be taken

1 This makes sense, as Hong Kong has always been a transit zone between South China and the rest of the world. 2 http://www.singstat.gov.sg/pubn/reference/yos09/statsT-trade.pdf. 3 Jean-Louis Margolin, Singapour: Genèse d’un nouveau pays industriel 1959–1987, Paris: L’Harmattan, 1987, pp. 300–301; Singapore Ministry of Trade and Industry, Economic Survey, various years. China–Singapore Cyclical Relations 229

for granted’: this favourite sentence of former Prime Minister Lee Kuan Yew refl ects well the uncertainties inherent in the very nature of such a small country — open, well-located but simultaneously exposed to adverse winds. A Long History of Chinese Presence The 14th century island port had made itself a, if not the, central place for exchanging products which came to the Straits of Melaka from the Southeast Asian region, from China, from India and from the Middle East.4 Singapore had probably then one of the fi rst settled populations of Chinese in Southeast Asia. Furthermore, it developed unusually close links to China. However, for several centuries, Chinese presence in Southeast Asia suffered greatly due to the ‘stops and gos’ of the mother country’s policies regarding the external world. Thus, during the early 15th century, the Yongle emperor of the Ming Dynasty initially treated all overseas Chinese as traitors, disloyal to their ancestors for having neglected their graves, and he considered wiping them out. Palembang (South Sumatra), which had become a major Chinese stronghold, was attacked and huge numbers were killed. Nevertheless, a special pacifi cation commissioner from the surviving Chinese community was appointed. For a brief period, between 1405 and 1433, during the famed maritime expeditions of Admiral Zheng He, Palembang and Melaka even occupied special statuses in China’s offi cial relations with Southeast Asia. Then China turned inward again, destroyed most of the archives related to the expeditions and severely restricted contact with the wider world. But the very transient political–military hegemony of Ming China had long-lasting effects on the geopolitics of the Malay Peninsula: Melaka replaced Singapore as the main hub of regional trade — a situation discovered a century later by the incoming Portuguese who Downloaded by [University of Defence] at 01:36 24 May 2016 made, between 1511 and 1641, the great, cosmopolitan harbour their fi rst and foremost base for the whole of Southeast Asia, second only to Goa in the eastern seas. As a consequence, Temasek all but

4 The beginning of this section owes much to John Miksic, ‘The Fourteenth to Fifteenth Centuries’, in Karl Hack and Jean-Louis Margolin (eds). Singapore: National University of Singapore Press. 230 Jean-Louis Margolin

disappeared from written archives, as so few have survived from the ancient and medieval Southeast Asian states.5 What is best known is that the Hindu ruler of Singapore moved to Melaka in or around 1415, where he soon converted to Islam, thus becoming a sultan. At the time of Temasek’s glory, in the 14th century, a Chinese population lived peacefully alongside the indigenous communities. Isolating foreign merchant communities from the locals is a common feature in many cultures; it can be found in medieval Europe, the Mediterranean countries, the Middle East and West Africa, hence the utmost importance and lasting survival of small ethnic minorities such as the Jews, Armenians, Lebanese or Greeks (outside their native lands). This practice protected the subjects of more or less shaky local rulers from absorbing foreign, possibly subversive, ideas; it also enabled the trading communities to retain their own customs, and often to maintain extraterritorial legal systems. Various commodities which were highly prized in China at the time could be found in the Riau Archipelago, which in some ways includes Singapore Island. Among them were pearls, tortoise shell, coral and the supposedly aphrodisiac sea cucumbers. All these, being sea products, the original inhabitants of the area (Sea Nomads or orang laut) were perfectly suited to provide. Consequently, by the mid-14th century, they may have shifted the main weight of their activities from preying upon traders to becoming traders through Singapore, if not directly with the Chinese. If India-originated concepts of power and religions (Hinduism, then Islam) dominated the societal sphere, an Indian presence is less conspicuous. However, the self-enclosing of China, during most of the 15th–17th centuries period,6 opened the way to a huge penetration of Southeast Asia by Indian traders and products (especially fabrics, ubiquitous in the region all along the 16th–17th centuries). An increasing part of the subcontinent’s products was Downloaded by [University of Defence] at 01:36 24 May 2016 disseminated by the newly arrived westerners. In the 18th century, China’s expansion and reopening triggered a new cycle of growing

5 The main reason being the general use for writing of the dried leaves of lontar palm tree — not a lasting material in monsoon countries. 6 The turning point was Zheng He’s disgrace and the deliberate destruction of his great ﬂ eet. Later, the ‘Japanese’ pirates (many of them being actually Chinese outlaws) made China’s coastal areas highly insecure. Finally, from 1630–80, the China–Singapore Cyclical Relations 231

Chinese presence and economic infl uence. A golden opportunity was offered by the West’s transitory decline, Dutch growing diffi culties not being balanced by a still modest British presence. What some authors call the ‘Chinese century’ was rather abruptly interrupted by European decisive advances in the region, especially after 1850. Under British rule (1819–1963), the China connection went through booms and bursts. Raffl es’ project was to make Singapore the main trading place between India and China: never was the position of those two countries in Singapore’s foreign trade as overwhelming as in the colony’s fi rst decades. But the foundation of Hong Kong, the forced opening of China’s ports as well as the increasing economic signifi cance of the Malayan/Sumatrean hinterland triggered a powerful fallback of Singapore on its region. Around 1900, the huge economic expansion, based on tin and rubber, made Singapore into a truly global city for the fi rst time, but it was the US or Germany, and later Japan, that increased their share of the foreign trade — not China nor India. Local Chinese dominated the domestic sphere, especially in the economy: it has been estimated that, around 1937, Chinese investments in Singapore and Malaya amounted to some 200 million Straits dollars, second only to British investments (320 million), but more than all other foreign investments taken together (135 million).7 The Malay Peninsula was undoubtedly the strongest bastion of Chinese presence region-wide. But in Southeast Asia, in 1941, among some US$4.4 billion of foreign investment, Chinese ones amounted to 640 million — some 15 per cent of the total, far exceeding the US (330 million) and even more Japanese investments (60 million). British-invested capital reached 860 million.8 Local Chinese intervened increasingly in politics too, but without obvious implications in foreign relations, as this remained the preserve of the British administration. It remains that Sun Yat-sen’s Downloaded by [University of Defence] at 01:36 24 May 2016

overthrow of the Ming Dynasty by the Manchu invaders, and the long-lasting resistance of Southern loyalist bastions such as Taiwan, brought disaster to what remained of China’s sea trade. 7 Victor Purcell, The Chinese in Southeast Asia, 2nd edn, Oxford: Oxford University Press, 1965, pp. 241–42. 8 D. G. E. Hall, A History of South-East Asia, 4th edn, London: Macmillan, 1981. 232 Jean-Louis Margolin

revolutionary movement9 and, later, China’s ‘National Salvation’ mobilisation against Japan and Mao’s new China found tremendous support in all spheres of the Singapore Chinese community, so apolitical all through the 19th century. Thus, between 1937 and 1941, Southeast Asian Chinese sent some $110 million to China, then fi ercely fi ghting against Japan.10 A Chinese revivalism had actually appeared around 1900 among high-class intellectuals: Dr Lim Boon Keng had been the fi rst local Chinese to get a Queen’s Scholarship and graduated in Edinburgh; he had converted to Christianity, and been nominated to the Legislative Council. Nevertheless, in 1897, he initiated a Confucianist Revival Movement, and became, between 1921 and 1937, president of the new university of Amoy (Xiamen), fi nanced in his native Chinese city by prominent Singaporean businessman Tan Kah Kee. China had played a direct role in that revival: As early as 1877, the successful businessman nicknamed Whampoa had been nominated ‘General Consul for the South Seas’ (Nanyang); even more signifi cant was, in 1891, the coming to Singapore of a specifi c Consul-General. He contributed to the development of cultural associations and sold honorifi c Mandarin titles.11 Singapore has always played a central role for Southeast Asian overseas Chinese (hua qiao). Many, if not most of them entered the region through the great harbour, and were redistributed by coolie brokers to places as far apart as Sumatra, Borneo or even Thailand. The most important hua qiao associations, newspapers or banks were in Singapore. The only overseas Chinese private university was created in the early 1950s through the fi nancial effort of the entire local Chinese population. More recently, Singapore played a safe- haven role for Chinese businesses and individuals from the entire region: It was said that in the 1980s no less than SGD$5 billion had been invested in the city state by Indonesian Chinese, eager to protect their savings from their country’s turmoil (always turning Downloaded by [University of Defence] at 01:36 24 May 2016

9 The leader of the 1911 Republican Revolution made no less than eight journeys to Singapore. 10 C. A. Fisher, Southeast Asia: A Social, Economic and Political Geography, London, 1964, p. 191. 11 Michael Godley, The Mandarin-capitalists from Nanyang: Overseas Chinese Enterprise in the Modernization of China, 1893–1911, London: Cambridge University Press, 1981, pp. 115–17, 130–42. China–Singapore Cyclical Relations 233

against the Chinese), and to acquire permanent residency status in Singapore (for a long time, a $150,000 investment has been a precondition). After President Suharto’s downfall (1998) and the ensuing trouble, thousands more Indonesian Chinese settled there, at least for a period of time. Ironically, the post-1980 upsurge of economic and political exchanges with China has been contemporary of a profound decline of China’s attraction on Singapore Chinese minds, the main reason probably being that not only themselves, but their parents too were born in Singapore or Malaya. Since the 1980s: A Multi-faceted Growing Relationship At the state level, things developed quite differently from people-to- people relationships. From 1975 — after the Sino–US rapprochement in 1971–72 — Singapore leaders began to develop more formal relations with China. In 1976, when Lee Kuan Yew visited China, he still ﬁ rmly expressed strong ideological opposition to China, but also declared that ‘Singapore would not be anti-China’. By the middle of the 1970s, some Singapore Chinese entrepreneurs had already begun to invest in China itself.12 Singapore also sought to interpose itself as a relay for multinational ﬁ rms wishing to invest in China. By 1988, China ranked sixth amongst Singapore’s trading partners, after the US, Malaysia, Japan, Hong Kong and Thailand. State encouragement was vital to such growth. But right from the start, entrepreneurs also attempted to renew their links with their province of origin — notably Fujian and Guangdong — and established some small joint ventures there. Then, from the middle of the 1980s, bigger investments were made in sectors where Singapore entrepreneurs were competitive and China required management expertise.13 Big private groups (such as Wah Chang) invested in Downloaded by [University of Defence] at 01:36 24 May 2016

12 Henry W.-C. Yeung, ‘Transnational Entrepreneurship and Chinese Business Networks — The Regionalization of Chinese Business Firms from Singapore’, in Thomas Menkhoff and Solvay Gerke, Chinese Entrepreneurship and Asian Business Networks, London: RoutledgeCurzon, 2002. 13 Catherine Paix, ‘The Singapore Domestic Bourgeoisie: How Entrepreneurial? How International?’ in Garry Rodan (ed.), Singapore Changes Guard: Social, Political and Economic Directions in the 1990s, New York: Cheshire-Longman, 1993. 234 Jean-Louis Margolin

various provinces, especially in the construction sector (harbour infrastructure, civil engineering, hotels, urban housing) and oil logistics, sometimes as early as the 1970s. The main Singapore banks — since long a major asset for the harbour’s economy — also started to give out loans to fi nance large projects. From the beginning of the 1980s, China had become a central element of the Singapore development strategy. But it was from the 1990s, especially when diplomatic relationships between the two countries were re-established and China initiated its second stage of reforms and privatisation, that the relationship deepened. The relationship became more political whilst rapidly strengthening on the economic level. Beforehand, a half-retired Singapore leader such as former Deputy Prime Minister Goh Keng Swee had been an adviser to the Chinese government, and ‘Suzhou II’, a huge new town in the strategic Jiangsu province, had been planned by Singapore government-linked companies. But the Singaporean governing elite now sought to encourage China to engage politically and economically in the Southeast Asia and wider Asian regions, whilst pursuing a strategy of internationalisation in all directions. The goal was to compensate for Singapore’s vulnerability and reaffi rm its position of global and regional centrality. Finally, the government launched an ‘Asian Values’ campaign in 1991, that signalled a ‘region rediscovery’ for an island long mesmerised by western ways, and that still harbours one of Asia’s biggest western communities. As early as 1997, China became the fi rst investment destination for Singapore, with over US$25 billion invested in 2005. The total trade between the two countries increased four-fold over the period 1991–2001; they even recorded an annual growth rate of 31 per cent in 2002–2003. Moreover, Singapore’s investments and businesses relationships are not a one-way fl ow. Whilst Singapore is re-exporting an important part of its imports from China to the region (40 per

Downloaded by [University of Defence] at 01:36 24 May 2016 cent), it is also becoming a stepping stone for Chinese enterprises looking to reach out to the region and to internationalise. Thus, in recent years, Chinese companies (both private and public) have settled in Singapore and listed to the Stock Exchange in increasing number. They aim at getting access to the knowledge and resources they needed to go global. In the political ﬁ eld, Singapore has consistently supported efforts to encourage dialogue between China and regional associations. For instance, it supported the growing dialogue and cooperation between China–Singapore Cyclical Relations 235

China and the ASEAN countries. Singapore promoted China’s association with ASEAN as a consultative member in 1991, then as a member of the strategic ASEAN Regional Forum (ARF) in 1994, and as a full dialogue partner in 1996. But Singapore leaders are too conscious of the growing unbalance between their tiny island and the Chinese subcontinent to place all their bets in the China connexion. Since the beginning of the 1990s they reactivated the fl edgling relationship with India. They endeavoured to engage India in Southeast Asia in order to counterbalance China’s rise, as well as to seize the new economic opportunities opened by India’s economic liberalisation, fast economic growth and ‘Look East’ policy.14 Singapore actively supported India’s engagement with ASEAN, which closely followed China’s track: India was accepted as a sectoral dialogue partner in 1992, then as a member of the ARF in 1995 and then as a full dialogue partner in 1996. India’s economic reforms launched in 1991 were followed by an active mobilisation of Singapore’s Indian business community.15 India has increasingly regarded Singapore as a possible gateway to a region with which the ties are ancient, multiple and meaningful. In addition, in Singapore, India could also rely on fi nding a sizeable minority (around 8 per cent) from the subcontinent that included signifi cant communities from various ethno-linguistic groups. From the Past to the Future A few lessons for the present and the future could be drawn. First, we should always have a dose of skepticism, even in front of the most impressive trends. The future is never assured: precipitous declines could follow massive upsurges. More specifi cally, it could be said that we are now in the middle of the third major historical outburst of China’s foreign trade during the last millennium: the fi rst one took place in the 13th–14th century, and probably lasted 50–100 years; Downloaded by [University of Defence] at 01:36 24 May 2016

14 Catherine Paix, ‘Entre le dragon et l’éléphant: la place de Singapour dans le processus d’intégration mondiale et régionale de la Chine’, paper presented at the Third Annual Conference on Global Asian Perspectives, ‘From Shanghai to Bangalore, Reappraising Business Models’, Paris: UNESCO, June 2007. 15 This mobilisation was marked by the formation of the ‘Gopio Global Organization of People of Indian Origin’ in 1996, which gathered together the Indian entrepreneurs from the diaspora (Non-Resident Indians – NRIs). It has been constantly supported by Singaporean-Indian business associations. 236 Jean-Louis Margolin

the second one started around 1680–1700, and lasted till the early 19th century. The third one is already some 30 years old. Based on the two precedents, it could last till 2050–2100, reaching the height of its momentum during the next 20 years.16 It should also be noted that the interval between the two fi rst upsurges has been about 250 years, and between the second and third about 150 years. Thus the periods of decline or stagnation have been about twice as long as the periods of progress. History, however, never repeats itself completely: the 13th–14th century outburst of China’s external trade was by and large confi ned to Southeast Asia; the late 17th century one extended to Europe through chinaware, and later tea; the present one is worldwide, including South America and Africa. Second, there is indeed a connection, but no direct proportionality between the domestic role of a foreign community and the foreign trade and relations of its country of origin. Every wave of Chinese commercial expansion went along a corresponding wave of Chinese emigration overseas. When the trade boom subsided, many Chinese were so settled in their new lands that neither did they return to China nor melt into the indigenous population.17 Actually, they found many ways to survive and prosper: local or regional trading, innovative land cultivation,18 mining (gold, then tin), fi scal farms of all kinds (in indigenous states as well as in European colonies) where they gained a quasi-monopoly. In all these fi elds, a connection with China was not compulsory. Nevertheless, compared with trade expansions of other countries, China’s are characteristically much more ‘labour-intensive’: both Portuguese and Dutch Asian trade routes (at least the most signifi cant ones on a world scale) with just a few thousands of their home people. However, in Dutch Batavia and the surrounding areas there were, in the early 18th century, more Chinese, not only than local Europeans, but also than the

Downloaded by [University of Defence] at 01:36 24 May 2016 16 Of course that is just guesswork. The difﬁ culties in forecasting the spreading of the H1N1 ﬂ u virus should keep us modest in our attempts. 17 Or, more exactly, they did not melt completely: many Baba Chinese from Melaka, for example, stopped using Chinese language and adopted Malay dress, as well as most ingredients of Malay cuisine. Nevertheless, they seldom converted to Islam, tended to intermarry and stuck to their values of hard work, frugality and formal education. 18 In early 18th-century Batavia (present-day Jakarta), the Chinese almost monopolised both export-oriented sugarcane plantations and vegetable growing for the city market. China–Singapore Cyclical Relations 237

Dutch population in all of Asia. The ability to mobilise a workforce composed of all kinds — from unskilled labourers to traders and bankers — was a tremendous support for commercial expansion and for the eventual competition, not only with indigenous enterprises, but even with the western ones, including in western colonies. This remains characteristic of China’s expansion, for example in South Africa and other Sub-saharan countries, today. Hence the probable resilience of China’s new trade ventures. Third, concentrating on Singapore since 1819, it has shifted repeatedly between a mostly regional role, pan-Asian centrality and global affi rmation (see Table 13.1). Until the foundation of Hong Kong and the opening up of Shanghai to foreign trade (1842), Singapore was essentially an emporium, roughly halfway between Bengal and South China, where Indian and Chinese goods could be exchanged with the minimum of government controls and without paying taxes. Hence the rapid infl ux of Chinese traders and labourers, soon to form a majority of the population. Then, in the mid-19th century, the focus shifted toward the immediate neighbours: the Malay world, more precisely Sumatra’s East coast and Malaya’s West coast, conveniently situated on the two banks of the Melaka Straits, southern opening of which was controlled by Singapore. Tobacco, cane sugar, gambier, pepper and, soon, tin started to fl ow into the harbour warehouses, and to fl ow out towards Europe’s new industries and consumer markets. Then, around 1910, the perspective became

Table 13.1: Singapore’s Main Trading Partners since 1825, in Percentage of Total Trade

‘Greater China’ Asia, Southeast Western countries (incl Hong Kong (excluding (Europe, North and Taiwan) + Indonesia in 1976, America) Japan (till 1935) Japan 1990 and 1998)

Downloaded by [University of Defence] at 01:36 24 May 2016 1825 18 14 0 48 1845 22 22 0 34 1885 30 (USA: 3) 13 NA 51 1915 29 (USA: 14) 9 NA 56 1935 37 (USA: 18) 14 NA 39 1960 22 (USA: 5) 6 6 49 1976 27 (USA: 14) 9 14 19 1990 35 (USA: 19) 14 15 19 1998 38 (USA: 19) 14 12 24 2008 22 (USA: 9) 20 6 28 238 Jean-Louis Margolin

more global. In just a few years, the US became the fi rst customer, as a major part of the booming rubber production was absorbed by the American automobile industry. In the inter-war years, fast- growing Japan became a major partner and has remained so, despite a post-1945 lull lasting some 15 years. Since the early 1970s, huge quantities of Middle-East petroleum were imported, refi ned and distributed all over Southeast Asia. Simultaneously, Singapore developed as a world-class fi nancial centre, and as the second busiest airport hub in Asia. Since the 1990s, another shift could be on the way. It is characterised by the grand reopening of China’s market and by attempts at reinforcing the institutional connections with other East Asian countries, so as to shield each other from the worst consequences of the successive economic tremors. If we considers Singapore’s almost continuous economic progress during the two last centuries, we are tempted to conclude that, at least for some countries, the most sensible choice could be not to make too defi nitive a choice between different spatial identities, but to try and chase two (or three, or four) hares at the same time.19 Fourth, during most periods, India and China have not been the communicating vessels for Singapore: the growth of one has seldom meant the downfall of the other. During the medieval and early modern periods, the connection between Southeast Asia and India seemed to have been more prevalent and, above all, more permanent than the connection with China. Indian traders and settled communities were more conspicuous, Indian infl uence was much more obvious in almost all cultural (starting with writing and religion) and political fi elds. But even during the heyday of Chinese activism, Indians and Chinese seemed to be more complementary than competitors. The textile industry (silk being a partial exception) was dominated by India, Chinese traders actually competing with Europeans to sell Indian fabrics in the remotest markets of the Indonesian Archipelago.

Downloaded by [University of Defence] at 01:36 24 May 2016 If India’s sales were conspicuous, China was conspicuous by its purchases: items of the forest and the sea were collected all over the region (one of the most pricey were birds’ nests), followed by growing quantities of pepper, tin and sandalwood, etc. The ‘Chinese’ 18th century saw, for the ﬁ rst time, the balance dramatically shifting at India’s expense. The main reason could be political: the 17th century

19 Free translation of the French proverb ‘courir deux lièvres à la fois’ (being unable to choose). China–Singapore Cyclical Relations 239

had been an era of civil war in China, of Mughal splendour in India. The 18th century was almost the exact reverse. Compounding such an alternation, China’s population somewhat doubled, reinforcing the emigration pressure. Nevertheless, during the colonial period, Indian presence recovered and grew again — if at a slower rate — alongside the Chinese one. Indian coolies fl ew towards the harbour or railway building sites, and later towards the rubber plantations. Indian traders, bankers, lawyers, etc. rewarding niches of activity. Even in today’s Singapore, the ‘speech’ professions are dominated by Indians: they are massively over represented among the law profession, professors, doctors, journalists and writers, not forgetting trade unionists and the politicians. In the economic fi eld, during the last decade, China’s increasing infl uence has not prevented India’s advance in Singapore economy and external relations. True, the respective roles of China/Chinese and India/Indians in Singapore are at present far from balanced. But India has not endured in that part of the world the precipitous decline of its infl uence several times suffered by China, probably because a more unifi ed China felt more easily the possibility, and all too often the desirability of self-insulation from the other countries. If historical long-term trends make sense, India (and overseas Indians?), sometime after 2050, could very well recover part or all of the infl uence lost to China and Chinese since the late 17th century. References Cheng Lim-Keak. 1985. Social Change and the Chinese in Singapore: A Socio- economic Geography with Special Reference to Bang Structure. Singapore: Singapore University Press. De Koninck, Rodolphe. 1992. Singapour. Un atlas de la révolution du territoire. Montpellier: GIP Reclus. Fisher, C. A. 1964. Asia: A Social, Economic and Political Geography,

Downloaded by [University of Defence] at 01:36 24 May 2016 London. Godley, Michael. 1981. The Mandarin-capitalists from Nanyang: Overseas Chinese Enterprise in the Modernization of China, 1893–1911. London: Cambridge University Press. Hall, D. G. E. 1981. A History of South-East Asia, (4th edn). London: Macmillan. Lee Soo Ann. 1973. Industrialization in Singapore. Melbourne: Longman. ———. 2007. Singapore: From Place to Nation. Singapore: Pearson. Margolin, Jean-Louis. 1987. Singapour: Genèse d’un nouveau pays industriel 1959–1987. Paris: L’Harmattan. 240 Jean-Louis Margolin

Miksic, John N. (ed.). 2003. Earthenware in Southeast Asia Singapore: Singapore University Press. ———. ‘The Fourteenth to Fifteenth Centuries’, in Karl Hack and Jean-Louis Margolin (eds). Singapore: National University of Singapore Press. Miksic, John N. and Cheryl-Ann Low Mei Gek (eds). 2004. Early Singapore, 1300s–1819. Singapore: Singapore History Museum. Mills, L. A. 1966. British Malaya 1824–67. Kuala Lumpur: Oxford University Press. Paix, Catherine. 2003. ‘The Singapore Domestic Bourgeoisie: How Entre- preneurial? How International?’ in Garry Rodan (ed.), Singapore Changes Guard: Social, Political and Economic Directions in the 1990s. New York: Cheshire-Longman. ———. 2007. ‘Entre le dragon et l’éléphant: la place de Singapour dans le processus d’intégration mondiale et régionale de la Chine’, paper presented at the Third Annual Conference on Global Asian Perspectives, ‘From Shanghai to Bangalore, Reappraising Business Models’. Paris: UNESCO. June. Purcell, Victor. 1965. The Chinese in Southeast Asia (2nd edn). Oxford: Oxford University Press. Trocki, Carl. 1990. Opium and Empire: Chinese Society in Singapore, 1784–1885. Singapore: Singapore University Press. ———. (1997) 2007. Prince of Pirates: The Temenggongs and the Development of Johor and Singapore, 1784–1885. Singapore: National University of Singapore Press. Turnbull, M. C. 1989. A History of Singapore, 1819–1988. Singapore: Oxford University Press. Wheatley, Paul. 1960. The Golden Khersonese. Kuala Lumpur: University of Malaya Press. Wolters, O. W. 1982. History, Culture, and Region in Southeast Asian Per- spectives. Singapore: ISEAS. Yeung, Henry W.-C. 2002. ‘Transnational Entrepreneurship and Chinese Business Networks — The Regionalization of Chinese Business Firms from Singapore’, in Thomas Menkhoff and Solvay Gerke (eds), Chinese Entrepreneurship and Asian Business Networks. London: RoutledgeCurzon. Yong, C. F. 1987. Tan Kah-Kee: The Making of an Overseas Chinese Legend. Singapore: Oxford University Press. Downloaded by [University of Defence] at 01:36 24 May 2016 Perspective from Sri Lanka 241

14 Emerging China: Prospects for Partnership in Asia — A Perspective from Sri Lanka

Nihal Rodrigo

The conference series from which this article emerges (2009 conference) was initiated, inter alia, to mark the historic Asian Relations Conferences held in 1947 and 1949. At the 1947 Conference, the representative of Ceylon (as Sri Lanka was then called), S. W. R. D. Bandaranaike stated as follows:

‘I am sure that it is the hope of all of us that this Conference is only the beginning of something much greater — a federation of free and equal Asian states, working not merely for our own advantage, but for the progress and peace of all mankind’.1

The year 2009 also marked the 55th anniversary of the Panchsheel Agreement between India, the conference host and China, whose rise in contemporary Asia and, indeed, beyond has engaged global attention. In 2008, Indian Prime Minister Manmohan Singh and Chinese Premier Wen Jiabao, subscribing to ‘A Shared Vision for the 21st Century’, also referred in the document to the Panchsheel Principles of Peaceful Cooperation, calling for a partnership extending even beyond Asia: ‘an international system founded on these principles’ which would be ‘fair, rational and mutually beneﬁ cial and will promote durable peace and common prosperity creating equal Downloaded by [University of Defence] at 01:36 24 May 2016 opportunity’.2 Continuity and Change in History In 1992, on a different plane, Francis Fukuyama’s book, The End of History and the Last Man (1992) was a bestseller. It projected

1 H. S. S. Nissanka, Sri Lanka’s Foreign Policy. New Delhi: Vikas, 1984, p. 58. 2 www.mea.gov.in, accessed 3 August 2011. 242 Nihal Rodrigo

the thesis that, with the break-up of the communist-inspired USSR into a number of independent states, and what Fukuyama thought was the ‘institutionalisation of western liberal democracy as the fi nal form of governance’, history had, indeed, ‘ended’. He even argued that the world had reached ‘the end point of mankind’s ideological evolution’. He has, of course, recanted much of this now. Change is one of the few constant factors in history. Global developments in the last decade or two in particular have shown that neither uni-polarity nor subjugation to a single politico-economic system of state organisation can endure eternally. Communism as a widespread system of governance has broken down and a number of independent states have moved out from its debris to install adjusted economic variants including those of ‘liberal democracy’. Communism in China has adjusted and adapted to evolving developments within the People’s Republic as well as beyond and has reached levels of development at a speed unprecedented in history. China is currently the third largest economy in the world; a space power and a nuclear power; one of the fi ve permanent members (the sole non-European) in the UN Security Council; has the world’s largest foreign exchange holdings including US treasury bonds valued at around $800 billion; and has attracted the largest quantum of foreign direct investment (FDI) of any country. It prides itself as the largest developing country in the world. India prides itself as the world’s largest democratic country. ‘The Asian Century’ In the current situation, assessments by governments, think tanks and other organisations have projected the onset of an ‘Asian Century’ in which China and India are seen as the most critical factors in the emerging power equation. A UN study prepared for a South–South Cooperation Conference in Kenya in December 2009, placed China and India ‘in a category of their own because of the scale and diversity Downloaded by [University of Defence] at 01:36 24 May 2016 of their South–South cooperation agendas’ and technical assistance initiatives that cover ‘almost all areas of interest to other developing countries’. The United States National Intelligence Council (USNIC) under- takes a strategic global assessment every four years. Its Report, released around November 2008, entitled ‘Global Trends 2025: A Transformed World’ ventured the prediction that the world is moving into a period of historic changes including, signifi cantly, a geographical transfer of ‘global wealth and economic power … Perspective from Sri Lanka 243

roughly from West to East’.3 An earlier USNIC global survey, issued in 2004, had already anticipated the emergence of China and India as powers that could transform the geopolitical scenario. The Commonwealth Secretary-General, Kamlesh Sharma, a former Indian diplomat, even sees the changing scenario as ‘equivalent to the Industrial Revolution and the Reformation in history … the end of geography, the death of time and distance … a compacting world’.4 At a popular level, magazines with global circulation, including Newsweek and Time, ran widely read articles on the predicted changes. The 12 May 2008 edition of Newsweek featured a lead article by editor Fareed Zakaria titled ‘The Post-American World’,5 followed by a series of continuing articles on the rise of China and India. The important point is that the concept of the ‘Asian Century’ is now in the popular domain, gaining wider global currency and credibility. Yet the continuing impact of the USA in global affairs should not be discounted, including its pervasive, sometimes debilitating, inﬂ uence on environmental issues and the ﬁ nancial and economic situation. Indian Prime Minister Manmohan Singh was quoted, in Washington, DC as saying that ‘we have not entered an irreversible shift in the economic strength of the United States’. US President Obama, on 23 October 2009, at the UN, declining to apologise for defending the interests of his own people, nevertheless stressed: ‘We (all humanity) share a common future … No longer do we have the luxury of indulging our differences to the exclusion of the work that we must do together … We must embrace a new area of engagement based on mutual trust and mutual respect.’ In November 2009, President Obama’s visit to China and the Indian Prime Minister’s State Visit thereafter to Washington were carefully balanced to avoid giving any impression of an undue tilt exclusively favouring just one

Downloaded by [University of Defence] at 01:36 24 May 2016 of the two Asian countries. ‘The New World Symphony’ In recent conferences, I have thought it appropriate to describe the global changes anticipated as not exclusively tied to the rise

3 www.dni.gov/nic/NIC_2025_project.html, accessed 3 August 2011. 4 http://network.nationalpost.com/np/blogs/francis/archive/2009/06/18/. 5 Fareed Zakaria, The Post-American World’, Newsweek, 12 May 2008. 244 Nihal Rodrigo

of only Chindia and its future dominance. I have preferred to describe the process as the New World Symphony, with apologies to Dvorak. Overall harmony, in political and other aspects, rather than confrontational cacophony, is what is currently required. India and China may be cast as joint composers or conductors playing, in harmony, with all other players, including any soloists playing their own theme without, however, affecting overall harmony. Some aspects of the ‘China–India Shared Vision for the 21st Century’, though a bilateral document, provide theoretical elements for ‘a harmonious world of durable peace and common prosperity’.6 China and India recognise ‘a signiﬁ cant historical responsibility to ensure comprehensive, balanced and sustainable social development of the two countries and to promote peace and development in Asia and the world as a whole’. China and India state that they respect ‘the right of each country to choose its own path of social, economic and political development’ and that ‘drawing lines on the grounds of ideologies and values, or on geographical criteria is not conducive to peaceful and harmonious coexistence’.7 Many of these themes were sounded at the Asian Relations conferences. The Chindia–Sri Lanka Nexus This article focuses on participants from China’s Asian neighborhood ‘dissecting the various contours’ of their bilateral relations with the People’s Republic to provide a context in which to consider what India’s role would be in the transnational changes and challenges that are emerging. An interesting nexus, in recent times, among China, India and Sri Lanka can be seen. It is perhaps more than mere coincidence that former Indian Foreign Secretary Nirupama Rao has also had the experience of serving, respectively, as High Commissioner in Sri Lanka and as Ambassador in China. So did her predecessor, Shiv Shankar Menon, as well as others before them. I served as

Downloaded by [University of Defence] at 01:36 24 May 2016 Ambassador in China, as Sri Lanka Foreign Secretary and as diplomat in India. There have been other such examples in the Sri Lanka Foreign Service as well. The following are some special aspects of the China–Sri Lanka relationship that would be relevant in the context of this article. They also touch on some aspects of contemporary China and relations with India as they continue to develop and evolve.

6 www.mea.gov.in. 7 Ibid. Perspective from Sri Lanka 245

Historical Legacies First, the China–Sri Lanka relationship extends deep into the past, centuries before the establishment of the People’s Republic. The Chinese scholar–monk Fa Xian spent two years at Abhayagiri Temple in Anuradhapura, Sri Lanka’s capital in the 5th century, transcribing Buddhist scriptures which he took back to China. He was also in India. Religious links between China and Sri Lanka have continued to the present day, including in the renovation of Abhayagiri Temple. With cooperation and participation from Sri Lanka, China held the ﬁ rst International Buddhist Forum in Hangzhou in 2006. The theme of the forum was ‘A Harmonious World begins in the Mind’. Today, Buddhist thought provides some solace to soothe tensions and frustrations among the young and old who may feel ignored and isolated from the heady economic development in China when wealth disparities and materialism create strain and tension. Many Buddha images were destroyed during the Cultural Revolution. However, a little-known fact is that at the 17th National Congress of the Communist Party of China (CPC), a constitutional amendment acknowledged the value of religion in the life of the people. China encourages and ofﬁ cially highlights the role of Buddhism in promoting social harmony as long as it has no external control centre, cult status or political undertones. The Panchsheel principles are adaptations of Buddhist precepts into international relations. Sri Lanka President Mahinda Rajapaksa, on his state visit to China in February–March 2007, gifted a large stone replica of a 4th-century Anuradhapura statue of the Samadhi Buddha to the Ling Guan Temple near Beijing. A model of this statue had also inspired Jawaharlal Nehru during imprisonment by the British. In a bilingual (English–Chinese) publication on the redevelopment by India and China, as ‘partners and stakeholders’, of the ancient Indian

Downloaded by [University of Defence] at 01:36 24 May 2016 Buddhist University of Nalanda described as the ‘Giver of Wisdom and Bridge of Friendship’, Nirupama Rao (then Ambassador in Beijing) wrote that Buddhist records indicated that the earliest, even pre-commercial, relations between India and Asian countries, including China and Sri Lanka, were defi ned ‘not by wars between hostile armies in attempts at self-aggrandizement … but by harmonious coexistence and fl owering of empires and civilizations through the message of love and compassion of the Buddha’. The Chinese navigator Zheng He, a Muslim, visited Sri Lanka on at least fi ve occasions, though not all of them peaceful, in the 246 Nihal Rodrigo

early part of the 15th century, well before Columbus reached the Americas. Sri Lanka has, for centuries, been a major mid-point in the Silk Route of the Sea which linked it with the East and the West — links which continue to develop. Multi-party Relations with China Second, Sri Lanka a vibrant democracy, and has seen regular government shifts and changes. Yet an abiding feature of every government, whatever its political leanings, is that consistently sound bilateral relations have been maintained with China. Regular consultations take place between the CPC and individual political parties in Sri Lanka. The relationship is thus neither ideology-driven nor party- based. Cooperation on long-term projects has continued despite government change. There have been, of course, publicised arguments on politico-ideological grounds between Premier Zhou Enlai and Sri Lanka Prime Minister Kotelawala of the United National Party, at the 1955 Bandung Conference without such encounters jeopardising the bilateral relationship. The historic China–Ceylon Rubber–Rice Pact of April 1952 was signed during the rule of the United National Party, then a strongly anti-communist political party. The pact is one now held out as an early example of a continuing pragmatic principle that countries with different political systems, and indeed of disparate sizes, could nevertheless cooperate closely and fruitfully for the common beneﬁ t of their peoples. The practice endures. In 1962, Sri Lanka’s Prime Minister Sirimavo Bandaranaike took the initiative to bring China and India together in Colombo to discuss border issues following military encounters, although the talks were not particularly successful. President Hu Jintao has described the continuing China–Sri Lanka relationship as a model of small

Downloaded by [University of Defence] at 01:36 24 May 2016 country–big country cooperation and friendship. In 2007, the highly developed Chinese city of Guangzhou, with a population of over 6 million, was twinned with Sri Lanka’s Hambantota District with a population of around 570,000 to promote economic and other cooperation. In over ﬁ ve decades of diplomatic relations between China and Sri Lanka, perhaps the only negative episode occurred during the Cultural Revolution over a dispute concerning some Chinese exports to Colombo. A Red Guard demonstration which took place at the Perspective from Sri Lanka 247

Sri Lanka Embassy in Beijing caused some minor damage to the building. The excesses of the Cultural Revolution are of course now frankly acknowledged by the People’s Republic as making its people suffer ‘some of the most serious setbacks and losses since its founding’. ‘The Advanced Productive Forces’ Third, the Sri Lanka–China relationship is not solely a State-driven relationship. China also ‘represents’ what former President Jiang Zemin called ‘the advanced productive forces’ (the miscellaneous corporate, fi nancial and professional entities emerging in China after the economic ‘opening up’) which play a major role in development projects undertaken in Sri Lanka and other countries. Before the ‘opening up’, Jiang Zemin, then a senior CPC offi cial in Shanghai, inspected also the fl edgling Greater Colombo Economic Zone to study and assess its functioning. China concedes that the overall level of this sector is ‘still much lower than in the developed countries in the West’ and that China must ‘vigorously develop its productive forces and improve its economy so that it can gain greater initiative and a more favourable position in future competition in science and technology’.8 Development projects in Sri Lanka, including the Hambantota Multipurpose Project, involve participation by the Chinese Govern- ment, companies and corporate entities under different forms of management, the Chinese Export Import Bank and other groups. The Project Agreement, signed in 2007, and terms for repayment of its loan component are favourable to Sri Lanka and followed negotiations with the Chinese Government and the ‘advanced productive forces’. At present, around 80 Chinese companies are also involved in various other Sri Lankan ventures and projects. Over 30 operate under special incentives provided by the Sri Lanka Board of

Downloaded by [University of Defence] at 01:36 24 May 2016 Investment (BOI). A Special Economic Zone (SEZ) is also being established for Chinese entrepreneurs in Mirigama under the aegis of the BOI. South Asian corporate sectors have been active in promoting economic cooperation including through the China–South Asia Business Forum in Kunming.

8 http://english.peopledaily.com.cn/90002/92169/92211/6274616.html, accessed 3 August 2011. 248 Nihal Rodrigo

The Economic Imperative Fourth, for Sri Lanka, it is the economic imperative that plays the catalytic role in the major joint projects undertaken in association with China. The Port of Colombo is considered the most efﬁ cient in South Asia particularly as a transshipment hub for the South Asian region. It provides regional ‘connectivity’, the development concept Indian Prime Minister Manmohan Singh has urged to promote economic linkages within the region. Shyam Saran, Special Envoy of the Indian Prime Minister, in his address at Port Blair on 5 September 2009, indicated that ‘seventy percent of shipping to and from Indian ports is handled by Colombo’ and that ‘a great deal of break-bulk is carried out at Colombo before being dispersed to various regional destinations’.9 The Hambantota Development Project has many dimensions, which have given rise to some misconceptions and imaginative speculation. Hambantota is located in the southern province of Sri Lanka, which is not as well developed as the island’s western province where Colombo is sited. The port complex being developed in Hambantota would ease pressures on Colombo and would eventually include trans-shipment and storage facilities, bunkering, ship repair (and later perhaps ship building) facilities, handling/storage of bulk fuel and other supplies. The sea lanes a few miles south of Hambantota are used for about 80 per cent of China’s oil imports and about 50 per cent of India’s energy supplies. Thus just as much as Colombo provides convenient and efﬁ cient economic connectivity for India within South Asia, Hambantota, given its location in relation to Indian Ocean maritime routes, would be moreover providing convenient economic connectivity beyond that, for East Asia (China, Japan, Korea) and ASEAN states with the Middle East and West Africa. There is media hype and exclamation marks among some think Downloaded by [University of Defence] at 01:36 24 May 2016 tanks that link Sitwe in Myanmar, Chittagong in Bangladesh, Hambantota and Gwadar in Pakistan as China’s ‘string of pearls’ or, as one ominous future horror-scope described it; a ‘necklace of thorns around India’. The London Times wrote of what it called ‘Sri Lanka’s crucial role in the Indian Ocean power struggle’ concluding, in corporate jargon, that the country’s ‘prime location in

9 http://abhishek4420.wordpress.com. Perspective from Sri Lanka 249

prime maritime real estate has elevated it to the Jewel in the Crown of the new Indian Ocean paradigm’.10 Shyam Saran, in his Port Blair address, indicated ‘nervous articulation of a threat can trigger mirror- images and hostile perceptions on the other side. There is no inevit- ability of confl ict with China. We believe there is enough space in this region for both China and India to be ascendant as we once were in history for an extended period of time’.11 At a lecture on ‘Maritime Imperatives of Indian Foreign Policy’ organised by the Indian National Maritime Foundation on 11 September, Shiv Shankar Menon observed that ‘for China, as for India and Japan, her energy security is intimately linked to keeping the sea lanes open in the Indian Ocean’. He added, as an example, that ‘given the need for energy security, it is therefore natural that Indian companies would operate oil tank farms in Trincomalee’ in Sri Lanka. He has declared also that there were no Chinese bases in the Indian Ocean despite the ‘string of pearls’ theory, but has kept open the question whether China’s access would, in the future, translate into political infl uence.12 In his Port Blair address, Shyam Saran indicated that both China and India ‘need to participate actively in shaping the emerging economic architecture in the region, as well as the emerging security architecture which should be open, inclusive and loosely structured’. He further clarifi ed that ‘dealing with China’s challenge is a function not just of how we pursue our bilateral relations with that country but how we order our relations with a large number of countries, both regionally and globally’.13 What the London Times had not noticed, or chose to ignore, are key development aspects that involve Sri Lanka in cooperation with both China and India. Apart from expanding its naval outreach, the economic development of the hinterland of Hambantota has been also a major objective of Sino–Sri Lanka cooperation. Sri Lanka’s poverty

Downloaded by [University of Defence] at 01:36 24 May 2016 alleviation and rural development programmes have progressed well despite changes in government. On the United Nations Human Development Index, Sri Lanka holds the highest ranking in South Asia. China and Sri Lanka, notwithstanding disparities in size, have

10 http://www.timesonline.co.uk/tol/news/world/asia/article6401262. 11 Ibid. 12 http://www.maritimeindia.org, accessed 3 August 2011. 13 http://abhishek4420.wordpress.com. 250 Nihal Rodrigo

also had productive cooperative exchanges on social cohesion and other related programmes on rural development. There are clear parallels in Sri Lanka’s long-standing ‘Village Reawakening’ projects and China’s ‘Back to the Countryside’ programmes, where the policy slogan in both countries has been simply ‘Putting People First’ — Sri Lanka using the slogan fi rst. China’s rural policy involves ‘giving more to villages, taking less and breathing new life to them … industry nurturing agriculture’.14 China–Sri Lanka economic cooperation in infrastructure development, power generation, mineral and oil deposits exploration is of special signifi cance in these programmes. Bilateral cooperation between Sri Lanka and India has continued over the years in these areas. There have also been useful exchanges of experiences with China on what China calls the ‘Five Balances’. These include areas such as civil administration and governance, anti-corruption measures, national disaster anticipation/prevention and mitigation and care of the disabled, which have a bearing on socio-economic development. The People-to-People Nexus Fifth, people-to-people linkages between Sri Lanka, India and China have been enhanced through religious linkages, as already described, as well as through cultural interaction, tourism, educational, academic and technical exchanges. All this has engendered economic benefi ts as well. Sri Lankan Airlines enjoy the privilege of having the largest number of entry points in the world into Indian airports. Next to Indian nationals, the highest number of Asian tourists and visitors arriving in Sri Lanka are now from China, following the commencement of Sri Lankan Airlines’ fl ights between Beijing and Colombo in 2005. Symbolically, Beijing–Colombo fl ight number 888 is considered auspicious — the Beijing Olympics were carefully planned to commence on 8/8/08 at 8.08 am. The agreements on,

Downloaded by [University of Defence] at 01:36 24 May 2016 respectively, Accredited Destination Status and Tourism Promotion have also greatly helped in these developments. In early 2007, shortly before the end of my posting in Beijing, landing rights into Shanghai, Guangzhou and Macao for Sri Lankan Airlines were also negotiated, which, regrettably have not yet been utilised for lack of adequate aircraft.

14 http://english.people.com.cn/90002/92169/92211/6275027.html, accessed 3 August 2011. Perspective from Sri Lanka 251

A particularly strong response from the general public of China was clearly evident in the aftermath of the tsunami of 2006. Assistance for the post-tsunami recovery process provided by the Chinese Government was considerable in respect of the reconstruction of damaged fi sheries and harbour infrastructure, housing as well as emergency medical and other help. In addition to that, non-government aid and voluntary contributions directly from the people of China, including schoolchildren, the media, artists’ groups, corporations and non-government organisations and foundations such as the Disabled Peoples Federation were the largest received in Sri Lanka from any country in the world. The Political Dimension Sixth, at the political level, cooperation between the two countries has been extensive over a wide range of regional and international issues. Regular high-level consultations are held and two presidential state visits from Sri Lanka were welcomed in China within a short time span of about a year and a half. Prime Minister Wen Jiabao visited Sri Lanka shortly after the tsunami. Ministerial delegations refl ecting a variety of functions and activities in the relationship have also been a regular feature. Like India, Sri Lanka has strongly supported the One China policy in respect of Taiwan, which territory is considered an integral part of the People’s Republic. Sri Lanka has opposed all attempts by Taiwan to gain membership in international organisations composed of sovereign states. Sri Lanka and China are fi rmly opposed to what China calls the three evils of terrorism, separatism and extremism. There is close cooperation against them at bilateral level as well as within regional and multilateral frameworks including at UN forums. Sri Lanka is a dialogue partner in the Shanghai Cooperation Organisation (SCO). Defence cooperation with China, including military training and the supply of arms and other equipment, has been of great value Downloaded by [University of Defence] at 01:36 24 May 2016 in Sri Lanka’s decisive battle against the separatist terrorism of the Liberation Tigers of Tamil Eelam (LTTE), which has been described by the United States Federal Bureau of Investigation as the deadliest terrorist group in the world. At the UN in September 2009, Chinese President Hu Jintao spoke of the need to ‘embrace a new security thinking of mutual trust, benefi t and coordination’ including on ‘non-traditional threats such as terrorism, proliferation of weapons of mass destruction, transnational organized crime … menacing the world’. 252 Nihal Rodrigo

There have been critical, angled comments about Sri Lanka’s battle against terrorism. What needs to be emphasised is that all governments in Sri Lanka since 1985 have, in good faith, sought to negotiate with the LTTE in the hope of peacefully reaching an acceptable solution. Many countries including India, Norway, the US, Japan and the EU have sought to broker or facilitate peace talks. All these endeavours have been frustrated by the LTTE which only cynically exploited the talks to buy time and strengthen its armed strength. Aspects of this process were succinctly summarised by Sri Lanka’s former High Commissioner (now Foreign Secretary) Romesh Jayasinghe at a seminar on post-confl ict Sri Lanka and India’s role held at Stella Maris College, Chennai in July 2009. Confronted by the ruthless blockage by the LTTE, at Mavil Aru, of essential water supplies to thousands of civilians, the government of President Mahinda Rajapaksa had no alternative but to take military action to decisively defeat terrorism. Following the liberation of areas held hostage by the LTTE, action is being taken, on a priority basis, to establish conditions under which thousands of forcibly displaced/ kidnapped people used as human shields by the LTTE are resettled in their original homes, averting the possibility of concealed LTTE cadres reverting to destructive violence. Areas extensively mined by the LTTE need to be cleared before people can be safely resettled in such areas. Multilateral assistance from the UN and bilateral assistance from India, China, the US, Pakistan and other countries in the post-confl ict process is being received to help speed up the process of safe, secure resettlement of the thousands of innocent citizens involved. External Ramifi cations of Terrorism in Sri Lanka and China Seventh, the London Times described recent multilateral cooperation Downloaded by [University of Defence] at 01:36 24 May 2016 at the UN and the Human Rights Council on Sri Lanka’s post- confl ict resettlement exercise as a ‘bizarre partnership of India, China and Pakistan on the supporting side of Sri Lanka’s self-adulating resolutions’ following the defeat of the LTTE.15 It is to be noted, in this context, that the United Nations Secretary-General himself visited Sri Lanka for a personal assessment of the situation and reached

15 http://www.defence.lk/new.asp?fname=20090524_02, accessed 3 August 2011. Perspective from Sri Lanka 253

agreement on a joint declaration with the government about the ground situation on which action is proceeding, mindful of the need to ensure the safety of the affected people from the vicious violent vengeful vestiges of the LTTE.16 The Australian newspaper described the battle against LTTE in the following terse, true terms:

Sri Lanka’s President has done what no Western leader has so far done. He has inﬂ icted a devastating, presumably ﬁ nal, defeat on a terrorist organization. Tigers will be remembered for savagery and cruelty. They pioneered suicide bombings. They pioneered child soldiers. They used human shields. They used children as terrorists. They murdered not only their opponents in the Sri Lankan Government or Security forces, they also murdered alternative Tamil leaders, especially moderates who rejected their terrorist methods. Like many extremist cults under the leadership of a charismatic dictator, in this case Velupillai Prabhakaran, who died in the Tigers’ jungle fastness … the Tigers killed each other.17

The LTTE, with the help of some of its expatriate supporters in Sri Lanka’s diaspora, particularly in developed countries, have built up over the years an insidious underground mafi a-type network through illegal activities including human smuggling, gun running, drug traffi cking, illegal fi nancial transactions including money laundering, extortion and massive credit card frauds amounting to millions of dollars. Efforts at ‘buying’ support of infl uential foreign politicians to lobby for the removal of the many national bans against the LTTE have been exposed and thwarted in ‘sting operations’ including by the US FBI. The remnants of the LTTE, overseas, are now seeking to promote a so-called ‘Provisional Transnational Gov- ernment of Tamil Eelam’ to continue its global illegal corporate networks. In a similar exercise unfolding in China, following recent acts of terrorism in Urumqi, in the northwestern Autonomous Region of Downloaded by [University of Defence] at 01:36 24 May 2016 Xinjiang, it has been revealed that external support and funding has been sought by the so-called World Uygur Congress (WUC) led by Rebiya Kadeer which China considers as supportive of the separatist

16 http://www.theaustralian.news.au/story/0,25197,25522747-253777,00. html. 17 http://english.peopledaily.com.cn/90001/90780/91342/6702514.html, accessed 3 August 2011. 254 Nihal Rodrigo

terrorist group ‘East Turkistan Islamic Movement’, which has been banned by the US as well. China’s People’s Daily indicated that, at a Washington press conference held on 13 July 2009, Ian Kelly, US State Department Spokesman, disclosed that Rebiya Kadeer’s WUC did receive funding support from the US National Endowment for Democracy, which has dangerous implications. At the UN on 23 October 2009, Chinese President Hu Jintao stated that ‘traditional and non-traditional security threats are intertwined, involving political, military, economic, cultural and other ﬁ elds … We should embrace a new security thinking of mutual trust, mutual beneﬁ t, equality and coordination (respecting) the security concerns of other countries.’ China and the South Asian Association for Regional Cooperation (SAARC) Finally, at the regional level, within the South Asian context, India, Sri Lanka and other members of SAARC have discussed possible areas of cooperation in which China, now formally an observer in SAARC, could interact with it. The earliest overtures by China to establish some form of mutual interaction with SAARC were made in 2000 when the then Assistant Minister of Foreign Affairs, Wang Yi, had discussions with the SAARC Secretary-General at the Secretariat in Kathmandu. In August 2009, the China Institute of International Studies (CIIS) and Sri Lanka’s Bandaranaike Centre for International Studies (BCIS), in association with the University of Sichuan, held a Conference in Chengdu with participation of all SAARC countries. It was the third such C=conference, following previous conferences in, respectively, Beijing and Colombo, which explored feasible areas of cooperation that may be developed between SAARC and China. Action has been taken to clarify procedures for cooperation between Observers and the SAARC, in accordance with the Downloaded by [University of Defence] at 01:36 24 May 2016 Memorandum of Understanding on the Role of Observers accepted at the Colombo Summit and followed up subsequently at the 16th Summit in 2010. The tentative areas under focused consideration include: (a) the establishment of practical consultative mechanisms at the SAARC Secretariat to consider, determine and recommend for acceptance areas for SAARC–China interaction; (b) cooperation on infrastructure development and economic connectivity projects in South Asia; (c) technical exchanges, cooperation and mutual assistance on socio-economic programmes such as poverty alleviation Perspective from Sri Lanka 255

and rural development; (d) measures to promote a more equitable balance in China–SAARC trade exchanges including through closer involvement of the corporate sectors; (e) enhancing people to people exchanges; and (f) consultations and possible coordination on select issues in the UN, international and regional forums of relevance to SAARC countries and China. References Fukuyama, Francis. 1992. The End of History and the Last Man. New York: Free Press. Nissanka, H. S. S. 1984. Sri Lanka’s Foreign Policy. New Delhi: Vikas. Zakaria, Fareed. 2008. ‘The Post-American World’, Newsweek. 12 May. www.mea.gov.in. Accessed 3 August 2011. www.dni.gov/nic/NIC_2025_project.html.Accessed 3 August 2011. http://network.nationalpost.com/np/blogs/francis/archive/2009/06/18/. Accessed 20 May 2009. http://english.peopledaily.com.cn/90001/90776/90883/6598040.html. Accessed 3 August 2011. http://english.peopledaily.com.cn/90002/92169/92211/6274616.html.Accessed 3 August 2011. http://abhishek4420.wordpress.com. http://www.timesonline.co.uk/tol/news/world/asia/article6401262. http://www.maritimeindia.org.Accessed 3 August 2011. http://english.people.com.cn/90002/92169/92211/6275027.html.Accessed 3 August 2011. http://www.defence.lk/new.asp?fname=20090524_02.Accessed 3 August 2011. http://www.theaustralian.news.au/story/0,25197,25522747-253777,00.html. http://english.peopledaily.com.cn/90001/90780/91342/6702514.html. Accessed 3 August 2011. Downloaded by [University of Defence] at 01:36 24 May 2016 256 Mohan P. Lohani

15 Involving China through Asian Integration: A Nepalese Perspective

Mohan P. Lohani

During the last six decades following the founding of the People’s Republic of China (PRC) in 1949, China has established itself as an emerging power ‘with impressive economic growth, steady defense modernization, political and diplomatic confi dence and the spectacular Olympics in Beijing in 2008’.1 The growing strength of China as an economic powerhouse of Asia is widely recognised. Such strength, as the Chinese leadership has reaffi rmed from time to time, does not pose a threat to any other country. On the contrary, since China’s development depends on peace, mutual cooperation and common development, ‘its rise will be a contribution, not a threat, to world peace and development’.2 It continues to uphold the policy of promoting world peace through cooperation with all countries, particularly by cultivating friendly and cooperative relations with neighbouring and other developing countries. China, which witnessed the economic crisis faced by the East Asian countries in 1997, is now braving the ongoing global economic crisis by injecting a colossal stimulus package of $586 billion. Developing countries, especially those that are trying to accelerate their economic growth through rapid economic expansion, primarily based on exports, have borne the brunt of the near-fi nancial collapse of the

Downloaded by [University of Defence] at 01:36 24 May 2016 industrialised countries.3 The Euro-Asia Economic Forum (EAEF) that met recently at Xian, Shaanxi Province, China drew the attention

1 Shambhu Ram Simkhada, ‘Nepal’s Perceptions of a Rising China’, unpublished, Kathmandu, 2009. 2 Li Jianguo, ‘Rising Peacefully’, Beijing Review, 22 April 2004. 3 Statement by Kirtinidhi Bista, Former Prime Minister, Nepal, to the ‘memory’ session of the Euro-Asia Economic Forum, 16 November 2009, Xian, Shaanxi Province of China. A Nepalese Perspective 257

of the region to the need to ‘work together’ for facilitating economic recovery. Developed countries of the West have urged China to play a signifi cant and lead role in stemming the crisis. It is hoped that the EAEF deliberations and its recommendations would help restore the much needed boost and resilience to the global economy. China and Emerging Asia The development of relations between China and the ASEAN, during the past two decades, has proved that China’s development has brought opportunities and benefi ts to its Asian neighbours.4 The economies of such countries have made substantial trade and output gains in recent years, despite the fact that China continues to stand out in the region for its rapid economic expansion and emergence as a major global trade partner.5 China and ASEAN entered into a free trade agreement (CAFTA) in 2005, with a plan to build up a free trade area by 2010. As a start, China and ASEAN’s six more advanced countries (Brunei, Malaysia, Indonesia, the Philippines, Singapore and Thailand) agreed to reduce import tariffs by up to 85 per cent, and gradually reach a zero tariff level by 2010. China and the four ASEAN members (Cambodia, Lao PDR, Myanmar and Vietnam) would do the same by 2015. Since 1997, ASEAN and China, Japan and Korea have embarked on a number of economic cooperation programs, particularly in the areas of fi nance. The broad framework for this cooperation was set forth in the Joint Statement on East Asian Cooperation announced by the Leaders in November 1999 in Manila, Philippines. That this framework had a solid foundation was generally admitted, but given the disparity in levels of economic development and social systems in the region, it was realised that it might take a longer period to fully develop the framework. In this context, CAFTA was an important move forward in terms of economic integration in East Asia. It was

Downloaded by [University of Defence] at 01:36 24 May 2016 believed that it would serve as a basis for the more ambitious vision of an East Asia Free Trade Area, encompassing ASEAN, China, Japan and Korea.6

4 Xiao Zan, ‘Boao Special’, Beijing Review, 22 April 2004, p. 18. 5 ‘Emerging Asia: Recent Trends in Trade and Output’, BFA Annual Report 2006: Economic Integration in Asia, 2006, p. 1. 6 ‘Forging Closer ASEAN–China Economic Relations in the Twenty First Century’, A Report Submitted by the ASEAN–China Expert Group on Economic Cooperation, October 2001. 258 Mohan P. Lohani

The establishment of a free trade area in East Asia would admittedly be a major economic revolution in the 21st century because it would be the biggest free trade area in the world, enjoying a market with a population of more than 2 billion people. The restoration and sus- tenance of global economic order is the shared vision and common goal of all Asian countries, including China. China, while expressing its readiness to contribute to the achievement of this goal, has noted with appreciation the initiatives of Asian governments and businesses in this direction through measures like

facilitating free trade by removing tariff and non-tariff barriers, opening up markets to an increasing number of products and types of services, inviting foreign investment to almost all sectors of economy, providing security to businesses, and running businesses in an efﬁ cient manner for the beneﬁ t of all consumers.7

China has emerged as a major destination for assembly, processing and other labour-intensive stages of the global production network. In fact, China’s prominent role in cross-border production sharing, in the overall context of the region’s trade expansion in recent years, has been widely acknowledged. Asia has, thus, integrated into a global production chain; what used to be made in different workshops inside one factory in one country is now produced by subsidiaries or sub-contractors across the region, taking advantage of each country’s resources and comparative advantages.8 China has become today the largest importer for a number of commodities and the largest exporter of a number of manufactured goods. China, India and the US China and India are two most populous nations of the world. The border between China and India is one of the longest in the world. There are lands and maritime boundaries between India and three Downloaded by [University of Defence] at 01:36 24 May 2016 Southeast Asian countries; India’s Andaman and Nicobar Islands are just hundred kilometres away from Indonesia and India’s exclusive economic zone covers a vast expanse of ocean from the Persian Gulf to the Malacca Strait.9

7 Beijing Review, 22 April 2004, p. 20. 8 BFA Annual Report 2006: Economic Integration in Asia, p. XIV. 9 India Today, 3, 2007, p. 17. A Nepalese Perspective 259

India’s ﬁ rst elected Prime Minister, Jawaharlal Nehru, even before India’s independence in 1947, had asserted,

The Pacifi c is likely to take the place of the Atlantic in the future as a nerve centre of the world. Though not directly a Pacifi c state, India will inevitably exercise an important infl uence there; India will also develop as the centre of economic and political activity in the Indian Ocean area, in Southeast Asia and right up to the Middle East.10

India, which ‘kept a certain distance away from ASEAN during the Cold War and many years after the end of the Cold War’,11 found the region’s thriving, fast-growing economy impressive and saw Southeast Asia’s population of half a billion as a big potential market and an important source of international capital. India hoped to use ASEAN as a springboard to enter the globalised market.12 India was keen to foster relations with Asia’s newly rising countries, absorb foreign investment, expand its market share and share in the benefi t of Southeast Asia’s economic prosperity in order to rescue its crisis-ridden economy in the early 1990s.13 Some Asian scholars have suggested that India’s existence and interest in Southeast Asia have provided the region with a certain force to balance and cancel out China’s regional infl uence. ASEAN sees India as a potential counterweight and is willing to see India play a role in the region.14 Goh Chok Tong, former Prime Minister of Singapore, compares ASEAN to a large aircraft, with China and Japan as one wing of the plane and India as the other. It is only when both wings leave the ground that the fl ight can be smooth and the landing safe.15

10 Jawaharlal Nehru, The Discovery of India, Meridian Books Limited, 1946, p. 510. 11 Downloaded by [University of Defence] at 01:36 24 May 2016 Sudhir Devare, India and Southeast Asia: Towards Security Convergence, Singapore: Institute of Asian Studies, 2006, p. 214. 12 India Times, September 1994. 13 Ravni Thackur, ‘Talk about India’s Look East Policy’, Focus on South Asia, 2, New Delhi, 2007, p. 63. 14 Faizal Yahya, ‘India and Southeast Asia: Revisited’, Contemporary Southeast Asia, Singapore, April 2003, pp. 99–100. 15 Satu P. Limaye, ‘India’s Relation with Southeast Asia Takes a Wing’, Southeast Asian Affairs, Singapore: Institute of Southeast Asian Studies, 2003, p. 39. 260 Mohan P. Lohani

High-level visits between India and China always make headlines. In 2003, Indian Prime Minister A. B. Vajpayee visited China and Chinese Prime Minister Wen Jiabao visited India at the invitation of the Indian Prime Minister. The two leaders agreed to establish a strategic and cooperative partnership for peace and prosperity, and set the direction for bilateral relationship. In November 2006, Chinese President Hu Jintao paid a state visit to India and a 10-pronged strategy was agreed upon during the visit to further strengthen the India–China Strategic Partnership. Most Indian strategists take the view that India and China have more cooperation than confl ict in political areas, more complementary areas than competition in the economic fi eld, and more shared views than contradicting opinions on international issues. With the end of the Cold War in the 1980s, there has been a paradigm shift in traditional international relations characterised by ‘polarity, alliance building, balance of power and spheres of infl u- ence’.16 Inaugurating the New Delhi Conference on 21 November 2009, Indian Vice President Mohammad Hamid Ansari emphasised the need for ‘the joint vision of the leaderships in India and China to ensure a global order in which our simultaneous development will have positive impact for our peoples and economies, as also for the rest of the world’.17 It will be pertinent to say a few words about Sino–American relations, in particular how China and the US, the dominant global power, get along in shaping the 21st century. There is a lively debate in both India and the US as to what the relationship will look like. To quote President Barack Obama, ‘Some in China think that America will try to contain China’s ambitions; some in America think that there is something to fear in a rising China.’ Part of the diffi culty in predicting the future is that China is not the only Asian power which the US has to deal with. For decades, Washington is going

Downloaded by [University of Defence] at 01:36 24 May 2016 to have to play a demanding diplomatic game in which it maintains good relations with China, with India and with its old ally Japan.18 China’s recovery and growing economic importance have led many

16 Mohammad Hamid Ansari, Vice President of India, Address to the Inaugural Session of ICWA-AAS Conference on ‘Emerging China: Prospects for Partnership in Asia’, New Delhi, 21 November 2009. 17 Ibid. 18 Michael Elliott, ‘Into the Unknown’, Time, 10 August 2009, p. 23. A Nepalese Perspective 261

to suggest that emerging China’s role in world affairs and in global institutions such as the Group of Eight (G-8) industrialised countries has to be reckoned with. Nepal’s Relations with China and India China and India are Nepal’s immediate neighbours to the north and the south respectively. It has maintained the best of relations with both its neighbours, and the country has beneﬁ ted from the friendly and generous cooperation over the years in multi-pronged development programmes and activities ranging from the construction of roads, bridges, power generation, supporting social services to setting up factories and other industrial undertakings through joint ventures. No other country would be happier if China and India, Nepal’s traditional friends since time immemorial, could normalise their relations by sorting out their differences and jointly conducting the ‘New World Symphony’, to borrow the imagery used by Nihal Rodrigo, former SAARC Secretary General, in order to create a more peaceful, prosperous and harmonious community in Asia. Nepal has repeatedly and categorically stated in response to security concerns expressed by both Chinese and Indian leaders that it will not allow its territory to be used for hostile operations and subversive activities against its neighbours. Nepal, too, would like its powerful nuclear neighbours to respect the sensitivities of a relatively small neighbour which is keen on democratising itself and devote its energies and attention to accelerating the pace of national development and bringing about improvement in the living conditions of its people.19 The Boao Forum for Asia (BFA): Genesis and Objectives Shaken badly by the economic crisis faced by the East Asian countries Downloaded by [University of Defence] at 01:36 24 May 2016 in 1997 and driven by the gigantic momentum of the process of globalisation and regional integration of economies,20 some leaders

19 Mohan P. Lohani, ‘China’s Foreign Policy: An Overview’, Friendship (A Special Issue of China Study Center, Nepal on the occasion of the 60th anniversary of the founding of the People’s Republic of China), October 2009. 20. Mohan P. Lohani, ‘Promoting Nepal–China Relations through Boao Forum for Asia (BFA)’, Nepal–China Relations, ed. Nischal N. Pandey, Kathmandu: IFA, 2005 pp. 14–25. 262 Mohan P. Lohani

of Asia proposed in September 1998 in Manila that an Asian Forum, similar to Davos World Economic Forum, be established at Boao, Hainan Province of the PRC. Such a forum led by Asians and guided by Asian perspectives and interests would provide opportunity to exclusively discuss Asian issues and aim at enhancing cooperation and exchange among and between Asian countries and other parts of the world. The proposal evoked a favourable response from China, and President Hu Jintao, the then Chinese Vice President, reacting to the proposal, said that the Chinese government would provide all necessary support and cooperation to make the proposal a reality. Meanwhile, Hu Jintao also emphasised that since the recognition, understanding and support of the Asian governments was vital to the establishment of the forum, China would wish to get itself further acquainted with the responses of other countries on this issue. 25 Asian countries, including Nepal, responded positively to the initiative under which the Asian countries ‘are required to face the challenges brought about by globalization and sustain the healthy growth of the economy by strengthening coordination, collaboration and exchanges among themselves as well as strengthen cooperation with other parts of the world’.21 Against this backdrop, the inaugural ceremony of the forum was held on 26–27 February 2001 at Boao, Hainan Province, PRC and was graced by leaders from 26 countries, including President Jiang Zemin of China, King Birendra of Nepal and Prime Minister Mahathir of Malaysia. Apart from providing the necessary initial political support to the forum, the leaders shared their views, born out of long experience in socio-economic development, with the forum participants for the concrete planning and execution of the organisation’s programme and activities.22 King Birendra, addressing the forum as China’s chief guest, drew the

Downloaded by [University of Defence] at 01:36 24 May 2016 attention of the august gathering to disparity in the level and pace of development of the countries in the Asian region and urged the forum to assist the Asian nations to ‘chart a deﬁ nite course to reduce this

21 Boao Forum for Asia: A Brief, prepared by BFA Secretariat, Beijing 2004, www.boaoforum.org, accessed 17 August 2011. 22 Binod P. Bista, ‘Asian Economic Forum Named after Boao’, The Kathmandu Post, March 2001 (Bista worked as a senior economist in the BFA Secretariat from 2002–2006). A Nepalese Perspective 263

disparity and achieve equitable and sustainable development so that the future generations can live with dignity and honor’.23 The leaders also emphasised that for countries aspiring to integrate themselves within the global mainstream, it was necessary for the forum to give due consideration to the protection of their respective social and economic interests. While President Jiang Zemin called upon the people of Asia to join hands and work vigorously for the joint development of all Asian countries through enhanced cooperation and exchange between Asia and the rest of the world for building a prosperous, strong and better Asia, King Birendra reiterated his country’s readiness ‘to develop and share resources — like the waters from the snowcapped Himalayas — for the collective beneﬁ t of all the peoples of the region’.24 Likewise, Prime Minister Mahathir ‘outlined the importance of utilizing big rivers for cheap transportation, and suggested that pipelines could be built for water from melting snow in the North to arid deserts of the South’.25 Precisely speaking, the leaders of Nepal and Malaysia hinted, in their speeches, at the prospects for partnership across Asia, which was the overarching theme of the conference held in New Delhi. The launching of an Asian Economic Forum known as BFA in February 2001 was more than a simple get-together. ‘The great minds aired their views for the Asians to listen. After all, it is the people of Asia who stand to gain from a prosperous Asian region. Collective efforts are required from all nations, big or small, rich or poor, to realize the dream of every Asian who wishes to live with honor and dignity — the basic human right guaranteed for all. For this to happen, all Asians must open up their mind, and think beyond their narrow self-interest’.26 BFA Looks Ahead

Downloaded by [University of Defence] at 01:36 24 May 2016 The BFA has been progressing steadily towards its mission: striving to promote the development goals of Asian countries through expanded regional cooperation, including greater regional and global integration and social responsibility. It has commenced the process

23 The Rising Nepal, 28 February 2001. 24 Ibid. 25 Mohan P. Lohani, ‘Promoting Nepal–China Relations’ op. cit. 26 Binod P. Bista, op. cit. 264 Mohan P. Lohani

of weaving together various sub-regional initiatives and mechanisms in order to realise the long-cherished goal of a pan-Asia cooperation mechanism.27 The forum, strongly supported by emerging China, has made its mark in a short period of eight years. What is heartening to note is the support it has received from the Chinese government. In the past annual conferences, China has been represented at the highest level — two presidents and two premiers have already participated, giving evidence of China’s strong political support. As a non-governmental organisation which provides a platform to government leaders, ministers and senior ofﬁ cials, the business community, the academia and representatives of international organisations for exchange of views and interactions in an informal setting, the BFA has played an important role in enhancing cooperative relations between governments and the business community, public- and private-sector institutions during the past eight years. The BFA secretariat, now headed by its dynamic Secretary-General Long Yongtu, has shown efﬁ ciency in making necessary preparations for the forum’s annual conference, including the provision of relevant documents and other logistical support. The Secretary-General has rightly observed,

BFA conferences, since its inception, have reviewed and identiﬁ ed all necessary elements for a successful and sustainable Asian integration… BFA has taken a distinct approach in furthering the Asian regional cooperation and integration process. It has been acting on two fronts: searching for common points on new areas of cooperation, and developing further the ongoing integration activities.28

The importance of promoting regional cooperation in sectoral activities such as tourism and education has been realised by the BFA’s board of directors. The BFA-sponsored International Tourism Conference was held in Guilin, China in November 2002, seven

Downloaded by [University of Defence] at 01:36 24 May 2016 months after the forum’s fi rst annual conference in Boao in April of the same year. The Guilin Conference was attended by over 500 participants, mainly ministers, former prime ministers, senior government offi cials, representatives of the business community, scholars and tourism promoters from Asia and other parts of the world. Needless to point out, a great deal of signifi cance has been attached by each

27 BFA Annual Report 2006: Economic Integration in Asia, p. XI. 28 Long Yongtu, Beijing Review, 22 April 2004, p. 23. A Nepalese Perspective 265

Asian country to the role of tourism in its national economy. In view of the tremendous potential of tourism in the region, the conference appealed to all participants, particularly offi cial delegations and representatives of the private sector from Asia, to promote tourism and work in partnership to attract thousands of tourists from the Asia–Pacifi c region and other parts of the world.29 Another area to which the BFA attaches great importance since its inception is education sustained by training and research. The forum’s declaration, adopted on 26 February 2001, stresses that one of the missions of the BFA is to ‘provide intellectual leadership for developing human resources and further research on issues of importance, both internal to the region and its relationship with the rest of the world’. In pursuance of this objective, China hosted, in December 2003, a meeting of initiators for the Education Forum for Asia (EFA), which reviewed the current status and prospects of Asian education, and recognised the crucial linkage between education and Asia’s long-term social and economic development against the background of regional integration’.30 The initiative issued by the meeting of initiators on 6 December 2003 stipulates that countries in the Asian region ‘need to consolidate their educational resources in order to maintain global competitiveness’. The fi rst International Conference on Education Cooperation in Asia was held in Beijing in August 2004 and adopted practical decisions and recommendations for integrating education into the overall national development strategy of each country in the region. In all the EFA conferences, the need for reducing the gap between the more advanced and less advanced countries in terms of economic, cultural and educational development in order to attain the ultimate goal of Asian integration has been stressed.31 The establishment of the Asian Scholarship Fund has been a notable achievement of the 2004 EFA Conference. Nepal and other less advanced countries in the

Downloaded by [University of Defence] at 01:36 24 May 2016 region can immensely beneﬁ t from this fund, as it aims at facilitating and encouraging the exchange of scholars and researchers in the

29 Mohan P. Lohani, ‘The Guilin Tourism Conference: An Assessment’, The Kathmandu Post, 29 November 2002. 30 Mohan P. Lohani, ‘Asian Education Forum’, The Kathmandu Post, 15 December 2003. 31 Mohan P. Lohani, ‘Beijing Education Conference’, The Kathmandu Post, 27 August 2004. 266 Mohan P. Lohani

region for better communication and talent enhancement, leading to economic growth and social transformation. It may be noted that all the EFA annual conferences, including the conference held in Xi’an city in November, have been supported by the Ministry of Education of China and co-organised by the BFA, UNESCO and the China Scholarship Council (CSC). Cultural and academic exchanges and interactions initiated by the forum during the past six years of its existence have signifi cantly contributed to the promotion of better understanding among peoples with diverse political, economic and socio-cultural backgrounds. Countries of the region have recognised and emphasised the need for linking human resource development to all-round national development. Education today is no longer a closed-door or isolated affair. It must be reoriented and revamped in response to changing times, situations and realities. As we are approaching the end of the fi rst decade of the new century that we live in, the education sector, like any other important sector in public life, is faced with enormous challenges and opportunities. While making the best use of available opportunities, we cannot shy away from challenges. China has joined forces with other countries in the region to make the BFA, a gigantic Asian adventure, a success and hopes to create an environment in which all countries of the region can reap the benefi ts of collective efforts within a win–win framework. The importance of the BFA cannot be simply superfi cially analysed and assessed. Though established as a non-governmental international organisation headquartered in China, the forum’s close link with Chinese authorities and leaders coupled with full involvement of Chinese business community of repute gives added advantage to the BFA in its scope of operations, infl uence and reach. For countries like Nepal, doing business outside of the country in a highly competitive environment is extremely diffi cult. The cost is mostly prohibitive. China has extended

Downloaded by [University of Defence] at 01:36 24 May 2016 its hand of friendship to all its neighbours to come forward and make use of forums such as the BFA in sharing the exploits of great Chinese economic prowess brought about rapidly by its new experiment based on the ‘one country-two systems’ model. By the sheer size of its economy China is able to attract many international businesses to its doorstep. While the BFA, with the full backing of government leaders, has always been the centre of attraction to foreign businesses, it has also given special emphasis to smaller economies within the region. While the leading economies of Asia are expected to further A Nepalese Perspective 267

strengthen their competitiveness in the global market, it is equally necessary for the smaller ones to catch up with the rest through timely reform of their economic infrastructure. China has successfully restructured its state-owned enterprises (SOEs), opened its market in line with its commitment to WTO membership, and has expressed its readiness to cooperate with the countries of the region, especially its neighbours. This is a phenomenon which countries like Nepal and others in the region cannot afford to miss at any cost. The BFA provides a solid ground for the sharing of such experiences through research papers by Chinese scholars, face-to- face interactions with members of the academia and business representatives and open discussions with Chinese policy makers at the highest level. Conclusion China has been praised for its assertive and forward-looking leadership, and all countries of the region which have attended the BFA conferences so far have expressed the conﬁ dence that China, keen as it is to see Asia emerge as a more developed, prosperous, peaceful and stable region in this century, would spare no pains in mobilising regional and international support and cooperation for the realisation of goals and objectives set forth in the Boao Declaration of 2001.32 BFA Secretary General Long Yongtu is positive in asserting China’s capacity for cooperation and contribution:

As a rising economic power in Asia, China has a lot to offer. China’s wise action of holding on to its currency exchange rate during the Asian fi nancial crisis in 1997 has made a signifi cant difference to the economic stability of the region. This has been acknowledged worldwide. China’s rapid growth and its tremendous potential benefi t all countries in the region.33

Downloaded by [University of Defence] at 01:36 24 May 2016 References Bista, Binod P. 2001. ‘Asian Economic Forum Named after Boao’, The Kathmandu Post. March.

32 For detail, see the following articles by Mohan P. Lohani: ‘Asian Development and Cooperation’, The Kathmandu Post, 7 November 2003 and ‘Highlights of BOAO Annual Conference’, The Kathmandu Post, April 2004. 33 Long Yongtu, op. cit., p. 22. 268 Mohan P. Lohani

Devare, Sudhir. 2006. India and Southeast Asia: Towards Security Convergence, Singapore: Institute of Asian Studies. Elliot, Michael. 2009. ‘Into the Unknown’, Time. 10 August. ‘Emerging Asia: Recent Trends in Trade and Output’, BFA Annual Report 2006: Economic Integration in Asia. ‘Forging Closer ASEAN–China Economic Relations in the Twenty First Century’, A Report Submitted by the ASEAN–China Expert Group on Economic Cooperation, October 2001. Li Jianguo. 2004. ‘Rising Peacefully’, Beijing Review. 22 April. Limaye, Satu P. 2003. ‘India’s Relation with Southeast Asia Takes a Wing’, Southeast Asian Affairs. Singapore: Institute of Southeast Asian Studies. Lohani, Mohan P. 2002. ‘The Guilin Tourism Conference: An Assessment’, The Kathmandu Post. 29 November. ———. 2003. ‘Asian Education Forum’, The Kathmandu Post. 15 December. ———. 2004. ‘Beijing Education Conference’, The Kathmandu Post. 27 August. ———. 2005. ‘Promoting Nepal–China Relations through Boao Forum for Asia (BFA)’, Nepal–China Relations, ed. Nischal N. Pandey. Kathmandu: IFA. ———. 2009. ‘China’s Foreign Policy: An Overview’, Friendship (A Special Issue of China Study Center, Nepal on the occasion of the 60th anniversary of the founding of the People’s Republic of China). October. Nehru, Jawaharlal. 1946. The Discovery of India. Meridian Books Limited. Simkhada, Shambhu Ram. 2009. ‘Nepal’s Perceptions of a Rising China’, unpublished. Kathmandu. Thackur, Ravni. 2007. ‘Talk about India’s Look East Policy’, Focus on South Asia, 2. New Delhi. Xiao Zan. 2004. ‘Boao Special’, Beijing Review. 22 April. Yahya, Faizal. 2003. ‘India and Southeast Asia: Revisited’, Cotemporary Southeast Asia. Singapore. April. Downloaded by [University of Defence] at 01:36 24 May 2016 Burmese Tango 269

16 Burmese Tango: Indian and Chinese Games and Gains in Burma (Myanmar) since 19881

Renaud Egreteau

Over the past two decades, China has developed a peculiar relationship with its Burmese southern neighbour,2 establishing a key — though delicate — partnership with the Burmese junta that took power in 1988. A great deal has been written on the Chinese strategic interests in and around Burma’s geopolitical ﬁ eld, especially through India’s leading academic and polity circles in the 1990s.3 China’s ambitions southward have indeed long raised serious concerns among New Delhi’s policy makers, giving birth to new ‘threat perceptions’4

1 In this article, the English terms ‘Burma’ and ‘Rangoon’ will be preferred to the vernacular terms ‘Myanmar’ and ‘Yangon’ for ease of linguistic simplicity, and without any political connotation or judgement. 2 Donald Seekins, ‘Burma–China Relations: Playing with Fire’, Asian Survey, 37 (6), 1997, pp. 525–39; Tin Maung Maung Than, ‘Myanmar and China: A Special Relationship?’ Southeast Asian Affairs 2003, 2003, pp. 189–203. 3 Dipankar Banerjee, ‘Myanmar and Indian Security Concerns’, Strategic Analysis, 19 (5), 1996, pp. 691–705; Baladas Ghoshal, ‘Trends in China–Burma Relations’, China Report, 30 (2), 1994 pp. 187–202; Mohan J. Malik, ‘Sino– Indian Rivalry in Myanmar: Implications for Regional Security’, Contemporary Southeast Asia, 16 (2), 1994, pp. 137–56; Swaran Singh, ‘Myanmar: China’s

Downloaded by [University of Defence] at 01:36 24 May 2016 Gateway to the Indian Ocean’, Journal of Indian Ocean Studies, 3 (1), 1995, pp. 80–87; Swaran Singh, ‘The Sinicization of Myanmar and its Implications for India’, Issues & Studies, 33 (1), 1997, pp. 116–33; Udai Bhanu Singh, ‘Recent Trends in Relations between Myanmar and China’, Strategic Analysis, 18 (1), 1995, pp. 61–72; P. Stobdan, ‘China’s Forays into Burma: Implication for India’, Strategic Analysis, 16 (1), 1993, pp. 21–38. 4 Mohan J. Malik, ‘Myanmar’s Role in Regional Security; Pawn or Pivot?’ Contemporary Southeast Asia, 19 (1), 1997a, pp. 52–73; Andrew Selth, ‘Burma and the Strategic Competition between China and India’, Journal of Strategic Studies, 19 (2), 1996, pp. 213–30. 270 Renaud Egreteau

and leading New Delhi to a concrete Burma policy shift in the early 1990s.5

– ‘Chinese threats’ to its national security, from the Indian Ocean onto which Burma is wide open thanks to a 1,920 km-long coastline, to an Indian ‘northeast’ plagued by insurgency and which shares a 1,643 km-long border with Burma and a contested frontier with China/Tibet beyond the disputed McMahon Line in Arunachal Pradesh; – ‘Chinese threats’ to its economic and commercial rise with an aggressive Chinese competitor gaining new markets and a crucial access to resources in Southeast Asia, starting with Burma; – ‘Chinese threats’ to its political and diplomatic regional ambitions illustrated by the launch of the Look East Policy thought out in New Delhi in the early 1990s and globally aimed at getting a stronger Asian toehold anywhere China has so far not gotten a concrete lead.

India consequently opted for a critical review of its approach to the Burmese issue during the 1990s, dropping its vocal support for democracy to cautiously engage a Burmese military regime ﬁ rmly on hold to power. Aimed at getting back the leverage it had during the colonial era, this policy review led many observers and commentators to indulge in the portraying of a new Sino–Indian ‘Great Game’ taking shape in and around Burma.6 With India back into the Burmese game, the triangular relationship India– Burma–China was analysed through the prism of another perfect

5 Downloaded by [University of Defence] at 01:36 24 May 2016 Renaud Egreteau, Wooing the Generals — India’s New Burma Policy, New Delhi: CSH-Authorpress, 2003; ‘India’s Ambitions in Burma: More Frustration than Success?’Asian Survey, 48 (6), 2008b, pp. 936–57; K. Yhome, Myanmar: Can the Generals Resist the Change, New Delhi, Rupa and Co., 2008. 6 Baladas Ghoshal, ‘Trends in China–Burma Relations’, China Report, 30 (2), 1994, pp. 187–202; Mohan J. Malik, ‘Sino–Indian Rivalry in Myanmar’; Andrew Selth, ‘Burma and the Strategic Competition between China and India’; Swaran Singh, ‘The Sinicization of Myanmar and its Implications for India’; P. Stobdan, ‘China’s Forays into Burma: Implication for India’. Burmese Tango 271

‘rivalry’ illustration.7 But 15 years afterwards, both India and China have experienced more diffi culties than expected in their political, military and commercial dealings with their Burmese counterparts. This article intends to illustrate the obstacles encountered by both India and China in Burma in the past decade, thus downplaying not only the fallacies about a dreadful ‘Chinese threat’ stemming from a China-manipulated Burmese military junta, but also the realities of a severe competition taking place in Burma between India and China. After all, the Sino–Indian ‘Great Game’ there, on which many articles and intelligence reports were drawn, might not be as blatant as often perceived. After briefl y describing both China and India’s emerging ambitions in Burma throughout the 1980s and 1990s, this article will analyse Beijing’s and New Delhi’s respective achievements and setbacks, eventually arguing that depicting the Burmese fi eld as a mere playground for a Sino–Indian strategic competition is a clear over exaggeration that denies Burma’s own potential to resist external infl uences through a skilful use of diplomatic power games and xenophobic nationalism. The Ambitions: China and India’s Strategic Interests in Burma China’s Burmese Agenda Since 1988, a unique partnership has been established between China and Burma, though this rapprochement had been foreseeable since Deng Xiaoping’s 1978 landmark visit to Rangoon. The Chinese interests in Burma have always appeared crystal-clear, as they respond to both geographical logics and politico-economic objectives for a rising China, wary of the economic development of its most isolated southwestern provinces and of the security and peaceful- ness of its southern borders. Given the strategic position of Burma, Downloaded by [University of Defence] at 01:36 24 May 2016

7 C. Uday Bhaskar, ‘Myanmar in the Strategic Calculus of India and China’, in Kanti Bajpai and Amitabh Mattoo (eds), The Peacock and the Dragon: India–China Relations in the 21st Century, New Delhi Har-Anand Publications, 2000, pp. 349–60; Renaud Egreteau, ‘India and China Vying for Inﬂ uence in Burma: A New Assessment’, India Review, 7 (1), 2008a, pp. 38–72; Mohan J. Malik, ‘Myanmar’s Role in Regional Security’; Andrew Selth, ‘Burma and Superpower Rivalries in the Asia–Paciﬁ c’, Naval War College Review, 55 (2), 2002, pp. 42–60. 272 Renaud Egreteau

which shares a more than 2,000 km-long border with Yunnan, the main idea for Chinese policy thinkers was the opening up of this landlocked province southward, benefi ting from Burma’s geographical organisation.8 As a consequence, developing a trade corridor running from Kunming to the Indian Ocean, logically following the Irrawaddy River was the primary task to be taken up by both the Beijing and Kunming authorities.9 That was nothing new, as old trade routes linking China and the Bengal region have already been in place for centuries; a quite coherent objective given the geopolitics of a Burmese strategic fi eld structured according the same North–South axis since the British colonial era. When a new Burmese military regime — the State Law and Order Restoration Council (SLORC) — came to power in 1988 and dropped the autarkical ideology of the previous Ne Winian regime to open up its economy, China took up the opportunity. While gradually opening up its borders and cautiously liberalising its still underdeveloped economy from the late 1980s, Burma’s SLORC then offered to its neighbours, starting with China, vast and under exploited natural resources and a credible market of more than 40 million people eager to fi nd new and cheap basic commodities.10 A crucial prospect for a booming Yunnan, which could from then on benefi t from this Burmese economic outlet at its very doorstep, the creation of a trade corridor from Yunnan to the Indian Ocean also proved to be of strategic importance for Beijing — although I argue that it had remained so far peripheral to Beijing’s Burma policy.11 For China, it obviously became important to be able to benefi t from a credible leverage in a country which became dramatically ostracised by the international community in 1988–90 — especially by India and the western powers. Being potentially able to exert a new kind Downloaded by [University of Defence] at 01:36 24 May 2016 8 Baladas Ghoshal, ‘Trends in China–Burma Relations’; P. Stobdan, ‘China’s Forays into Burma’. 9 See the outline described by the then Chinese Vice Minister for Transports and Communication, Pan Qi, ‘Opening the Southwest: An Expert Opinion’, Beijing Review, 28 (35), 2005, pp. 22–23. 10 Udai Bhanu Singh, ‘Recent Trends in Relations between Myanmar and China’. 11 C. Uday Bhaskar, ‘Myanmar in the Strategic Calculus of India and China’; Swaran Singh, ‘Myanmar’. Burmese Tango 273

of political and military pressure on India on its eastern fl ank (both through the northeast region and the Indian Ocean) bear out to be also an element the Chinese took into account when making their new policy choices toward Burma in the late 1980s. With regard to the latest Sino–Indian border clashes and diplomatic tensions about Arunachal Pradesh in 1986–87, this Chinese strategic goal then appeared consistent.12 Consequently, along with the (re)construction of Burmese infrastructure, the enhancement of bilateral trade, new Chinese — more specifi cally Yunnanese — investments through the development of new networks in upper Burma, a strengthened military cooperation illustrated by the sales of abundant weaponry to the growing Burmese Armed Forces (Tatmadaw)13 and with regular mutual diplomatic support on the international scene, the Chinese approach to Burma clearly emerged from 1988 as a multifaceted policy, which ever since has showed a remarkable continuity. There, India found its fi rst source of concern from the early 1990s. Enter India: Threat Perceptions and a ‘Look East’ Strategy In face of the 1988 Burmese political upheavals, India fi rst adopted a clear support to the Burmese democracy movement that embraced the student uprising — to which Aung San Suu Kyi gradually clung on.14 New Delhi deliberately chose the opposite policy to that of Beijing, which was prompt in establishing a much closer relationship with the new Burmese military rulers. India’s position was visibly infl uenced by the ethical approach of Indian intellectual and political leaders who felt themselves close to Aung San Suu Kyi’s rising democratic struggle, as soon as the daughter of Burma’s independence hero came to light in Rangoon. Those pro-democracy Indian circles included former

12 Downloaded by [University of Defence] at 01:36 24 May 2016 Salamat Ali, ‘Tension on the Border’, Far Eastern Economic Review, 7 May 1987, pp. 33–35. 13 See, for instance, Bertil Lintner, ‘Oiling the Iron Fist — Armed Forces Receive Large Quantities of New Weapons’, Far Eastern Economic Review, 6 December 1990; ‘Rangoon’s Rubicon: Infrastructure Aid Tightens Peking’s Control’, Far Eastern Economic Review, 11 February 1993, p. 28; and ‘Myanmar’s Chinese Connection’, International Defence Review, 27 (11), November 1994, p. 24. 14 Renaud Egreteau, Wooing the Generals — India’s New Burma Policy; Pramod K. Mishra, ‘India’s Burma Policy’, Strategic Analysis, 12 (10), 1989, pp. 1183–1200. 274 Renaud Egreteau

Indian Prime Minister Rajiv Gandhi (1984–89) who had visited Burma in December 1987, and many Indian activists, left-wing members of parliament, civil rights militants and academics. Two pro- democratic Indian Ambassadors — I. P. Singh (1986–89) and P. M. S. Malik (1990–92) — had also been posted to Rangoon in those troubled Burmese times and purposely took public positions against the new military junta, the 1988 crackdown and denounced Aung San Suu Kyi’s fi rst house arrest (1989–95).15 But by the early 1990s, it appeared far more obvious for India that the new junta was there to stay and rumours began to fl ow among the intelligence, and journalistic and academic circles about the gradual sliding of the country into the Chinese strategic orbit. Indeed, India’s security circles (army, navy, but also the security people in the northeast) were the fi rst to ring the bell, slowly de- nouncing the counter effects of the ethical pro-democracy stance.16 The vacuum left in Burma was rapidly fi lled up by China which soon became a crucial supplier of small arms, ammunitions, vehicles and navy ships of the Burmese Armed Forces. That consequently meant a stronger Burmese Army — after years of isolation and looking inward — which could pose new military threats at India’s very doorstep. If India’s offi cial statements kept on criticising Burma’s new military leadership while vocally supporting Aung San Suu Kyi’s iconic opposition, risks of seeing the Burmese junta widely opening its doors to a rising — and rival — China became evident. Also, given the extreme sensitivity of the strategic Indian northeast for New Delhi — including Arunachal Pradesh partly being claimed by Beijing — Burma showed no qualms in turning a blind eye on the traffi cking activities and sheltering opportunities of anti-India rebel groups deep down in the Burmese jungles during the 1988—92 years.17 India dreadfully feared a revival of old connections between the Chinese intelligence and few anti-Indian insurgents (Nagas, Assamese and

Downloaded by [University of Defence] at 01:36 24 May 2016 other Maoist rebel groups), despite the ofﬁ cial declarations made by

15 Interview with Ambassador Preet M. S. Malik, New Delhi, 19 April 2007. 16 Dipankar Banerjee, ‘Myanmar and Indian Security Concerns’; C. Uday Bhaskar, ‘Myanmar in the Strategic Calculus of India and China’. 17 Renaud Egreteau, Instability at the Gate: India’s Troubled North East and its External Connections, Occasional Paper, No. 16, New Delhi: Centre de Sciences Humaines, 2006. Burmese Tango 275

Beijing back in 1979.18 Finally, when rumours on the construction of monitoring facilities, surveillance network and new military ports by China along Burma’s coastline began to ﬂ ood international intelligence agencies’ reports in the early 1990s, global threat perceptions of Burma gradually becoming a Chinese ‘pawn’ (or merely another Chinese province as the wide literature of the 1990s proves), urged Indian policy makers to review their approach of the Chinese challenge there.19 The policy shift came in 1992–93, with India taking the lead and gradually building up a new engagement policy with the Burmese rulers,20 a policy that was part of its post-1991 ‘Look East’ strategy.21 New Delhi put an end to its vocal criticism of the Burmese junta as well as its blind support to Aung San Suu Kyi’s democratic struggle, while slowly backing away from the Burmese militancy in exile. India thus became far more cautious and discreet in its diplomatic approach of the Burmese conundrum and ‘no meddling in internal affairs’ turned then to be the leading mantra of Indo–Burmese relations.22 The Gains: Achievements of China and India’s Thrusts through Burma since 1988 A Crucial Sino-Burmese Partnership Since 1988, China has been developing a concrete and credible trade corridor running from Kunming in Yunnan to Mandalay and then Rangoon,23 crossing the Sino–Burmese border at Ruili/Muse (but also at other cross-border points, especially southward to Shan state: Wanding, Nancang, Cangyan, Meng’a, Daluo, Damenglong) and

18 As regularly reported by the press, quoting Indian ofﬁ cials. For instance, see ‘Insurgent Groups in N-E getting Help from China?’, The Times of India, 31 October 2008; and ‘NE Militants Smuggle Chinese Arms through Myanmar’,

Downloaded by [University of Defence] at 01:36 24 May 2016 Press Trust of India, 21 February 2010. 19 ‘Sino–Myanmar Ties irk Delhi’, The Times of India, 20 November 1992. 20 Renaud Egreteau, Wooing the Generals — India’s New Burma Policy. 21 Rajiv Sikri, ‘India’s “Look East” Policy’, Asia–Paciﬁ c Review, 16 (1), 2009, pp. 131–45. 22 K. Yhome, Myanmar. 23 Wayne Bert, ‘Burma, China and the USA’, Paciﬁ c Affairs, 77 (2), 2004, pp. 263–82; John W. Garver, ‘Development of China’s Overland Transportation Links with Central, South-west, and South Asia’, The China Quarterly, 185, 2006, pp. 1–22. 276 Renaud Egreteau

using both the well-maintained Road 3 (from Muse to Mandalay via Lashio) and the Irrawaddy River (either from Myitkyina or from Bhamo’s small rebuilt fl uvial harbour).24 Vast commercial fl ows have been witnessed upwards to Yunnan and downwards to Rangoon, with a Sino–Burmese bilateral trade mainly concentrated along the Yunnan/Shan state borders. Starting from US$76.03 million in 1989, this bilateral trade crossed the US$1 billion target in 2003 ($1,079.7 billion) to reach US$3.37 billion in 2010–2011.25 While China imports mainly raw products (timber, gems, rubber, crude oil, vegetables, fi shing goods), it exports to Burma a wide range of cheap manufactured products, machines and tools through huge loans and credits lines generously offered — mostly by the Yunnan authorities.26 Besides, military interactions were set up as soon as 1989, with the SLORC signing a US$1 billion deal on the sales of modern weaponry with China, completed in 1994 by another US$0.4 billion contract. Both have been followed up by maintenance agreements throughout the 1990s.27 Various Burmese military infrastructures were upgraded in the early 1990s thanks to the assistance of Chinese engineers and equipment (army headquarters in Rangoon, naval bases at Hainggyi, Greater Coco, Zadetkyi).28 Combined with the valuable diplomatic support of Beijing on the international scene, it enabled the Burmese regime to effi ciently balance the international ostracism it was the object of since the imposition of international (read western) economic and political sanctions and arm embargo from the late 1990s.29

24 Personal observations during ﬁ eldwork conducted in 2003, 2004, 2005 and 2009. 25 The Myanmar Times, ‘Foreign Investment Floods into Myanmar’, 27 June–3 July 2011. 26 Author’s interview, China Consulate-General, Mandalay, Burma, 29 April Downloaded by [University of Defence] at 01:36 24 May 2016 2005. 27 Mohan J. Malik, ‘Burma slides under China’s Shadow’, Jane’s Intelligence Review, 9 (7), July 1997b, pp. 319–22. 28 See Andrew Selth, ‘Burma, China and the Myth of Military Bases’, Asian Security, 3 (3), 2007, pp. 279–307. 29 Lai-Ha Chan, Gerald Chan ad Pak K. Lee, ‘China’s “Realpolitik” Engagement with Myanmar’, China Security, 5 (1), 2009, pp. 101–23; Chengyang Li and Liang Fook Lye, ‘China’s Policies towards Myanmar: A Successful Model for Dealing with the Myanmar Issue?’ China: An International Journal, 7 (2), 2009, pp. 255–87; Tin Maung Maung Than, ‘Myanmar and China’. Burmese Tango 277

In exchange for the recognition of the ‘One China Policy’ by Burma and the privileged access to its natural resources, the use of Beijing’s veto against a UN Resolution condemning Burma at the UN Security Council in January 2007 or the constant support of China at other UN agencies (ILO, HR Commission) further proved the coherence of the China–Burma equation.30 Above all, investments in infrastructures and in the oil and gas sector from the 2000s further illustrate the diversifi ed facets of the Sino– Burmese partnership and tend to assert the Chinese ambitions in the region with the Burmese regime ‘banking on Natural Gas’.31 The fi rst credible investment of a Chinese oil company in Burma was concluded (only) in September 2001 (through the China National Petroleum Corporation — [CNPC]), but a few years later, the four biggest Chinese oil companies were present in Burma. Beside the CNPC, Sinopec gained in September 2004 one onshore oil block (northwest of Mandalay) and in October–December 2004 China National Offshore Oil Co. (CNOOC, along with a Singaporean fi rm, Golden Aaron Pte Ltd) gained the strategically located onshore oil block M surrounding Ramree Island (Arakan coast) as well as fi ve other offshore natural gas blocks. Lucid, CNOOC’s spokesman, even declared in 2004 that, thanks to western sanction policies conducted toward Burma, ‘it (was) also easier for Chinese Oil companies to gain access, as most of Oil companies (wouldn’t) go there’.32 In June 2009, CNPC fi nally inked its 1,100 km-long pipeline project linking Kyaukphyu (Ramree Island) to Kunming, confi rming China’s ambitions in the Burmese energy sector.33 The Indian Way of Engaging Burma From 1993, Indian leaders cautiously opted for a gradual engagement of their Burmese counterpart, with several key issues in sight.34 The fi rst matter of concern for New Delhi was clearly its northeast. Downloaded by [University of Defence] at 01:36 24 May 2016 30 ‘China, Russia Veto Myanmar Resolution’, The Washington Post, 14 January 2007. 31 John W. Garver, ‘Development of China’s Overland Transportation Links with Central, South-west, and South Asia’; Tin Maung Maung Than, ‘Myanmar and China’. 32 ‘CNOOC Plans Burma Forays’, The Standard of Hong Kong, 27 October 2004. 33 CNPC Press News Release, 19 June 2009. 34 Rita Manchanda, ‘Reasons of State’, Far Eastern Economic Review, 6 May 1993, p. 12. 278 Renaud Egreteau

New military cooperation from a strengthened Burmese Army were sought to crack down on the anti-Indian insurgents’ outfi ts that had long established underground networks of mobile camps and traffi cking routes on Burmese territory.35 Collaboration in border surveillance, exchange of intelligence, high-level talks and joint- military operations (the fi rst one in 1995) aimed at tackling the illicit activities of the ULFA, NSCN-IM or PLA armed outfi ts were set up. India gradually showed its willingness to see the Burmese Armed Forces taking more initiatives in the region, stressing the fact that they were fi ghting the same ‘terrorist’ activities, as proved by the Naga insurgency — especially the Khaplang faction of the National Socialist Council of Nagaland (NSCN-K) — today fi ghting mostly the Burmese Army. Second, the establishment of a credible diplomatic partnership between India and Burma was thought out both to bring Burma into New Delhi’s emerging Look East Policy (initiated in 1991) and to balance China’s regionalist ambitions through ASEAN or the Greater Mekong Sub-region Project.36 Regional organisations such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC, 1997) or the MGC (2000), beside the India–ASEAN Summit (fi rst one held in 2002) and the ARF dialogue enabled India to get closer to a Burmese regime now welcomed in the regional diplomatic scene. The Kunming Initiative (or BCIM, launched in 1999) presented the originality of gathering India, China and Burma (plus Bangladesh) in the same organisation, but the Indians proved to be more reluctant to fully participate in the sponsorship of this peculiar forum, given the transnational sensitivity of the region (and the Chinese lead in the organisation).37 Being in a position to

35 Dipankar Banerjee, ‘Myanmar and Indian Security Concerns’; C. Uday Bhaskar, ‘Myanmar in the Strategic Calculus of India and China’; L. K.

Downloaded by [University of Defence] at 01:36 24 May 2016 Choudhury, ‘Indo–Myanmar Relations: Retrospect and Prospect’, Indian Quarterly, 61 (4), 2005, pp. 143–68; Renaud Egreteau, Instability at the Gate; Pradip Saikia, ‘North-east India as a Factor in India’s Diplomatic Engagement with Myanmar: Issues and Challenges’, Strategic Analysis, 33 (6), 2009, pp. 877–89. 36 Anindya Batabyal, ‘Balancing China in Asia: A Realist Assessment of India’s Look East Strategy’, China Report, 42 (2), 2006, pp. 179–97; C. Raja Mohan, ‘India’s Geopolitics and Southeast Asian Security’, Southeast Asian Affairs, 2008, pp. 43–60. 37 Author’s discussion with Amb. Rajiv Sikri, retired Secretary (East), Indian Ministry of External Affairs, Hong Kong, November 20, 2009. Burmese Tango 279

globally checkmate the Chinese in the Burmese strategic fi eld has indeed been perceived as a key rationale behind New Delhi’s Burma moves through the 1990s.38 Third, economic and commercial considerations have given another strong impulse to New Delhi’s new Burma approach. After the 1994 trade agreement signed between Rangoon and Delhi and the opening of the Tamu/Moreh cross-border point the year after, strategic investments for the construction of roads (such as the 160 km-long Tamu-Kalewa portion), maritime or fl uvial ports (Sittwe, Dawei), power plants (in the Sagaing Division with the Tamanthi and Shwezaya Hydroelectric projects, for instance), factories (electric motors, textile, cable, bicycles, agricultural products) were programmed by India to create a new Indian sphere of infl uence in central and western Burma.39 The Indo–Burmese bilateral trade then rose from US$62.15 million during the 1988–89 fi scal year to US$345.15 million in 2000–2001, to fi nally reach US$1.07 bn in 2010–11.40 As Burma’s fourth to sixth commercial partner (depending on the years), India became the leading country to export pharmaceuticals to Burma while being the fi rst to import Burmese agricultural products, especially beans and pulses.41 Last, taking position on the still unexploited Burmese hydrocarbon market (Arakan offshore natural gas, through the Indian state-controlled ONGC-V and GAIL companies as well as Essar Oil) became one of the most obvious objectives of an India whose energy needs were exponentially growing, despite New Delhi’s political indecisions.42

38 Downloaded by [University of Defence] at 01:36 24 May 2016 L. K. Choudhury, ‘Indo–Myanmar Relations’; Renaud Egreteau, ‘India and China Vying for Inﬂ uence in Burma’; ‘India’s Ambitions in Burma’. 39 Dambarudhar Nath, Reopening of the Stilwell Road — Prospects and Problems. 40 The Hindu, ‘Myanmar, India Step Up Cooperation in Health Sector’, 3 August 2011. 41 Author’s interview, Embassy of India in Rangoon, Burma, 26 February 2008. 42 Marie Lall, ‘Indo–Myanmar Relations in the Era of Pipeline Diplomacy’, Contemporary Southeast Asia, 28 (3), 2006, pp. 424–46; Renaud Egreteau, ‘India’s Ambitions in Burma’. 280 Renaud Egreteau

The Setbacks: Obstacles and Resistances to a Sino–Indian Power Play in Burma Estrangement and Frustration: Intricacies of the China–Burma Relationship Despite prevailing loyalty and fi delity within the strong Sino–Burmese partnership, the most powerful neighbour of Burma has, however, recently experienced several setbacks in its dealings with the Burmese military regime.43 A clear blow occurred in 2004 with the sacking of the ‘pro-China’ (or at least perceived as) General Khin Nyunt, Prime Minister and head of the dreadful Military Intelligence Services (MI) since 1984.44 The purge of hundreds of MI offi cers and agents in October 2004 saw China losing a critical network within the Burmese regime, a network that had been built up since 1988 through personal relationships and high-ranking offi cial visits.45 Many Chinese diplomats have already expressed their frustration in front of the gap that had widened between them and the junta’s decision- making centre since then.46 Though vital to Burma and its regime, the Chinese partnership had, in the eyes of the Burmese military, to be balanced and not out of control. The Sino-phobic propensity of the Burmese society revived by the overwhelming presence of new Yunnanese migrants in northern Burma and the predatory relationship established by China throughout the 1990s had already sparked a reassessment of the need and patterns of the bilateral relationship in the 2000s.47 Access to the leaders of Tatmadaw

43 Lai-Ha Chan, Gerald Chan and Pak K. Lee, ‘China’s “Realpolitik” Engagement with Myanmar’; Renaud Egreteau and Larry Jagan, Back to the Old Habits: Isolationism or the Self-Preservation of Burma’s Military Regime, Occasional Paper No. 7, Bangkok: Institute of Research on Contemporary Southeast Asia (IRASEC), 2008; Ian Holliday, ‘Beijing and the Myanmar Problem’, The Paciﬁ c Review, 22 (4), 2009, pp. 479–500; Chengyang Li and Downloaded by [University of Defence] at 01:36 24 May 2016 Liang Fook Lye, ‘China’s Policies towards Myanmar’. 44 Larry Jagan, ‘Power Struggle intensiﬁ es Uncertainty’, The Bangkok Post, 31 January 2005. 45 Renaud Egreteau and Larry Jagan, Back to the Old Habits. 46 Various interviews with Chinese diplomats, Embassy of China to Burma, Rangoon (2005–2008). 47 Mya Maung, ‘On the Road to Mandalay: A Case Study of the Sinonization of Upper Burma’, Asian Survey, 34 (5), 1994, pp. 447–59; Donald Seekins, ‘Burma–China Relations: Playing with Fire’, Asian Survey, 37 (6), 1997, pp. 525–39; Swaran Singh, ‘The Sinicization of Myanmar and its Implications for India’. Burmese Tango 281

has now been far more complicated for the Chinese, although the Ambassador, Political Counselors and Military Attaches are regularly brought to Naypyidaw on special aircrafts for regular meetings with the junta’s representatives.48 There are still strong misinterpretations of the Chinese abilities in Burma as well as the logical tendencies of the Burmese turning towards India to balance the Chinese infl uence.49 The isolationist, xenophobic and nationalist mantra of the Burmese are often overlooked, especially among international security and academic circles.50 There is a common perception in the western world, and in Asia as well, that China can infl uence the Burmese leadership and society at will, even to the point of exerting pressure to instil socio-political changes inside the country.51 How many declarations of the EU, various agencies of the UN, the US, even the ASEAN have put forward the crucial role of China here? International pressure on Beijing during the Burmese monks’ demonstrations (‘Saffron Revolution’) in September 2007 or after the passage of Cyclone Nargis that swept the Irrawaddy delta in May 2008 further illustrated this common image. But it is highly overestimated. The latest border tensions between Yunnan and Burma in August 2009, with the Burmese Armed Forces crushing the ethnic Kokaung militia and pushing thousands of Burmese (and Chinese) refugees into Yunnan showed how Beijing was still very uncomfortable with the unpredictable instability along the borders.52 India’s infl uential security circles have tended to point out a Chinese threat in every strategic territorial corner of India, including through Burma. But as far as the latter is concerned, I belong to a

48 Larry Jagan, ‘China’s Uneasy Alliance with Myanmar’, Asia Times, 24 February 2006. 49 Wayne Bert, ‘Burma, China and the USA’; L. K. Choudhury, ‘Indo–Myanmar Relations’; Mohan J. Malik, ‘Regional Reverberations from Regime Shake-up in

Downloaded by [University of Defence] at 01:36 24 May 2016 Rangoon’, Asia Paciﬁ c Center for Security Studies, 4 (1), 2005, pp. 1–5. 50 Renaud Egreteau and Larry Jagan, Back to the Old Habits; Mikael Gravers, Nationalism as Political Paranoia in Burma: An Essay on the Historical Practice of Power, Richmond: Curzon, 1999; Mya Maung, ‘On the Road to Mandalay’; Andrew Selth, ‘Burma, China and the Myth of Military Bases’, Asian Security, 3 (3), 2007, pp. 279–307. 51 Lai-Ha Chan, Gerald Chan and Pak K. Lee, ‘China’s “Realpolitik” Engagement with Myanmar’; Ian Holliday, ‘Beijing and the Myanmar Problem’; Chengyang Li and Liang Fook Lye, ‘China’s Policies towards Myanmar’. 52 Drew Thompson, ‘Border Burdens: China’s Response to the Myanmar Refugee Crisis’, China Security, 5 (3), 2009, pp. 11–20. 282 Renaud Egreteau

rather less hawkish school that puts forward Burmese nationalistic and isolationist resistance capacities. China is not controlling at will Burma and its regime as is often perceived by the outside world. Burma is not merely a ‘puppet’ nor a pawn’ of Beijing, otherwise the country would have changed drastically in the past years, given the Chinese frustration and diffi culties in understanding the Burmese regime and society.53 This over-infl uence of the ‘anti-China’ posture among New Delhi’s policy makers’ circles is a dramatic constraint for India, at least regarding Burma’s position. Disillusion and Misreading: India’s Diffi culties in Burma After 15 years of close Indo–Burmese engagement, disillusionment became obvious among Indian leaders, though most of the infl uential policy makers in New Delhi or Rangoon are not planning any policy change. At least a reappraisal of reasonable strategic objectives might be underway in the South Block.54 While India is today in a far better position than during Ne Win’s autarkical times (a US$1 billion Indo–Burmese bilateral trade, cordial diplomatic relations with the Burmese generals, no serious and direct threat perceptions to India’s overall security), it is still lagging behind as compared to China (US$3.37 bn in 2010–2011. bilateral trade with Burma), but also as compared to Thailand (between US$2 and 3 billion bilateral trade every year for the past decade), or Russia and Singapore in terms of diplomatic trust. Many reasons can explain the diffi culties of India; a few are outlined hereafter. The Logics of Geography A fi rst reason, which might not be that evident for policy makers looking at a global map of the region, is that Burma does offer a far better geographical setting to China (in the North) than to India 55 Downloaded by [University of Defence] at 01:36 24 May 2016 (to the West) in their respective thrust southward and eastward.

53 Renaud Egreteau, ‘India’s Ambitions in Burma’; Renaud Egreteau and Larry Jagan, Back to the Old Habits; Andrew Selth, ‘Burma, China and the Myth of Military Bases’. 54 Renaud Egreteau, ‘India’s Ambitions in Burma’. 55 Andrew Selth, ‘Burma and Superpower Rivalries in the Asia–Paciﬁ c’, Naval War College Review, 55 (2), 2002, pp. 42–60. Burmese Tango 283

Though trade routes have linked in the past Yunnan and Assam and the Brahmaputra Valley,56 it is indeed far more difﬁ cult to develop an East–West corridor through Burma, rather than a North–South corridor given the opportunities tendered by the Irrawaddy plains running from the Himalayas down to the Indian Ocean. If we observed the strategic options chosen by the British during the colonial era when they exploited the Burmese province from their Indian empire (1824–1948), very few roads linked Bengal Presidency to Burma. Neither any railway system had been built between the Assam railway corridor (which ended near the city of Ledo) and the North–South Myitkyina–Mandalay–Rangoun crucial axis, despite Burma on one side and the Bengal/Assam area on the other being two critical regions for the growth of the British Empire. Maritime links to/from the Burmese ports (Akyab, Sandoway, Rangoon/Monkey Point, Moulmein, Tavoy, Mergui) were instead favoured. The Burmese had then to wait till the late 1930s — and the Sino–Japanese War raging in Central China — to see the ﬁ rst construction of the ‘Burma Road’. Today, too, Burma remains organised according to this geopolitical setting, along the roads, waterways and railways built over the past decades. It remains potentially wide open to various ports along the Burmese coastline, but not according to the Assam– Thailand East–West corridor, far more awkward to promote given both the geographical obstacles (dense mountains, deep jungles, lack of recent historical connections) and political ones (insurgency, ethnic-dominated off-limit areas). Logics of geography prevail here, as various on-site investigations that I carried out in Burma illustrate. Diplomatic Pitfalls On the international scene, India obviously offers less diplomatic assurance to the Burmese regime than its crucial Chinese or Russian partners.57 Indeed, Beijing has long been supportive of Burma in

Downloaded by [University of Defence] at 01:36 24 May 2016 various UN meetings (in New York, Geneva or Vienna) aimed at condemning the Burmese military regime, and Russia too became — through its veto power at the UN Security Council — a key ally for the junta.58 Without a consistent weight at the UN level, India cannot

56 Dambarudhar Nath (ed.), Reopening of the Stilwell Road — Prospects and Problems. 57 Chengyang Li and Liang Fook Lye, ‘China’s Policies towards Myanmar’. 58 Larry Jagan, ‘Myanmar Woos China, Russia’, Asia Times, 12 April 2006. 284 Renaud Egreteau

pretend, for too long, to bring a much needed political security to an otherwise ostracised Burmese regime. The rapprochement between the Russians and the Burmese began in obvious form the early 2000s, with various commercial (MoU signed and loans granted by Moscow), military (sales of weapons and helicopters) and nuclear (a US$5million reactor) deals at stakes.59 A great constraint for India — still considered by the Burmese at a different level than China, Russia or the US — this lack of diplomatic infl uence at a global stage prevents New Delhi from offering a multifaceted partnership to a Burma in need of limited but critical friendly partners.60 Indecision over the Northeast Internal divergences within India over the signifi cance and role of its northeastern frontiers have hampered New Delhi from establishing a clear Burma policy, taking the Indo–Burmese continental borders as a credible launch pad for its ambitions eastward.61 India has indeed to solve — as it is still highly debated among various circles of the vibrant Indian civil society and policy-making elite — its northeast quagmire in order to be in position to more effi ciently conduct its thrust through Burma.62 As long as New Delhi cannot fi gure out how to deal with the northeast instability, its transnational insurgency, border dispute with China in Arunachal Pradesh (McMahon Line), potential economic development with or without closer commercial interactions with Burma, and marginalisation from the mainland, India will not be able to fully achieve its ambitions in western Burma. On one side, a great majority of the northeast business and intellectual circles (Nath 2004) are favouring an opening up of the northeast towards Burma and Southeast Asia (so as to counterweight the Delhi- led policies in the northeast proper), a revival of the Stilwell Road to

Downloaded by [University of Defence] at 01:36 24 May 2016 59 Sergei Blagov, ‘From Myanmar to Russia, with Love’, Asia Times, 12 April 2006. 60 N. Ganesan, ‘Myanmar’s Foreign Relations: Reaching Out to the World’, in Robert Taylor, Kyaw Yin Hlaing and Tin Maung Maung Than (eds), Myanmar: Beyond Politics to Social Imperatives, Singapore: Institute of Southeast Asian Studies (ISEAS), 2005, pp. 30–55; Renaud Egreteau and Larry Jagan, Back to the Old Habits. 61 Rajiv Sikri, ‘India’s “Look East” Policy’. 62 Sanjib Baruah, ‘Look East, but via the North-East’, The Indian Express, 12 December 2003. Burmese Tango 285

connect China and the furthering of the NH39 up to Mandalay.63 On the other side — portraying a pure realist assessment of the geopolitical situation in the region — most of New Delhi’s security circles as well as few still infl uential elements of a ‘Sino-phobic’ Indian political elite militates against a socio-economic international opening up of the region that would mean an opening of the northeast strategic doors to the neighbours, starting with a ‘hawkish’ China. They would indeed rather keep the northeast under control (i.e., with added military forces). Indeed, Chinese presumed or asserted ambitions are a key element of northeast security (and not solely Burma or Bangladesh), and the border skirmishes along the McMahon Line during the summer of 2009 once again proved the strategic sensitivity of the area.64 Last, New Delhi is also more and more realising the diffi culties of establishing viable counter- insurgency collaboration with the Burmese Army.65 Given the over sensitivity of the Burmese top leadership wishing to keep various diplomatic bargaining chips towards India (and other neighbours) and local Burmese authorities far more corrupted and connected to anti-Indian armed outfi ts (Naga, Assamese or Manipuri insurgents), the Indian intelligence, diplomatic and security circles are now caught between the necessity to still cultivate the Burmese junta (that has all the chance to remain in control of the Burmese polity in the years to come) and the regular frustration of seeing every joint Indo–Burmese operation rarely reaching its fundamental objectives.66 Cautious Economic Choices by India Another point where India has not met its objectives, or at least not as much as expected a decade ago, is the economic partnership it purported to build with its Burmese neighbour.67 India had much diffi culty in reaching the fi gure of US$1 billion bilateral trade

63 Downloaded by [University of Defence] at 01:36 24 May 2016 Wasbir Hussain, ‘India’s Northeast: The Super-highway to Southeast Asia?’ IPCS Issue Brief No. 105, June 2009. 64 Kanwal Sibal, ‘China continues to Outmanoeuvre India’, The Telegraph (Kolkata), 1 September 2009. 65 Dominic J. Nardi, ‘Cross-Border Chaos: A Critique of India’s Attempt to secure its Northeast Tribal Areas through Cooperation with Myanmar’, SAIS Review, 28 (1), 2008, pp. 161–71; Pradip Saikia, ‘North-East India as a Factor in India’s Diplomatic Engagement with Myanmar’. 66 Renaud Egreteau, ‘India’s Ambitions in Burma’. 67 Ibid.; K. Yhome, Myanmar. 286 Renaud Egreteau

in 2008 (the target was announced in 2003).68 This is not much considering the US$2.6 billion Sino–Burmese trade, the US$3.2 billion Indo–Bangladeshi commercial exchanges or, more obviously, the US$51 billion Sino–Indian trade hit the same year. India has actually put the focus on very few key economic sectors in Burma (such as pharmaceuticals and agriculture) but has not developed a wide range of commercial activities compared to its other Asian rivals — Thailand, Korea, Singapore, Malaysia and, of course, China — which are far more diversifi ed in their economic approaches to the Burmese ‘boon’. India has planned only few infrastructures projects, far less than Chinese and Yunnanese companies involved in many roads, bridges, factories or power plant constructions. Indian companies have thus been dealing with contracts of only few million US$ each time (which is, however, considerable for Burma given the poor state of its economy, but remains a low-key investment strategy from India).69 It essentially refl ects a lack of political will on India given the hesitancy and divisions mentioned above, given also the diffi culties of access to the Burmese top leadership through which most US$ multi-million deals have to go.70 In October 2008, a crucial meeting between Burmese Prime Minister General Thein Sein and Jairam Ramesh, India’s Minister of State for Commerce, Industry and Power (and a vibrant defender of the northeast opening-up cause) pledged for further border commercial interaction to balance New Delhi’s disappointment in not securing a key hydrocarbon project in Burma.71 India’s decision to exploit the Arakan offshore natural gas from the early 2000s had indeed been chosen to be exported to Yunnan through the Chinese state-controlled oil fi rm CNPC. Once China got the upper hand in that specifi c issue, with the blueprint for Kyaukphyu’s pipeline between Ramree Island and Yunnan almost settled with the Burmese Downloaded by [University of Defence] at 01:36 24 May 2016 68 Embassy of India (Yangon), ‘India–Myanmar Cooperation: New and Innovative Opportunities’ (on the occasion of the Made in India Show in Myanmar, 19–22 February 2004), Yangon: L. B. Associates, 2004. 69 Interview, India’s Commercial Counsellor attached to the Embassy of India to Burma, Rangoon, 28 January 2005. 70 Interview, Naresh Kumar Dinodiya, President of the Indians of Myanmar Association, Rangoon, 25 January 2005. 71 The Hindu, Niche role for India in ties with Myanmar, October 19, 2008. Burmese Tango 287

authorities, the state-controlled Indian oil companies (ONGC-V and GAIL) entered a strong introspection dilemma on whether or not backing away from the consortium they had joined a few years ago (A-1 and A-3 projects off the Arakan coast) was correct. India might have, there, lost an opportunity to further its presence in Burma.72 But hesitant and too specialised economic initiatives, as well as a persistent recourse to Indian businessmen mainly based only in Singapore, Kuala Lumpur or Bangkok, or to Burmese of Indian origin far less connected to Burma’s new economic networks compared to 50 years ago (when they dominated the lion’s share of colonial Burma’s economy) have led India to lose ground on the Burmese economic fi eld.73 Underestimation of the Xenophobic Dimension in Burma Finally, another issue has been underestimated in the past years by Indian policy makers: the infl uence of historical legacies and the negative perceptions of Indian communities — and thus India as a whole — in Burma. It remains extremely diffi cult globally for all foreigners but more specifi cally for people of Indian origin (businessmen, diplomats, academics) to enter a still xenophobic Burmese society,74 to get access to the ultra-nationalist Burmese military leadership which still controls the lion’s share of the country’s economy despite the liberalisation policies initiated from 1988. Bruised by the colonial experience during which Indian communities have developed strong linkages, wide fi nancial networks and participated to the ruling and exploitation of the Burmese province to the detriment of indigenous communities,75 Burma remains a diffi cult place to settle or where to be in a position to exert a wide infl uence and easily develop trade connections when being Indian or of Indian origin.

72 Marie Lall, ‘Indo–Myanmar Relations in the Era of Pipeline Democracy’. 73 Interview, C. Murali, President of the India-Myanmar Business Club, Downloaded by [University of Defence] at 01:36 24 May 2016 Rangoon, 27 January 2005. 74 Mikael Gravers, Nationalism and Political Paranoia in Burma. 75 Michael Adas, ‘Immigrant Asians and the Economic Impact of European Imperialism: The Role of South Indian Chettiars in British Burma’, Journal of Asian Studies, 33 (3), 1974, pp. 385–401; Nalini Rajan Chakravarti, The Indian Minority in Burma — The Rise and Decline of an Immigrant Community, London: Oxford University Press, 1971; Moshe Yegar, ‘The Muslims of Arakan’, in idem (ed.), Between Integration and Secession: The Muslim Communities of the Southern Philippines, Southern Thailand and Western Burma/Myanmar, Lanham: Lexingtong Books, 2002, pp. 19–70. 288 Renaud Egreteau

In terms of a more strategic perspective, India is not as welcome in Burma as most Indian thinkers may have fi gured it out, especially in its China’s counterbalance strategy.76 The logic indeed would command a Sino-phobic’ Burma — as described early in the 1990s — to turn towards India, the other neighbouring power of the region. In 2004, the abundant literature regarding India’s strategic opportunities after the sacking of General Khin Nyunt further illustrated the misperceptions and miscalculations of Indian Burma watchers. Many Indian strategists enthusiastically welcomed the junta’s internal watershed and encouraged the cultivation of closer links with the so-called ‘pro-India faction’ which was supposed to be led by General Maung Aye, benefi ting from the purge of many ‘pro-China’ elements of the junta, starting with Khin Nyunt himself.77 But far from been materialised, this was wishful thinking, as the ‘kalas’ — a deep-rooted derogatory term designating the Indians and the Muslims in Burmese language (and foreigners in general) — are in fact still negatively represented in the Burmese psyche, including at the highest level.78 For instance, it remains indeed extremely problematical for Burmese of Indian origin to move up through the Burmese military hierarchy. The Chinese too are negatively perceived, but at a very different level, for they are the paukphaw, the ‘older’ — though annoying — ‘brother’ who have to be accommodated. The xenophobic and nationalist dimension of an isolationist Burmese leadership might help in understanding why Indians are walking on eggs in Burma. But in the past years, during most of my fi eldwork, many Burmese — especially within the business community — have expressed these awkward perceptions they still have of their Indian counterparts and stated — with some irony — that ‘the kalas were coming back’ in Burma, leading to some embarrassment. Parts of the Indian elite seem aware of these diffi culties linked to historical and cultural legacies, especially within the diplomatic and intelligence circles, but far less 79

Downloaded by [University of Defence] at 01:36 24 May 2016 in the academic, militant and business ones.

76 Mohan J. Malik, ‘Regional Reverberations from Regime Shake-up in Rangoon’. 77 Sudha Ramachandra, ‘Myanmar Power Play leaves India Smiling’, Asia Times, 21 October 2004; C. S. Kuppuswamy, ‘Myanmar: The Shake-up and the Fallout’, South Asia Analysis Group Paper No. 1161, 9 November 2004. 78 Moshe Yegar, ‘The Muslims of Arakan’. 79 Renaud Egreteau, ‘India’s Ambitions in Burma’. Burmese Tango 289

Conclusion: Beyond (Mis)Perceptions Much has been written on the growing Sino–Indian rivalry through Burma. But on-the-ground reality displayed the fallacies of this ‘myth’.80 Fiercer commercial competitions have been witnessed in the timber, hydroelectric, oil and gas and basic commodities trade sectors between China and Thailand, or Thailand and Malaysia, even between Singapore and South Korea, at least more than between India and China directly. The logic of maps (with Burma being stuck in between the two emerging giants) does not actually refl ect the logic of geography, neither the historical legacy of the region. Fantasies about China’s domination of Burma have led many Indian policy makers base their approach to the Burmese conundrum accordingly.81 But there is not much of a Sino–Indian rivalry there, in spite of India having lost one key energy market to China in 2008. Both countries do not compete in Burma for the same products, markets or local infl uence. The triangular relationship must indeed more been understood in terms of bilateral dealings (China–Burma, Burma–India). True, both an emerging India and a rising China can and will have a signifi cant impact on Burma’s internal development in the long run, but to assume that they (individually or through a bilateral competition) can sway at will the evolution of Burma’s political and economic future while using the country as a mere playground for their global rivalry is another matter. The lack of a severe, multidimensional and protracted Sino–Indian rivalry through Burma illustrates as much the deep-rooted nationalist and isolationist tendencies of the Burmese regime (and society, which remain a powerful impediment to external pressure) as the delicate position in which both India and China are there. China is not as comfortable as may be thought with Burma; India is in an even further alienated position in the country. But both

Downloaded by [University of Defence] at 01:36 24 May 2016 cannot afford to isolate or neglect the Burmese ﬁ eld, thus paving the way for years of cordial but unsecure regional interactions with their estranged neighbour.

80 Renaud Egreteau, ‘India and China Vying for Inﬂ uence in Burma’; Andrew Selth, ‘Burma, China and the Myth of Military Bases’. 81 Andrew Selth, ‘Burma, China and the Myth of Military Bases’. 290 Renaud Egreteau

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Ghoshal, Baladas. 1994. ‘Trends in China–Burma Relations’, China Report, 30 (2): 187–202. Gravers, Mikael. 1999. Nationalism as Political Paranoia in Burma: An Essay on the Historical Practice of Power. Richmond: Curzon. Hindu, The. 2011. ‘Myanmar, India Step Up Cooperation in Health Sector’. 3 August. Holliday, Ian. 2009. ‘Beijing and the Myanmar Problem’, The Pacifi c Review, 22 (4): 479–500. Jagan, Larry. 2005. ‘Power Struggle intensifi es Uncertainty’, The Bangkok Post. 31 January. ———. 2006. ‘China’s Uneasy Alliance with Myanmar’, Asia Times. 24 February. Kuppuswamy, C. S. 2004. ‘Myanmar: The Shake-up and the Fallout’, South Asia Analysis Group Paper No. 1161. 9 November. Lall, Marie. 2006. ‘Indo-Myanmar Relations in the Era of Pipeline Diplomacy’, Contemporary Southeast Asia, 28 (3): 424–46. Li, Chengyang and Liang Fook Lye. 2009. ‘China’s Policies towards Myanmar: A Successful Model for Dealing with the Myanmar Issue?’ China: An International Journal, 7 (2): 255–87. Lintner, Bertil. 1990. ‘Oiling the Iron Fist — Armed Forces Receive Large Quantities of New Weapons’, Far Eastern Economic Review. 6 December. ———. 1993. ‘Rangoon’s Rubicon: Infrastructure Aid Tightens Peking’s Control’, Far Eastern Economic Review. 11 February. ———. 1994. ‘Myanmar’s Chinese Connection’, International Defence Review, 27 (11). November. Malik, Mohan J. 1994. ‘Sino–Indian Rivalry in Myanmar: Implications for Regional Security’, Contemporary Southeast Asia, 16 (2) 137–56. ———. 1997a. ‘Myanmar’s Role in Regional Security: Pawn or Pivot?’ Contemporary Southeast Asia, 19 (1) 52–73. ———. 1997b. ‘Burma slides under China’s Shadow’, Jane’s Intelligence Review, 9 (7): 319–22. July. ———. 2005. ‘Regional Reverberations from Regime Shake-up in Rangoon’, Asia Pacifi c Center for Security Studies, 4 (1) 1–5. Manchanda, Rita. 1993. ‘Reasons of State’, Far Eastern Economic Review. 6 May. Mishra, Pramod K. 1989. ‘India’s Burma Policy’, Strategic Analysis, 12 (10): Downloaded by [University of Defence] at 01:36 24 May 2016 1183–1200. Mohan, C. Raja. 2008. ‘India’s Geopolitics and Southeast Asian Security’, Southeast Asian Affairs, pp. 43–60. Maung, Mya. 1994. ‘On the Road to Mandalay: A Case Study of the Sinonization of Upper Burma’, Asian Survey, 34 (5): 447–59. Myanmar Times, The. 2011. ‘Foreign Investment Floods into Myanmar’. 27 June–3 July. Nardi, Dominic J. 2008. ‘Cross-Border Chaos: A Critique of India’s Attempt to secure its Northeast Tribal Areas through Cooperation with Myanmar’, SAIS Review, 28 (1): 161–71. 292 Renaud Egreteau

Nath, Dambarudhar (ed.). 2004. Reopening of the Stilwell Road — Prospects and Problems. New Delhi: Anamika Publishers & Distributors. Qi, Pan. 2005. ‘Opening the Southwest: An Expert Opinion’, Beijing Review, 28 (35): 22–23. Ramachandra, Sudha. 2004. ‘Myanmar Power Play leaves India Smiling’, Asia Times. 21 October. Saikia, Pradip. 2009. ‘North-East India as a Factor in India’s Diplomatic Engagement with Myanmar: Issues and Challenges’, Strategic Analysis, 33 (6): 877–89. Seekins, Donald. 1997. ‘Burma–China Relations: Playing with Fire’, Asian Survey, 37 (6): 525–39. Selth, Andrew. 1996. ‘Burma and the Strategic Competition between China and India’, Journal of Strategic Studies, 19 (2): 213–30. ———. 2002. ‘Burma and Superpower Rivalries in the Asia–Pacifi c’, Naval War College Review, 55 (2): 42–60. ———. 2007. ‘Burma, China and the Myth of Military Bases’, Asian Security, 3 (3): 279–307. Sikri, Rajiv. 2009. ‘India’s “Look East” Policy’, Asia–Pacifi c Review, 16 (1): 131–45. Singh, Swaran. 1995. ‘Myanmar: China’s Gateway to the Indian Ocean’, Journal of Indian Ocean Studies, 3 (1): 80–87. ———. 1997. ‘The Sinicization of Myanmar and its Implications for India’, Issues & Studies, 33 (1): 116–33. Singh, Udai Bhanu. 1995. ‘Recent Trends in Relations between Myanmar and China’, Strategic Analysis, 18 (1): 61–72. Standard of Hong Kong, The. 2004. ‘CNOOC Plans Burma Forays’. 27 October. Stobdan, P. 1993. ‘China’s Forays into Burma: Implication for India’, Strategic Analysis, 16 (1): 21–38. Thompson, Drew. 2009. ‘Border Burdens: China’s Response to the Myanmar Refugee Crisis’, China Security, 5 (3): 11–20. Tin Maung Maung Than. 2003. ‘Myanmar and China: A Special Relationship?’ Southeast Asian Affairs 2003, pp. 189–210. ———. 2005. ‘Myanmar’s Energy Sector: Banking on Natural Gas’, Southeast Asian Affairs 2005, pp. 257–89. Washington Post, The. 2007. ‘China, Russia Veto Myanmar Resolution’. 14 Downloaded by [University of Defence] at 01:36 24 May 2016 January. Yegar, Moshe. 2002. ‘The Muslims of Arakan’, in Moshe Yegar (ed.), Between Integration and Secession: The Muslim Communities of the Southern Philippines, Southern Thailand and Western Burma/Myanmar, pp. 19–70. Lanham: Lexington Books. Yhome, K. 2008. Myanmar: Can the Generals Resist the Change. New Delhi: Rupa & Co. Trust Defi cit in India–China Relations 293

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17 The Trust Deﬁ cit in India–China Relations

Tansen Sen

The hope that a growth in trade and commerce between India and China would improve bilateral relations has not materialised. Although the volume of trade between the two countries is set to cross the 60-billion US dollar mark, there is a marked defi cit in mutual understanding and confi dence. This is evident from recent newspaper articles and posts on the blogosphere that have appeared in both countries. The unresolved border issue is no doubt a major hurdle that needs to be crossed before substantial confi dence is built between the people of two countries. The article argues that a lack of basic knowledge about each other is one of the reasons for the continued insecure, increasingly uncomfortable and noticeably distrusting relations between India and China. The two countries have failed to create adequate mechanisms to foster people-to-people contact and raise awareness and knowledge about each other. Also lacking are institutions and qualifi ed researchers who could contribute toward the formation of comprehensive, accommodating and forward- looking policies toward each other. The foundation for contemporary India–China relations cannot be solely the commercial exchanges, which themselves can lead to unintended misgivings and rivalries. Rather, mutual trust and confi dence can only be achieved through adequate knowledge and proper Downloaded by [University of Defence] at 01:36 24 May 2016 understanding of the history, culture, psychology, politics, scientifi c developments and other facets of each society by the other side. Despite, what some like to call, the two millennia of ‘civilisational dialogue’, it seems the two countries have never really talked to each other. In fact, as a case made in the fi rst part of this article, the portrayal of the ancient interactions as a phase of affi nity, dialogue and mutual understanding that was ushered by the transmission of Buddhism to China is misleading. This representation of the ancient interactions 296 Tansen Sen

between India and China is advanced either by people who have little or no knowledge of the historical exchanges or those who are extremely selective of the sources. It is not surprising, therefore, that such portrayals appear mostly in publications from India and China, where the process of peer review is virtually non-existent. Deluded by such portrayals, the leaders of the two countries often bask in the glory of the ancient past without realising that the lack of mutual understanding and knowledge, particularly in regard to the Indian knowledge of China, stretches back to the fi rst millennium. In fact, those familiar with the relevant historical materials quickly notice that while there are detailed records of India in Chinese sources, Indians had very little to say about the Chinese. While a list of what the Chinese received from India could fi ll a couple of pages, what India got in return is still a topic of debate. In other words, the issue of lack of mutual understanding and knowledge is more acute than has been previously acknowledged. The second part of the article will propose that Indian and Chinese governments and the private sector must try to rectify the ‘trust defi cit’ by fi rst investing in appropriate research institutes and programmes to study the other country. Second, the two governments should promote people-to-people contact through educational exchanges and tourism. Third, the Indian media must devote resources to cover China not through sensational news reports, but by presenting insightful views and factual information. Without these steps the trust defi cit between the two countries will continue to grow and the pending border issue will never get resolved. We will be left content with clichés such as ‘civilisational dialogue’ and ‘ageless friendship’. The Overemphasis on Buddhist Connections More than 30 years ago, Professor Krishna Prakash Gupta of

Downloaded by [University of Defence] at 01:36 24 May 2016 University of Delhi wrote the following about the misuse of Buddhism as a rhetorical tool in contemporary India–China relations.1 To both India and China, the Buddhist connection has become a useful psychological device to project their own corresponding images of parity and ascendance in history. For India, the notion of transmission and diffusion of cultural traits in the past — of Buddhist inﬂ uences

1 Krishna Prakash, Gupta, ‘The Making of India’s Image in China’, China Report, 15 (2), 1979, pp. 39–50. Trust Deﬁ cit in India–China Relations 297

going over to China and ‘Indianising’ the Chinese — reinforces its self- image of cultural superiority. For China, the notion of acculturating certain useful aspects of an alien doctrine — of ‘Sinicising’ Buddhism in order to utilise it for the enrichment of its culture — establishes the catholicity of its own superior politics. A reference to the Buddhist connection thus becomes a basis for perpetuating a monologue. India and China while apparently talking to each other, in fact only talk to themselves. I have a similar opinion. It is too simplistic to use the Buddhist connection as evidence of ‘friendly’ relations or mutual dialogue between India and China. In fact, the word ‘friendly’ is inappropriate for describing ancient relations between ‘India’ and ‘China’, two entities that did not exist in these modern nation state forms before the 20th century. There is no doubt that the spread of Buddhism facilitated the movement of people, stimulated commercial activity and, in a few instances, facilitated diplomatic exchanges. However, an in-depth study of the establishment of Buddhism in China reveals a more complex process that was largely devoid of an intensive dialogue between the Indians and Chinese. Instead, the success of Buddhism in China owes more to the dialogue that took place among the Chinese Buddhists, who wrote commentaries and other texts, within a Chinese framework, that expressed their understanding of Buddhist teachings. These Chinese commentaries and not the translated sutras were instrumental in establishing Buddhism as one of the three main religions of China.2 It is true that there were monks such as Faxian, Xuanzang and Yijing who travelled between the two regions and produced important travelogues. But none of them had any signiﬁ cant impact on the doctrinal development of Buddhism in China. Faxian may not have had any signiﬁ cant role in the development of monastic rules in China, the reason for his visit to India; Xuanzang’s translations

Downloaded by [University of Defence] at 01:36 24 May 2016 of Buddhist texts failed to ﬁ nd a wide readership; and Yijing is more famous for his two historical narratives than for his contribution to Buddhist philosophy. The spread of Buddhism to China also produced many critics of India, a fact that is glossed over by those who see only friendship and afﬁ nity in the ancient relations. The Confucian scholars and Taoist philosophers, for example, regularly

2 Robert H. Sharf, Coming to Terms with Chinese Buddhism: A Reading of the Treasure Store Treatise, Honolulu: University of Hawaii Press, 2002. 298 Tansen Sen

described India as a barbaric country. Even some Buddhists in China were critical of the Indian society. The 10th-century monk Zanning, for example, claimed that the Indian culture was too unsophisticated and simple to observe and record historical events in detail. He concluded that Indians were ‘satisﬁ ed with generalizations’.3 Criticisms of India became more acute during the early 20th century, when Chinese intellectuals debated about the best way to reform China and save the country from being colonised by European powers. India, in this discourse, was described as a ‘lost’ and ‘enslaved’ nation. An article published in Beijing nübao made mockery of the Indian people and the country’s Buddhist legacy in the following manner:

You thought that India was just ﬁ ne, huh? Then why did it invite destruction [heyi youwang ne]? It is because they knew superstition … When the British arrived in the cities, they [the Indians] just sat around praying to Buddha … praying that their city would not be destroyed. What do you think: are these Indians foolish, or what? Do they deserve to die, or what? After not too long, they became slaves of the British and they’re still resting in their dreams … Ah! Compatriots [tongbao]! I would like to ask you if you want to be citizens [guomin] of a great and independent nation, or if you want to become slaves [nuli] of a lost state? If you want the latter, then I’ve nothing left to say; if the former, then you should throw away those Bodhisattva statues modeled of clay… and you should give that money used for burning incense to your children for their education … If you don’t believe me, then just watch: those red turbans will be wrapped around your heads, too!4

Kang Youwei, one of the leading intellectuals of Qing China, advocated drawing lessons from the failure of Indian civilisation. After the reforms (known as the ‘Hundred Days Reform’) he instigated

Downloaded by [University of Defence] at 01:36 24 May 2016 failed, Kang ﬂ ed to India and lived in Darjeeling for over a year. Already, in 1895, almost three years before his reform movement

3 Tansen Sen, Buddhism, Diplomacy, and Trade: The Realignment of Sino- Indian Relations, 600–1400, Honolulu: University of Hawaii Press, 2003, p. 137. 4 Rebecca L. Karl, Staging the World: Chinese Nationalism at the Turn of the Twentieth Century, Durham and London: Duke University Press, 2002, pp. 162–63. Trust Deﬁ cit in India–China Relations 299

started, Kang had begun referring to India and some other countries as examples of states that had been colonised because they failed to modernise themselves. ‘Formerly’, he wrote in a statement for the Society for the Study of Self-Strengthening, ‘India was a celebrated nation in Asia, but she preserved her traditions without changing and so during the time of Qianlong the British people organized a company with one hundred and twenty thousand gold as capital to carry on a trade with her and subjugated the fi ve parts of India’.5 A similar point was expressed by Liang Qichao in 1901. Liang was a student of Kang Youwei and an admirer of the Indian, especially the Buddhist, civilisation. He was also the person intimately involved in inviting and playing host to Rabindranath Tagore in China in 1924. Noting that India was ‘taken over by 70,000 small capitalists of the East India Company’, Liang laments: ‘I have heard of countries destroying other countries, but I have never heard of a noncountry destroying another!’.6 Juxtaposed with the diaries of Chinese Buddhist monks, which were written by pilgrims visiting what they considered to be a holy land, these critical perceptions of India indicate that there was more to ancient India–China relations than ‘friendly’ exchanges and blissful perceptions between the two countries. I do not want to get into the famous voyages of Zheng He, depictions of which as peaceful and friendly missions are equally problematic. I would like to, instead, reiterate something that Krishna Prakash Gupta wrote in his article. The present discourses on India–China interactions, both political and scholarly, should not delude themselves with the historical exchanges. The use of selective historical episodes and records only creates a misleading image of the past and serves no real purpose in either resolving the border issue or creating trust and confi dence among the people of two countries. Instead, what we could perhaps learn from the past is the unfortunate failure of the Indians, over Downloaded by [University of Defence] at 01:36 24 May 2016 the course of two millennia, to have little or no discourse on China, an issue that I believe is the key reason for the trust defi cit between India and China.

5 Ssu-yu and Ten and John K. Fairbank, China’s Response to the West: A Documentary Survey 1839–1923, Cambridge: Harvard University Press, 1961, p. 152. 6 Rebecca L. Karl, Staging the World, p. 160. 300 Tansen Sen

The Cultural Route to Confi dence Building Ordinary Indians know very little about China. They may have heard about the impressive urban developments in Beijing and Shanghai, but the psychological scars and memories of the India–China confl ict of 1962 still overshadow any positive perception of China. Similarly, an ordinary Chinese has limited knowledge of India, many perceiving India as a chaotic, poor and dirty country. However, a quick look at Chinese newspapers and bookstores will reveal that the information on India available to the Chinese is more diverse and quantitatively greater than that about China in Indian media and scholarly publications. We may even argue that the quality of information available to the Chinese through the print media is better than what is found in India, especially because there are more Chinese journalists, with knowledge of Indian languages, stationed in India than there are Chinese-knowing Indian reporters in China. Furthermore, while Chinese Studies in India are concentrated in Delhi, with no quality institutions to pursue the study of China elsewhere in the country, the Chinese have managed to set up India Studies programmes in Sichuan, Guangdong and Yunnan provinces. In other words, the two-millennium-old trend of the Indians in regard to inadequate discourse on China seems to be continuing. It is proposed that without rectifying this trend it would be diffi cult to achieve mutual understanding and trust. I am not privy to the India–China border talks or the summits of the India–China Eminent Persons Group (which seems to have stopped functioning), but nothing substantial in regard to confi dence building has been accomplished despite numerous rounds of meetings. Neither has the increased fl ow of merchandise nor the brisk exchange of business people contributed much toward cross-cultural understanding. But the later development must be credited for facilitating people-to-people contact and for providing an incentive to develop a knowledge base about people, Downloaded by [University of Defence] at 01:36 24 May 2016 institutions and goods. Here, too, it is believed that a majority of businessmen are more interested in short-term monetary gains rather than a longer-term cultural dialogue through trade. Perhaps they do not realise that they will be the fi rst ones affected if the ties between India and China deteriorate. Because political and commercial exchanges have yet to yield substantial results, the focus should perhaps now shift to the cultural route as a way to create basic knowledge and understanding about each other. In order to create this basic knowledge and address the Trust Defi cit in India–China Relations 301

trust deﬁ cit issue, three things must be accomplished. First, emphasis must be placed on the study and research of China in India and that of India in China. Second, the media in the two countries could have wider, and perhaps a ‘fair and balanced’, coverage of the other country. Third, the two governments should encourage tourism and travel between the two countries. The problem with Chinese Studies in India was already recognised in the 1960s and reiterated in conferences and seminars held in India and China. One reason for this lack of proper institutions in India is the failure of the Indian government and the private institutions to make substantial investments in research work on China. Today, the study of China in India is concentrated in Delhi, with very few institutions outside the city that can engage in meaningful research on China. I am not aware of any universities in Kolkata, Mumbai or Chennai that offer extensive courses on China or Chinese language. Even the esteemed Cheena-Bhavan at Visva-Bharati needs an overhaul in both curricula and facilities. It is surprising that the private sector, despite the upsurge in trade, has failed to recognise the value of investing in China-focused think tanks and research centres. By not investing in such centres and programmes, the Indian government and the private sector are probably missing out on unique insights, valuable recommendations and possibilities of establishing effective networks of interactions with the Chinese. They may have believed (and continue to do so) that these are trivial issues, easily accomplished by diplomats and business people. I think that the erratic relations between the two countries during the past two years have proved them wrong. It is time that India produces a diverse group of China specialists whose deliberations, recommendations and publications could not only contribute to India’s foreign policy, but also form the basis for understanding China. I do not want to go into details about problems with India Studies Downloaded by [University of Defence] at 01:36 24 May 2016 in China, but will note that the major weakness there seems to be related to the curricula. Chinese students can receive training in various regional languages of India, but access to related social science and humanities courses is lacking. As mentioned above, centres and programmes on India already exist outside Beijing, but with the recent Chinese emphasis on developing South Asian Studies, more such institutions are being established in other Chinese cities. The Chinese have also stationed some of their South Asian scholars and language 302 Tansen Sen

specialists at their embassies in India. These people not only serve important role in stimulating interactions with the local people, but also give feedback to the government about local issues. India should perhaps follow a similar strategy. An important component of developing research and educational programmes about each other is institutional collaboration and exchanges. While some such collaboration already exists, more needs to be established in order to facilitate exchange of ideas and knowledge. A major hurdle in this endeavour, however, is the visa policy of the Indian government towards Chinese students and scholars. Any Chinese citizen attending conferences, taking courses or teaching at Indian institutions, even one who is part of an offi cial exchange programme, has to go through months-long scrutiny. The experience is frustrating for them as well as the Indian host institutions. Indeed, the struggle to get a visa, which sometimes involves unpleasant exchanges with visa offi cers, is now the most common complaint of Chinese students and intellectuals interested in India. Even those who have visited India frequently in the past and are considered to be the leading scholars of India in China face this problem. It is creating unwarranted resentment among a group of Chinese who are sincerely interested in promoting India–China relations. It is a clear signal to them that the Indians still do not trust the Chinese. Since this policy has a direct impact on people who are eager to contribute to the improvement of India–China relations, it might be one of the most damaging strategies. It can only lead to the widening of the trust defi cit. Many of the Chinese scholars who complain about the visa problem do not realise that the Chinese government’s recent decisions on granting visas to residents of Arunachal Pradesh and Kashmir draw a similar reaction from the Indian public. This strategy, whose objective is not very clear, hardens the Indian view that the Chinese

Downloaded by [University of Defence] at 01:36 24 May 2016 cannot be trusted. Indeed, the perplexing visa policies from both sides are major hindrances to people-to-people exchange and negate any conﬁ dence-building measures that may have been initiated in the past 10–15 years. Compounding the problem is the negative press coverage of China in Indian newspapers and of India in some of the hawkish Chinese dailies and websites. It must be pointed out, however, that there is a difference in the negative news coverage in the two countries. While in India, Chinese actions and policies are presented as news reports, Trust Deﬁ cit in India–China Relations 303

in China the negative portrayal of India takes place mostly in form of editorials or commentaries. The former is usually more sensational and perhaps intended to sell the newspaper; the latter often reﬂ ects the views of the younger, increasingly vocal, nationalistic members of the Chinese society. In both cases there is certain degree of exaggeration and concealment of facts. They also demonstrate misapprehension and the lack of trust about each other. Although reporting by Pallavi Aiyar (for The Hindu) and Reshma Patil (for Hindustan Times) has recently provided new insights into Chinese society, the fact remains that the coverage of China in the Indian media is minimal and often distorted. The failure of the Indian media to place Chinese-knowing journalists in China seems to indicate that they do not take the coverage of that country seriously, even though they recognise China as an important neighbour and an economic superpower. The Indian media has to take a lead to provide not only news and analysis of border issue, from both positive and negative angles, but also publish features about Chinese culture, history and economy. The likelihood of this happening is slim given the pitiful state of Chinese Studies in India and the proﬁ t motive of the newspaper publishing houses. Tourism is another avenue that has to be fully explored in order to increase people-to-people contact. In 2008 when more than 40 million Chinese travelled abroad, less than 100,000 went to India. The numbers are better for Indian tourists going to China, about half a million or so during the same period. However, these numbers are far less than the potential, given the population and proximity of the two countries. In 2007, at the closing ceremony of the ‘China–India Year of Tourism’, the then Indian ambassador to China and the current Foreign Secretary Nirumapa Rao hoped that ‘in the near future, India will become the No.1 tourist destination for the Chinese people and vice versa’. A lot needs to be done in order to achieve this goal. In addition to the visa hurdle, the people on both sides need

Downloaded by [University of Defence] at 01:36 24 May 2016 to be educated about the beneﬁ ts of travelling to each country. In recent years new air links have opened up, and the Chinese National Tourism Administration has set up an ofﬁ ce in Delhi and Indian Tourism has established its branch in China. But Chinese tourists, when asked about visiting India, often enquire as to why they should choose India over Southeast Asian countries, Japan, Europe or the US. This question needs to be answered. Perhaps this is where the ancient links between the two countries could be highlighted. Tourism seems to be the best way through which people can come into contact with 304 Tansen Sen

distant societies, have ﬁ rst-hand knowledge and understanding of the history and culture of the foreign people, and spread the word about the alien land among their country mates. This is the role that was played by the Chinese monks Faxian, Xuanzang and Yijing. Indeed, it is in this cultural discourse, rather than in political or diplomatic arenas, that the writings and contributions of Buddhist monks belong and should be utilised. Conclusion The above proposal for the cultural route as a way to foster mutual understanding and trust presumes that public opinion plays some role in the foreign policy and international relations of both India and China. This may be a naïve belief, but these are steps that can be accomplished with minimal effort and investment. It is time to take a radically different approach to improving contemporary India–China relations. There is a need to start by accepting the fact that the people of the two countries, despite 2,000 years of interaction, know very little about each other. Attempts, thus, should be made ﬁ rst to educate the people, train experts and increase people- to-people contact. Nirupama Rao has done service to the country by emphasising this cultural path during her tenure as the Indian ambassador to China. The new Culture and Information Wing of the Indian embassy opened in Beijing under her, a Visiting Chair in Indian Studies was established at Shenzhen University and numerous exchanges of cultural delegations took place between India and China. These are initial steps that need to be continued by the current Indian ambassador to China. The private sector in India should also contribute to issues beyond trade and business between India and China. In fact, it is imperative that they invest in research centres and programmes. The Chinese government and companies should similarly take the lead in promoting cultural interactions between

Downloaded by [University of Defence] at 01:36 24 May 2016 the two countries. It may take time, but after such a long interaction, the two emerging countries of Asia might want to ﬁ nally begin a true dialogue and create understanding and trust between the people of the two countries. References Gupta, Krishna Prakash. 1979. ‘The Making of India’s Image in China’, China Report, 15 (2): 39–50. Trust Deﬁ cit in India–China Relations 305

Karl, Rebecca L. 2002. Staging the World: Chinese Nationalism at the Turn of the Twentieth Century. Durham and London: Duke University Press. Sen, Tansen. 2003. Buddhism, Diplomacy, and Trade: The Realignment of Sino- Indian Relations, 600–1400. Honolulu: University of Hawaii Press. Sharf, Robert H. 2002. Coming to Terms with Chinese Buddhism: A Reading of the Treasure Store Treatise. Honolulu: University of Hawaii Press. Teng, Ssu-yu and John K. Fairbank. 1961. China’s Response to the West: A Documentary Survey 1839–1923. Cambridge: Harvard University Press. Downloaded by [University of Defence] at 01:36 24 May 2016 306 Christian Wagner

18 Soft Power and Foreign Policy: Emerging China and its Impact on India

Christian Wagner

The international system of the 21st century is to be characterised by contradictory trends. On the one hand, the economic benefi ts of globalisation will increase state power, thereby strengthening the idea of a multi-polar world. On the other hand, non-state actors that challenge state authority and global institutions that exert infl uence on state behaviour via a variety of international regimes and institutions point at a non-polar world system.1 China and India will certainly be important players in this new global arena. Their emerging economies became pillars for the global economy. China’s widening industrial base is slowly transforming the country into an economic superpower. India’s service sector became the global back offi ce before the international economic and fi nancial crisis. The new international status of both countries can be observed in the political fi eld as well. India and China had been members of the Outreach 5 countries at the G 8 summits. But the emergence of the G 20 summit this year has boosted their international standing. Moreover, both countries are developing their hard power capabilities. India and China are nuclear powers and are putting more resources into the modernisation of their military forces. The new importance and responsibility of India and China is also visible in the various regimes

Downloaded by [University of Defence] at 01:36 24 May 2016 of global governance. Solutions for trade issues in the context of the WTO, global climate policy and the Millennium Development Goals can only be achieved if China and India are included. On the bilateral level, India and China share a long and difﬁ cult relationship. The pendulum swung from friendship in the 1950s

1 Richard N. Haass, ‘The Age of Nonpolarity: What will Follow U.S. Dominance’, Foreign Affairs, May/June 2008, pp. 44–56. Emerging China and its Impact on India 307

to confrontation that escalated in the border war of 1962 back to various forms of confl ict and cooperation in the 1990s. The future relationship between both countries will probably be marked by ‘soft balancing’, i.e., a mixture of partnership and rivalry on different levels. Still, both countries will continue their rivalry in regard to their territorial aspirations, their quest for resources or their claims for geo-strategic infl uence. The border question will remain the biggest problem, resulting in diplomatic and military skirmishes. However, this will not prevent both sides from holding joint military exercises, developing common security interests, and joint initiatives in the fi eld of global governance. Today, the bilateral relations are shaped by economic considerations. Despite all problems, China became India’s biggest trading partner. Economic interdependence will continue to grow and will increase cooperation, but the vision of ‘Chindia’ that characterised Nehru’s ideal for closer pan-Asian cooperation with China in the 1950s will remain a distant vision. In such a complex web of old and new security challenges linked to various forms of economic and political interdependences, states have to look for new strategies to pursue their national interests. Joseph Nye’s concept of soft power has broadened the scope of power from traditional hard power strategies to new areas and strategies by which states may try to pursue their interests.2 Besides traditional strategies ‘to coerce’ by military power and ‘to pay’ by economic power, states may also try ‘to attract’ others in order to pursue their foreign-policy goals. The attractiveness of ideas, values and norms which is at the core of soft power has not only triggered a debate and policy initiatives in the US and Europe, China has also begun to shift its foreign-policy resources to soft-power initiatives. One indicator is the growing discourse on the concept of soft power and its relevance for China’s foreign policy. In 2006, there were 104 papers on this issue; in 2007, the number has already increased to 3

Downloaded by [University of Defence] at 01:36 24 May 2016 237. A second indicator is the proliferation of Confucius Institutes that were established in 2004 in order to propagate Chinese language and culture. In 2007 there were 203 Confucius Institutes and in

2 Joseph S. Nye, Jr, ‘Soft Power: The Means to Success’, World Politics, New York, 2004. 3 Li Mingjiang, ‘Soft Power in Chineses Discourse: Popularity and Prospect’, Working Paper No. 165, Singapore: Rajaratnam School of International Studies, 2008, p. 4. 308 Christian Wagner

2009 their number has rose until August to 272.4 The emergence of Chinese soft power has already initiated a debate in the US on how to deal with this new phenomenon.5 Soft Power and India’s Foreign Policy According to Nye, soft power ‘rests on the ability to shape the preferences of others’.6 He defi ned soft power as attractive power, that is, ‘getting others to want the outcomes that you want’ mainly by a strategy of co-optation rather than coercion.7 Nye identifi ed three main resources of a country’s soft power: ‘culture (in places where it is attractive to others), its political values (when it lives up to them at home and abroad), and its foreign policies (when they are seen as legitimate and having moral authority)’.8 In contrast to military and economic power, soft power differs in its behaviour, primary currency and government policies. Soft-power behaviour is characterised by attraction and agenda setting, the primary currencies being values, culture, policies, institutions and government policies being shaped mainly by public diplomacy, bilateral and multilateral diplomacy.9 Soft power should be seen as a complementary rather than an exclu- sionary strategy with hard power. The challenge is to fi nd the right mix between both strategies in order to achieve smart power.10 The relevance of soft power gets clearer when a distinction is drawn between soft-power capacities, i.e., the domestic resources to increase the attractiveness, and soft-power capabilities in foreign policy which aim at persuading others to adopt one’s goals.11 If soft power has become an issue for the US, China and EU, it is only fair to ask for India’s soft-power capacities and capabilities.

4 Confucius Institute Online, http://college.chinese.cn/en/node_1979.htm, accessed 18 November 2009. 5 Thomas Lum, Wayne M. Morrison and Bruce Vaughn, ‘China’s “Soft Power”

Downloaded by [University of Defence] at 01:36 24 May 2016 in Southeast Asia’, CRS Report for Congress, Washington, DC, 2008. 6 Joseph S. Nye, Jr, ‘Soft Power’, p. 5. 7 Ibid., pp. 6–7. 8 Ibid., p. 11. 9 Ibid., p. 31. 10 Ernest J. Wilson III, ‘Hard Power, Soft Power, Smart Power’, The Annals: The American Academy of Political and Social Science, 616, March 2008, p. 115. 11 Thomas Lum, Wayne M. Morrison and Bruce Vaughn, ‘China’s “Soft Power” in Southeast Asia’, p. 1. Emerging China and its Impact on India 309

On the one hand, compared to China, India looks like a soft power by default. A democratic tradition of more than 60 years, Mahatma Gandhi, with his concept of non-violence and peaceful confl ict mediation as national hero and Bollywood as a quasi-global dream fabric are indicators that seem to qualify India as one of the soft powers of the 21st century. India’s high economic growth rate following the liberalisation after 1991 has increased the country’s international attractiveness. Moreover, the common democratic traditions have always been emphasised in the relations with the US, EU and Japan and were regarded as the basis for a closer cooperation. On the other hand, India seems to be hesitant to use its most important political feature, its democratic values, as a ‘resource’ in the global and regional competition with China. It seems to suggest itself that common political values could also act as a strong bond to promote India’s relations with the West and to counter China’s economic attractiveness at the same time. But the promotion of democracy or the support for human rights have not played a signifi cant role in India’s foreign policy so far. This raises the question about India’s potential in soft power that will be analysed in the categories of culture, political values and foreign policy. Culture: Capacities and Capabilities The most important feature of Indian society is its plural character. It is differentiated between a variety of religious, caste, ethnic, tribal and linguistic groups. The offi cial rhetoric propagates the idea of ‘unity in diversity’ and the principle of ‘tolerance’ as the main achievement of this social structure. But it should not be overlooked that culture is one of the most sensitive domestic issues. On the one hand, India’s political development after independence in 1947 was shaped by numerous confl icts over language, caste, ethnicity and religion. On the other hand, the cultural diversity has also contributed to the

Downloaded by [University of Defence] at 01:36 24 May 2016 stability of India’s democracy. A majority culture with the political claim to dominate other groups would have probably further intensifi ed domestic confl icts. The experiences of ethnic confl icts in neighbouring countries, for instance, in Sri Lanka and Pakistan, are negative examples in this regard. Because of the cultural diversity and the various confl icts that are related with it, it is not astonishing that the Indian government has focused on the non-political aspects of Indian culture. The Indian government undertook various efforts in recent years in order to 310 Christian Wagner

translate ‘culture’ into a foreign-policy tool. The main aim was to change India’s image from a developing country plagued by poverty and illiteracy to a modern and dynamic state in order to attract foreign investors and to foster economic growth. In cooperation with the corporate sector, the Indian Brand Equity Foundation (IBEF) was established as a public–private partnership. It supported, among other activities, the ‘India Everywhere’ campaign at the World Economic Forum in Davos in 2006. Until 2009, the Indian Council for Cultural Relations (ICCR) set up 22 cultural centres in 19 countries. Numerous activities ranging from ﬁ lm festivals to book fairs and art events illustrate India’s new endeavours to use soft power in her foreign policy. Karan Singh, President, ICCR, stated that ‘soft power is important and the idea behind […] is to project India as a plural multicultural society and to achieve the goals of political diplomacy’.12 Besides the ICCR and the IBEF, India is also propagating the use of Hindi abroad. Various events are sponsored every year like the World Hindi Conference and similar events on the regional level. Moreover, the publication of Hindi textbooks in other countries is also supported by the Ministry of External Affairs (MEA).13 The creation of a National Knowledge Commission may also help to increase India’s international attractiveness. Political Values: Democracy and Human Rights India’s democratic traditions are outstanding among the group of decolonised countries that became independent after World War II. Since 1951, India saw 15 national elections followed by various changes of government. In contrast to East and Southeast Asia, India has not witnessed a relevant debate about Asian or Indian values. The Hindu nationalist Bharatiya Janata Party (BJP) has not been able to transform the majority of Hindus into a political force. Looking at India’s democratic credentials and achievements,

Downloaded by [University of Defence] at 01:36 24 May 2016 it is astonishing that they have not found resonance in its foreign policy.14 The support of democracy is a very recent development in

12 Saurabh Shukla, ‘Soft Power’, India Today, 30 October 2006, p. 24. 13 An overview on the activities can be found at the annual reports of the MEA. 14 India’s demand for the democratization of the international system supported her claim for a permanent seat in the security council of the United Nations (UN). Emerging China and its Impact on India 311

India’s foreign policy and was mainly fostered by the rapprochement with the US in the 1990s.15 In 2000, at the urging of the Clinton administration, India supported the founding of the Community of Democracies (CoD) in Warsaw, which, inter alia, promotes the spread of democratic regulations and institutions at the regional and international level.16 In 2004, the states of the CoD founded the Democracy Caucus at the UN, an initiative for the purpose of representing the goals of the CoD under the umbrella of the UN and its organisations. In July 2005, India and the USA proclaimed a common Global Democracy Initiative (GDI) for the purpose of promoting democracy and development. In the context of this initiative, the Indian government developed the ﬁ rst steps towards its own training programmes. The activities are presently concentrated on support in the electoral process, the development of an independent judiciary and a free press and the realisation of human rights.17 In 2005, India participated in the UN Democracy Fund, another institution for the building up of democratic structures and the protection of human rights.18 Since the beginning of 2009, India has paid US$15 million into this fund and is thus the second largest donor after the USA. Mainly civil society projects are supported, with India having various purposes behind its collaboration in these global initiatives. By cooperating with the USA in the GDI, India was able to build up its political as well as economic and military relationship with Washington. At the same time, it underlined its global leadership ambitions that were readily supported by the Bush administration.

15 Jan Cartwright, ‘India’s Regional and International Support for Democracy: Rhetoric or Reality?’ Asian Survey, 49 (3), 2009, pp. 403–28; Raja C. Mohan, Raja, ‘Balancing Interests and Values: India’s Struggle with Democracy Promotion’, The Washington Quarterly, 30 (3), 2007, pp. 99–115; John Wagner,

Downloaded by [University of Defence] at 01:36 24 May 2016 ‘Promotion of Democracy and Foreign Policy in India’, SWP Research Paper 13, Berlin, 2009. 16 B. Raman, ‘Community of Democracies’, South Asia Analysis Group, Paper 119, Noida, 2009, www.southasiaanalysis.org/%5Cpapers2%5Cpaper119.html, accessed 30 February 2008. 17 An overview of the up to now modest activities is offered on the homepage of the Ministry of External Affairs, Capacity Building Exercise under ITEC programme (www.gdi.nic.in, accessed 20 July 2009). 18 For more information on the goals and the projects see www.un.org/ democracyfund/index.htm (accessed 13 January 2009). 312 Christian Wagner

That India was involved in promoting democratic principles had an additional effect: now the country was able to counter with greater credibility the desire of the USA that it should take part in American actions to effect democratic changes in third-world countries. India embedded its activities for democracy promotion in the context of its development efforts under the Indian Technical and Economic Cooperation (ITEC) programme. The strong connection between development activities and democracy promotion is most obvious in India’s engagement in Afghanistan. After the military intervention in Afghanistan in the aftermath of 9/11, India became heavily involved in the civil reconstruction of the country. It supplied humanitarian aid, promoted educational programmes, supported road building and the rebuilding of the Parliament, and trained Afghan diplomats. India has spent over US$1 billion for the reconstruction in Afghanistan so far. According to Indian fi gures, 3,000–4,000 Indians are working in Afghanistan in private and public reconstruction projects.19 Except for Bhutan, no other country receives as much Indian development aid as Afghanistan.20 India’s efforts in Afghanistan are also listed as a model case in the GDI.21 Besides promoting democracy in Afghanistan, India is slowly beginning to support democratic elections in other parts of the world. In 2001 and 2002 India supported the elections in Benin. The government of Ivory Coast sent a delegation to India on the occasion of the 2004 elections.22 The promotion of democracy poses a conceptual challenge for India’s foreign policy because it has always been a strong advocate for the norm of ‘non-interference in internal affairs’. But within the context of the UN, Indian initiatives for the promotion of democracy fi t well into its foreign policy profi le and multilateral traditions. Traditionally, India is one of the countries that make the largest number of troops available for UN peacekeeping missions.

Downloaded by [University of Defence] at 01:36 24 May 2016 19 Fahmida Ashraf, India–Afghanistan Relations: Post 9/11, Strategic Studies, 27 (2), 2007, www. issi.org.pk/journal/2007_ﬁ les/no_2/article/a4.htm, accessed 28 July 2009. 20 Ministry of External Affairs, ‘Annual Report 2007–2008’, New Delhi: Government of India 2008, p. 158. 21 See model case, Indian Efforts in Afghanistan (Indian Assistance for Democracy in Afghanistan), http://www.gdi.nic.in/ (accessed 11 November 2009). 22 See Ministry of External Affairs, Annual Report (various years), http://meaindia.nic.in, accessed 29 July 2011. Emerging China and its Impact on India 313

India could underline its interest in the support of democracy and benefi t from the newly established institutions. At the same time, India’s voting record in the Human Rights Council showed that the principle of non-interference was not subordinated in favor of the support of democracy or the protection of human rights.23 The importance of the various initiatives within the context of India’s total foreign policy, however, does not seem to be very high. Thus, in the 2005–2006 and 2007–2008 annual report of the MEA the UN Democracy Fund was referred to only briefl y, and in the 2006–2007 report not at all. This is similar for the GDI, which is not mentioned in any of these three annual reports.24 Foreign Policy: Institution Building, Agenda Setting, Development Assistance Soft power in the fi eld of foreign policy aims at the creation of legitimacy and moral authority in international politics in order to attract others. The capabilities to achieve this include a wide spectrum of measures like institution building and agenda setting. To achieve these goals there are several capacities like the diplomatic service, role of public diplomacy, role of the parliament, policy of development assistance and academic infrastructure like think tanks. India’s capacities have not been well developed in these areas. The size of its diplomatic service is remarkably low in relation to the population and its claim for great power status.25 The Indian government has announced an increase of the diplomatic service in order to meet the rising commitments in international institutions. It is a special feature of democracies that the parliament should have a role in the formulation and oversight of foreign policy. In India, foreign policy has been mainly a prerogative of the prime minister. The parliament has been weak in foreign policy and does not have powers like the ratifi cation of international treaties. Many

Downloaded by [University of Defence] at 01:36 24 May 2016 important decisions have been taken by the prime ministers without consulting the cabinet or the parliament. India’s growing economic interdependence will increase public debate as more and more

23 Jan Cartwright, ‘India’s Regional and International Support for Democracy’ p. 419. 24 Ibid. 25 Daniel Markey, ‘Developing India’s Foreign Policy “Software”’, Asia Policy, No. 8, 2009, pp. 73–96. 314 Christian Wagner

segments of the society will be affected by the positive and negative effects of globalisation. In 2007, the MEA set up a wing for public diplomacy in order to increase the dialogue with the civil society on international affairs and their effects for India. In the fi eld of development cooperation the most important instrument is the IITEC that was established in 1964. Since many years, India is one of the largest recipients of offi cial development assistance (ODA) but has also begun to give fi nancial assistance to other developing countries. The biggest recipients of Indian aid are its neighbours in South Asia. Afghanistan, Bhutan, and Nepal receive more than 70 per cent of these grants whereas African countries only get 3 per cent.26 The Indian fi gures do not clearly differentiate between economic support for Indian exports and ODA.27 In 2007–2008 there was the demand for the creation of an India International Development Cooperation Agency (IIDCA) in order to translate India’s growing economic clout into better coordination and delivery of India’s ODA to other countries.28 Looking at India’s ability to transform these capacities into capabilities offers a different perspective. Soft power can be oper- ationalised as the ability to create international institutions, set the agenda for global issues and mobilise coalitions. The culmination of India’s infl uence in international institution building was probably between the 1950s and the 1970s. The fi rst Asia Relations Conference in 1947 in New Delhi, and the establishment of the Non-Aligned Movement (NAM) in Bandung, Indonesia in 1955 within the scope of the Asia–Africa Conference were only two examples of India’s soft-power capabilities at that time. A similar development could be observed in the fi eld of agenda setting. Indian prime ministers like Jawaharlal Nehru and Indira Gandhi set the international agenda between the 1950s and the 1980s with their demands for decolon- isation, conventional and nuclear disarmament, the creation of a New

Downloaded by [University of Defence] at 01:36 24 May 2016 International Economic Order (NIEO) or a New Information Order (NIO) in order to overcome the gaps between the developed countries

26 Ministry of External Affairs, ‘Annual Report 2007–2008’, p. 158. 27 Vijaya Katti, Tatjana Chahoud and Atul Kaushik, ‘India’s Development Cooperation — Opportunities and Challenges for International Development Cooperation’, German Development Institute, Brieﬁ ng Paper 3, Bonn, 2009. 28 G. Srinivasan, G. ‘Ministry keen to Create Agency for providing Development Aid’, Business Line, 31 December 2007, accessed 11 November 2009. Emerging China and its Impact on India 315

of the North and developing countries in the South. The ITEC programme has certainly helped India to build up its leadership role among the developing countries in many international institutions. The networks that have been established also helped India to build informal coalitions in many negotiation rounds like the G 77 or in the context of trade talks in the WTO. Nevertheless, India’s ability to establish institutions or coalitions to pursue its interests seems to have been diminished since the 1990s. While the NAM lost its importance in international affairs, other organisations like the G 15, BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) or the IOR- ARC (Indian Ocean Rim-Association for Regional Cooperation), which were established by India’s initiative, have not been very successful. India was a latecomer in the regional institutions in Southeast Asia like ASEAN which it joined as a full dialogue partner in 1995. India pursued its national interests in new institutions like the WTO but was hardly able to shape the international agenda in the same way as it did in the 1960s and 1970s. India’s global ambitions for being recognised as a great power were promoted mainly by the nuclear tests of 1998, a classical hard-power strategy, and the improved relationship with the USA. Therefore, India’s soft-power capabilities seem to have been diminished on the global level. An opposite development could be observed on the regional level. Here, soft power initiatives gained greater importance after the liberalisation in 1991.29 Before 1991, South Asia was regarded as part of India’s national security that led to various interventions as in the Maldives in 1988 or Sri Lanka from 1987–90. With the new economic imperative in its foreign policy, India is regarding South Asia since the 1990s as part of its economic development. India was active in promoting the SAARC Free Trade Arrangement of 1996. The Gujral Doctrine, with the emphasis on the principle

Downloaded by [University of Defence] at 01:36 24 May 2016 of non-reciprocity, also helped to redeﬁ ne India’s relations with her neighbours. India’s unilateral trade concessions for LDC countries in South Asia and the initiative to increase regional connectivity and to establish a South Asia University at the SAARC Summit in 2007 can be regarded as soft-power strategies.

29 Christian Wagner, ‘From Hard Power to Soft Power? Ideas, Interaction, Institutions, and Images in India’s South Asia Policy’, Heidelberg Papers in South Asian and Comparative Politics, Working Paper No. 26, Heidelberg, 2005. 316 Christian Wagner

Soft Power and Foreign Policy: Towards a New Balance? Foreign policy always needs a new balancing between soft and hard power in order to achieve smart power and to pursue national interests in a changing international environment. India has slowly developed its soft-power capacities in order to create a new national image and to attract foreign investors. Concerning its soft-power capabilities, India has developed a defensive posture. National interests like security concerns vis-à-vis China and Pakistan, economic development and energy security have a much greater importance compared to normative considerations like the promotion of India’s democratic experiences. India’s hard- and soft-power strategies have always differed depending whether the focus was on the regional or the global level. Historically, Nehru was a promoter of soft-power strategies in the 1950s, much before these concepts were discussed. His engagement in regional crisis management and his personal engagement in the creation of the NAM are evidence of this. Of course, India seemed to have learnt a bitter lesson in 1962 that soft power is worthless without the backing of hard-power capabilities.30 However, it is not without irony that Nehru was probably the right person at the wrong time when he promoted soft-power strategies on the global level that were not appreciated during the Cold War period but only later. In South Asia, the hard-power strategies of political and military interference of the 1970s and 1980s have not been successful. Since the 1990s, soft-power strategies seem to prevail in India’s approach towards her neighbours. China’s new engagement in South Asia may require again a rebalancing or ﬁ ne tuning of India’s hard- and soft- power tools. India may not be able to cope with China’s economic attractiveness but it has an advantage over China in regard to Downloaded by [University of Defence] at 01:36 24 May 2016 democratic traditions. In 2009, all member countries of SAARC had democratic elected governments according to minimalist deﬁ nitions of democracy. This constellation can be used to promote common values in SAARC. As democracy is a non-contentious norm in all member countries, unanimity could be achieved in order to include

30 Shashi Tharoor, ‘The Land of the Better Story: India and Soft Power’, Global Asia, 2 (1), April 2007, p. 74. Emerging China and its Impact on India 317

a common commitment towards democracy in the SAARC charter. Moreover, SAARC election observer missions should also help prevent a backslide of individual countries into authoritarian rule. If democracy is regarded as the best way of governance by the people of South Asia, the cooperation of democracies in South Asia should help to improve the regional cooperation. Who else, if not India, could take the lead in such a process? References Ashraf, Fahmida. 2007. ‘India–Afghanistan Relations: Post 9/11’, Strategic Studies, 27 (2). www.issi.org.pk/journal/2007_ﬁ les/no_2/article/a4.htm. Accessed 28 July 2009. Cartwright, Jan. 2009.‘India’s Regional and International Support for Democracy: Rhetoric or Reality?’ Asian Survey, 49 (3): 403–28. Congressional Research Service. 2008. ‘China’s Foreign Policy and “Soft Power” in South America, Asia, and Africa’. Washington. Haass, Richard N. 2008. ‘The Age of Nonpolarity: What will Follow U.S. Dominance’, Foreign Affairs, pp. 44–56. May/June. Katti, Vijaya, Tatjana Chahoud and Atul Kaushik. 2009. ‘India’s Development Cooperation — Opportunities and Challenges for International Development Cooperation’, German Development Institute, Brieﬁ ng Paper 3. Bonn. Lum, Thomas, Wayne M. Morrison and Bruce Vaughn. 2008. ‘China’s “Soft Power” in Southeast Asia’, CRS Report for Congress, Washington, DC. Markey, Daniel. 2009. ‘Developing India’s Foreign Policy “Software”’, Asia Policy, No. 8: 73–96. Mingjiang, Li. 2008. ‘Soft Power in Chinese Discourse: Popularity and Prospect’, Working Paper No. 165, p. 4. Singapore: Rajaratnam School of International Studies. Ministry of External Affairs. 2008. ‘Annual Report 2007–2008’, p. 158. New Delhi: Government of India. Mohan, Raja, C. 2007. ‘Balancing Interests and Values. India’s Struggle with Democracy Promotion’, The Washington Quarterly, 30 (3) 99–115. Nye, Joseph S. Jr. 2004. ‘Soft Power: The Means to Success’, World Politics. New York. Downloaded by [University of Defence] at 01:36 24 May 2016 ———. 2009. ‘Get Smart’, International Herald Tribune. 16 January. Raman, B. 2000. ‘Community of Democracies’, South Asia Analysis Group, Paper 119. Noida www.southasiaanalysis.org/ %5Cpapers2%5Cpaper119. html. Accessed 30 February 2008. Shukla, Saurabh. 2006. ‘Soft Power’, India Today, p. 24. 30 October. Srinivasan, G. 2007. Ministry keen to Create Agency for providing Development Aid’, Business Line, 31 December 2007. Accessed 11 November 2009. Tharoor, Shashi. 2007. ‘The Land of the Better Story: India and Soft Power’, Global Asia, 2 (1): 74. April. 318 Christian Wagner

Wagner, Christian. 2005. ‘From Hard Power to Soft Power? Ideas, Interaction, Institutions, and Images in India’s South Asia Policy’, Heidelberg Papers in South Asian and Comparative Politics, Working Paper No. 26. Heidelberg. ———. 2009. ‘Promotion of Democracy and Foreign Policy in India’, SWP Research Paper 13. Berlin. Wilson III, Ernest J. 2008. ‘Hard Power, Soft Power, Smart Power’, The Annals: The American Academy of Political and Social Science, 616. March. Downloaded by [University of Defence] at 01:36 24 May 2016 Shifting Balance of Power and India–China Relations 319

19 The Shifting Balance of Power and China–India Relations: Between Cooperation and Competition

Zhang Guihong

World balance of power has been changing gradually and shifting to Asia due to the rapid and simultaneous rise of the two Asian powers, China and India, in the past 20–30 years. They have over 1 billion people each, a huge society, a robust economy and growing military capabilities. They are nuclear-armed states, and enjoy a signiﬁ cant inﬂ uence in the developing countries from Asia to Africa and Latin America. Their large geographical sizes and geo-strategic locations also make them key actors in Asian politics and the world stage as well. More importantly, both countries have great power ambition and potential. The questions are: How is the balance of power between China and India evolving? What are the decisive factors and implications of the shifting balance of power? How to manage the shifting balance of power in order to contribute it to regional stability and world prosperity? The Evolution of the Balance of Power between China and India

Downloaded by [University of Defence] at 01:36 24 May 2016 China and India were the only two surviving ancient civilisations in the history of the human being. They were dominant economies in Asia for a long time. At the beginning of 18th century, each shared about 23 per cent of the world GDP. In 1820, China is estimated to have accounted for nearly 32 per cent while India for 16 per cent of global GDP. The two countries had continuous trade and cultural exchange but little political interaction between them at that time. They were powers, but unlike that in Europe, there was no balance of power. 320 Zhang Guihong

The earliest contacts between China and India could at least go back to the days of the world-famous Silk Route, a trade channel that connected ancient China with the outside world via South (and Central) Asia. The famous Buddhist monk Xuanzang went on a pilgrimage to India during the Tang Dynasty in order to obtain Buddhist religious texts called sutras. Journey to the West, one of the four great classical novels of Chinese literature, is a fi ctionalised story of his trip to India. Western colonial countries came to India in the mid-18th century and to China in the mid-19th century, which changed the nature of original China–India relations and left behind legacies of boundary disputes between the two countries. Like many other countries, China and India were also the victims of European colonial domination. Due to external colonial exploitation and domestic turmoil, their GDP declined to 24 per cent by the end of 19th century and further reduced to 9 per cent of the global income by middle of the 20th century. In the early stage after India’s independence and the foundation of New China in late 1940s, India enjoyed a more favourable position in the balance of power between the two countries, particularly in terms of political infl uence and international reputation in the third world. India also played a more active role in promoting a harmonious relationship between the two countries. Similarly, China also responded positively to developing a good relationship with India. India and China won their independence in 1947 and 1949, respectively, and established a diplomatic relationship in 1950, making India the fi rst non-communist country which offi cially recognised the People’s Republic of China (PRC). In 1954, Premiers Nehru and Zhou Enlai paid their mutual visits and proposed the well-known Five Principles of Peaceful Co-existence or Panchsheel. However, the cordial relationship was not enduring due to their divergent national interests and power politics of the Cold War.

Downloaded by [University of Defence] at 01:36 24 May 2016 Because of China’s reform in Tibet and the Dalai Lama into exile in 1959, China and India diverged on the Tibet issue and ﬁ nally went to border war in 1962. Since then, China and India have been adversaries not only because of bilateral divergence, but also their external rivalry: China became the friend of India’s enemy (Pakistan) and the enemy of India’s friend (Soviet Union). The bilateral ties turned to coldness till the normalisation in 1976. By winning the border war with India in 1962, testing nuclear weapons in 1964, resuming its permanent seat in the UN Security Shifting Balance of Power and India–China Relations 321

Council in 1971 and establishing diplomatic relations with most of the western countries in the 1970s, the balance of power shifted in favour of China. Furthermore, China’s economic reform and opening up since 1978, 13 years ahead of that of India, made China stronger than India in terms of economic strength, military capability and international infl uence. India’s Prime Minister Rajiv Gandhi’s visit to China in 1988, the fi rst in 34 years, was a turning point of bilateral ties. During his visit, both sides agreed to maintain the stability and tranquility along the Line of Actual Control (LAC) before the fi nal solution of the border dispute, and to set up a joint working group on the border issue. The end of the Cold War gave more impetus to a better relationship between the two Asian powers. During India’s Prime Minister Narasimha Rao’s visit to China in 1993, the two countries signed an agreement on maintaining the peace and tranquility along the border. In 1996, Chinese President Jiang Zemin paid a visit to India. In the fi rst such by a Chinese head of the state, the two countries signed an agreement on confi dence building measures (CBMs) along the LAC. They agreed to establish their ‘constructive cooperative partnership toward the 21st century’, signalling China’s strategic shift to a balanced foreign policy toward South Asia in the post-Cold War time. However, India’s citation of China’s threat to justify its Pokhran II nuclear tests in 1998, along with the unresolved boundary disputes and the Tibet issue brought New Delhi and Beijing into a rigid situation once again. The bilateral relationship improved after several visits by political leaders of both sides, including India’s Foreign Minister Jaswant Singh’s visit in 1999, India’s President K. R. Narayanan’s visit in 2000, China’s Prime Minister Zhu Ronji’s visit in 2002 and India’s Defence Minister George Fernandes in 2003. Particularly during Prime Minister A. B. Vajpayee’s visit to China in 2003, Beijing and New Delhi forged

Downloaded by [University of Defence] at 01:36 24 May 2016 a consensus on a wide range of bilateral, regional and global issues. Both sides signed the Declaration of Principles and Comprehensive Cooperation in China–India Relations, mutually recognised Tibet and Sikkim and initiated the mechanism of Special Representative for border negotiation.1

1 Declaration on Principles for Relations and Comprehensive Cooperation between the People’s Republic and China and the Republic of India, 23 June 2003. 322 Zhang Guihong

More recently, three visits by top leaders of two countries raised the bilateral ties to a higher level. First, Chinese Primer Wen Jiabao paid a visit to India in April 2005. During his visit, the two governments for the fi rst time in the entire history of PRC and ROI agreed to establish a ‘strategic and cooperative partnership for peace and prosperity’. This visit also led to signifi cant progress on border and trade cooperation. The two countries agreed to political parameters and guiding principles for the boundary dispute to facilitate an early resolution. Beijing and New Delhi signed 12 bilateral documents, including the Protocol of Implementing Military CBMs in the Border Areas along China–India LAC and the Five-Year Plan of Sino–Indian Comprehensive Economic and Trade Cooperation, and set an ambitious bilateral trade target of US$600 billion for 2010. Second, in November 2006, Chinese President Hu Jintao paid a state visit to India, which marked an important milestone in the bilateral relationship. During Hu’s visit, the two countries issued a joint statement highlighting a 10-point strategy to reinforce their strategic and cooperative partnership and signed 13 agreements to strengthen cooperation in trade, investment, energy, and cultural and educational exchanges. Third, in early 2008, India’s Prime Minister Manmohan Singh visited China, becoming the fi rst foreign governmental leader who paid the visit to China in 2008. During his three-day stay in Beijing, Singh visited Beijing Olympic Game’ establishment on the fi rst day, and gave a speech at Chinese Academy of Social Sciences on the next day, which was broadcasted live on CCTV. He also attended the ‘China–India Summit for Trade, Investment and Cooperation’ in which more than 600 business leaders from both countries participated. China and India signed a ‘shared vision for the 21st century’, and 10 important bilateral agreements and MoUs. Besides, India decided to contribute `7.5 million to the Center for Indian Downloaded by [University of Defence] at 01:36 24 May 2016 Studies of Peking University, which was established on the occasion of Vajpayee’s visit to Beijing in 2003. With 20 years’ continuous and rapid economic growth after the end of the Cold War, China and India have accumulated respective comparative advantages. It is widely acknowledged that China is the headquarters of world manufacturing (world factory) while India is a hub of world services (world offi ce). China has more advantage in the fi eld of infrastructure construction, volume of foreign trade, growth of GDP and FDI, political mobilisation, social stability and Shifting Balance of Power and India–China Relations 323

sports performance. India, on the other hand, is more developed in the areas of software service, fi nancial and legal systems, medium- and small-enterprises competitiveness, political democracy, social freedom and cultural diversity. China and India represent two models of economic development and social transformation. It is hard to say which is better. From around the beginning of the new century, Chinese scholars gained awareness of the emergence of India as an unquestionable fact, at least an unavoidable trend, considering India as ‘a major power with more than one billion population, an economic prowess with great growth potential, a de facto nuclear weapon state, a country with large infl uence in developing world, and a nation with important geo-strategic meaning’.2 According to a Chinese India expert, India’s rise has both a negative and positive impact on China. An emerging India will constitute a certain challenge and pressure on the one hand, such as strategic contra- vention, economic competition, military pressure and diplomatic trouble, and bring some benefi ts on the other, such as similar political claim, economic cooperation potential and diplomatic and common security concerns.3 Beijing is now paying increasing attention to India’s drive for great-power status through diplomatic initiatives and a military build-up.4 However, considering the fact that China has stronger national comprehensive strength, more active and constructive role in regional affairs and a higher position in international politics, it is reasonable to say that China remains at a relatively more favourable position in the balance of power between China and India. Main Factors that Lead to the Shifting Balance of Power and its Implications Global and Strategic Signifi cance of China–India Ties Downloaded by [University of Defence] at 01:36 24 May 2016 China and India — with a combined population of more than 2.3 billion — are the two most populous nations in the world.

2 Ma Jiali, Focus on India: The Rising Power (Guanzhu yindu: jueqi zhong de daguo), Tianjing: Tianjing remin chubanshe, 2002, pp. 2–3. 3 Ibid., pp.14–16. 4 Zheng Ruixiang and Rong Ying (eds), The Rise of India and China–Indian Relations (Yindu de jueqi yu zhongyin guanxi), Beijing: Dangdai shijie chubanshe, 2006, p. 363. 324 Zhang Guihong

Given the size of their territory and population, the scale and potential of their economy and their position as de facto nuclear weapons states, the relationship of the two Asian giants cannot be trivial. Both leaderships held that the Sino–Indian relationship has gone far beyond a bilateral level and ‘is of global and strategic signifi cance’. In the political arena, both China and India are accommodating each other to their respective ‘rise’. India has been committed to the ‘One China’ policy since the very beginning of its independence, and China seems to be supportive of India’s bid for a permanent seat in a reformed UN Security Council.5 The two countries have roughly overcome the diffi culty that arose from their border confl ict in 1962. Beijing and New Delhi also share extensive and sustained common views and interests on regional and global facets — from the preference of multilateralism to the support of Asian regional integration. In the economic fi eld, along with the dual fast and long growth of two large economies, Sino–Indian two-way trade is rapidly expanding and their mutual investment is increasing annually. The bilateral trade increased from US$2.9 billion in 2000 to US$18.7 billion in 2005, with an average annual growth of 45 per cent. It reached US$24.9 billion in 2006 and US$ 51.7 billion in 2008, targeting US$ 60 billion by 2009. Moreover, both China and India are perceived as the most attractive destination of Foreign Direct Investment (FDI), and among a few economies that contribute most to world economic growth. With the parallel rise of China and India as well as the transformation of world economic and political order, the evolution of China–India relations has been watched worldwide. A newly published report by the World Bank states that ‘[T]he rise of China and India as major trading nations in manufacturing and services will affect world markets, systems, and commons substantially, and hence change the environment in which other countries make their 6

Downloaded by [University of Defence] at 01:36 24 May 2016 economic decision.’

5 ‘China … understands and supports India’s aspiration to play a greater role in the United Nations’. See China–India Joint Declaration’ in New Delhi on 21 November 2006. 6 L. Alan Winters and Shahid Yusuf (eds), Dancing with Giants: China, India and the Global Economy, Singapore: World Bank and Institute of Policy Studies, 2007, p. 31. Shifting Balance of Power and India–China Relations 325

In the nuclear and security realm, the two countries have basically walked out from the trouble caused by India’s nuclear weapon testing when China was implicitly cited by the Indian side to justify its tests. China has joined Nuclear Suppliers Group (NSG) that more or less relieves India’s concern over the China–Pakistan nexus of sensitive technology transfer. The two sides have agreed to promote cooperation in the fi eld of nuclear energy, consistent with their respective international commitment. They have also carried out joint military exercises and strengthened their military confi dence- building measures (CBMs). Despite the considerable progress and high expectations for Sino–Indian political relations, a number of issues remain unresolved. They include ‘unresolved territorial disputes, mutual suspicions of each other’s strategic intentions, and the changing balance of power and realignments at the global and regional levels’.7 Main Factors Aff ecting China–India Balance of Power By briefl y reviewing the process of balance of power between China and India, we can fi nd that at least the following several factors of bilateral relationship are decisive in the shift of balance of power. First, hard power, strategic capabilities in particular, is the basic element for the posture of balance of power. For example, with the nuclear tests in 1998, India not only received more attention and serious concerns from the US and the international community, but also obtained a leverage to reduce strategic imbalance with China and increase its weight in dealing with bilateral ties with China. Second, soft power, political and diplomatic resources in particular, is vital to the shifting balance of power. For example, China’s diplomatic victory of resuming its permanent membership of the UNSC implied a big shift of balance of power between China and India in the Cold-War era. The long-term strategic relationship be-

Downloaded by [University of Defence] at 01:36 24 May 2016 tween China and Pakistan does give China a powerful leverage to deal with its ties with India. Similarly, India, in recent years, made use of its warming strategic relations with the US, Japan and Vietnam to beneﬁ t from its ties with China. Third, the trend of the shifting balance of power depends on whether or not to play a constructive role in regional affairs. For example,

7 Jin-dong Yuan, ‘The Dragon and the Elephant: Chinese–Indian Relations in the 21st Century’, The Washington Quarterly, 30 (3), Summer 2007, p. 131. 326 Zhang Guihong

when China hosts several rounds of six-party talks on DPRK nuclear issues, plays a leading role in the Shanghai Cooperation Organisation (SCO), actively takes part in regional institutions such as ASEAN Plus One, the East Asia Summit (EAS), the Asia–Pacifi c Economic Cooperation (APEC), etc., China’s regional infl uence and soft power gradually grows. In contrast, India has been involved in a long-term rivalry with Pakistan and other neighbouring countries, and was not so active in contributing to regional integration and cooperation regimes such as the South Asian Association for Regional Cooperation (SAARC). This is an important factor that can partly explain why India was restrained in South Asia while China played a bigger role in international affairs. Fourth, whether or not to have a friendly and stable environment is an important factor that shifts the balance of power. For example, when China engaged in confl ict with the US in the Korean Peninsula in 1950s and with the Soviet Union along the border in the 1960s, many resources had to be used for external struggle instead of domestic construction. While China, to some extent, was isolated in the international community in the 1950s, India played a leading role in the non-aligned movement and had considerable infl uence in the newly independent countries. Implications of China–India Relations The shift of balance of power will shape the posture of future Sino–Indian relations and have a lot of implications for the Asian landscape. First, given the size of territory and population, the scale and potential of their economies, their position of being nuclear-armed states and their independent foreign policy, the shift of balance of power between China and India has gone far beyond a bilateral level and is of global and strategic signifi cance. The China–India

Downloaded by [University of Defence] at 01:36 24 May 2016 partnership is a determinant factor for regional and global peace and development, and for Asia’s emergence as the political and economic centre of the new international order. Second, considering their comparative advantage, complementary development model and great potential for cooperation, there is enough space and opportunity in Asia and beyond to accommodate the common development of China and India. Third, the shift of balance of power between China and India should not and is not necessarily a zero-sum game; instead, it is Shifting Balance of Power and India–China Relations 327

quite possible to be a win–win situation. China and India should not ask who will outdo whom. Both countries have the obligation to cooperate beyond disputes and differences. To Manage the Shifting Balance of Power For a long time, China and India as two neighbouring regional powers have been perceived as ‘natural competitors’ economically, geopolitically and strategically.8 The China–Indian relationship could be one of the most important bilateral relations in Asia in the future. Their development is the major impetus of Asia, and the cooperation between China and India is the key factor for the future of Asia. It is vital to materialise and institutionalise the potential for cooperation based on structural commonness for the purpose of the increase of mutual trust on the one hand, and to handle properly the divergence and disputes on some functional issues for the purpose of the reduction of distrust on the other hand. To manage the shifting balance of power, the following points are recommended: To have Mutual Support for Respective Independence of Foreign Policy Both China and India have centuries-old civilisations and a unique oriental culture; they experienced a colonial rule in the past; and now both are developing countries and in a social transitional period, which has a deep impact on their foreign policy and relations. There are four dimensions of China’s diplomatic focus: periphery, major powers, developing countries and multilateral scene. China’s diplomatic positions on international agenda, no matter climate change and environment, or human rights and knowledge property protection are in character with the emphasis of the gradual period, different from those of western developed countries, and with focus on responsibility and contribution, which is different from those of the rest of most Downloaded by [University of Defence] at 01:36 24 May 2016 of the developing countries. Both support the democratisation of

8 See, for example, John W. Garver, Protracted Contest: Sino–Indian Rivalry in the Twentieth Century, London: Oxford University Press, 2001, pp. 5, 110–11; Sujit Dutta, ‘China’s Emerging Power and Military Role: Implications for South Asia’, in Janathan D. Pollack and Richard H. Yang (eds), In China’s Shadow: Regional Perspectives on Chinese Foreign Policy and Military Development, Santa Monica, CA: RAND, 1998, p. 94; Ma Jiali, Focus on India: Emerging Power (Guanzhu Yindu: jueqi zhong de daguo), p. 14. 328 Zhang Guihong

international relations and world multiplicity and prefer a peaceful and a negotiable way to resolve international disputes and the leading role the UN in it. To be Humble to Learn from Each Other Since their national independence and foundation, both China and India have experienced a diffi cult and polemic period. But now both are devoted to economic development and the improvement of the people’s livelihood. China came to fi nd a suitable road to development in the late 1970s, and achieved a remarkable achievement in economic growth and social progress through its reform and open policy. Since its economic reform in the early 1990s, the competition ability of India’s state-owned enterprises has been enhanced considerably and its private companies showed their energy. China as ‘world factory’ and India as ‘world offi ce’ have generated their comparative advantage in manufacturing and in IT service, respectively. For China and India, both of which have a super state and huge society, it is extremely important to implement a scientifi c, sustainable and balanced development through system innovation. They face a common challenge: how to reduce social gap, promote social equality and justice, build a harmonious society and ensure that people benefi t from reform and development. To Accommodate the Dual Rise in the Region and Beyond There is a feeling that for the 21st century and world, the most infl u- ential event may not be 9/11 but the rise of China, or, more accurately, the dual rise of China and India. In the process of simultaneous emergence, China and India can and should cooperate to address some common challenges, for example, the shortage of energy, environmental pollution, climate change, terrorism, the rich–poor Downloaded by [University of Defence] at 01:36 24 May 2016 gap, education and employment. There is great potential for China and India to be complementary in their respective advantage fi elds. The rise of China and India not only upgrades the importance of their bilateral relationship, but also brings transforming factors to major power relations and international order. To Compete Healthily Some scholars, particularly American scholars, have described China and India as ‘natural competitors’. The cooperation between them is Shifting Balance of Power and India–China Relations 329

bigger than competition, in fact, the competition itself turned to be healthier. In the energy fi eld, both are trying to fi nd common interests based on the new model of mutual cooperation which they both seek. As regards the political system, though China’s and India’s party system are different from each other, but both paid more attention to social welfare, and have accumulated much experience of political stability and freedom, respectively. In the fi eld of security, neither China nor India regard each other as a threat, and maintain long-term stability and tranquility along the border through CBMs. Through strategic dialogue, strategic understanding and political trust are increasingly enhanced. With mutual visits by leaders, bilateral relations are warming. To Implement a Good-Neighbourhood Policy Any country can select its friends, but cannot select its neighbours. In the past years, both China and India have some kind of enmity with their neighbouring countries. At present, both need a stable environment to ensure their domestic economic development. One characteristic of China’s good-neighbourhood policy is to establish a multilateral regime to deal with regional issues. With the Six-party Talks, the SCO and ASEAN Plus One, the hotspot issues surrounding China were relaxed. Similarly, with the revival of the SAARC, participation of the EAS and ASEAN regime and obtaining the observer status in SCO, India fi nds its enlarged infl uence in South Asia and beyond. To Contribute Together to Asian Community/Century Both China and India are Asian powers with the most population, largest size and fastest growth in Asia and leading role in East and South Asia. The cooperation between China and India is extremely important not only for themselves but for the rest of Asia as well. The economic development in China and India has been a major Downloaded by [University of Defence] at 01:36 24 May 2016 momentum for Asian and world economic growth. Their contribution to Asian development is demonstrated not only in the growth rate, but more through the development model and political development. The Chinese development model is with manufacturing- and foreign trade and investment-driven, along with political stability and social opening-up, while India’s model is concentrated on IT and the service industry along with political democracy and social freedom. The two countries’ experiences as well as lessons provide valuable implications for the rest of the Asian and developing countries. 330 Zhang Guihong

To Cooperate and Coordinate Regionally and Globally Both China and India actively take part in regional cooperation. Asian integration, both on the regional and sub-regional levels, has made considerable progress, partly because of China and India’s active promotion and participation. With regard to multilateralism, both China and India have experienced a process of negative to passive to positive and active attitude. With the further development of Asian integration, China and India may initiate more regional cooperative regimes on security, particularly in the non-traditional security ﬁ eld. Globally, China and India may coordinate to express the voice of and protect the interests of developing countries in the multilateral forums, and support each other in coping with global issues and challenges. To Manage the Role of Pakistan and the US Though China’s South Asian policy turned to be more balanced and it tried to develop a partnership with India and Pakistan separately and respectively, as long as India–Pakistan relations remain to be fundamentally improved, the suspicion regarding China–Pakistan cooperation will remain unchanged. On the other hand, the US keeps upgrading its strategic partnership and military cooperation with India, as well as with Japan, South Korea and Australia in the Asia–Paciﬁ c, which accordingly constitutes a certain strategic pressure on China. China understands that India has enough reason to develop a strategic partnership with the US, but any kind of alliance with the US is not in India’s interests. China also understands the US intention to make use of India as a counterweight of China, but I do not believe that this will be realistic or feasible. It is highly necessary to initiate two trilateral dialogues and cooperation mechanisms among China–Pakistan–India, and China–India–US. The development of bilateral relations should not be aimed at the

Downloaded by [University of Defence] at 01:36 24 May 2016 expense of third country. To Reduce the Trust Deﬁ cit There are two main issues that may affect mutual political trust: one, the outstanding unsettled boundary question, and two, China’s position with regard to India’s nuclear weapons programme and its bid for UNSC permanent membership. There is no clear borderline in history and the emotional legacy of border conﬂ ict has not yet disappeared, and the high expectation for a favourable border settlement, and mixed residence of different minorities have Shifting Balance of Power and India–China Relations 331

complicated the issue. The border issue is crucial for realising the full potential of cooperation. It is also a sensitive issue in both countries. Some progress has been achieved in recent years. Yet, it is a long way to go to reach the fi nal solution. It needs to have courage and vision to take into account and accommodate reasonable interests of each other. It needs to have innovation and wisdom to explore ideas and a mutual acceptable arrangement that creates a win–win situation for both sides and ensures lasting and enduring peace on the borders, for example, the balance of interests, soft approach to the hard issue. India’s nuclear weapons state status is not recognised or accommodated by the current non-proliferation regime of which China is an important member. China understands and supports India’s greater role in the UNSC, but there is great divergence among UN members with regard to UNSC reform, including who is qualifi ed and how to reform the UNSC. Before the relevant arrangement and consensus are reached among UN members, it is diffi cult to see substantial progress in this regard. India always asked for an open and unambiguous statement by China to support India’s bid for the permanent membership of a reformed UNSC. China’s position is clear. The UNSC needs more representatives from developing countries, particularly from the African continent. India, according to various factors, is one of the qualifi ed candidates to be the new permanent member of the reformed UNSC, most likely without veto. However, there is yet to be a global and regional consensus on which kind of country is qualifi ed enough to be the new permanent member of the reformed UNSC. To better manage the shifting balance of power, a few approaches and measures are also necessary: (a) to maintain top-level visits, promote middle-level exchange and increase people-to-people contact; (b) to deepen economic interdependence and upgrade the cooperation level; (c) to enlarge educational and cultural communication; (d) to Downloaded by [University of Defence] at 01:36 24 May 2016 expand the negotiation and dialogue channels in terms of border issue; (e) to respect and support the other side’s core national interests; and (f) to understand and support the other side’s political and diplomatic aspiration in the international community. References Dutta, Sujit. 1998. ‘China’s Emerging Power and Military Role: Implications for South Asia’, in Janathan D. Pollack and Richard H. Yang (eds), In China’s Shadow: Regional Perspectives on Chinese Foreign Policy and Military Development. Santa Monica, CA: RAND. 332 Zhang Guihong

Garver, John W. 2001. Protracted Contest: Sino–Indian Rivalry in the Twentieth Century. London: Oxford University Press. Hongwei, Wang. 2009. A Critical Review of the Sino–Indian Relations of the Present Age (Dangdai zhongyin guanxi shuping). Beijing: Zhongguo zangxue chubanshe. Jiali, Ma. 2002. Focus on India: The Rising Power (Guanzhu yindu: jueqi zhong de daguo).Tianjing: Tianjing remin chubanshe. Mingqiu, Zhang. 2004. Sino–India Relations 1947–2003 (Zhongyin guanxi yanjiou 1947–2003), Beijing: Beijing daxue chubanshe. ———. 2006. Across the Himalayan Gap: A Chinese Quest for Understanding India (Kua yue ximalaya zhangai: Zhongguo xunqiu liaojie yindu). Chongqing: Chongqing chubanshe. Ruixiang, Zheng and Rong Ying (eds). 2006. The Rise of India and China–Indian Relations (Yindu de jueqi yu zhongyin guanxi). Beijing: Dangdai shijie chubanshe. Weiling. 2008. A Study of China–Indian Relations in the Post-Cold War Era (Lengzhan hou zhongyin guanxi yanjiu). Beijing: Zhongguo zhengfa daxue chubanshe. Weiping, Zhou. 2006. A Century of China–India Relations (Bainian zhongyin guanxi). Beijing: Shijie zhishi chubanshe. Winters, L. Alan and Shahid Yusuf (eds). 2007. Dancing with Giants: China, India and the Global Economy. Singapore: World Bank and Institute of Policy Studies. Xingming, Sui. 2007. ‘Sino–Indian Relations: A Social Cognition Perspective (Zhongyin guanxi yanjiu: shehui renzi shijiao). Beijing: Shijie zhishi chubanshe. Yuan, Jin-dong. 2007. ‘The Dragon and the Elephant: Chinese–Indian Relations in the 21st Century’, The Washington Quarterly, 30 (3). Summer. Zhonghai, Chen. 2008. A Study of China–Indian Diplomatic Relations 1991–2007 (Lengzhan hou zhong yin waijiao guanxi yanjiu 1991–2007). Beijing: Shijie zhishi chubanshe. Downloaded by [University of Defence] at 01:36 24 May 2016 India Rising and China–India Strategic Interaction 333

India Rising and China–India Strategic Interaction: Geopolitical Uncertainty versus Conﬁ dence Building

Zhang Li

China and India, two recognised rising global powers, share a responsibility for peace, stability and development in the ever- changing international politico-economic order. In the early 1950s, the political leaders of the two nations had a great longing for a New Asia standing up from the ruins of colonialism, extricating itself from western supremacy, and speaking with one voice. The jointly advocated principles of peaceful co-existence or Panchsheel proved to be an encouraging symbol of this unprecedented endeavour. However, the intensifying boundary disputes and the resultant border war in 1962 totally dashed the hope of a friendly neighbourhood and Asian solidarity. The bilateral ties of China with India became a victim of both nationalist outbursts and Cold-War grapples worldwide. In retrospect, indeed, there is much to be drawn as helpful experience and lessons for the future. The 60th anniversary of the Sino–Indian diplomatic relationship highlights a coherent theme of concern envisaged by the two Asian giants: how to nurture and sustain a credibly healthy partnership in view of their mutual benefi ts as well as the regional and global Downloaded by [University of Defence] at 01:36 24 May 2016 signifi cance. It seems to come full circle as far as this signifi cant relationship is concerned. As an essential part of securing this promising prospect, enhancement of strategic trust and exploration of areas of cooperation should be regarded as a pressing necessity. At the operational level, an outstanding issue in this regard is to give real substance into the existing partnership and institutionalise their strategic interaction in order to maximise consensus and shared interests, increase the predictability of policy options towards each 334 Zhang Li

other, reconcile differences including the boundary disputes and geo-strategic discrepancies, and advance their international profi les while achieving the parallel aspiration to be global powers. As a subject of growing global interest and under intriguing debates, India’s perceived rise offers another signifi cant input in understanding China–India strategic engagements in different dimensions. Many believe that the rise of India is an undisputed fact although there are still constraints as well as daunting internal and external challenges in the way of its being among global powers in the near future.1 More importantly, from a Chinese perspective, India’s ascendance will considerably infl uence its relations with China and produce profound implications for the region at large. India’s Global Aspiration and the Response from China As generally observed, there have been some key thrusts made by India in meeting its designed goals to be a global power and enhancing its strategic profi le in the present international context. These initiatives have evoked worldwide responses and repercussions in different ways. Among India’s major initiatives to be a global power are (a) amplifying its role in reshaping the global politico-economic order; (b) seeking permanent UNSC membership on the basis of UN reforms; and (c) being accepted as a legitimate nuclear power endorsed by the global nuclear regimes. Corresponding to India’s outspoken aspirations and dealing with the major neighbour in South Asia, China’s refl ections are differentiated, selective, calibrated and open-ended, and are basically determined by some sophisticated considerations and known commitments. China embraces the emerging reality of India rising as an important power in the shifting global socio-economic structure. This

Downloaded by [University of Defence] at 01:36 24 May 2016 posture is a result of its awareness of a broad common ground and overlapping interests for them at the global and developmental level. Some convincing examples support this argument. There have been positive comments and analyses in Chinese media and publications

1 For a recent intensive examination of the potentials and constraints relating to India’s rise, see Ingolf Kiesow and Nicklas Norling, The Rise of India: Problems and Opportunities, Stockholm and Washington: Central Asia-Caucasus Institute and Silk Road Studies Program, 2007 and Edward Luce, In Spite of the Gods: The Strange Rise of Modern India, Random House, 2006. India Rising and China–India Strategic Interaction 335

on the ‘BRIC’ and India’s impressive performance in it.2 The inspiring idea of ‘Chindia’, coined by Jairam Ramesh, a well-known Indian economist, has become popular in China and promises a constructive response.3 Beijing is believed to have joined India in being outspoken about the rights and interests of developing nations in the global politico-economic regimes such as the WTO. A more balanced assessment of India’s global strategy and realistic diplomacy has begun to gain momentum within the Chinese strategic community, which modestly recognises India’s adeptness at dealing with the major powers and optimising its national interests conditioned by complicated parameters. Some Chinese academics have also tended to develop an intellectual evaluation of India’s democratic politics and ongoing socio-economic transformation.4 This positive trend, along with increasing people-to-people contact, is extremely helpful for more stable and predictable Sino–Indian relations. Beijing has voiced its willingness to support India to play an expanding role in global affairs, hinting at prioritising a chance for India among the other candidates in event of the UN reforms in the future.5 However, China’s generalised expression of support but evading promise on the speciﬁ c issue is far from India’s expectation and tends to be dismissed as meaningless. Beijing’s reservations about and indifference to India aspiring to seek UNSC membership, at least partially, derive from its perception of uncertainty of the bilateral relations apart from the understandable misgivings about the resultant dilution of its power as one of the sitting members of the UNSC. The most probable scenario, in prospect, remains that Beijing will tune up its position and degree of support or boycott on the basis of the nature and the trajectory of its complex relations with India as well as the changing regional and global political alignments. India’s persistent endeavour to be recognised as a legitimate member of the global nuclear club following the nuclear tests in May 1998

Downloaded by [University of Defence] at 01:36 24 May 2016 has undergone a difﬁ cult process. As is well known, China, from the very beginning, tried to obstruct India’s effort to do so because of its

2 Tang Liang, ‘Prospects of the BRIC: India Ranks No. One’, CCTV online, 27 October 2008. 3 ‘Sino–Indian Relation’, China Daily, 17 January 2008. 4 Wang Hongsheng, ‘How to Build a Harmonious Society: India’s Experience’, China and World Observer, Issue 1, Beijing, 2007. 5 ‘China Supports a Larger Indian Role in UN’, The Indian Express, 25 October 2007. 336 Zhang Li

stated adherence to the principles of global non-proliferation and of its strong resentment against the rhetoric of ‘China threat’ upheld by New Delhi as the central rationale to bolster its nuclear option.6 Beijing has been concerned about the Indo–US engagement regarding India’s nuclear status, especially the major progress in this regard secured by the both sides culminating in the signature of the civilian nuclear deal.7 At the same time, Beijing’s attitude toward the nuclear reality on the subcontinent has become visibly pragmatic and fl exible in terms of touching upon this issue in its strategic dialogue with New Delhi and sounding about the likelihood of cooperation in civilian nuclear energy.8 Nevertheless, it has to be admitted that there remains a seen gap of perception regarding India’s nuclear status. This discrepancy helps, to some extent, in explaining Beijing’s hesitance to endorse New Delhi with a waiver or an exclusive offer in the International Atomic Energy Agency (IAEA) and the Nuclear Suppliers Group (NSG).9 Hopefully, however, practical thinking will eventually dominate China’s policy options toward this sensitive issue in the near future. Strategic Implications of India’s Rise: China’s Assessments As a result of chronic trust defi cit and defi ciency of effective bilateral regimes of engagements, India’s rise in strategic sense might create some complicated geopolitical ramifi cations for China and for Sino–Indian relations, despite its visible merits and advantages in general. In other words, as a result of chronic trust defi cit and in- completeness of effective bilateral regimes of engagement, India’s rise

6 A summarised review of China’s reaction toward India’s nuclear tests in 1998 is ‘China and the Nuclear Tests in South Asia’ by the James Martin Center for Nonproliferation Studies, Monterey Institute of International Studies, http://

Downloaded by [University of Defence] at 01:36 24 May 2016 www.nti.org/db/china/nsascris.htm#China’s%20Reaction%20to%20India’s% 20Nuclear, accessed 23 October 2009. 7 ‘China Voices Concern over US–Indo Deal’, Press TV, 2 September 2008, http://www.presstv.ir/detail.aspx?id=68199§ionid=351020404, accessed 27 October 2009; and for an Indian reading of China’s response to the Indo–US civilian nuclear cooperation see D. S. Rajan ‘What China thinks about the N- deal Progress’, 24 July 2008, http://www.rediff.com/news/2008/jul/24guest1. htm, accessed 30 October 2009. 8 ‘India, China Pledge Nuclear Cooperation’, The Hindu, 14 January 2008. 9 Chris Buckley, ‘China State Paper Lashes India–U.S. Nuclear Deal’, Reuters India News, 1 September 2008. India Rising and China–India Strategic Interaction 337

may pose some major issues of concern and bring about uncertain consequences, which are primarily in view of regional security and the bilateral interaction. There are several signifi cant aspects deserving analysis. The Stalemate of Resolving Sino–Indian Boundary Issue Despite several agreements, guidelines of political parameters and negotiations on border at different levels, and after more than a dozen rounds of special representative talks on border, there seems to have been no substantial progress or meaningful breakthrough made.10 The dialogue has proceeded at a glacial pace and with occasional setbacks as a result of lacking trust and consensus on some central points. The prospects of resolving the boundary disputes might probably be increasingly unsure against the backdrop of India’s strategic rise in the present global context. Strengthened military capability and strategic assets following economic modernisation will bolster India’s self-assertiveness and enable it to take a tougher stance and discount the give-and-take approach in the negotiation on border. Additional Indian military deployments along the eastern sector of the China–India Line of Actual Control (LAC) in 2009, coupled with the intermittent hawkish gestures on the border from New Delhi, seem to add to this mounting perception.11 Less possible is that its increasing confi dence and rising global image will encourage India to practise a more reconciliatory and pragmatic approach toward a fi nal settlement of the pending issue. Problematic Indo–Pakistani Ties and the Unsmooth Peace Process It is an unfortunate fact that New Delhi’s strained relations with Islamabad have constrained and neutralised its efforts to rise at the Downloaded by [University of Defence] at 01:36 24 May 2016 regional level. The improvement of the India–Pakistan relationship will considerably benefi t Beijing and offer it more room to manoeuvre

10 ‘Sino–Indian Border Talks need Prolonged Patience: Chinese Experts’, China News, 7 August 2009, http://news.southcn.com/international/gjkd/content/2009- 08/07/content_5510260.htm, accessed 15 October 2009. 11 Wang Qian, ‘India Enhances Military Deployment in Southern Tibet: Political Intentions and Strategy toward China’, Global Online, 26 July 2009, http://bbs.yahoo.cn/read.php?tid=199616, accessed 26 October 2009. 338 Zhang Li

in the fi eld of diplomacy and security in terms of China’s interest in maintaining a stabilised peripheral environment.12 It is marked by China’s relatively new agenda of symmetrically nurturing ties with both India and Pakistan. As observed, the welcome peace process between the two South Asian neighbours was disrupted in the wake of the Mumbai terror attack in November 2008, in which India alleged the involvement of Pakistan-based terrorists. The fragility of the New Delhi–Islamabad ties and the hardship in addressing the daunting Kashmir problem are likely to be further exacerbated as a result of the amplifying superiority over Pakistan by India in economic and strategic capabilities. The judgement of the trend of Indo–Pak ties will also continue to affect, if not determine, the dimensions of the Sino–Pak strategic nexus that has worked and China’s concern of interest about the terrorist challenge in the region and the Afghan imbroglio. Sino–Indian Geopolitical Encounters in South Asia and Immediately Beyond India’s rise will further confi rm its predominant role in the region and infl uence its ties with its smaller neighbours in an overwhelming way. Among these countries are Bangladesh, Nepal, Sri Lanka, Afghanistan and Myanmar, apart from Pakistan. It is a known fact that China is keen to have closer interaction with these regional countries. Thus, there is a growing concern in India about a potential confrontation between Beijing and New Delhi in view of their mutually neutralising or even colliding geo-strategic interests.13 China’s perception and judgement of the nature of engagement with India has a visible bearing on its policy design in South Asia. Regrettably, so far, the reality of the rising of the two Asian giants seems unable to make China lose its vigilance for India’s regional primacy or urge India to go out of the

Downloaded by [University of Defence] at 01:36 24 May 2016 shadow of the so-called Beijing’s conspiracy to encircle India by roping in the smaller regional actors.

12 Zhang Li, To Manage Conﬂ ict in South Asia: China’s Stakes, Perceptions and Inputs, Sweden: Institute for Security and Development Policy (ISDP), October 2009, pp. 65–75. 13 B. Raman, ‘The Danger of the India–China Hysteria’, Rediff. News, 8 September 2009, http://news.rediff.com/column/2009/sep/08/the-danger-of-the- india-china-hysteria.htm, accessed 26 October 2009. India Rising and China–India Strategic Interaction 339

India’s Strategic Interaction with the USA The upgrading of Indo–US strategic engagement, a focus of growing concern, produces long-term geopolitical consequences and strategic uncertainty for China.14 Beijing noticed the promise by the Bush administration to help India to become a global power in the 21st century, reasonably doubting the real intentions behind the rhetoric and wondering whether it would change the course of New Delhi’s diplomacy.15 It is arguably believed that the strategic links of China and India respectively with the US create a zero-sum effect on their strategic interaction although Beijing is not willing to recognise this phenomenon.16 In such a scenario, New Delhi’s declared independent diplomacy remains impressive, whereas there are lingering worries in China that a rising India might come to be part of a US-driven strategic alignment by acting as a counterweight to China in the Asia–Paciﬁ c and Indian Ocean region or simply bandwagoning with the only superpower. This easily explains why Beijing has, at times, sharply reacted towards any US-led strategic moves involving India presumably directed at China, such as the conceived idea of an Asian version of the North Atlantic Treaty Organisation (NATO) in 2003 or the Quadrilateral War Game in April 2007.17 Relevance and Limitations of Regional/Multilateral Strategic Regimes There are several activating multilateral and regional mech-anisms and frameworks involving both China and India in varying degrees, basically including the Shanghai Cooperation Organisation (SCO), South Asian Association for Regional Cooperation (SAARC), ASEAN and the China–India–Russia tri-party consultation, which promise the opportunity of coordinating their obligations and beneﬁ ts in a

Downloaded by [University of Defence] at 01:36 24 May 2016 14 Tim Beal, ‘Using India to Keep China at Bay’, Foreign Policy in Focus, 12 December 2006. 15 Zhang Yuyan and Zhang Jingchun, ‘China–India Relations in Asian Economic Integration’, Contemporary Asia–Pacific Studies, Beijing Issue 2, 2006. 16 Shi Hongyuan, ‘China–India–US Tripartite Ties: A Zero-Sum Game?’ Outlook Weekly, Beijing, November 2009. 17 Stephen Blank, ‘Inherent Dangers in an “Asian NATO”’, Asia Times, 19 September 2003; ‘A “Goodwill” Joint Naval Drill?’ People’s Daily, 21 April 2007. 340 Zhang Li

broader range. As a rising global power, however, as some analysts suggest, India will unavoidably seek a share of leadership or primacy in pan-Asia that may produce mixed effects on its linkages with the regional groupings.18 For instance, India has preferred to adapt these engagements to its designed objectives and calibrate the degree of participation in a selective way in order to maximise its multi- pronged diplomacy and security calculus. The positive settings of multilateral interaction tend to be nulliﬁ ed as a result of a limited sharing of strategic interests. The disaccord of interest considerations of China and India in the regional and multilateral arrangements may unnecessarily complicate the running of the regimes given the lingering trust deﬁ cit at the bilateral level. India’s Maritime Strategy and the Security of the Indian Ocean China has increasingly emphasised the importance of the Indian Ocean in solidifying its security and national interests, including securing overseas energy and trading shipments through major sea lanes and chokepoints including the Malacca Strait and enhancing maritime security such as combating piracy.19 China’s pending disputes with several ASEAN members on the sovereignty of the South China Sea add to the concern over India’s involvement in the scene in disfavour of China. For India, there is the shadow of the so-called ‘string of pearls’ strategy,20 and for China, there is lingering concern that India will develop its strategic presence in the South China Sea and forge security partnerships with the ASEAN countries. There is recognised potential and need for both sides to search for coordination and cooperation. However, in view of India’s unique geo-strategic location on the Indian Ocean and Malacca as well as the unstable bilateral strategic relations, Beijing seems to have no assurance of the nature and prospects of China’s future engagements Downloaded by [University of Defence] at 01:36 24 May 2016

18 Tarique Niazi, ‘Sino–Indian Rivalry for Pan-Asian Leadership’, China Brief, 6 (4), 2006. 19 Liang Hui and Tang Lu, ‘China’s Indian Ocean Strategy: A Debate among Chinese, US and Indian Experts’, International Herald Leader, Beijing, 10 March 2009. 20 Ishaan Tharoor, ‘India’s China Panic: Seeing a “Red Peril” on Land and Sea’, Time, 20 September 2009, http://www.time.com/time/world/article/0,859 9,1924884,00.html, accessed 28 October 2009. India Rising and China–India Strategic Interaction 341

with India on the water despite the willingness to cooperate in maritime security and several modest joint naval trainings and port visits.21 India’s Interest Projection in Central Asia and Ramifi cations for China Central Asia has come to be an increasingly important arena for both Beijing and New Delhi. China’s engagements with India in the region involve several major areas of global concern such as anti-terrorism and extremism, energy security and trans-border connectivity including overland trading routes and the planned gas/oil pipelines.22 India’s display of soft power of cultural and historical linkages and China’s advantage of investment in trade, energy and infrastructure in Central Asia have been factors infl uencing the region in different ways. In addition, both China and India, threatened by the growing undercurrents of extremism and militancy prevailing in Greater Central Asia including Afghanistan, have a potential to develop a sense of solidarity to stabilise the situation in the region and complement each other by their own advantages. But in geo- strategic sense, there could be almost inevitable for them to unfold a full-fl edged contest for both energy tapping and strategic leverage in the long run.23 Any reliably functioning platform for anti-extremism cooperation has not been well solidifi ed yet. Added to this, India’s initiatives to acquire military bases and forge security nexuses in Central Asia have had a telltale strategic overtone for China, apart from its growing interest in energy and strategic minerals acquisitions in Central Asia. To take a longer perspective, therefore, the nature of Sino–Indian interaction will eventually depend on whether both sides are able to coordinate their agendas and overcome the zero-sum effects in the conceived new ‘Great Game’. Downloaded by [University of Defence] at 01:36 24 May 2016

21 Wang Dehua, ‘China’s Peaceful Strategy in the Indian Ocean’, Social Sciences Comments, No. 12, Shanghai, 2008. 22 M. K. Bhadrakumar, ‘India Follows China’s Central Asian Steps’, Asia Times, 29 November 2004. 23 Sanjay Dutta, ‘Raising Bar: China Poses Threat to India’s Central Asia Gas Plan’, The Times of India, 26 June 2008; Zhang Guihong and Rong Tingrong, ‘From Contest to Win–win: China–India Contest and Cooperation in Central Asia’, South Asian Studies Quarterly, 4, Chengdu, 2008. 342 Zhang Li

The Look East Policy with Geo-strategic Connotations As one signifi cant thrust, India’s Look East policy has had multiple associations with China’s growing involvement in this robust region and has produced complex implications. In particular, the geographic coverage of the designed strategy has tended to expand to East Asia and the Asia–Pacifi c region as a whole, which enormously broaden the range and scale of engagement between Beijing and New Delhi. For China, India’s increasing access to the region offers some mixed signals in strategic sense. As its calibrated reaction, China seeks cooperation and mutual interests as well as being prepared to launch a ‘healthy competition’ with India in terms of the looming opportunities in the region by participating in the ASEAN-Plus mechanisms of free trade and development.24 At the same time, China has been seriously concerned about India’s strategic intentions and actual manoeuvres in the ASEAN region including running military programmes and cultivating security relations with the regional states. Some Recommendations China and India rising together in a strategic sense is, no doubt, a highly encouraging process in terms of its profound infl uence on and implications for the prevailing international politico-economic structure. Nevertheless, as examined and highlighted above, the workings of the outstanding issues regarding China’s engagement with India in the volatile regional and global context tend to keep this relationship unstable and uncertain. Thus, the best way of stabilising the relationship is to enhance mutual trust and confi dence by institutionalising their strategic engagements at the bilateral, regional and global levels. There is also a growing need for both sides to work together to address the outstanding problems coming in the way of achieving mutual benefi ts and friendly neighbourhood. Sustaining and deepening China–India strategic interaction will Downloaded by [University of Defence] at 01:36 24 May 2016 considerably infl uence the nature and the trajectory of the bilateral relations in the future. In terms of their aspiration and capacity to be among the global powers and substantially infl uence the global

24 Kang Sheng, ‘India’s Eastward to ASEAN: Implications for China’, Journal of Yunnan Government College, Issue 8, Kunming, 2006; Zhuang Rui, ‘China and India join Regional Economic Cooperation: A Comparative Analysis’, Contemporary Asia–Paciﬁ c Studies, Issue 2, Beijing, 2007. India Rising and China–India Strategic Interaction 343

politico-economic order, there is a perceived necessity for them to deepen their engagement at a strategic level in order to enhance mutual trust and stabilise the present relationship. After all, the enhancement of trust and conﬁ dence remains a key requisite for reaching consensus and achieving cooperation. The ﬂ ux of the regional and global scenario provides China and India both opportunities and challenges. Based on the analysis above, some recommendations are tentatively relevant and meaningful:

(a) To take pragmatic, ﬂ exible and decisive policy approach to addressing the border problem following the principles of mutual accommodation and reciprocal concessions: Both sides should work together for a paradigm shift from the ongoing ‘freezing’ one to the expected ‘resolving’ one by presetting reliable policy objectives for the special representatives’ talks on boundary; securing some irreversible progress; and striving for an early resolution of the border and territorial disputes. It is important to arrive at a consensus of perception on the status quo of the borders; key points of difference including the status of Tawang; the bottom line of security concern of each side; the enforcement of the signed political parameters for resolution; and the functions of special representatives mechanism on boundary and the Sino–Indian strategic dialogue. In the prevailing circumstances, it is especially important to clarify the central divergences and contributing factors and to enhance the level of military mutual conﬁ dence so as to jointly work towards a favourable settlement of the dispute in a positive way. (b) To enhance transparency and predictability of their respective strategies in South Asia: China’s encounters with India in Downloaded by [University of Defence] at 01:36 24 May 2016 South Asia will come to be a looming reality, sooner or later, and there is a raised expectation for reconciling their regional agendas for a constructive purpose. To be general, Beijing is well aware of the geopolitical uniqueness and designed interests India enjoys in South Asia. It is reasonably expected for China to continue its shifting course of South Asia policy featuring nurturing parallel relationships with India and Pakistan that started in the mid-1990s, and quest for 344 Zhang Li

a constructive role in facilitating the peace process of the subcontinent; base its policy reaction to the changing Indo– Pakistan relations as well as other major confl icts and crises in South Asia on issue-specifi c perceptions and assessments; and obtain more room for effective and acceptable diplomatic manoeuvre on an unbiased basis. It is true that Beijing has made efforts to nurture its partnerships with other nations in South Asia. For India, therefore, there is a realistic need to develop innovative thinking and understanding of China’s amplifying interests in the region and deal with it on a renewed footing. (c) To develop an accommodating and non-confrontational regional agenda to deal with each other: As two rising global powers and burgeoning geopolitical players, China and India unavoidably share some spheres of strategic infl uence and leverage along their peripheries and in the neighbourhood. These areas include Central Asia, the ASEAN region as well as the other part of South Asia. Given the perceived fact that China and India have incompatible or even clashing projections of interest in these regions, it is important to maximise room for cooperation and usher in healthy competition in the true sense, thus trying to replace the geo-strategic approach with one of geo-civilisation by properly using their soft powers. To do this, both sides need to respect each other’s core interests and security sensitivities. A concerted effort to seek tangible cooperation between them should be a welcome development in terms of the economic and security gains in these regions and beyond. (d) To advance coordination and cooperation in non-traditional security: Given that China and India, in the present scenario, have been unable to secure a visible breakthrough of mutual

Downloaded by [University of Defence] at 01:36 24 May 2016 trust in the areas of defence and conventional security, especially over the border problem and clashing geopolitical designs, it will be signifi cant for them to promote substantive cooperation in the fi eld of non-traditional security, which will greatly help expand the common ground and shape shared security concerns. The areas for cooperation, both existing and potential, range from targeting terrorism and extremism, fi ghting pirates and trans-border crimes such as narcotics and India Rising and China–India Strategic Interaction 345

arms traffi cking, jointly exploring overseas energy acquisition to enhancing nuclear confi dence measures and intensifying the global anti-proliferation effort. (e) To promote CBMs and avoid misperception and misreading of each other’s strategic intentions: As has been visibly perceived, the level of strategic trust and confi dence between Beijing and New Delhi remains relatively low and the trust defi cit is particularly apparent in the security and military areas. This ground reality necessitates a set of raised criteria to assess the effects and signifi cance of the strategic interaction. It requires both Beijing and New Delhi to envision differences, contradictions and clash of interests, either existing or potential, in a highly pragmatic and direct manner and identify the themes of dialogue of enduring concerns and dominating signifi cance. It may prove helpful for not evading, concealing and downplaying strategic divergences and trust defi ciency. A more frank and unreserved dialogue usually offers reliable rationales for policy makers and strategic communities to perceive, read and assess each other’s strategic intentions in the right manner. (f) To breathe more substance into the existing framework of Sino–Indian strategic partnership: So far, the high-profi le strategic negotiation and consultation between China and India have not truly become a regular and institutionalised regime despite several rounds of the strategic dialogue held in recent years. In the prevailing context, it is meaningful for both sides to deepen strategic engagement and broaden the range and scale of dialogue and consultation on the basis of their own interests and security calculations. It is a more credible, more effective and truly institutionalised platform of engagement that promises a healthy, stable and constructive Downloaded by [University of Defence] at 01:36 24 May 2016 bilateral relationship between Beijing and New Delhi. The achievement of this goal needs and merits a concerted endeavour. References Beal, Tim. 2006. ‘Using India to Keep China at Bay’, Foreign Policy in Focus. 12 December. 346 Zhang Li

Bhadrakumar, M. K. 2004. ‘India Follows China’s Central Asian Steps’, Asia Times. 29 November. Blank, Stephen. 2003. ‘Inherent Dangers in an “Asian NATO”’, Asia Times. 19 September. Buckley, Chris. 2008. ‘China State Paper Lashes India–U.S. Nuclear Deal’, Reuters India News. 1 September. China News. 2009. ‘Sino–Indian Border Talks need Prolonged Patience: Chinese Experts’. 7 August. http://news.southcn.com/international/gjkd/content/2009- 08/07/content_5510260.htm. Dehua, Wang. 2008. ‘China’s Peaceful Strategy in the Indian Ocean’, Social Sciences Comments, No. 12. Shanghai. Dutta, Sanjay. 2008. ‘Raising Bar: China Poses Threat to India’s Central Asia Gas Plan’, The Times of India, 26 June. Sheng, Kang. 2006. ‘India’s Eastward to ASEAN: Implications for China’, Journal of Yunnan Government College, Issue 8. Kunming. Guihong, Zhang and Rong Tingrong. ‘From Contest to Win–win: China–India Contest and Cooperation in Central Asia’, South Asian Studies Quarterly, 4. Chengdu. Hindu, The. 2008. ‘India, China Pledge Nuclear Cooperation’. 14 January. Hongyuan, Shi. 2009. ‘China–India–US Tripartite Ties: A Zero-Sum Game?’ Outlook Weekly. Beijing. November. Hongsheng, Wang. 2007. ‘How to Build a Harmonious Society: India’s Experience’, China and World Observer, Issue 1. Beijing. Hui, Liang and Tang Lu. 2009. ‘China’s Indian Ocean Strategy: A Debate among Chinese, US and Indian Experts’, International Herald Leader. Beijing. 10 March. Indian Express, The. 2007. ‘China Supports a Larger Indian Role in UN’. 25 October. Kiesow, Ingolf and Nicklas Norling. 2007. The Rise of India: Problems and Opportunities. Stockholm and Washington: Central Asia-Caucasus Institute and Silk Road Studies Program. Li, Zhang. 2009. To Manage Conﬂ ict in South Asia: China’s Stakes, Perceptions and Inputs. Sweden: Institute for Security and Development Policy (ISDP), pp. 65–75. October. Luce, Edward. 2006. In Spite of the Gods: The Strange Rise of Modern India. Random House. Downloaded by [University of Defence] at 01:36 24 May 2016 People’s Daily. 2007. ‘A “Goodwill” Joint Naval Drill?’ 21 April. Niazi, Tarique. 2006. ‘Sino–Indian Rivalry for Pan-Asian Leadership’, China Brief, 6 (4). Press TV. 2008. ‘China Voices Concern over US–Indo Deal’, Press TV. 2 September. http://www.presstv.ir/detail.aspx?id=68199§ionid=351020404. Qian, Wang. 2009. ‘India Enhances Military Deployment in Southern Tibet: Political Intentions and Strategy toward China’, Global Online. 26 July. http://bbs.yahoo.cn/read.php?tid=199616. Accessed 26 October 2009. India Rising and China–India Strategic Interaction 347

Rajan, D. S. 2008. ‘What China thinks about the N-deal Progress’, 24 July. http://www.rediff.com/news/2008/jul/24guest1.htm. Accessed 30 October 2009. Raman, B. 2009. ‘The Danger of the India–China Hysteria’, Rediff News. 8 September. http://news.rediff.com/column/2009/sep/08/the-danger-of-the- india-china-hysteria.htm. Accessed 26 October 2009. Rui, Zhuang. 2007. ‘China and India join Regional Economic Cooperation: A Comparative Analysis’, Contemporary Asia–Paciﬁ c Studies, Issue 2. Beijing. Tharoor, Ishaan. 2009. ‘India’s China Panic: Seeing a “Red Peril” on Land and Sea’, Time. 20 September. http://www.time.com/time/world/article/0,8599, 1924884,00.html. Accessed 28 October 2009. Yuyan, Zhang and Zhang Jingchun. 2006. ‘China–India Relations in Asian Economic Integration’, Contemporary Asia–Paciﬁ c Studies, Issue 2. Beijing. Downloaded by [University of Defence] at 01:36 24 May 2016 348 Hu Shisheng and Peng Jing

21 The Rise of China and India: Prospects of Partnership

Hu Shisheng and Peng Jing

In April 2005, the leaders of both China and India declared that both countries are committed to build up a ‘strategic cooperative partnership toward peace and prosperity’. However, this partnership has been mainly developed with regard to global economic issues. The political, security and social interactions of the two nations are still limited one way or the other and the efforts of building up ‘strategic partnership’ have been troubled and sometimes even derailed by various disturbances. In fact, Sino–India partnership is still very limited in many areas. Nevertheless, it is strongly believed that building up an unbreakable ‘strategic partnership’ is a must for both China and India to rise as global powers in non-occidental ways. The increasing common ground shared by these two countries will serve as the powerful adhesive to such partnership. This article dwells on Sino–India partnership in ﬁ ve parts, covering the conception of partnership, rationale of building up partnership, reasons behind the lack of a solid Sino–India partnership, evaluation of current Sino–India relations, and some approaches to substantiate Sino–India partnership in the future. On Partnership Downloaded by [University of Defence] at 01:36 24 May 2016 With the progress of globalisation and internet-isation, the world has become unprecedentedly interdependent. Country-to-country relations are more based on cooperation and coordination than confrontation or alliance. Hence more and more countries, out of their own national interests and in line with their respective strengths and position in the international systems, prefer to build up some kind of partnerships with others. In April 2005, the leaders of China and India also declared that they were committed to build up ‘strategic cooperative partnership toward peace and prosperity’. Sino–India Rise of China and India: Partnership 349

relations have thus started a new chapter. This emerging partnership between the two Asian giants has arrested global eyeballs and caused great concerns from the western world. Some American analysts saw this as a possible high-tech alliance that could threaten the US, arguing that ‘if present trends continue, both India and China might have economies larger than ours in the 21st century, there’s plenty of reason to pay attention to this nascent techno-military alliance’.1 What is Partnership? Partnership aims at mutual benefi ts and common progress via cooperation and coordination on equality. In today’s much more globalised world, this type of relationship, being much different in nature from traditional alliances, is based on the promotion of the respective development and progress of the involved parties. There are basic criteria to judge whether partnership has been built up between/among countries, such as common interests of realistic and outstanding signifi cance, full recognition of these common interests (including the approaches, priorities in materialising these common interests) and institutionalised mechanisms for realising common interests. Therefore, signifi cant common interests is the prerequisite for countries to build up partnership of any sort; full recognition of such common interests is the decisive factor in determining the quality of partnership (referring to the pace and depth of cooperation); while interest-coordinating mechanisms are the real substance and carrier of partnership. The so-called signifi cant common interests here should include strategic, political, economic, security and cultural interests. The guiding principles for a successful partnership are equality, cooperation, mutual benefi ts and interdependence. Some Remarkable Aspects in Building up Partnership First, common interests tend to alter in different times. Common

Downloaded by [University of Defence] at 01:36 24 May 2016 in-terests provide the basis for building up a partnership, and could be different when the partnering countries are undergoing distinct development phases, and when world trends are undergoing changes in different eras. As a matter of fact, partnerships built on refreshed common interests could be more shockproof, long lasting and time tested.

1 C. Rajghatta, ‘Natwar to Meet Bush on Thursday’, Times of India, 2005, http://timesoﬁ ndia.indiatimes.com/articleshow/msid-1076879,curpg-1.cms, accessed 3 July 2009. 350 Hu Shisheng and Peng Jing

Second, the stability of partnership relies upon mutual respect to and sensitivity towards each other’s core national interests. Third, partnering countries need neither to be consentient on every issue with each other, nor to be submissive to each other’s every concern. Safeguarding one’s own core national interests, which are often not alike, is still the utmost pursuit for a country to build up partnership with others. Hence, it is unrealistic to expect partnering countries to agree with each other in all their core national interests. What really matters for partnering countries is that they should jointly consult, mutually support and cooperate with each other on big issues which involve their core national interests. If much needed, it is better for partnering countries to make mutual, not unilateral concessions, on big issues which are related to their core national interests and have a huge potential to damage their partnership. Fourth, partnership excludes any sort of approach by force in addressing each other’s differences and disputes. In many issues, partners should get accustomed to agreeing to disagree. Common Interests as the Bedrock of Sino–India Partnership Generally speaking, the following four major common interests should be regarded as the bedrock of Sino–India partnership. First, to ensure that domestic development is not derailed in any way, and especially to ensure that economic development is on a healthier but fast track. Only development could lay down a solid physical base for both China and India to strategically rise. Thus, ‘development ﬁ rst’ becomes the shared kernel in their rising strategy. Second, to ensure that bilateral relations are stable and friendly in a long run. This is a must for both countries to cultivate a favourable external environment for their strategic rising. Third, to ensure the peace, stability and development in the sur-

Downloaded by [University of Defence] at 01:36 24 May 2016 roundings, especially in areas with overlapping national interests of both China and India. It is worthwhile to point out that South Asia-Indian Ocean and its rim is becoming more and more relevant in determining the rising pace and quality of both China and India. Fourth, to ensure that international systems and orders evolve in a favourable orientation. In fact, to establish gradually favourable international systems and orders, in which China and India both could have the ﬁ nal sayings, is the ultimate goal pursued by rising China and India. Globally speaking, it is safe to argue that only Rise of China and India: Partnership 351

China and India have the capacity to build up a non-occidental international system. The International Background of Sino–India Partnership The current international situation, in which Sino–India partnership would be built up and developed, is outstanding and unique compared to any time in history. This provides the necessity and unassailable logic for China and India to forge strategic partnership for the benefi t not only of their people, but also of the region and the world. First, the current world patterns are undergoing dramatic changes, due to three reasons. The fi rst reason is that non-state actors, such as terrorists, NGOs, multinationals and internet-izens have become active and infl uential in international politics. They are becoming more and more relevant in change of the international order, guiding rules of international relations and world strategic patterns. The second reason is the collective rise of not a few developing countries. As a matter of fact, the simultaneous rise of those developing countries is gradually changing the basic structure of international power balance, transforming the confi guration of international orders and neutralising the bloody confrontation history during the rise and fall of major powers. The example of BRIC shows that the rise of one country could be ‘of peace, by peace and for peace’ .2 It is becoming a prominent world trend in international relations that more and more non-occidental countries are challenging peacefully the dominance of western powers, especially in terms of development. Big power relations are entering into a new era, in which traditional powers and rising powers have to get accustomed to and adaptive with each other. The third reason is that this world faces so many transnational non-traditional security challenges which entail global cooperation

Downloaded by [University of Defence] at 01:36 24 May 2016 and coordination. Beside terrorism, climate change, the food crisis, energy and water shortage, epidemic diseases, natural disasters, etc. all require international joint efforts. For the sake of humankind, international cooperation and coordination has already become a popular trend in international politics and relations.

2 Yigui Wang, ‘Rising Together of China and India and its Impacts on International Politics’, International Review, April 2007. 352 Hu Shisheng and Peng Jing

Second, economic globalisation is undergoing new rounds of readjustment and restructuring. The world economy has come across various challenges and crises due to the structural contradictions accumulated in the process of economic globalisation, such as the out-of-order of globalisation process with more and more developing countries and regions being marginalised; the severe lack of global fi nancial management and supervision in particular; the increasing collision between natural resources (with energy in particular) consumers and producers (or providers); and the dramatic shifting of driving forces to globalisation from the developed countries to developing ones. But the utmost challenge is how to deal with the consequences of the shift of balance between developed economies and developing ones. The shifting of such balance would defi nitely entail a serious of restructuring and readjustment of global economic power balance, work-division regimes, trade relations, benefi t dis- tributions, international institutions, development modes, etc. G 8 has been formally replaced by G 20. This is the most recent example in this regard. Nowadays, the fi nancial crisis, energy security, food safety and climate change are all acutely challenging the development modes and approaches still practised by most countries. Several countries have been forced to make utmost efforts to ensure their social and economic development to be a sustainable take one. This kind of effort could be the revolutionary force to transform fundamentally the existent international economic systems. Third, the anxiety of the Euro–American world becomes very acute while facing the rapid rising of Chindia. It is safe to say that Euro–American countries will employ various strategic resources to safeguard their supremacy. For example, the fi nancial crisis provides them with a timely excuse to retreat from trade liberalism. It is more worrisome that the rightist conservatives in western societies are trying to rekindle (refresh) the Cold-War mentality. The recent shift

Downloaded by [University of Defence] at 01:36 24 May 2016 of the strategic focus of the Obama administration could also be regarded as a response to the rapid rising of China and India. On 6 August 2009, in his speech made at the Centre of Strategic and International Studies (CSIS), the principal adviser to President Obama on counter terrorism, John Brennan, refused to use the catchword ‘war on terrorism’ or ‘global war’ in deﬁ ning Obama’s national security strategy and foreign policy. He claimed that terrorism is ‘only one of the many multi-national challenges faced by this world in 21st century’, not the sole issue in the relations between USA and Rise of China and India: Partnership 353

other countries. Brennan also made it clear that the campaign against extremism is not one part of the ‘war on terrorism’, and there is clear difference between terrorists and jihadists (Brennan 2009).3 Brennan’s speech clearly indicated that the Obama administration has begun to shift its global strategic focus on anti-terror war. The reason behind this shift is not only because the current anti-terror war is diffi cult to win, but also because there are much more pressing challenges faced by the US, such as the rising of new powers, fi nancial crisis, cyber security, energy security, climate change, etc. Fourth, the geopolitical environment in Asia has become more complicated and dynamic. Not only are many Asian countries under dramatic political, economic, social and security transformation, but they are also unprecedentedly clustered in the same time period with Asian powers, including emerging ones and extant ones, like China, Japan, India, South Korea and ASEAN. Moreover, many powers are accelerating their strategic involvement in this region. For example, nearly all major players here have put forward some initiatives in mapping this region. The US has vigorously re-entered ASEAN and put forward the idea of an Asia–Pacifi c G 8; Japan has suggested to build up an ‘East Asia Community’ and even an ‘Asia–Pacifi c Network’ (in 30 years); Australia has offered to establish an ‘Asia–Pacifi c Community’ by 2020; and India has strongly proposed to set up an ‘Asian Economic Community’ and ‘Asian New Security Framework’. Asia, the habitat of so many powers clustered simultaneously, has become one unique arena for power games and a testing ground for various innovative initiatives, concepts and practices. Some Realities about Rising China and India It is well acknowledged that the rise of India and China is of strategic and global signifi cance, judging by whatever aspects. The population of India and China stands at 40 per cent of the world population.

Downloaded by [University of Defence] at 01:36 24 May 2016 The real development of China and India means the real development of this population. In recent years, especially during the economic crisis and depression, the economic growth of China and India has already become a very important driving force of the global economy.

3 John Brennan, ‘Partnership with Muslims based on Mutual Interest and Mutual Respect rather than through the Narrow Prism of Terrorism’, speech in CSIS, 6 August 2009, http://www.imra.org.il/story.php3?id=45025. 354 Hu Shisheng and Peng Jing

International politics is also becoming more and more democratic due to the rising of China and India. The most signifi cant prospect is that the comprehensive rise of China and India would fi nally compel the world to become more oriental. However, China and India look big but are really not strong; they seem strong but are still weak. The overall GDP fi gures show that both China and India are among the largest economies, but judging by their per capita GDP, they are still very backward.4 What is more alarming is that such development is not balanced; the severe disparity between rich and poor, rural and urban, coastal region and hinterland, environment and development, effi ciency and cost, limited natural resources and extensive industrialisation, foreign market and domestic consumption all show that in terms of development, China and India are still very backward, still need decades of effort and ‘out-of-the-box’ innovative approaches to catch up even with the world average, let alone with the developed countries. Moreover, the most important indicator for a global power is its capacity to lead the world with its own creative ideas or theories, while both China and India are still incapable in this regard. What is more challenging for China and India is that, although they are still developing countries in real terms, they are widely expected to carry more and more obligations and responsibilities as developed countries, especially on development issues, such as emission reduction, the working conditions for labour forces (human rights), fi nancial openness and market access. To sum up, China and India are both in the processes of industrialisation, urbanisation, informationisation (IT-based), marketisation and internationalisation. The enormous internal and external challenges and even risks faced by the two countries are beyond the imagination of those traditional powers. Downloaded by [University of Defence] at 01:36 24 May 2016 4 According to the IMF ranking (2008), in the ‘list of countries by GDP (nominal) per capita’, among 180 countries listed, China ranks 104 (with 3,529 used per capita GDP), India 143 (with 1,017 used per capita GDP). According to The World Bank, China ranks 98 (with 2,912 used per capita GDP) among 170 listed countries, while India ranks 131 (with 1,068 used per capita GDP). According to the CIA World Factbook (est. 2008), China ranks 119 (with 3,174 used per capita GDP) among 192 countries listed, while India ranks 146 (with 1,078 used per capita GDP). http://en.wikipedia.org/wiki/List_of_countries_by_ GDP_(nominal)_per_capita. Rise of China and India: Partnership 355

Reasons for the Lack of Partnership between China and India — After Establishing Diplomatic Relations After the establishment of diplomatic relations, China and India enjoyed a very short period of good relations demonstrated by the popular slogan ‘Hindi–Chini Bhai–Bhai’. However, the China–India honeymoon ended shortly. The Dalai Lama’s fl eeing and taking asylum in India in 1959; the border war in 1962; the Second and Third Indo–Pak War; and the Afghanistan War triggered by Soviet invasion in 1979, gradually, step by step, drove China and India into two confronting Cold-War camps in South Asia. The main reason for the long lack of partnership between China and India after they established diplomatic relations was that their confl icting interests overran their shared common interests. Generally speaking, at least three factors have contributed to the long lack of partnership between China and India after they established diplomatic relations. First, their core national interests confl icted severely. Both India and China had broken the colonial shackles nearly at the same time. Leaders of both countries had regarded sovereignty, integrity and territory unifi cation as their fundamental core national interests. Regretfully, their deep-rooted different perceptions on the Tibet issue and border dispute, their sensitiveness and assertiveness in safeguarding their respective core national interests, the immaturity in defi ning their sovereignty and national interests in western terminology and conceptions, and the lack of effective and effi cient consultative mechanisms, had all contributed to the fi nal confl icts between China and India in their core national interests. Second, the US–USSR Cold War reduced the possibility for China and India to quickly bury their differences. As a matter of fact, the two superpowers had taken the advantage to create contradictions

Downloaded by [University of Defence] at 01:36 24 May 2016 and stoke feuds between China and India. At one time, the US and USSR had competed to win over India. The 1962 border war made their work much easier, and ﬁ nally led to the formulation of two confronting Cold-War camps in South Asia: US–China–Pakistan on one side and USSR–India on the other. Even today, Cold-War leftovers are still hovering in South Asia, and still impact negatively the building up of a Sino–India partnership. Third, both countries lacked solid common interests. After independence, China and India had both made unremitting efforts 356 Hu Shisheng and Peng Jing

to stand on their own in nearly all areas. The two countries had little overlap and interaction of great signifi cance bilaterally, regionally and globally. China had not opened up to the world until 1979, and India until 1990. They, though bordering with each other, had lived back to back. The bilateral trade volume was a most persuasive argument in this regard. In 1990, the volume of China–India trade stood at US$260 million while in 2008, the fi gure stood at US$51.8 billion. Rationale for Rising China and India to Build up Partnership Being rising major powers, China and India have to build up their strategic partnership upon the kindly consideration of their respective national interests and sensitivity towards each other’s national interests in making their respective policies. Generally speaking, their national interests are quite similar. The key components of both countries’ national interests are maintaining healthy and sustainable economic and social development; safeguarding national security; protecting sovereignty, independence and territory integrity; and cultivating and maintaining a favourable international environment. Their overlapping national interests have bestowed their bilateral relations with great homogeneity, complementarity and stability. First, in terms of the strategic similarity. Ever since the beginning of this new century, it has been both China and India’s clearly established and to-be-realised strategic objective to become as soon as possible developed countries and important polars in a multi- polarised world. China hopes to build an all-round wealthier and comfortable society in the fi rst 20 years, while ‘India will get transformed into a safe and economically developed nation before the year 2020’.5 This shows that at least two leaderships happen to have the same judgement on their strategic opportunities for national Downloaded by [University of Defence] at 01:36 24 May 2016 development. Hence, it has become both countries’ strategic option in a considerably long-term period to strive for a more peaceful and favourable international environment, especially a more harmonious periphery, in order that both countries can concentrate on promoting comprehensive economic and social development. The homogeneity of their strategic requirements and options has greatly guaranteed

5 P. D. Patil, ‘National Awakening’, New Delhi, 14 August 2006. Rise of China and India: Partnership 357

their bilateral relations to be free of severe confrontations in the foreseeable future, and expanded substantially the common interests for both in maintaining stable bilateral relations and regional stability and development. This kind of strategic homogeneity has also increased their common languages in striving for more say and rule- making rights in the international system. Second, in terms of strategic complementarities. Due to different geographical locations, economic development modalities and political systems, these two countries have respective strengths and hence various complementarities of strategic signifi cance. Politically speaking, the diversity of their external political infl u- ences provides both China and India a vast space for political cooperation. Both countries have enjoyed better and solid mutual political confi dence among Asian–African developing countries with differentiated emphasis. China’s political infl uence is more focused in the Asia–Pacifi c region, Central Asia and Africa, while India gives more importance to South Asia, West Asia and the Indian Ocean Rim. Besides, India’s multiple-party democratic system has helped New Delhi indirectly in winning political proximity with and acceptability by the western world, while the political-cum- economical pattern of China has become much more appealing to the developing countries. These differences would enable both China and India to bring into full play their complementary advantages, and to some extent it would be more conducive for both countries to enhance their mutual strategic requirements towards each other. Generally speaking, China and India are emerging in ways totally different from the existing dominant powers. They have many more common lessons and experi-ences in development. Giving the consideration of their national situations, their mutual assistance, in the form of partnership, towards each other in the international arena could enable them to expand their respective strategic interests Downloaded by [University of Defence] at 01:36 24 May 2016 and strategic space in a much bigger way. This is just as what Indian Prime Minister Manmohan Singh once said during the visit of the Chinese Prime Minister Wen Jiabao to India in April 2005, that India and China could ‘reshape the world order’. The combined forces of China and India have the potential to create a new era for Asia and hence for the world. In the security area, the different threat perceptions of China and India have provided much room and many reasons to boost their 358 Hu Shisheng and Peng Jing

security cooperation. China’s core national interests converge in East Asia. China focuses eastward much more than elsewhere especially on military matters. This preoccupation is unlikely to change in the foreseeable future. However, the most signifi cant check of India’s development and strategic rise has long been from the South Asian region itself. But the situation has changed dramatically in favour of India. India’s peripheral environment in South Asia has improved markedly in recent years, since Pakistan, India’s arch rival, has been deeply bogged down in an anti-terror mire; Sri Lanka has ended its nearly 30-years’ civil war under India’s acquiescence; Bangladesh has wound up its political turmoil since the restoration of multi- party democracy in 1991; and in Nepal, all the parties, including the Maoists, have come to realise that any political regime cannot survive without India’s positive cooperation. But against this background, Sino–India relations have come across as unpleasant in recent years due to media hype and VVIPs’ remarks. The ‘China threat concept’ has been much played out in India’s media and security circles. Luckily, the two leaderships have a strong belief in the global and historic signifi cance of Sino–India strategic partnership. In this sense, it is quite obvious that increasing India–China security cooperation and understanding would greatly improve the regional environment for the rising of both countries. Besides, for China, much better bilateral relations with India will certainly make New Delhi exert more restraint on the Tibet issue. While for the Indian side, New Delhi hopes that solid Indo–China relations would be helpful in eradicating all the possibilities of China’s interference into Indian domestic diffi culties, such as the armed split-ist movement in northeast India and the extreme leftist violence plaguing Indian hinterland. Better Indo-China relations would also be conducive for India and Pakistan to normalise their relations.

Downloaded by [University of Defence] at 01:36 24 May 2016 In economic terms, China and India enjoy various complementarities, which have benefi ted and will still benefi t the two economies’ development. Different economic developing modes and phases, different saturation of internal markets, shared technological edges and abundant human resources are defi nitely helping China and India to cooperate effectively to attain mutual benefi ts, especially in providing the world with commodities at good prices and of high quality. Through combining India and China’s respective advantages, these two huge economies would be capable to change the world in Rise of China and India: Partnership 359

a fundamental way. As a matter of fact, both countries have already undertaken cooperation in pharmaceutical, textile, automobile, iron and steel and infrastructure industries. They have made full use of their respective strengths. However, since both China and India are rising rapidly and simultaneously, competition, and in some areas fi erce competition, is inevitable. This is vividly demonstrated in the international markets of various natural resources, energy in particular. The rocketing prices of various raw materials are more or less related to the good appetites of these two economies. But in order to prevent such competition from running out of control and from adding unnecessary extra burden on the rising of China and India, it is imperative for both countries to ensure such competition be healthier and, if possible, to transform this it into cooperation. The cooperation in the energy area has already set an excellent example for both countries to be partners in all the other areas in the future. India and China agreed in January 2006 to cooperate on overseas acquisitions of energy assets. The agreement grew out of their co-ownership of a Sudanese fi eld and their cooperative bid for fi elds in Syria. These joint pursuits are knitting together the interests of Asian state-owned oil and gas behemoths Oil and Natural Gas Corporation (ONGC) in India, and China National Petroleum Corporation (CNPC) and China National Offshore Oil Co. (CNOOC) in China. All in all, the more rapid development the two economies will have, the more mutual complementarities in various areas will China and India be able to enjoy. Third, in terms of the similarity of challenges. This is the solid political basis for both countries to build up strategic partnership during their rising process. Generally speaking, China and India would face two major challenges. One, is the restriction caused by the bottleneck of natural resources. In this regard, China and India

Downloaded by [University of Defence] at 01:36 24 May 2016 have abundant reasons to establish a kind of development alliance to jointly address this problem, including how to build up a cost- effi cient economy (low carbon-emission economy), how to establish environmental-friendly economic development modes, and how to fi nd new energy and new materials. It is unwise for China and India to expect a generous blessing from the western countries. We can only depend on ourselves to solve our similar problems and realise common prosperity. It should be imperative for China and India to cooperate in fi nding a way out especially under the technological 360 Hu Shisheng and Peng Jing

sanctions imposed by the western countries. As Indian Prime Minister Manmohan Singh once said, India and China could develop in a ‘mutually supportive manner’.6 The other challenge is the restriction imposed by the international system. It is quite natural that western-dominated international systems have various restrictions against the rising of India and China with huge populations. How to fi ght against the beating and hammering from the western countries could be the biggest logical reason for China and India to form a partnership in the global arena. Moreover, in recent years, especially after the fi nancial crisis, there is a kind of trade protectionism from the western world to guard against emerging economies like China and India. Their popular protectionist tools include a new quality control regime, new labour and environmental criteria, human rights, intellectual property rights, subsidy policy, emission reduction (related to climate change) and security concerns. Under such circumstances, it is all the more imperative for China and India to jointly fence against this negative trend and hold high the banner of free trade. All in all, it should be the most important strategic goal for China and India to jointly deal with the international system so as to reduce the competition tension and enhance their capacity to make full use of the favourable aspects and avoid the negative aspects of the existent international system, and make common efforts to reform the international political and economic system for the sake of not only the development and prosperity of China and India, but also of the world as a whole. In this regard, whether or not China and India could fi nally solve their historically bequeathed problems and disputes, it would not have and should not have any substantial negative bearing over their efforts in realising their strategic rejuvenation and global ambitions. Fourth, in terms of controllable and governable confl icts and friction,

Downloaded by [University of Defence] at 01:36 24 May 2016 Sino–India relations have become much more mature and submissive to their rising strategies.

(a) Border dispute has limited capacity in preventing China and India from cooperating in strategically important areas. Although

6 Joint Press Interaction by Prime Minister Manmohan Singh and Chinese President Hu Jintao, 21 November 2006, http://mea.gov.in/pressbrieﬁ ng/2006/ 11/21pb01.htm. Rise of China and India: Partnership 361

the belligerent remarks carried by various forms of media have cast some shadow over bilateral relations, some scholars are arguing that the border issue might once again hijack such relations. However, top leaders of both countries have met with and visited each other regularly, and important agreements have reached and signed periodically. It is worthwhile to point out that the border regions have been free of bullet shooting ever since 1967. In one word, charged with historically signifi cant missions and faced with historically unique strategic opportunities, the statesmen of both China and India would not allow the border dispute to disturb their strategic pursuits (to be global powers). Under this background, the capacity of the border issue to derail the bilateral relations has been signifi cantly reduced. (b) Out of geo-strategic consideration and out of the pursuit of diplomatic independency, it is very unlikely that New Delhi will ally with the US in Washington’s hedging China strategy, unless China forces India to jump into the American wagon. Just as Indian Foreign Minister Natwar Singh pointed out in the Shangri-La Dialogue in January 2005, it is outdated and nonsensical to judge Indo–China relations by the cliché of ‘balance of power’ and ‘confl ict of interests’. He also mentioned that both China and India have realised fully that a peaceful environment is of extreme importance to the development of both countries. Indian former External Affairs Minister Natwar Singh pointed out, in his inaugural address at the 7th Asian Security Conference held on 27 January 2005, There are many who look at India–China relations with the old mindset of ‘balance of power’ or ‘confl ict of interests’ and see East Asia as a theatre of competition between Downloaded by [University of Defence] at 01:36 24 May 2016 these two countries. Such theories are losing relevance in today’s fast-emerging dynamics of Asia’s quest for peace and prosperity. He also mentioned that, both China and India are mindful of the overarching importance of a peaceful surrounding environment for them to pursue their most fundamental task of national development. These remarks hold water. 362 Hu Shisheng and Peng Jing

(c) Economic friction is a natural by-product of closer interaction. Trade problems, such as anti-dumping and anti-subsidy issues, unbalanced trade relations, new business visa regulations, ‘market economic status’ issue and market access complaints are, in fact, all the natural concomitant disputes of much closer bilateral economic interactions, and they could only be addressed and settled through more interaction. All the more importantly, the present scale and level of the bilateral economic and trade cooperation is still disproportionate to the comprehensive economic strength and potential of both economies; in the foreseeable future, the mainstream of the bilateral economic and trade relations will still be cooperation with mutual beneﬁ ts, not competition with mutual damage. More importantly, for the sake of peaceful rising in the long run, both countries have to transform zero-sum competition into a win–win situation by all means. (d) It is of vital importance to maintain internal stability and development. Rapid economic development and comprehensive interaction with the world have brought dramatic changes in the two societies. This unprecedented rapid process has either given birth to various social problems or made the existing problems much more acute, and pose tremendous challenges to each other’s rising strategy. In China, the social disturbance has been demonstrated mainly in the form of violent mass demonstrations, including ethnic riots in some regions concentrated by ethnic minorities. In India, the social disturbance has been mainly displayed by ‘four “evil” forces’, referring to the ethnic split-ists, religious extremists, radical leftists and deadly terrorists. In this sense, both China and India will, in the long run, have to be more concentrated in addressing their own internal affairs with social stability in particular. Downloaded by [University of Defence] at 01:36 24 May 2016 The good neighbourhood policies practised by both countries are submissive to internal stability. (e) There is no logical necessity to strive for regional dominance. Under the current circumstances, the proﬁ t from obtaining the dominant position is remarkably decreasing, while the price to be paid for it has increased remarkably. Moreover, there are many heavyweight players in the strategic arena. Besides the US, there are Japan, Russia, Australia and ASEAN. Rise of China and India: Partnership 363

This scenario has further enhanced the difﬁ culty for China and India to compete for dominance in Asia. As a result, the chance of strategic partnership between China and India in this region has increased.

To sum up, the rising together of China and India has provided much more space and potential for their strategic partnership although Sino–US relations are the most important bilateral relations in the world. In the future, Sino–India relations will be one most important bilateral relations unless one of them collapses (like the USSR) or stops in progress. Keeping this much larger picture in mind, both countries have to avoid confrontation and rivalry, and turn the strategic overlaps and competitions into cooperative partnership. Moreover, if China and India could make common endeavours in fi nding a different rising model from the westerners’, not only their own peoples but also the entire humanity would benefi t. In fact, it is the obligation of both countries with centuries-old civilisations and sagacious wisdom to pave a new way for this world, to build a world free of confl ict and poverty, glittering with harmony and enjoying common prosperity and progress. Approaches to Build up Sino–India Partnership Review on the Current Sino–India Relations The outstanding characteristics for current Sino–India relations are as follows: First, Sino–India relations bilaterally look like an upside-down triangle. Top leaders and ministers are much more active in promoting Sino–India relations, while the two civilian societies have a very limited positive role in this regard. In recent years, the media has played a negative and hostile role in disturbing Sino–India Downloaded by [University of Defence] at 01:36 24 May 2016 relations. Bilaterally speaking, top leaders meet regularly on multilateral forums. Besides mutual visits, leaders of both countries have many occasions to meet each other every year, such as in the UN assembly, G 20 summit, SCO summit, East Asia Summit and G 8 summit. Leaders of both countries have attached great importance to Indo– China relations. For example, in July 2009, during the fi rst BRICs summit held in Russia, Indian Prime Minister Manmohan Singh told 364 Hu Shisheng and Peng Jing

Chinese President Hu Jintao that ‘India will give top priority to its relations with China’. There are various governmental dialogues at the vice-minister level, such as ‘defence and security consultation’, ‘fi scal and fi nancial dialogue’, ‘strategic dialogue’, ‘foreign policy consultation’ and ‘special representative dialogue on border issue’. A hotline has been established between the two foreign ministers, and the two prime ministers have also decided to set up one. Both sides have signed several important documents; the leaders of both countries agreed to establish a ‘strategic cooperative partnership for peace and prosperity’ and signed ‘Political Parameters and Guiding Principles on Border Issue’ in April 2005 during Chinese Prime Minister Wen Jiabao’s visit to India; the two leaders agreed to the ‘Ten Strategies’ to deepen ‘strategic cooperative partnership’ in November 2006 during Chinese President Hu Jintao’s visit to India; the two leaders agreed upon a ‘Shared Vision for the 21st Century’ in January 2008 during Indian Prime Minister Manmohan Singh’s visit to Beijing. The two prime ministers agreed to cooperate on ‘climate change’ in October 2009, during the East Asia Summit. Besides, there is an increasing number of Chinese ministerial delegations to India. In 2007 and 2008, there were about 40 and 60 Chinese ministerial delegations, respectively, visiting India. More importantly, military exchanges have witnessed remarkable progress, such as the ‘defence and security consultation’, anti-terror military drillings between two armies, joint military exercises between two navies (they have already been held thrice), mutual visits between defence ministers and other high offi cers. The most signifi cant confi dence-building measures (CBMs) should be the visits of Indian generals, who are in charge of disputed border regions. In September 2009, there were four Indian generals visiting Beijing, Chengdu and Lhasa. This was the second time for Indian generals, commanding frontier corps deployed along Sino– Downloaded by [University of Defence] at 01:36 24 May 2016 India disputes regions, to visit Tibet. This clearly indicates that China and India have enjoyed very high mutual understanding and mutual trust at the military level. However, there is severe lack of people-to people-exchanges between the two countries. In recent years, only about 600,000 people have visited each other annually, with Chinese to India comprising only one-tenth of this number. If two peoples misunderstand each other, they are prone to be misguided by media hype.7 The results of the Rise of China and India: Partnership 365

Pew Global Attitudes Project in 2006 showed that 43 per cent Indians have negative perspectives toward China.8 A survey carried out by Indians also showed that in 2002, 26 per cent Indians tended to regard China as a non-friendly country, while the fi gure in 2006 increased to 66 per cent. This kind of public opinion would defi nitely prevent the improvement of bilateral relations, let alone forming a partnership. Second, China and India have little substantial cooperation regionally. The existing regional organisations involving both India and China are neither full of dynamics, such as the SAARC (lack cohesiveness and progress for years), Kunming Initiatives (although the four members have held eight rounds of conferences, there is little progress, even the highly hyped Kunming–Kolkata car rally has still not materialised), ‘China–South Asia Business Forum’ (four conferences have already been held in Kunming, but only the Chinese side is very active), nor encouraging vigorous cooperation between China and India, such as the East Asia Summit (the focus is still on East Asia issues), the SCO (the focus is still on regional issues related closely to China, Russia and Central Asia). As for the very much relevant ‘Indian Ocean Navy Forum’, India refuses to permit China to participate by arguing that China is not an Indian Ocean rim country. This is very negative for China and India to formulate a partnership, since the national interests of rising China and India have been overlapping more and more. Without any effi cient consultative mechanism on regional issues, it would be very diffi cult for China and India to build up mutual understanding and mutual trust, and fi nally enhance substantial cooperation. Third, China and India are becoming strategic partners in many global issues, especially in issues related to development. The two Downloaded by [University of Defence] at 01:36 24 May 2016

7 M. Nalapat, ‘U.S. and India Consider “Asian NATO”’, http://archive. newsmax.com/archives/articles/2003/5/29/162032.shtml, accessed 20 May 2009; D. Scott, ‘Sino–Indian Security Predicaments for the Twenty-First Century’, Asian Security, 4 (3), September 2008, pp. 244–70; B. Verma, ‘China May Attack India by 2012’, 13 July 2009, http://www.breakingnewsonline.net/2009/07/expected- new-war-inbetween-china-and.html, accessed 10 August 2009. 8 K. Mahbubani, ‘Can China Develop a Vision for Asia?’ in Wang Jisi (ed.), China International Strategic Review, Beijing: World Affairs Press, 2009. 366 Hu Shisheng and Peng Jing

countries have built up close cooperation in such global issues as reforming and reshaping international economic and trade orders, reforming the fi nancial system, pushing forward the Doha round of dialogue, addressing the fi nancial crisis, fi ght against climate change and the western pressure on this issue, deal with energy and food security, and human rights and development. The driving force for China and India to form a global partnership in all these issues is the same with similar challenges faced by China and India while globalising. They have to join with each other. The Sino–India global partnership is still concentrated in economic and social development areas. These two countries continue to have many mutual misunderstandings and suspicions in international political and security areas. In the ideological area (value), a multi-party democratic India tends to view the one-party authoritative China through a western perspective, that is, India would like to look at itself as ‘us’ and China as ‘others’ in the existing international system. The ideological differences, if not handled properly, might discourage India, to some extent, in cooperating with China in a more proactive way. To sum up, there are two driving forces for China and India to build up partnership. One is that China and India have more and more shared interests and common ground in the international sphere; the other is that top leaders are committed to promoting partnership for their ‘rising’ strategy. In this sense, China–India relations have possessed some essentials of partnership, but not enough. The lack of people’s support makes Sino–India relations appear as not very stable and sustainable. Some Outstanding Factors Preventing China and India from Forging Close Partnership

Downloaded by [University of Defence] at 01:36 24 May 2016 Sino–India partnership faces various restrictions from three different levels. Bilaterally, these two countries have been troubled by the border dispute and trade imbalance. Regionally, the ‘third-party factor’ and ‘Indian Ocean factor’ have some negative bearing on China and India relations. The India side often argues that China is carrying out ‘encircling-India’ foreign policies, while the Chinese side sometimes argues that India clubs with the US, Japan and Australia to check the rising of China. Globally speaking, due to China’s not-so-determined attitude towards India’s efforts in seeking permanent membership of the UN Security Council and nuclear power club, India tends Rise of China and India: Partnership 367

to believe that China does not want to see India’s rise, let alone support India’s big power ambitions. Hence, many scholars from both China and India tend to believe that the ‘strategic cooperative partnership’ is still a long-term goal, requiring unremitting efforts from both sides. There are several reasons preventing China and India from cooperating as close and strategic partners, although top leaders of both countries have believed that Sino–India partnership is a must for their emerging as global powers, although the grim international reality has required that Sino–India partnership be one organic part of their rising strategies. First, they have different understandings and perspectives on their historical legacies, mainly related to the Tibet and the border issue. According to the Chinese side, the two countries had never demarcated their border; the McMahon Line is the legacy of British colonialism, which has not been recognised by successive Chinese governments and should be rectifi ed or abolished. China and India should settle their border issue through negotiations; both geographical factors and historical factors were very relevant. However, the Indian side believes that China should reciprocate India’s goodwill in giving up all its rights and privileges in Tibet (inherited from the British India Empire),9 by recognising the McMahon Line; the 1954 agreement recognised India’s claim on the border issue, thus there is no need to undergo new rounds of negotiations on this issue. These perceptions naturally led to the ‘forward policy’ of the Indian government in the 1950s and fi nally resulted in border confl icts and even war. The ‘1962 border war complex’ among Indian people even today prevents

9 A. Bhattacharya, ‘India Reveals Flawed Tibet Policy’, 7 December 2007, http://www.atimes.com/atimes/South_Asia/IL07Df01.html; Swaran Singh, ‘Three

Downloaded by [University of Defence] at 01:36 24 May 2016 Agreements and Five Principles between India and China’, http://www.ignca. nic.in/ks41062.htm, accessed 9 August 2011. Singh pointed out in this article that, in April 1954, Chinese and Indian leaders signed an ‘Agreement between the Government of the Republic of India and the Government of the People’s Republic of China on Trade and Inter-course between Tibet Region of China and India’. In this agreement, India gave up its military, communications and postal and other rights which New Delhi had inherited from the British in accordance with the Anglo-Tibetan Treaty of 1904. After the second British invasion against Tibet, Indian Prime Minister Jawaharlal Nehru tended to believe that this agreement is the recognition of the existing situation. This had been his major argument repeatedly explained to the people and the politicians. 368 Hu Shisheng and Peng Jing

the Indian government to make any settlement on the border issue based on mutual understanding and concessions. The two countries missed an important opportunity to settle the border issue during the ‘Hindi–Chini Bhai–Bhai’ days. Second, different developing phases and modes between China and India, especially in the manufacturing fi eld, have led to the imbalance of bilateral trade and economic conservatism. Due to the much improved infrastructure and the large-scale effect, China is more advanced in manufacturing industry than India. The same item is about 35–40 per cent cheaper in price if produced by Chinese manufacturers than by their Indian counterparts. Chinese commodities are hence very competitive as compared to Indian ones. This scenario led to the rapid increase of India’s trade defi cit with China. In 2004, India still enjoyed a trade surplus (of US$1.7 billion) with China, while in 2008, China’s trade surplus with India increased to US$11.2 billion. The rapidly increasing trade defi cit with China has deeply worried the Indian business and political circles. They have hence become more conservative in granting market access to China. Former Indian Prime Minister A. B. Vajpayee put forward the idea of building up the India–China Free Trade Area in 2003 during his visit to China. However, after India’s unfavourable balance bilateral trade with China, the Indian government and Indian business communities have gradually cooled down regarding reaching an FTA or regional trade arrangements with China. Although the feasibility report on Regional Trade Arrangement was completed and submitted to each other’s central government in October 2007 by the Sino–India Joint Research Group, which was set up after Chinese Prime Minister Wen Jiabao’s visit to India in April 2005, there has been no progress henceforth. What is more worrisome is that India has increased anti-dumping and anti-subsidy censoring cases against more and more Chinese Downloaded by [University of Defence] at 01:36 24 May 2016 products; in recent years, even those produced in some third-world countries have not been spared. In the fourth quarter of 2008, the number of anti-dumping cases against Chinese goods equalled to that of the whole year of 2007, and the amount of value involved in each case was signifi cant. Since the December 2008, India kicked off more and more investigations on special safeguard measures against some export items from China to India. For example, from 19 December 2008 to 6 February 2009, India launched successive Rise of China and India: Partnership 369

investigations on special safeguard measures against China-made linear alkyl benzene, calcined soda, aluminum plate and aluminum foil, and nylon curtain cloth imported by India. India also started anti-subsidy censoring against sodium nitrite exported to India from China, and issued an ordinance to prohibit the import of toys made in China. These investigations are more harmful than the traditional anti-dumping and anti-subsidy censoring. The former enables the relevant departments to take ‘protection fi rst, investigation later’ measures, while the latter practises ‘investigation fi rst and protection later, if necessary’. In this regard, it is very ‘easy’ for the investigators to get negative results against Chinese goods. Third, the Cold-War mentality still has some role in disturbing the build-up of the Sino–India Partnership. The concepts of ‘infl uential sphere’, ‘zero-sum game’, ‘natural barrier’, ‘buffer zone’ and ‘balance of power’ still have not a few believers. For example, the theory of ‘balance of power’ still has many followers in both countries. Whether using Pakistan to counterbalance India or to form an ‘Asian NATO’ to counterbalance China, Cold-War mentality is still popular one way or the other. As another example, scholars in the security circle, especially in India, still believe that the Himalayan mountain ranges should serve as the ‘natural barrier’ between China and India. This ‘natural barrier’ should not be penetrated by various physical connectivities such as the highways, railways and pipelines. The concept of ‘buffer zone’ is closely related to it. In the past, the British Indian Empire regarded Tibet as the ‘buffer zone’ not only between India and China but also between Britain and Russia. Independent India has carried forward this ‘buffer zone’ idea. Even today, any development in China’s relations with these Himalayan ‘kingdoms’ would entail great concerns and knee-jerking counter actions from India. Fourth, it is of vital importance to take full consideration of Downloaded by [University of Defence] at 01:36 24 May 2016 domestic pressure during internal and external transitional periods. On the one hand, the central authorities have become weak during the current social, economic and political transitions in the two countries. Foreign policies are affected by domestic factors, such as nationalism, regionalism, public opinion, social resentment and departmental interests. Leaders have to take consideration of do-mestic factors while making decisions on very sensitive issues, including foreign policies. On the other hand, the region China and India are located 370 Hu Shisheng and Peng Jing

in is also undergoing dramatic changes. Both China and India are still not too sure as to what kind of regional roles they should play. Both countries are more sensitive and suspicious towards each other’s regional strategic intentions. Fifth, it is unavoidable for countries to have mistrust or suspicions of their emerging neighbours. They are worried that their national interests may be damaged or eroded by their rising neighbours. During the Cold War, the USSR was the ticklish neighbour which China had worried much about; nowadays, rising China has incurred great uneasiness and concerns from Japan. Also, it can be noticeably felt that Indian neighbours are very worrisome about a rising India. Sixth, different political cultures and systems have negative impact on the mutual understanding between China and India. Judging by political mentality or psychology, India has been recognised by westerners and by itself as a member of the western system, while China is still one member among ‘others’. Indian elites would rather look at China through the westerners’ perspective, than buy the arguments of the Chinese. As for the role of the media, the Chinese think that Indian authorities have the capacity to control belligerent rumours or remarks diffused by the Indian media, while the Indian side tends to strongly believe that all the remarks made by the Chinese media, including on the internet, have the approval of the Chinese authority. Seventh, the vicious propaganda of Sino–India competition by the westerners also led to mutual misunderstanding between China and India. In the past decade, Sino–India comparative studies has become a popular theme in the international community. However, not a few westerners have deliberately portrayed rising China as the rival of rising India in such studies. They would like to see these two rising powers compete with each other. Out of political sympathy, Downloaded by [University of Defence] at 01:36 24 May 2016 they would like to see India ﬁ nally defeat China. It is beyond their imagination that two neighbours with pending border disputes could peacefully coexist with each other and rise simultaneously. Such vicious comparison has cultivated mutual mistrust or suspicion. For example, the so called ‘string of pearls’ strategy was initially minted by an unknown analyst in Pentagon, and then was stirred up by various scholars, especially Indian scholars. Rise of China and India: Partnership 371

Some Thoughts on How to Build Up a Strategic Partnership between China and India Cultivating Sagacious Understanding and Perceptions towards Sino–India Partnership First, competition does not mean confrontation. China and India should establish a benign and fair competition mechanism, in line with international practices, regulations and their respective national situation. Second, the rise of China is an opportunity for the rise of India and vice versa. Third, both China and India have colonial history and long and rich cultures and civilisations and, most important, they are the major benefi ciaries of globalisation. So, the rising of these two countries would be totally different from the rising of Germany and Japan in the 19th century and the US in the 20th century. Fourth, there is enough space for China and India to cooperate, since their core national interests do not overlap in many areas. Fifth, with the expanding of each other’s overseas interests, it is inevitable for both China and India to enter each other’s ‘areas of core national interests’ or ‘traditional infl uential spheres’. Both countries have to live with this development. Sixth, the Sino–India partnership is of strategic and global signifi cance. The two countries should not discount such importance. Seventh, cooperative partnership in other areas could build up high-density interdependence, which could be conducive and catalytic in settling border disputes. Constructing a Regional Integrated Production and Marketing Network, making Full Use of Each Other’s Respective Strengths in a Comprehensive and Synergic Way

Downloaded by [University of Defence] at 01:36 24 May 2016 The Chinese labour force has high productivity, while India is quite effi cient in capital utilisation. Chinese manufacturing is very advanced and competitive, while India has been rapidly developing into a global IT powerhouse. The much more developed (especially compared with China) software industry of India has already turned India into the ‘world back offi ce’. So, the combination of the two economies could defi nitely produce ‘economic added-effi ciency’. There are two approaches to smooth Sino–India trade and economic relations. One is to establish more joint ventures in areas full of potential or actual 372 Hu Shisheng and Peng Jing

fi erce competition. The other is to review the trade defi cit issue in a larger picture of bilateral economic relations. India and China should, besides, take the lead in developing the extended regions, including China and South Asia, into one interdependent and integrated market and production base, to pool and utilise all the resources in this region for development and prosperity. One of the effective ways to improve the SAARC’s performance and Sino–India strategic mutual trust could be a co-driver mechanism in SAARC. That is to say, China and India could both act as one of the drivers of the SAARC; this co-driver mechanism would operate on consensus among the SAARC members. The mechanism could dilute the maximum mistrust between small members and India and hence could be conducive in promoting the integration of the SAARC region. Building up Physical Connectivity between China and India China and India and all the other SAARC members would be connected into one development community within and beyond through the highways, railways, grids, optical fi bres, pipelines and river networks, which would lay a solid foundation for China–South Asia economic integration, social interaction and people-to-people engagement, just as what happened between China and ASEAN. It is worthwhile to point out here that while China is all set to expand its railway network up to the Nepal border by 2020, India has come up with an even more attractive plan to put Nepal, Pakistan and Bangladesh in its railway network. This ambitious proposal was fl oated by the Indian Minister of State for Roads, Transport and Railways, R. P. N. Singh to the transport ministers of SAARC states in Colombo in mid-July 2009. In the meeting, it was asked of SAARC countries to declare the next decade (2011–2020) as

Downloaded by [University of Defence] at 01:36 24 May 2016 the ‘Decade of Intra-regional Connectivity in SAARC’. The time period envisaged by this SAARC meeting overlaps with the ‘China Mid-term and Long-term Railway Network Scheme (2003–2020) (2008 Revision)’. According to the Chinese scheme, by the end of the 12th Five-Year Plan (2011–2015), the Lhasa–Xigatse and Lhasa–Linchi railway lines will be completed and be connected with the Lhasa–Geermu (Qinhai–Tibet) railway; and by the year 2020, China would have at least two railway linkages to South Asia: one to Nepal via Lhasa–Kotari, the other to India via the Rise of China and India: Partnership 373

Yadong-Natula Pass–Gangtok. Besides, there are two more railways into South Asia beyond 2020. One railway linkage is via Myanmar to be connected with the railways within India and Bangladesh; the other is the China–Pakistan railway linkage. From this scheme, we can see that by the end of 2020 there will be one straight railway linkage, running along the territory not far from the southern border with SAARC countries, from Kunming to Lhasa and then to Kashgar in Xinjiang, ﬁ nally entering Central Asia. From this horizontal railway, there will be several lateral railways extended into Myanmar, India, Nepal and Pakistan. Establishing an Institutionalised National Interest Coordination Mechanism, and Setting up more Communication Channels These need to be established especially in areas where their national- interests overlap. Hence, it is necessary to set up such dialogue channels as the India–China Dialogue on South Asia and China– India Indian Ocean Forum to make the strategic intentions of both countries in each other’s ‘traditional domain’ to be fully understood, so as to reduce negative knee-jerking reactions and to dispel conspiracy fabrications. Increasing Popular Culture Cooperation and People-to-people Interaction between China and India This needs to be increased in the areas of NGOs, mass media, entertainment (joint production of movie and TV programmes, jointly run TV channels), tourism (promotion of Buddhist history and culture trips, including Nepal, India, China and Pakistan), and education (professional trainings, tele-education). The cooperation in popular culture would greatly increase people-to-people understanding and create a favourable atmosphere for inter-governmental cooperation. Downloaded by [University of Defence] at 01:36 24 May 2016 Taking the Lead Role and Responsibility, through Coordination and Consultation, in Addressing and Solving the Regional Non-traditional Challenges Such challenges include ecological protection, food security, energy shortage, water crises, ﬁ nancial tsunami, climate change, natural disaster and narcotic issues. Moreover, China and India could be more generous in granting market access to the products from all 374 Hu Shisheng and Peng Jing

the other SAARC members and Indian Ocean rim countries, and at the same time build up a better compensation mechanism for those under developed ones during the marketisation process. India and China should make more contributions in poverty elimination and infrastructure construction in this extended region. It is the obligation and responsibility of China and India to prove to the international community that they could rise ‘by peace, of peace and for peace’. Being from two ancient civilisations, the two peoples have the wisdom, capacity and courage to pave a brand-new way for the vast developing world to achieve common prosperity, stability and peace through partnership. References Bhattacharya, A. 2007. ‘India Reveals Flawed Tibet Policy’. 7 December. http://www.atimes.com/atimes/South_Asia/IL07Df01.html. Accessed 17 August 2011. Brennan, John. 2009. ‘Partnership with Muslims Based on Mutual Interest and Mutual Respect rather than through the Narrow Prism of Terrorism’, speech at Centre of Strategic and International Studies (CSIS). 6 August. http://www. imra.org.il/story.php3?id=45025. Accessed 17 August 2011. He, Jingru. 2009. ‘Toward Great Rejuvenation (the Splendid 60 years of China), People’s Daily. http://cpc.people.com.cn/64093/64387/9818246/html. Accessed 3 July 2009. Mahbubani, K. 2009. ‘Can China Develop A Vision for Asia?’ in Wang Jisi (ed.), China International Strategic Review. Beijing: World Affairs Press. Nalapat, M. 2003. ‘U.S. and India Consider “Asian NATO”’. http://archive. newsmax.com/archives/articles/2003/5/29/162032.shtml. Accessed 20 May 2009. Patil, P. D. 2006. ‘National Awakening’. 14 August. New Delhi. Rajghatta, C. 2005. ‘Natwar to Meet Bush on Thursday’, Times of India. http://timesoﬁ ndia.indiatimes.com/articleshow/msid-1076879,curpg-1.cms. Accessed 3 July 2009. Scott, D. 2008. ‘Sino–Indian Security Predicaments for the Twenty-First Century’, Asian Security, 4 (3): 244–70. September. Downloaded by [University of Defence] at 01:36 24 May 2016 Singh, Swaran. 2008. ‘Three Agreements and Five Principles between India and China’. http://www.ignca.nic.in/ks41062.htm. Accessed 9 August 2011. Verma, B. 2009. ‘China May Attack India By 2012’. 13 July. http://www.breaking newsonline.net/2009/07/expected-new-war-inbetween-china-and.html. Accessed 10 August 2009. Wang,Yigui. 2007. ‘Rising Together of China and India and its Impacts on International Politics’, International Review. April. Where are India–China Relations Heading? 375

22 Where are India–China Relations Heading?: A Futuristic Outlook

Ranjit Gupta

China and India are the world’s two most populous countries. They are the two largest countries of Asia and are neighbours. They have impressively fast growing economies. There is every likelihood of their becoming the largest and third largest global economies, respectively, in the next two or three decades. A partnership relationship between these two countries is virtually an imperative for peace and prosperity not only for the 2 billion plus people of China and India but for the people of Asia as a whole and indeed the world. As a diplomatic practitioner for the past four decades, it is my ardent desire that this is what the relationship should evolve into. This is an objective that the governments of the two countries must consciously work at to achieve. But is it likely to happen? My article seeks to answer this question. For the average Indian citizen, the ‘visible’ aspects of Sino–Indian interaction and relations necessarily constitute the primary touchstones of assessing China’s intentions, motives and policies towards India. It is these ‘visible’ aspects that I portray in my article. Perceptions arising out of these realities are of enormous signiﬁ cance in a democracy like India and may well become more signiﬁ cant drivers of the relationship than the viewpoints of policy makers and academics. In a democracy

Downloaded by [University of Defence] at 01:36 24 May 2016 it is particularly important for the government and the public not to be out of sync. In an age of instant communication, an activist media and a surfeit of unveriﬁ ed information, the consequences of such dissonance could be particularly dangerous. In addition, as a former diplomat, personal observations and experiences in the context of seeing policies getting translated into ground realities; information that became available in the discharge of professional responsibilities both at headquarters and in missions abroad; and insights gained through intensive interaction with peers 376 Ranjit Gupta

from different countries with different perspectives have provided me with additional dimensions to the understanding and appreciation of issues relating to Sino–Indian interaction, as well as to perceptions of China’s historical background and policy motivations. I have endeavoured to put all this into a structured format in this article. The style, format and the nature of my presentation, which is from the perspective of a diplomatic practitioner, is necessarily very different from an article written by a scholar, researcher or academic. It is my conviction that my inputs will provide added value to discussions in conferences and seminars, including to the printed product thereof. Policy makers and scholars must take them on board while considering issues of Sino–Indian relations. At the very outset, it is useful to pose and answer questions such as — What have been China’s and India’s approaches to relations with and perceptions of each other’s value systems, worldviews, strategic objectives, etc.? The answers provide an invaluable backdrop to a review of China–India relations and interaction over the past 60 years in their bilateral, neighbourhood, regional and global dimensions. This would enable the drawing of an objective picture of the realities of the relationship and contrast those realities with the rhetoric which has and continues to envelop it. An objective assessment of these inputs would lead to a virtually automatic conclusion as to whether a ‘partnership’ has existed in the past, exists today or is likely to exist in the future. Background China is the only country in human history that has been a unitary political entity without interruption for over 2,200 years. This has been possible because strong central and authoritarian rule domestically and domination of the neighbourhood have been the mantras of Chinese rulers. These characteristics constitute the essence of

Downloaded by [University of Defence] at 01:36 24 May 2016 China’s historical and civilisational political legacy and the pivotal centrality of the Chinese State both in the domestic as well as external contexts since the beginning of recorded history. Hierarchy is a very important concept in the Chinese worldview. China has traditionally seen itself as the Centre of the Universe. The acquisition, accumulation, consolidation and ruthless exercise of power have been the basis of the Emperor’s enjoying the Mandate of Heaven to rule over not only China but its vast periphery and the ‘barbarians’ residing therein. Both historically and in the modern era, China’s Where are India–China Relations Heading? 377

rulers have come to and stayed in power through violence and force. All of this has become an integral part of Chinese tradition. Shorn of ideological shrouds, policies of the new People’s Republic of China (PRC) have been motivated by these legacies and traditions and moulded by cold calculation of national interest under a no-nonsense, unsentimental, realist leadership. The great historian R. C. Majumdar highlighted another feature of the traditional Chinese way of perceiving and feeling, thinking and acting:

There is, however, one aspect of Chinese culture that is little known outside the circle of professional historians. It is the aggressive imperialism that characterized the politics of China throughout the course of her history, at least during the part of which is well known to us. Thanks to the systematic recording of historical facts by Chinese themselves, we are in position to follow the imperial and aggressive policy of China from the third century BC to the present day, a period of more than 2200 years. It is characteristic of China that if a region once acknowledged her nominal suzerainty, even for a short period, she should regard it as a part of her empire forever and she would automatically revive her claim over it even after a thousand years whenever and wherever there was a chance of enforcing it.1

Tibet was swallowed up and since then India has become the pre- eminent target of this syndrome in the modern era. The Indian historical experience has been dramatically different. The Indian subcontinent harboured a shifting kaleidoscope of a huge variety of socio-political structures sharing broad commonalities of religion, culture and social mores, but which collectively constituted an equally ancient civilisation as China. Throughout history the subcontinent has been subject to invasions by a whole range of peoples, many of whom subsequently made India their home and were absorbed into the civilisational fabric of India. For most of history, India has Downloaded by [University of Defence] at 01:36 24 May 2016 been more of a civilisational concept than a single political entity. The Republic of India that emerged in 1950 was very different from any historical India. This new India and its new rulers, utterly different

1 R. C. Majumdar, The Organiser, Special Diwali Issue, New Delhi, 1965, quoted in Claude Arpi, ‘The Fate of Tibet’, New Delhi: Har-Anand Publications, p. 260. Also, World Culture of Shanghai, September 1949. Quoted by P. C. Chakravarti, India–China Relations, Calcutta: Firma KL Mukhopadhyaya, 1961, pp. 161–62. 378 Ranjit Gupta

from the predecessors, entered completely uncharted waters in so far as the conduct of international relations was concerned as there were no national traditions to provide guidance. India’s independence movement was grounded very fi rmly in principles utterly different from those that have normally motivated the historical State. In a process completely unprecedented in human history, the people of India overthrew the rule of the British Empire, the most powerful empire the world had ever known, through a non-violent, peaceful, civil struggle led by the ‘naked fakir’, as the British had dubbed Mahatma Gandhi, and entered into a voluntary association with the erstwhile rulers in the form of the British Commonwealth. India’s fi rst Prime Minister, Jawaharlal Nehru, a titan of India’s independence struggle, in keeping with the ethos of the freedom struggle and India’s inherited historical and civilisational legacies, committed the new India to a pacifi st approach to relations between states guided by a dreamy, if not utterly naïve, idealism. This was eloquently demonstrated when India, within weeks of independence, having saved the capital of Kashmir from Pakistani invaders, and despite being clearly the stronger of the two, took the issue to the UN before expelling them from the Kashmiri territory that they had occupied. Domestically, India opted to become a democratic, plural, secular polity with a government to be elected by all adults of the entire country, with freedom of worship, an independent judiciary and the rule of law, a free press, and ideas and processes that had taken the western world a few centuries to put in place on the one hand and completely outside the experience of the oriental world on the other. India has always celebrated diversity and proactively promoted the rights and distinctiveness of its minorities. All this had no precedent in world history. India joined the world as a free nation with a mindset and policy approaches moulded by these ideals and attributes.

Downloaded by [University of Defence] at 01:36 24 May 2016 It was inevitable that this huge contrast between China and India in terms of historical legacies and contemporary experiences would be reﬂ ected in the two countries adopting entirely different statecraft strategies and priorities and divergent international relations policy approaches. The notion of 2,000 years of peaceful interaction between these two ancient civilisations is largely a deliberately created myth as Giri Deshingkar, renowned China scholar, has aptly pointed out in his writings. The towering Himalayas and the inhospitable Tibetan Where are India–China Relations Heading? 379

plateau not only separated India and China geographically but also prevented any meaningful interaction, both positive and negative. China and India were aware of each other’s existence mainly because Buddhism was ‘exported’ to China from the ‘Western Heaven’, as India was often referred to in the Buddhist context, and through the writings of celebrated pilgrim travellers. Though there was considerable trade between India and China, this was indirect, almost completely through Southeast Asia-based traders by the maritime route or through Central Asia-based traders traversing the ‘Silk Route’. India and China became ‘neighbours’ in a real sense only after the arrival of the British in India when substantive interaction between the two countries effectively began around the middle of the 19th century for the fi rst time. This interaction started at a time in China’s history when it was in decline, weak and being exploited by foreign countries, and British power was rising in India and spreading its infl uence on the Tibetan plateau and in coastal China. Hence, by the time the communists seized power in Beijing, the dominant images of India in the perceptions of the Chinese ruling elite, were less of Buddhism or Dr Kotnis, and more of the introduction of opium, of Indian soldiers fi ghting the Chinese on behalf of the British, of perfi dy in Tibet and of exploitative trade practices — all facets associated with British colonial rule. Rapidly erasing bitter memories and remnants of its ‘century of humiliation’ acquired immense importance. The establishment of the external contours of the Chinese state as per its own perceptions of its territorial domain became a primary foreign policy objective of the new communist rulers of China. In a farsighted and consciously taken decision, Hong Kong, a British colony, was not specifi cally targeted because it could have entailed an immediate and direct confl ict with England and its allies. Its separate status for almost 50 years and its unique status have now proved to be very valuable for China’s

Downloaded by [University of Defence] at 01:36 24 May 2016 integration with the global economy. Obtaining control of Taiwan and Tibet became the ﬁ rst foreign-policy priorities. As far as Taiwan was concerned, a force of 17,000 PLA soldiers invaded Quemoy in October 1949 and suffered a stinging defeat at the hands of KMT forces, its ﬁ rst setback in the previous three years during the civil war; the outbreak of the Korean War forced a change of US policy, which had only months earlier ditched Chiang Kai Shek; the US recognised the KMT regime as the continuing legitimate government of China and ordered the 7th Fleet to defend the island against 380 Ranjit Gupta

any contingencies. It later forged a military alliance with Taiwan which lasted till 1979 and thereafter protection was afforded by the Taiwan Relations Act. These US measures have enabled Taiwan to remain a self-governing entity even today. Tibet remained to be dealt with. China’s second priority was the reordering of relations with its immediate historical neighbours, Korea and Japan. As a fellow communist state, relations with the USSR acquired a unique importance of their own, while the US represented an overarching threat; the two were embroiled in a war by the autumn of 1950 in Korea. India was very low in China’s priorities and came into play primarily in the context of China’s ambitions vis-à-vis Tibet. China was determined to eliminate India’s inherited privileges and rights in Tibet arising from the British colonial period. Mao considered leaders of the newly independent ex-colonial countries as ‘running dogs of imperialism’ and this characterisation included India’s leadership. For example, ‘Nehru is a rebel against the movement for national independence, a blackguard who undermines the progress of the people’s liberation movement, a loyal slave of imperialism’ (in a Shanghai publication World Culture, 1949). There was no place for pan-Asianism in the Chinese worldview. China’s initial objective was the reassertion of China’s traditional and historical centrality in its immediate neighbourhood, in the tradition of the long established system of institutionalised inequality in relations between the Middle Kingdom and the peripheral tributary states, with a China-centric and China-dominated Asia as the longer-term goal. Fast forwarding, Martin Jacques has noted in his insightful book, When China Rules the World: The End of the Western World and the Birth of a New Global Order, that with China now dominating the economies of East and Southeast Asian countries, ‘China’s economic strength, together with its enormous population, could return

Downloaded by [University of Defence] at 01:36 24 May 2016 the region to a not dissimilar state of affairs to that which existed in the past’.2 Jawaharlal Nehru, India’s ﬁ rst Prime Minister and Minister for External Affairs, was the unchallenged architect of independent India’s foreign policy. In sharp contrast to China’s views of India, he held a rather romanticised view of China. His vision of Asia’s future

2 Martin Jacques, When China Rules the World: The End of the Western World and the Birth of a New Global Order, London: Allen Lane, 2008. Where are India–China Relations Heading? 381

was rooted in his conviction that India and China, newly liberated, and sharing an understandable distrust of the West and its imperial ways, could together create a postcolonial Asian renaissance. Partly undeterred by considerations mentioned earlier and partly deliberately ignoring them, the development of a strong relationship with China became the cornerstone and the single-most important element by far of Prime Minister Nehru’s foreign policy. India believed in multi-polarity and a relationship of equality, mutual respect and friendship with all countries, a difﬁ cult if not virtually impossible objective in the real world beset by narrow ambitions and jealousies. Idealism is noble but cannot be a substitute for policy. This approach represented the triumph of wishful thinking over strategic thinking but has not been abandoned even 60 years after independence and many nasty experiences. Given these hugely contrasting if not conﬂ icting legacies, beliefs and objectives, the possibility of developing and maintaining a friendly relationship was always going to be a gargantuan task. In any event, rivalry was inherent due to the fact that two huge nations were rising simultaneously. Nevertheless, India has proactively and consistently taken the initiative to engage with and reach out to China, while China has equally consistently dictated the agenda, terms and outcomes of the engagement. Bilateral Dimension From day one of the inception of the PRC, China adopted a forward strategy vis-à-vis India designed to put it and keep it on the back foot. India and its leaders became the subject of harsh public denunciation and claims on Indian territory were openly made by Mao. After the military takeover of Tibet in 1950, all the areas once ethnically connected with Tibet became for Beijing part of the erstwhile Chinese Empire. Mao used the imagery of the palm of the hand — Tibet and

Downloaded by [University of Defence] at 01:36 24 May 2016 the fi ve fi ngers — Bhutan, Sikkim, NEFA, Ladakh and Nepal — to suggest that these areas were China’s and a communiqué from the Xinhua news agency was considered suffi cient to establish the claim. Both in the context of the issue of mutual recognition and the Tibet issue, China was aggressive and assertive and India was timid and submissive and the net result was that within a year of coming into existence, the PRC had unequivocally established an uncontested ascendancy vis-à-vis India both on the ground in Tibet and psychologically in the minds of the respective leaderships. 382 Ranjit Gupta

India enjoyed high international standing when it obtained independence which was two years before the PRC came into existence. China then had two regimes contending for recognition as the legitimate regime of China. Only the Soviet-bloc countries had recognised the new communist regime. Nehru showed undue haste in switching recognition from the existing KMT government of the Republic of China to the brand new communist regime of the PRC despite the strong reservations of his colleagues in the government and the Congress Party.3 Nehru acceded to U Nu’s request to enable Burma, already under attack by the CPC-backed Burma Communist Party and deeply fearful of a resurgent China, to become the fi rst non-communist state to recognise the PRC; India was next and did so on 31 December 1949. This prompted Britain to do so on 6 January 1950 and by 18 January 1950, 11 other countries also did so. India led the charge to breach communist China’s isolation in the international community. Despite being a new, weak and relatively isolated entity, the PRC made it clear that it would only enter into diplomatic relations with those countries that accepted that Taiwan, which had become the new headquarters of the ousted and contending KMT regime, was an integral and inalienable part of China; India complied without asking China to reciprocally recognise that Kashmir, already an issue before the UN, was an integral part of India. China’s claims to Tibet, though historically rather dubious, were widely known through the offi cial maps of the Ching Dynasty and KMT government. Conscious of the fact that the British had left India in 1947, the new communist government in Beijing had let the world know that the PLA had been assigned the task of ‘liberating’ Tibet from foreign infl uences during 1950 itself. Anticipating precisely such an eventuality, British and Indian offi cials had started warning India’s new leaders from 1946 onwards that preparatory measures

Downloaded by [University of Defence] at 01:36 24 May 2016 should be taken to safeguard India’s interests in Tibet against possible Chinese action in Tibet. In keeping with its conviction that a close relationship with China is necessary, the government of independent India chose not to prepare for or talk to China about such an eventuality. China invaded Tibet on 7 October 1950 and within a year the vast country was under full Chinese control.

3 Claude Arpi, Born in Sin: The Panchsheel Agreement, New Delhi: Mittal Publications, 2004, p. 285. Where are India–China Relations Heading? 383

India chose not to contest Chinese aggression, peremptorily turned down US suggestions of possible help to counter it and derailed attempts by western and other countries for the issue to be discussed by the UN. During the next fi ve years, India acceded to every single Chinese demand relating to Tibet,4 including supply of rice and other daily necessities from 1952 onwards for the PLA through Calcutta and the Sikkim border and this in fact went on till 1955;5 closure of the Indian Consulate in Kashgar in 1953; formal recognition of the fait accompli of China taking over Tibet and unconditional withdrawal of all its rights and privileges in Tibet through the 1954 Agreement and Letters annexed to it. Once again, while doing so, India did not insist upon reciprocal recognition by China that Kashmir was a part of India. In fact, in the 1954 Agreement, India readily agreed to Demchok being mentioned as a trading post between Western Tibet and Ladakh as the Chinese said they could not mention Kashmir as that would be taking sides between India and Pakistan!6 After all that India had done for China, China remained hardnosed and hardheaded, ever mindful of potential future strategic policy requirements. From 1950–587 India was engaged in an unprompted, self- propelled, global campaign on behalf of the PRC in every conceivable forum. The self-imposed compulsion to maintain good relations with China strongly infl uenced India’s evolving policy in the context of the Korean War and India’s non-participation in the 1951 San Francisco Conference at which most of the world agreed on a peace treaty with Japan. In 1954, Nehru persuaded Zhou Enlai to visit Burma and deputed a senior MEA offi cial to escort him; later, Nehru invited and introduced Zhou Enlai to Afro-Asian leaders in Bandung in 1955. Nehru was responsible for China being invited to the Geneva Indo–China Conference in 1955 even though he did not succeed in getting an invitation for India. India rejected the possibility of Downloaded by [University of Defence] at 01:36 24 May 2016 4 Claude Arpi, Born in Sin provides a very detailed account of Sino–Indian interaction from 1950–58 in the context of the Chinese invasion and takeover of Tibet. 5 On 5 April 1952, Chou En-lai told Panikkar that ‘for many years Tibet would have to depend on India for several daily necessities and desired transportation of food supplies to Tibet via Calcutta’. For details of discussions and arrangements for supplying rice see Claude Arpi, Born in Sin, pp. 83–91. 6Ibid. 7 Ibid. 384 Ranjit Gupta

permanent membership of the Security Council and insisted that the PRC be given China’s seat fi rst.8 Even when India was going out of its way to be helpful, China had already started stoking the embers of incipient ethnic unrest in northeast India and consciously converted it into a full-blown insurgency by providing the rebels funds, arms, training and sanctuary and roped in an eager and willing Pakistan to support the insurgents through its eastern wing and later enticed Bangladesh to do so too. The tide had to turn but ironically this turn contributed even more to India’s humiliation. Egged on by handpicked Intelligence Bureau chief B. N. Mullick, Nehru’s petulance grew and frustrations started surfacing as he fi nally erupted in fury, adopting an entirely misconceived and maladroitly implemented ‘Forward Policy’. Nehru swung from one extreme to the other — from being utterly unreasonably accommodative to being utterly unreasonably stubborn. The one proposal that he should have accepted, since he had accepted all others, was rejected and India has been paying an increasingly heavier price ever since. Zhou Enlai had made proposals to address the contentious territorial issues on the basis of then existing ground realities in the eastern and western sectors, which, in the context of circumstances then obtaining and which India in any case was never going to be able to reverse, were eminently reasonable but these were rejected. The artifi cially induced ‘Hindi Chini Bhai Bhai’

8 Tan Chung (ed.), Across the Himalayan Gap: An Indian Quest for Understanding China, New Delhi: Indira Gandhi National Centre for the Arts, 1998, p. 21. Bulganin: While we are discussing the general international situation and reducing tension, we propose suggesting at a later stage India’s inclusion as the sixth member of the Security Council. Nehru: Perhaps Bulganin knows that some people in USA have suggested that India should replace

Downloaded by [University of Defence] at 01:36 24 May 2016 China in the Security Council. This is to create trouble between us and China. We are, of course, wholly opposed to it. Further, we are opposed to pushing ourselves forward to occupy certain positions because that may itself create diffi culties and India might itself become a subject of controversy. If India is to be admitted to the Security Council it raises the question of the revision of the Charter of the UN. We feel that this should not be done till the question of China’s admission and possibly of others is fi rst solved. I feel that we should fi rst concentrate on getting China admitted. (Selected Works of Jawaharlal Nehru, Series II, 29, minutes of meeting with Soviet Leaders, Moscow, 22 June 1955, p. 231. Where are India–China Relations Heading? 385

phase inevitably evaporated in increasingly mutually virulent diatribes and culminated in the Chinese invasion of India in 1962, leaving behind a huge territorial dispute and irretrievably shattering India’s image and standing in the world at large and the third world in particular, a psychological blow India has not recovered from till today. China occupied 38,000 sq. km of Indian territory in Kashmir and laid claim to 90,000 sq. km in the east, including the whole of Arunachal Pradesh. The 1960s and 1970s were a period of intense mutual hostility and virtually no interaction. Finally, India again took the initiative to improve and normalise relations by sending back its ambassador to Beijing in 1976 and by the visit of Foreign Minister A. B. Vajpayee in 1979; however, China exhibited its contempt by invading Vietnam, then arguably India’s closest and probably only friend in Asia, while the minister was still in China. Prime Minister Rajiv Gandhi’s visit to China in 1988, another Indian initiative that was regarded as a path- breaking effort, was very warmly welcomed in China because the Joint Statement contained a signiﬁ cant paragraph:

The Chinese side expressed concern over anti-China activities by some Tibetan elements in India. The Indian side reiterated the long-standing and consistent policy of the Government of India that Tibet is an autonomous region of China and that anti-China political activities by Tibetan elements are not permitted in India.

India’s formal acknowledgement of China’s claim to Tibet, enshrined in the 1954 Agreement, no longer existed in any document as that agreement was valid for eight years and had lapsed in 1962. Given all that had transpired since 1962, there was no reason for including this provision and using phraseology which was much more explicit in recognising the Chinese takeover of Tibet and that too in a suo moto and subservient manner, much more so than in the

Downloaded by [University of Defence] at 01:36 24 May 2016 1954 agreement. India completely ignored the fact that at that time a large-scale revolt was underway in Tibet. Once again, India did not deem it necessary to press for reciprocal Chinese acceptance of India’s territorial integrity in Kashmir and Sikkim. Pakistan had already ceded some territory in Kashmir to China. China never had a claim on or relating to Sikkim and no country in the world had a dispute with India regarding Sikkim but China had made it into a bilateral problem by the mid 1970s and by discussing it for decades, India gave China a say in the matter. 386 Ranjit Gupta

The violent and brutal suppression of the pro-democracy demonstrations in China in June 1989 elicited strong condemnation from the western world and the imposition of sanctions but India not only maintained silence but in the next 12 months there were almost a dozen exchanges of visits of second-tier leaders, offi cials and other delegations. India’s over reaction in controlling Tibetan pro- testers during the visit by Premier Li Peng in 1991 was another demonstration of India’s resolve in not letting Tibet or any other issue become a problem in the way of Sino–Indian rapprochement. The Rajiv Gandhi visit set in motion a process of increasing frequency of exchange of high-level visits; a remarkable fact worth noting is that while each Indian visit was a single-country visit, each Chinese visit to India was part of a tour of South Asian countries. China tested a hydrogen bomb during President Venkataraman’s visit to China in 1992. Symbolism has always been very important in China’s diplomacy. Thus, through its comments and actions, from 1950 onwards China reconfi rmed repeatedly, in crystal-clear fashion, its view of India’s place in the world and its contempt for Indian sensitivities. Even more importantly, during this period of ostensible rapprochement with India, China was consciously and deliberately making Pakistan into a nuclear-weapons power with a growing and lethal missile capability, in stark violation of all international norms to which it was party. India had known about this aspect of the relationship throughout, and of the fact that it continues in unabated fashion even today, but has never taken up the issue with China in an assertive manner. The texts of recent China–India joint statements have invariably contained a specifi c mention of India’s commitment to respect Chinese sensitivities with regard to Tibet and the one-China concept as suo moto Indian policy positions and, incredibly, a sentence in which China pats India on the back for doing so, but there has never

Downloaded by [University of Defence] at 01:36 24 May 2016 been any mention of even one of the many issues through which China has sought to undermine India’s territorial integrity, internal and external security and wellbeing. For example:

The Indian side recognizes that the Tibet Autonomous Region is part of the territory of the People’s Republic of China and reiterates that it does not allow Tibetans to engage in anti-China political activities in India. The Chinese side expresses its appreciation for the Indian position and reiterates that it is ﬁ rmly opposed to any attempt and action aimed at splitting China and bringing about ‘independence of Where are India–China Relations Heading? 387

Tibet’. The Indian side recalled that India was among the ﬁ rst countries to recognize that there is one China and its one-China policy remains unaltered. The Chinese side expressed its appreciation of the Indian position (Vajpayee–Wen Jiabao Joint Statement, June 2003). XII. The Indian side reiterated that it recognized the Tibet Autonomous Region as part of the territory of the People’s Republic of China and that it did not allow Tibetans to engage in anti-China political activities in India. The Indian side recalled that India was among the ﬁ rst countries to recognize that there is one China and its one China policy remains unaltered. The Indian side stated it would continue to abide by its one China policy. The Chinese side expressed its appreciation for the Indian positions (Manmohan Singh–Wen Jiabao Joint Statement, April 2005).

India suggested wording that was included in the Joint Statement in 2005, in which prime ministers Wen Jiabao and Manmohan Singh expansively declared that ‘India and China relations have now acquired a global and strategic character’ and that ‘an India–China Strategic and Cooperative Partnership for peace and prosperity’ is possible; the two countries have ‘agreed to establish’ such a partnership ‘based on … mutual respect and sensitivity for each other’s concerns and aspirations’ and ‘based on mutual and equal security’. This has been repeatedly reiterated in press conferences after high-level meetings since then, despite the clear and growing disconnect between rhetoric and realities on the ground. China today is the pivotal factor in the continual growth of world trade, global trade linkages and international trade interdependencies. With India also a rising economic power and with its own global trade also growing impressively, it is an imperative and a given of the dynamics of global trade that Sino–Indian trade will also inevitably grow. The rapid growth of Sino–Indian trade is therefore natural and to be expected; there is no reason at all for any hype on this

Downloaded by [University of Defence] at 01:36 24 May 2016 score. In fact, the reality is that the trade basket mirrors an economic relationship more akin to that between a colony and its master — in the ﬁ rst 11 months of 2008, 71 per cent of Indian exports to China comprised iron ore, up from 59 per cent in 2007 while Chinese exports include a considerable element of low-quality, cheap, sub- standard goods. On the other hand, China is acquiring a dominant position in exports to India in some sectors such as telecom and power-generating equipment which has serious strategic implications for India. China may have become India’s largest trade partner but 388 Ranjit Gupta

India is only China’s 10th-largest trading partner. Another ominous sign in the trade relationship is the increasing trade defi cit. In 2004, the balance of trade was $1.7 billion in India’s favour. By 2006, this surplus had turned to a $4.12-billion defi cit, widening further last year to $11.2 billion, with Indian exports of $20.3 billion overshadowed by imports from China worth $31.5 billion. India’s total trade with China is less than a quarter of the USA’s trade defi cit with China. Thus, the trade relationship tilts very heavily to the advantage of one side and India gets no leverage with China because of this relationship. Here also, if anything, China has the upper hand and can dictate terms. Neighbourhood Dimension The motivations for China’s approach to its relations with South Asian countries, which constitute India’s immediate neighbourhood, are unique and have been very different to those governing China’s policies towards all other regions. This difference is entirely due to the India factor. South Asia should have been India’s natural sphere of infl uence because India has a bigger area, larger population, larger GDP, larger military than that of all countries in South Asia combined; because of cultural, religious and ethnic similarities and shared historical background; and because of geographical contiguity. India is the only South Asian country that shares borders with all the others whereas none of them share a boundary with one other. However, barring Bhutan, China has much closer political and military relations with India’s South Asian neighbours than India and wields far greater clout than India. This is strange but true and the question arises: Why? Though a contributory factor has been the nature of the regimes that India’s South Asian neighbours have had, with these regimes consistently projecting India as the main threat to their countries and

Downloaded by [University of Defence] at 01:36 24 May 2016 using this bugbear to legitimise these regimes and their anti-Indian policies in the eyes of their peoples, China has consciously and deliberately nurtured these orientations by providing these countries with extensive multidimensional support. In the absence of this strong Chinese support it is very doubtful that these countries could behave with India in the manner that they have been doing. The relationship with Pakistan is China’s oldest, most consistent, strongest ‘all-weather’ strategic relationship in the world. The shared focus of this relationship has been to undermine Indian interests and Where are India–China Relations Heading? 389

security domestically in India, in fostering anti-Indian sentiment and policies in other South Asian countries and in damaging India’s relationships and image in the world at large. Both countries have extended mutual support to each other unconditionally, particularly in all issues involving India, and both countries work together around the world to denigrate India and against Indian interests. In recent years, many articles and books have graphically exposed how extensively China assisted in the development of Pakistan’s nuclear programme and delivery systems. Since Pakistan’s nuclear programme is entirely India-centric, this is in itself revealing about the intensity of Chinese hostility towards India. China has signifi cantly enhanced the supply of the latest fi ghter aircraft and other modern military equipment and the People’s Daily commentary on 14 October 2009 highlighted that the China–Pakistan military alliance is fi rmly in place with President Hu Jintao’s assuring visiting Pakistan Prime Minister Gilani (13 October) of China’s complete and unwavering support for Pakistan’s security. This was supplemented concurrently by the head of China’s military–industrial complex saying it would make Pakistan self-reliant in defence with co-production of advanced weapons systems including AWACS (Airborne Warning Control System). While India received overwhelming international sympathy and support during the 26 November 2008 terrorist outrage, the Chinese reaction stood out like a sore thumb. The state-run China Institute of Contemporary International Relations claimed that the terrorists who carried out the attack were from India. Moreover, even as the terrorist strike was on, yet another Chinese ‘scholar’ gleefully noted: ‘The Mumbai attack exposed the internal weakness of India, a power that is otherwise raising its status both in the region and in the world.’ The Foreign Ministry-run China Institute of Strategic Studies warned: ‘China can fi rmly support Pakistan in the event of war’, adding: ‘While Pakistan can benefi t from its military cooperation with China Downloaded by [University of Defence] at 01:36 24 May 2016 while fi ghting India, the People’s Republic of China may have the option of resorting to a strategic military action in Southern Tibet (Arunachal Pradesh), to thoroughly liberate the people there.’ Rather than condemning the terrorists and their supporters, Chinese Foreign Ministry Spokesman Qin Gang echoed the Pakistani position, urging India and Pakistan to ‘maintain calm’ and investigate the ‘cause’ of the terror attack jointly. Not surprisingly, China has single-handedly protected Pakistani terrorists from being blacklisted in the UN. 390 Ranjit Gupta

China has consciously exploited domestic instability in countries of the region for strategic advantage vis-à-vis India. In the process, China has spun a web of very strong economic, military, political and strategic relationships with Bangladesh, Myanmar and Pakistan. A special effort has been underway in Nepal and is meeting with notable success. The Maoists, who have recently become the pre- eminent political force in Nepal, have publicly proclaimed their determination to sign a Peace and Friendship Treaty with China which includes security and military cooperation clauses which are quite worrisome for India. They wish to drastically revise the 1950 Treaty with India. China’s relationships with these four countries impinge directly on India’s territorial integrity, national security and economic prosperity. Meanwhile, China has permanently positioned a large number of troops in Tibet. In addition, nuclear weapons tipped missiles targeted at India, large air force deployment in 14 new airports all over Tibet have also been positioned in recent years. All this is backed up by state-of-the-art road and rail transport and supply infrastructure that is being expanded all along the Indian border. This is clearly not needed to control a few million poor Tibetans armed only with their Buddhist faith and reverence for the Dalai Lama and who clearly cannot pose any meaningful threat to the mighty Chinese State. Therefore the question must be asked — Why all this militarisation of Tibet and all along the Indian border? Regional Dimension Despite India’s strong reservations, Nepal and Bangladesh, with puppet master Pakistan pulling strings from the background, successfully led the drive for China to be granted Observer status at the South Asian Association for Regional Cooperation (SAARC), though India managed to dilute the impact by getting Japan as an Observer and since then others have also become so. China has been a very

Downloaded by [University of Defence] at 01:36 24 May 2016 vocal and active participant in SAARC meetings. As Indian Ambassador to Thailand, I know from ﬁ rst-hand personal knowledge that amongst China’s regional policy priorities was thwarting the emergence of any signiﬁ cant Indian role in Southeast Asia. Therefore, China was absolutely livid when India was invited to become a full dialogue partner of ASEAN ahead of China and it conveyed its anger to ASEAN countries in no uncertain terms. China was invited to join the ASEAN Regional Forum (ARF) in 1994 and thereafter it tried to prevent India from being included Where are India–China Relations Heading? 391

in the ARF. China tried very hard to have the ARF issue a very strong condemnation of India’s nuclear tests in 1998 but these attempts were blocked by the ARF’s ASEAN members. China’s strong attempts to block India being invited to be a part of the East Asian Summit mechanism was yet another manifestation of this policy. Though there are very cogent reasons not to accept countries which are not an intrinsic geographical part of Central Asia as members of the Shanghai Cooperation Organisation (SCO), whenever the possibility of Indian membership was raised by Russia or a Central Asian member country, China’s reservations scotched the idea. China permitted India to become an Observer only when Russia agreed to allow Pakistan in as an Observer too. China has burgeoning diplomatic, economic, energy, investment, military and trade relations with Myanmar. In addition, China is constructing river, road and rail transport infrastructure to connect landlocked Yunnan Province with the Bay of Bengal and the Andaman Sea through Myanmar. If China were to acquire full sway over Myanmar, then, for all practical purposes, China would surround India’s northeastern states and China’s de facto border would also extend to the shores of the Bay of Bengal. Such a China–Myanmar relationship would ensure that India’s national interests, territorial integrity, national security, wellbeing and potential role in Asia in the future could all become hostage to China’s strategic plans and designs in this highly sensitive region. Therefore, China’s growing relationship with Myanmar has become a factor of enormous strategic consequence for India. Having very satisfactorily covered India’s eastern regional ﬂ ank in Myanmar, China is doing rather well on the western regional ﬂ ank as well. Iran’s best global bilateral relationship is with China and is particularly strong in the military and energy spheres. China now has a growing presence and role in Afghanistan — as of 2008, Chinese

Downloaded by [University of Defence] at 01:36 24 May 2016 companies had 33 projects in Afghanistan for construction of basic infrastructure, with a total value of $480 million. In what is the biggest foreign investment in Afghanistan ever, China won the bid to develop the Aynak copper mine, beating US, Canadian and Russian companies. This almost $4-billion deal includes $2.9 billion for the mine segment, and almost a billion for a power plant, and a freight railroad to the Chinese border. There is increasing understanding between the US, North Atlantic Treaty Organisation (NATO) and China to stabilise the security situation in the country. 392 Ranjit Gupta

Indian Ocean Dimension When China became a net importer of oil in 1993 for the fi rst time, Zhao Nanqui, a senior offi cial of China’s PLA, had proclaimed: ‘We can no longer accept the Indian Ocean as an Ocean of the Indians.’ Since then, China has been involved in the construction and upgradation of ports and naval facilities in countries adjacent to India such as Bangladesh, Myanmar, Pakistan and Sri Lanka. In recent years, China has made signifi cant inroads into Maldivian affections. China has been vigorously courting Mauritius and Seychelles also with Head of State-level visits and huge aid disbursements. Furthermore, it is seeking to develop road and rail transport connectivity corridors through Myanmar to Bangladesh and the Bay of Bengal and through Pakistan to Gwadar on the Arabian Sea. These transport linkages have self-evident security and strategic implications. The past year has witnessed the fi rst ever deployment of Chinese naval vessels in the Arabian Sea and off the Somali coast ostensibly for anti-piracy operations. China is thus stepping beyond its traditional continental, land-oriented security paradigms. These activities clearly indicate China’s power projection intentions in the Indian Ocean, which China has not been shy to hide. There have been reports of Chinese suggestions to the US that they leave the Pacifi c Ocean to the Americans as long as the US leaves the Indian Ocean to the Chinese. China is clearly consciously seeking to erode India’s natural advantages in the Indian Ocean. Global Dimension China’s open opposition to India’s Security Council permanent membership, its strenuous lobbying against the Indo–US nuclear deal and attempts to scuttle the Nuclear Suppliers Group (NSG) waiver for it, its seeking to stop the funding of development projects in Arunachal Pradesh by the Asian Development Bank, its obstructionism Downloaded by [University of Defence] at 01:36 24 May 2016 towards Indian involvement in regional multilateral forums, etc. are examples of China’s open and egregious undermining of India’s international role and aspirations. Much is made of India and China cooperating in climate change, international trade and international fi nancial restructuring negotiations. This is simply because their interests happen to coincide; China is doing India no favour. Throughout history, China’s rulers have been farsighted and conscious of the future. India is the only Asian country in size, population, Where are India–China Relations Heading? 393

and economic and military potential which could stand in the way of China’s hegemony in Asia. As would be evident from the foregoing account, recognising this fact, China’s approach to India has been very different from the tactics it has used with the rest of the world from the beginning. The major elements of its India policy have been to: adopt a posture of friendship as and when needed to encourage India to continue on its chosen path of cultivating China; frighten India by intimidation rhetoric whenever needed; weaken India by undermining its internal and external security; nurture and promote anti-Indian sentiment amongst India’s neighbours in particular and other countries in general; tarnish India’s image and international standing; obstruct and undermine India’s regional and global aspirations; assertively pursue the establishment of a strategic presence in the Indian Ocean and thus, to box and besiege India in the subcontinent by surrounding it in the north, east, west and south by creating new Chinese capabilities and instrumentalities of inﬂ uence against India. To me, it would appear that from China’s perspective, the single really important bilateral issue relates to the Dalai Lama. India’s granting the Dalai Lama asylum in 1959 and allowing him to live and function in India, permitting the existence of a variety of Tibetan institutions and hosting the world’s largest Tibetan community outside Tibet, have been very deeply galling to China because all this has enabled the Tibetan issue to remain alive, both within Tibet as well as internationally. However, India has repeatedly said that it accepts that Tibet is a part of China. The Dalai Lama has repeatedly said that Tibet is a part of the PRC and he only seeks autonomy offered in the 1951 Agreement and under the Constitution of China. Notwithstanding this, for reasons that seem unclear, China’s rhetoric suggests that it has increasingly started linking the future of bilateral relations with India with the Dalai Lama issue. Downloaded by [University of Defence] at 01:36 24 May 2016 Authoritarian regimes have always believed that they can do no wrong and that all their troubles are created by their adversaries, real and imagined. The fact is that even after 60 years of absolute control and rule over Tibet and huge investments in its economic development China still faces enormous resentment from the people of Tibet. This has led to periodic riots but a few million Tibetans armed only with their faith cannot challenge the mighty Chinese State. The regime’s paranoia regarding stability and ‘split-ism’ is an 394 Ranjit Gupta

entirely self-created bugbear. China blames the Dalai Lama or the support that he enjoys globally or India for its problems in Tibet but its troubles are due to its failure to honour its own constitution and its commitment to grant autonomy; its harshly repres- sive policies resulting in the killing of hundreds of thousands of Tibetans and thousands missing; unleashing a devastating and unprecedented cultural genocide in which thousands of monasteries were destroyed; demonising the Dalai Lama in uncivilised language, rather unbecoming of a putative global leader; causing ecological degradation and unsustainable exploitation of its natural resources; comprehensive military occupation of the Tibetan plateau; and growing Han migration in a deliberate and continuing demographic transformation of Tibet. Relationship on the Cusp of a Crisis The current atmosphere is reminiscent of the worst period of bilateral relations in the early 1960s. This deterioration started in 2006, when in complete dis-regard of conventional diplomatic norms, the Chinese Ambassador in New Delhi assertively aired China’s claims to Arunachal Pradeesh on the eve of President Hu Jintao’s visit to India in November 2006, and his assertions were backed up by Foreign Ministry statements in Beijing without suitable public riposte from the MEA. ‘In our position the whole of what you call the state of Arunachal Pradesh is Chinese territory, and Tawang (district) is only one place in it. We are claiming all of that — that’s our position,’ he told the news channel CNN-IBN just days ahead of the Chinese President’s visit to India. China’s imperious statements and behaviour in the context of the outbreak of demonstrations in Tibet in March 2008 and the Olympic torch coming to Delhi were remarkably crude and offensive.

Downloaded by [University of Defence] at 01:36 24 May 2016 India’s governmental leaders were amongst the few not invited to the Olympics opening ceremony. The Chinese Foreign Minister has publicly questioned that the principle of settled populations would be one of the determinants of a border settlement despite it being enshrined in the 2005 Joint Statement between the two prime ministers. Since then, sarcastic, condescending and offensive articles and particularly Arunachal-related outbursts have been appearing more and more frequently in China’s state-controlled press and in articles written by different analysts attached to various think Where are India–China Relations Heading? 395

tanks affi liated with the State Council, Foreign Ministry, Communist Party and PLA. All this escalated very considerably since the summer of 2009 and coincided with increasing intrusions and other incidents on the border, particularly in the Ladakh and Sikkim regions; China has been protesting Indian leaders’ visits to Arunachal; denying visas to offi cials of Arunachal; issuing stapled visas to Indian citizens from Arunachal and Jammu and Kashmir and justifying the practice amounting to clearly publicly questioning that these two states are a part of India; making it clear that there is no question of concessions on the border and in fact even hinting at forcibly recovering ‘occupied southern Tibet’, a phrase used increasingly to refer to Arunachal; increasing references to having taught India a lesson in 1962, etc. The fl ow of strongly negatively worded articles has become a fl ood — merely listing them would take many pages but at least two merit special mention: First, a Chinese language article captioned ‘If China takes a Little Action, the So-called Great Indian Federation can be Broken Up’ published in Global Times, an English language adjunct of the Chinese Government’s mouthpiece The Peoples’ Daily. The writer has argued that China, in its own interest and the progress of Asia, should join forces with different nationalities like Assamese, Tamils, Nagas and Kashmiris and support them in establishing independent nation states of their own, out of India. The article calls on China to take action to break up and dismantle the ‘so-called’ Indian state into 20–30 independent states with the help of ‘friendly countries’ like Pakistan, Bangladesh, Nepal and Bhutan. Second, venting anger against Prime Minister Manmohan Singh’s one-day visit to Arunachal Pradesh on 3 October, 10 days later, on 13 October, Global Times quoted the Foreign Ministry’s Spokesman Ma Zhaoxu by name as having stated that ‘Indian Prime Minister Manmohan Singh made another provocative and dangerous move by

Downloaded by [University of Defence] at 01:36 24 May 2016 visiting the East Section of the China-India Boundary, which India calls Arunachal Pradesh, on October 3, ahead of a local legislative election… China is strongly dissatisﬁ ed with the visit by the Indian leader to “Southern Tibet” disregarding serious Chinese concerns’ to ‘stir up trouble at the disputed area’ and ‘we demand the Indian side address China’s serious concerns’. Such harsh language when referring to a leader who has been meeting his Chinese counterparts quite frequently is simply never ever used in diplomatic practice. All this is clearly a reﬂ ection of the increasingly uncompromising 396 Ranjit Gupta

mindset of the Chinese leadership vis-à-vis India and reﬂ ects renewed belligerence and a very deﬁ nite hardening of China’s attitude to India. Michael Sheridan, in a report from Beijing in the Sunday Times of 27 September 2009, says:

Thursday’s parade is certain to provoke an outpouring of virulent nationalism. Curiously, the enemy most often spoken of is India. The censors permit alarmingly frank discussion on the internet of the merits of a war against India to secure the Tibetan plateau. “Help the Maoists take over power in India to pay them back for hosting the Dalai Lama,” said one contributor. Conclusion To conclude, ‘partnership’ implies the existence of a relationship that is more than merely friendship, a relationship that proactively helps in developing each other’s potential to the maximum, a relationship which not only promises mutual security but ensures that each helps the other to guarantee it. India has demonstrated by word and deed that it desires deeply and sincerely to have such a partnership relationship with China. Can the same be said for China? The record of interaction that I have set out in this article clearly suggests that the state of the relationship will be determined by the decisions of the Chinese leadership, irrespective of whatever India might say or do. If China persists in going down the path that it has been treading the past few months then the immediate future will be a period of great tension and things could even spin out of control. It may not be in China’s interest to do so. There are enormous internal vulnerabilities in China which could be triggered by provoking instability on its borders, to the maintenance of which China has attached top priority in recent decades. By taking precipitate action against India, China may well succeed in imparting spine to India’s government which has Downloaded by [University of Defence] at 01:36 24 May 2016 so far have only exhibited pusillanimity towards China. China may convert the people of a rising India into long-term if not perpetual enemies. China’s international standing will take a beating and con- ﬁ rm suspicions of virtually all neighbours that the concept of China’s peaceful rise is mere camouﬂ age. China may well push India into a quasi-military alliance with the US which no political party in India has so far advocated. Given current realities, I am pessimistic that there will even be a tension-free, normal relationship let alone a partner relationship, at least in the short term. Where are India–China Relations Heading? 397

References Arpi, Claude. 2004. Born in Sin: The Panchsheel Agreement, New Delhi: Mittal Publications. Chakravarti, P. C. 1961. India–China Relations, Calcutta: Firma KL Mukhopadhyaya. Chung, Tan (ed.). 1998. Across the Himalayan Gap: An Indian Quest for Understanding China, New Delhi: Indira Gandhi National Centre for the Arts. Jacques, Martin. 2008. When China Rules the World: The End of the Western World and the Birth of a New Global Order. London: Allen Lane. Nehru, Jawaharlal. 1955. Selected Works of Jawaharlal Nehru, Series II, 29, minutes of meeting with Soviet Leaders, Moscow. 22 June. Downloaded by [University of Defence] at 01:36 24 May 2016 398 Emerging China

About the Editors

Sudhir T. Devare, currently Director General, Indian Council of World Affairs (ICWA), joined the Indian Foreign Service in 1964 and served in various capacities including Deputy Permanent Representative to the Committee on Disarmament, Geneva (1976–80); Ambassador of India to South Korea (1985–89); First Indian Ambassador to the newly formed Republics of Ukraine, Armenia and Georgia (1992–94); and Ambassador of India to Indonesia (1994–98). While serving as Secretary, Ministry of External Affairs, Government of India from 1998 till his retirement in 2001, he was closely associated with India’s ‘Look East’ policy initiative with the Asia–Paciﬁ c. He was also a member of the National Security Advisory Board (2001–2003). His academic credentials include Visiting Professor, Centre for East Asian Studies, Jawaharlal Nehru University, New Delhi (2002); Vice Chairman, Research and Information System (RIS) for Developing Countries, New Delhi (2002–2006); Visiting Senior Research Fellow, Institute of Southeast Asian Studies, Singapore (2002–2006); and Fellow, Weatherhead Centre for International Affairs, Harvard University, Cambridge, USA (2007–2008). Besides being author of two books he has also published several articles in newspapers and journals. E-mail: [email protected]

Swaran Singh is Professor and Chairperson, Centre for International Politics, Organization and Disarmament, School of International Studies, Jawaharlal Nehru University, New Delhi. He is President, Association of Asia Scholars (AAS), New Delhi; General Secretary, Indian Association of Asian & Paciﬁ c Studies (ICAPS), Varanasi; and

Downloaded by [University of Defence] at 01:36 24 May 2016 Member, Bangkok-based Asian Scholarship Foundation’s Regional Review Committee for South Asia. Singh is Visiting Professor, University of Peace (Costa Rica), and has formerly been Visiting Faculty, Beijing University; Xiamen University; Shanghai Institute of International Studies; Center for Asian Studies, Hong Kong University; Asian Center, University of the Philippines; Guest Faculty at Stockholm International Peace Research Institute (Sweden); Academic Consultant (2003–2007), Center de Sciences Humaines (CHS), New Delhi; and Research Fellow, Institute for Defence Studies Notes on Editors 399

and Analysis, New Delhi. Singh is on the Editorial Board of Asian Policy & Politics (Manila), Journal of the Indian Ocean Region (Hyderabad), Journal of Indian Ocean Studies (Delhi) and Millenial Asia (Delhi). He has authored China–India Economic Engagement: Building Mutual Conﬁ dence (2005), China–South Asia: Issues, Equations, Policies (2003) and China’s Changing National Security Doctrines (1999); and edited China–Pakistan Strategic Cooperation: Indian Perspectives (2007). His monograph, Nuclear Command & Control in Southern Asia: China, India, Pakistan is forthcoming. E-mail: [email protected]

Reena Marwah, Secretary General, Association of Asia Scholars (AAS), New Delhi is Associate Professor, Jesus and Mary College, University of Delhi, New Delhi and has an MPhil and PhD in International Business. In addition to several years of graduate and post-graduate teaching of macro economics and Indian economics, she lectures frequently at institutions of higher learning and embassies in India and abroad. She is recipient of the Robert McNamara fellowship of the World Bank in 1999–2000 and the Asia Fellowship of the Asian Scholarship Foundation in 2002–2003. She has been Visiting Fellow, Shanghai Academy of Social Sciences (2008). She has ﬁ ve books to her credit as well as three monographs on globalisation, poverty and inequality and the impact of information and communication technology on poverty in India and Nepal. She has presented papers at more than 50 international conferences. Her research interests include gender and development issues, multilateralism, globalisation and poverty. E-mail: [email protected]; [email protected] Downloaded by [University of Defence] at 01:36 24 May 2016 400 Emerging China

Notes on Contributors

Aileen S. P. Baviera is Professor and former Dean, Asian Center, University of the Philippines, Manila (Philippines). She is Executive Director, Philippines–China Development Resource Center; President, Philippines China Studies Association; and Editor, Asian Policy and Politics. She holds a PhD in Political Science and specialises in international security and Asia–Paciﬁ c Studies. Her publications have been on contemporary China Studies, Asia–Paciﬁ c security and regionalism in East and Southeast Asia. E-mail: [email protected]

Renaud Egreteau is Post-Doctoral Fellow, CERI/Sciences Po (France). He holds degrees in Oriental Studies (Hindi, National Institute of Oriental Languages and Civilizations, Paris) and a PhD in Political Science (Institute of Political Sciences of Paris, 2006). He is Research Assistant Professor, Hong Kong Institute for Humanities and Social Sciences, Hong Kong University (Hong Kong) and was Research Associate at the Institute of Research on Contemporary South East Asia, Bangkok (Thailand) and Centre de Sciences Humaines, New Delhi (India). Besides his academic research on India’s foreign policy, India’s northeast instability and the Burma/Myanmar political situation, he has taught at the Institute of Political Science, Paris (France) as a part-time lecturer in Asian Studies.

John W. Garver is Professor, International Relations, Sam Nunn School of International Affairs, Georgia Institute of Technology, Atlanta, Georgia (USA). He specialises in Chinese and East Asian foreign affairs and has published numerous books and articles dealing with China’s international relations. He works with the Downloaded by [University of Defence] at 01:36 24 May 2016 School of Management and the CIBER programme at Georgia Tech in executive training in doing business in China. He has travelled extensively in the Far East and is ﬂ uent in Chinese. His recent book is The Protracted Contest, Indian–Chinese Rivalry in the Twentieth Century (2001). E-mail: [email protected]

Ranjit Gupta, a retired Indian Foreign Service ofﬁ cer, is Member, National Security Advisory Board and Visiting Fellow, Institute of Notes on Contributors 401

Chinese Studies, New Delhi (India). He is leading a joint research project with the Gulf Research Centre, Dubai, on India–GCC Relations on behalf of the Ministry of External Affairs, Government of India. He was Visiting Fellow, Institute of Defence Studies and Analyses, New Delhi; Visiting Professor, Academy of Third World Studies, Jamia Millia Islamia University, New Delhi; and Ambassador-in-Residence, Jawaharlal Nehru University, New Delhi. During his 39-year career he served in Cairo, New York, Gangtok, Jeddah, Frankfurt and Kathmandu. Later, he was successively India’s Ambassador to Yemen (North), Venezuela, Oman, Thailand and Spain and fi nally Head, non-offi cial Offi ce, Taiwan. E-mail: [email protected]

Phung Thi Hue is Associate Professor of History, Institute of Chinese Studies, Vietnam Academy of Social Sciences, Hanoi (Vietnam). She is also Director, Hanoi’s Centre for Taiwan Studies. She has over 60 academic articles published in books, magazines and journals in Vietnam and other countries (many articles are in Chinese).

Fu-Kuo Liu is Chairman, Division of American and European Studies, Institute for International Relations, National Chengchi University, Taipei (Taiwan). He has written extensively and is an expert on regional security in the Asia–Paciﬁ c, the cross-strait peace process, Taiwan security and foreign policy, Asian regionalism, and US policy in Asia. His most recent writing on India is ‘A Study of the Terrorist Threat in India’ in Tuan-Yao Cheng (ed.), India (2009). E-mail: [email protected]

Mohan P. Lohani is a scholar, diplomat and political commentator, and Executive Director, Institute for Sustainable Development (ISD) since 1992. He is also Principal, Kathmandu Model College (KMC), Kathmandu (Nepal) since 2005. As a diplomat he served as Nepalese Downloaded by [University of Defence] at 01:36 24 May 2016 Ambassador to Bangladesh, Sri Lanka and the Maldives (1987–91). He also served as Executive Director, Institute of Foreign Affairs (1998–2001) and was Nepal’s Deputy Representative to the UN (1976–80). E-mail: [email protected]

Jean-Louis Margolin is Senior Lecturer, Aix-en-Provence University (France). He studied History at Ecole Normale Supérieure and University Paris-VII, where he completed his PhD in 1982. He is 402 Emerging China

Deputy Director, Marseille’s Institute for Research on Southeast Asia (IRSEA/CNRS). His PhD dissertation was published as a book entitled Singapour 1959–1987: Genèse d’un nouveau pays industriel (1989). He is a member of the editorial board of Moussons, a quarterly review dedicated to Southeast Asia, as well as of the History Commission of France’s Centre National du Livre, the major public subsidy giver for book publishing. He has presented papers in about 60 conferences and has published around 120 articles and book chapters, as well as a large number of book reviews and newspaper articles. E-mail: ﬂ [email protected]

Chung-in Moon is in the Department of Political Science and is Dean, Graduate School of International Studies, Yonsei University, Seoul (Republic of Korea). He specialises in China’s foreign policy and China–Korea relations and represents his country at several international forums and summit level meetings. E-mail: [email protected]

Peng Jing is Professor, Center for South Asia–West China Cooperation & Development Studies, Sichuan University, China.

Nihal Rodrigo is former Foreign Secretary of Sri Lanka and Secretary General, SAARC. He had been closely involved with the two SAARC summits held in Colombo (1991 and 1998) and was a delegate to the Fifth, Seventh, Ninth and Tenth Summits. He has served in various presidential committees dealing respectively with human rights, information strategy, foreign affairs and the acquisition of artworks for state collections. He also served on the Board of Management, Bandaranaike Centre for International Studies, Colombo (Sri Lanka). His interests include painting, ﬁ lm and political cartoons. He is currently working on a book on the inﬂ uence of domestic factors on

Downloaded by [University of Defence] at 01:36 24 May 2016 Sri Lankan foreign policy. E-mail: [email protected]

D. S. Rajan is Director, Chennai Centre for China Studies (India). He held senior positions in the Government of India, New Delhi from 1964–2002. During this period, he was in charge of covering developments in China and the Far East. After his retirement, he worked as Senior Fellow, Observer Research Foundation, New Delhi. He has since been taking part in various seminars/workshops/ media and TV interviews on China both at home and abroad and Notes on Contributors 403

his writings on China are published regularly in various journals/ newspapers/websites. He is ﬂ uent in Chinese and Japanese languages. E-mail: [email protected]

Tansen Sen is at the Department of History, Weissman School of Arts & Sciences, Baruch College, New York. Born in India, he moved to China at the age of 15. He received his BA from the Beijing Languages Institute, MA from Beijing University, and PhD from the University of Pennsylvania. He specialises in Asian history and religions and has special scholarly interests in Buddhism, Sino–Indian relations, Indian Ocean trade and Silk Road archeology. He has done extensive research in India, China and Japan with grants from the American Institute of Indian Studies, Japan Foundation, American Philosophical Society and Chiang Ching-kuo Foundation. He is a member of the Nalanda Mentor Group and Honorary Fellow, MAK Azad Institute of Asian Studies, University of Delhi. He is author of Buddhism, Diplomacy, and Trade: The Realignment of Sino–Indian Relations, 600–1400 (2003). He has co-authored China at the Crossroads: A Festschrift in Honor of Professor Victor H. Mair (2006). E-mail: [email protected]

Chih-yu Shih teaches Political Psychology, Cultural Studies and China Studies in the capacity of University Chair Professor, Department of Political Science, National Taiwan University, Taipei (Taiwan). He is author of 60 books including Autonomy, Ethnicity and Poverty in Southwestern China: The State Turned Upside Down (2007), Navigating Sovereignty: World Politics Lost in China (2003), Collective Democracy: Political and Legal Reform in China (1999), State and Society in China’s Political Economy: Cultural Dynamics of Socialist Reform (1995) and The Spirit of Chinese Foreign Policy: A Psychocultural View (1990). He is Editor, Asian Ethnicity and an Downloaded by [University of Defence] at 01:36 24 May 2016 editorial board member of a few international and domestic political science as well as China Studies journals. He has an MPP from Harvard University and PhD from the University of Denver.

Hu Shisheng is Director (South Asia), China Institute of Contemporary International Relations, Beijing (China). He completed his PhD from Beijing University and specialises in South Asian affairs. He regularly contributes to both print and visual media and has contributed to academic journals. E-mail: [email protected] 404 Emerging China

Meidyatama Suryodiningrat is Managing Editor, The Jakarta Post, Indonesia. His previous positions included assignments to the Business, National or City desks and the Foreign Desk at The Jakarta Post. After serving as Deputy Editor and Editor of the National Desk, he became Managing Editor in 2001. He received his BA in Political Science from Carleton University, Ottawa (Canada) and studied at the Graduate School of International Development Studies, Dalhousie University, Halifax, Nova Scotia (Canada). E-mail: [email protected]

S. M. Tang is Head, Department of Strategic Studies, Faculty of Defence and Management Studies, National Defence University of Malaysia (UPNM), Kuala Lumpur (Malaysia). E-mail: tang@upnm. edu.my

Tomohiko Taniguchi is Adjunct Professor, Keio University Graduate School of System Design and Management, Japan and an Advisor to the Ministry of Foreign Affairs (MOFA), Government of Japan (since 2008). He serves as Senior Advisor, Board of Central Japan Railway (JR Tokai) and Advisor, WEDGE Corporation. From 2005 to 2008, he Taniguchi served as Deputy Press Secretary and Deputy Director General on Public Diplomacy at the MOFA. Prior to that, he was Chief Senior Writer, Nikkei Business, Nikkei BP., Inc. He has been Visiting Fellow, Woodrow Wilson School, Princeton University; Shanghai Institute of International Studies; and Brookings Institution. He has published three books in Japanese on foreign exchange regimes and international affairs and numerous articles both in Japanese and English.

Sarah Y. Tong is at the Department of Economics, East Asian Institute, National University of Singapore. She received her PhD

Downloaded by [University of Defence] at 01:36 24 May 2016 in Economics from the University of California, San Diego and MA in Management from Beijing University of Aeronautics. She has been Visiting Fellow, Center for Northeast Asian Economic Cooperation University of Hong Kong, Hong Kong SAR, China; and Research Associate Professor, HK Institute of Economic and Business Strategy. She has published extensively on the US–China trade imbalance and foreign direct investment in China and other related issues. E-mail: [email protected] Notes on Contributors 405

Christian Wagner is Senior Research Associate, SWP (Stiftung Wissenschaft und Politik), Ludwigkirchplatz 3-4, Berlin. He is a well- known German expert on South Asia. He wrote his PhD dissertation at the University of Freiburg (Germany) on the Muslims of Sri Lanka, analysing how this group of Sri Lanka’s population was entangled in the ethnic conﬂ ict between the Singhalese and the Tamils of Sri Lanka. Focusing on Indian foreign policy and South Asia, he has published extensively on the roots and implications of the Sri Lanka civil war and the scope for reconciliation and peace building. E-mail: christian. [email protected]

John Wong is Research Director, East Asian Institute, National University of Singapore. He is an expert on Chinese political economy and has written extensively on China’s interaction with East Asian countries. His books include The Political Economy of China’s Changing Relations with Southeast Asia (1984) and China’s Emerging New Economy: The Internet and E-Commerce (2001).

Ong Keng Yong was Secretary General, Association of South East Asian Nations (ASEAN) from 2003–2007. He is Director, Institute of Policy Studies, Lee Kuan School of Public Policy, National University of Singapore, Singapore. His research interests include international relations and governance in Singapore. He entered the Singaporean diplomatic service in 1984. For the next 10 years, he worked in Saudi Arabia, Malaysia and the USA successively at Singaporean embassies in those countries. From 1996–98, he was ambassador and high commissioner of Singapore to India and Nepal. From 1998–2002, he worked as an aide to Prime Minister Goh Chok Tong till 2002, when he was elected Secretary-General, ASEAN. He was concurrently Chief Executive Director, People’s Association from 1999–2002. E-mail: [email protected] Downloaded by [University of Defence] at 01:36 24 May 2016 Zhang Guihong is Executive Director, Center for South Asian Studies, Institute of International Studies, Fudan University, Shanghai. He has participated in the ‘International Visitor Leadership Program’ (2003) sponsored by the US Department of State and was Visiting Scholar, Henry L. Stimson Center (2002–2003), Monterey Institute of International Studies and University of Georgia (2008), USA, and ASIA Fellow, Jawaharlal Nehru University as well as Institute for Defence Studies and Analyses (2004–2005), New Delhi. He has 406 Emerging China

published several articles in Indian journals including Security and Society, South Asian Survey, International Studies, China Report, Aakrosh, Fault Lines and Strategic Analysis. His current research projects include ‘China–India Relations after the End of Cold War’, ‘U.S.–India Strategic Partnershsip and its Implications for China’ and ‘China–India–U.S. Trilateral Relations’. E-mail: ghzhang@fudan. edu.cn

Zhang Li is Research Professor, International Relations, Institute of South Asian Studies, Sichuan University (Chengdu, China). His was Visiting scholar in the UK (St Antony’s/Oxford University), India, (Jawaharlal Nehru University), Hong Kong (Centre for Asian Studies), and Sweden (Institute of Peace and Confl ict Management/ University of Uppsala). His research covers China’s multilateral and neighborhood diplomacy; China–South Asia strategic links; and Asia-Pacifi c security and confl ict prevention. He has a PhD in the history of diplomacy and is a member of the Chinese Association of International Affairs, Asia-Pacifi c Studies and Strategic Assessments, South Asia Studies, and Pan-Himalayan Survey and Consultation. He is the author of several books and dozens of journal articles/book chapters, among recent publications being China’s Concerns over India–Pakistan Confl ict and Sino-Indian Relations (2008) and To Manage Confl ict in South Asia: China’s Stakes, Perceptions and Inputs (2009). E-mail: [email protected] Downloaded by [University of Defence] at 01:36 24 May 2016 Index 407

Index

Abe, Shinzo, 182 Association of Asia Scholars (AAS), alliance of democracies concept, 60 xix, xviii, 5–6 American power, 70 Association of Southeast Asian Nations Ansari, Mohammad Hamid, 260 (ASEAN), 2, 7, 36; challenges Arc of Freedom and Prosperity con- before, 35; and China’s: free cept, 12, 185, 196–98 trade agreement (CAFTA), 257; arms imports, value of: by China, 94; regional initiatives with, 156–60; by India, 95 role in, East Asian ﬁ nancial crisis, ASEAN–China Free Trade Agreement 2; free Trade Agreement (FTA) (ACFTA), 105, 108–109, 111 (see Free Trade Agreement [FTA]); ASEAN Free Trade Agreement great powers, engagement of, (AFTA), 105, 219 31–35; and India: distance after ASEAN Plus One Summit, 109 Cold War, 259; and Japan’s: ASEAN Plus Three Summit, 22, 109 Trade-in-Goods agreement, 63; ASEAN Regional Forum (ARF), 22, multilateral institutions, revival of, 53, 235; talk-shop nature of, 216 22; multilateralism: and regional ASEAN Way, 3, 7, 219 security (see regional security Asia: China role and status in: and ASEAN multilateralism); US diplomatic and political status, dominance, 21; past and present, 172–75; economic and trading 39–41; role of, 33; Singapore: status, 171–72 promotion China association Asia Economic Community (AEC): with, 235; support to India, 235 New Delhi stress on formulation balance of power: between China of, 59 and India: evolution of, 319–23; Asian Cooperation Dialogue (ASD), 8 factors affecting, 325–26; factors Asian economy(ies), xvii; diversion responsible, for shifting, 323–25; from China, 2 implications of shift, 326–27; Asian financial crisis: China’s role management of shifting, 327–31 in, 100 Bandaranaike, Sirimavo, 246 Asian foreign exchange, 7

Downloaded by [University of Defence] at 01:36 24 May 2016 Bandaranaike, S. W. R. D., 241 Asian Relations Conference, xix, Bandit study: Taiwan, in, 133 241, 314 basso continuo: Japan perceptions of Asia–Pacifi c Community (APC), 48, China, of, 186–91 52; Australia stance on, 55 Baviera, Aileen S. P., 8 Asia Pacifi c Economic Cooperation Bay of Bengal Initiative for Multi- (APEC), 39, 100, 326 Sectoral Technical and Economic Asia–Pacifi c theatre, 21 Cooperation (BIMSTEC), 278, Association for Relations across the 315 Taiwan Straits (ARATS), 179 Beijing Olympics, 250 408 Emerging China

Bharatiya Janata Party (BJP), 310 China–ASEAN Free Trade Agreement bilateralism, 24 (CAFTA), 107, 175, 257 bipolar system, xvii China–ASEAN Fund on Investment Boao Forum for Asia (BFA): genesis Cooperation, 63 and objective of, 261–63; looks China-centrism: culture and history ahead, 263–67 as, 130–33; decision and image, Bohao Forum, 8 involvement of, 118; image prob- Brennan, John, 353 lem, importance of, 118; national Buddhism influence: Indo–China conditions as, 124–30; possibility relations, on, 296–99 for realignment, 137–39 burgeoning trade: between India and China–Ceylon Rubber–Rice Pact, China, 64–65 246 Burma: and China: obstacles and China economy: growth of, 143 resistances between, 280–82; par- China–India relationship: bilateral tnership between, 275–77; strat- dimension, 381–88; during crisis, egic interests in, 271–73; difﬁ - 394–96; global dimension, 392– culties faced by India: cautious 94; Indian Ocean dimension, economic choices, 285–87; dip- 392; neighbourhood dimension, lomatic pitfalls, 283–84; inde- 388–90; regional dimension, cision over Northeast, 284–85; 390–91 logics of geography, 282–83; Chindia–Sri Lanka nexus, 244 underestimation of Xenophobic dimension, 287–88; and India: Chinese political reform see partnership between, 277–79; incrementalism policy shift by New Delhi, 270; Chun-Chieh, Huang, 117 Sino–Indian ‘Great Game,’ 270– Clinton, Bill, 216 71; threat perceptions and Look Cold War, xvii; US dominance over East strategy, of India, 273–75 world after, 21 Bush, George W., 32 communism, 242 Community of Democracies (CoD): Cambodian crisis, 49 India’s support to, 311 Caporaso, J., 25 complementary economies, 82 Chai, Joseph, 81–82 concentric circles, 37 Chatwal, S. S., xviii Conference on Interaction and Con- China: challenges of development fidence Building across Asia and integration: domestic affairs, (CICA), 8, 53 176–78; foreign affairs, 178–80; construction industry: China, of, 88 Downloaded by [University of Defence] at 01:36 24 May 2016 emergence as global manufacturing cooperative security concept, 53 centre, 65; rise of: scholars’ views Council of Security and Cooperation on, 1; role in formulation, of in the Asia Paciﬁ c (CSCAP), 75 regional architecture, 60; South creative destruction, 71 Asian Association for Regional cross-border production sharing: Cooperation (SAARC) and (see China role in, 258 South Asian Association for cultural ownership: disputes in Korean Regional Cooperation [SAARC] literature over, 117 and China) Cultural Revolution (1966), 132 Index 409

Dali, Yang, 128 Eurocentrism: re-appropriation of, Davos World Economic Forum, 8 133–37 Decade of Intra-regional Connectivity, Exclusive Economic Zone (EEZ), 372, 390 193 Defence Assistance agreement: between exports: from China: global market India and Vietnam, 225 share of, 83; India, to, 80; from Democratic Party of Japan (DPJ), India: China, to, 80; global market 182 share of, 83 Deng Xiaoping theory, 169 Deshingkar, Giri, 378 11th Five-Year programme: China, Dragon Boat Festival, 117 of, 144 Foreign direct investment (FDI): East Asia: free trade area, establishment competition between India and of, 258; growth and integration China for, 88–91; South Korea, in, 147–48; strategic landscape: of: to China, 204; to India, 204 issues, 217–19 foreign policy: China, of, 119; impact East Asian Community (EAC), 52 of renovation, in Asian countries, East Asian (EA) economy(ies), 143, 173; soft-power initiatives, 307; 149–50; China as dragon-head, themes of, 4; India, of: soft power 153–56 and (see soft power and foreign East Asian ﬁ nancial crisis, 2, 256 policy, of India); Japan, of, 182; East Asian intra-trade: origin and towards China, 193; Malaysia, destination of, 151–52 of: foundation of, 219–21; impact East Asian nations: current account of regional power shift between surpluses of, 7 China and Japan, 221; soft power, East Asia Summit (EAS), 22, 33, 46– 313 47; characterizes region openness foreign weapons: purchasing of: by and inclusiveness, 50; Nalanda China, 92; by India, 92 project, 51; participant, 50 Forum on China–African Cooperation East Timor problem, 27 (FOCAC), 101 economic rise, of China, 144–47; Free Trade Agreements (FTAs), 47, regional impact of: challenges 59 impose before Japan, 148–53; dragon-head for EA economies, G-20, xvii, 57, 306 153–56; regional initiatives with Gandhi, Indira, 314 ASEAN, 156–60 Gandhi, Mahatma, xix, 309 Downloaded by [University of Defence] at 01:36 24 May 2016 economy of, China: towards Sino- Gandhi, Rajiv, 274, 321, 385 centric East Asian: China dynamic George Washington carrier, 216 growth, sustainability of, 161–62; global aspiration, of India: and China’s response from EA economies, response, 334–36 162–63 Global Democracy Initiative (GDI), Education Forum for Asia (EFA), 311 265 globalization: impact on ASEAN, 46 Euro-Asia Economic Forum (EAEF), Global Trends 2025 report, 242 256 Goh, Evelyn, 40 410 Emerging China

Goldman Sachs: prediction on Indian Indian quest: for international parity economy, 202 with and security from China, good-neighbour policy: China, of, 68 101–102 Indian society: feature of, 309 Great East Asia Co-prosperity Sphere, Indian Technical and Economic 59 Cooperation (ITEC) programme, Great Leap Forward (1958), 132 312 Gross domestic product (GDP): India rise, strategic implications of: China’s account in, 1 China’s assessment of, 336–42 Gujral doctrine, 315 Indonesia: perspective on ASEAN, Gupta, Krishna Prakash, 296 36 Indo–US civil nuclear cooperation Hambantota Multipurpose Project, agreement, 60 247–48 industrial production: US, of, 71 hard power, 69 Industrial Revolution, 1–2, 70 harmonious world (externally) see INS Mumbai, 225 foreign policy, themes of China’s INS Ranvir, 225 Hatoyama, Yukio, 182 institutional entrepreneur, 22 see also high-performing economies see miracle Association of Southeast Asian economies Nations (ASEAN) Hundred Days Reform, 298 International Atomic Energy Agency (IAEA), 336 IITEC, 314 International Buddhist Forum, 245 imports: from China: India, to, 74, International Conference on Education 76–79; from India: China, to, Cooperation, 265 74–75, 79 international division: labour and hard incrementalism, 126–27 power, of, 68 India: and Association of Southeast international service sales: by China, Asian Nations (ASEAN): support 84–88; by India, 84–88 of Indonesia, 43–44 International Tourism Conference, India Everywhere campaign, 310 264 see also Boao Forum for India International Development Asia (BFA) Cooperation Agency (IIDCA), 314 Japan–India strategic alliance, 182 India–Japan Declaration on Security Japan regionalism, 33 Cooperation, 61 Japan–US Joint Declaration on Downloaded by [University of Defence] at 01:36 24 May 2016 Indian Brand Equity Foundation Security, 216–17 (IBEF), 310 Jiabao, Wen, 101, 109, 241, 260 Indian Council for Cultural Relations Jintao, Hu, 130, 194, 246, 260 (ICCR), 310 Joint Malabar military exercise, 60 Indian Council of World Affairs Joint Statement on East Asian (ICWA), 5–6 see also Naidu, Cooperation, 257 Sarojini; Nehru, Jawaharlal; establishment of, xviii kalas, 288 Indian National Maritime Foundation, Kunming Initiative, 278 249 Kyi, Aung San Suu, 273–74 Index 411

Lama, Dalai, 393–94 Naidu, Sarojini, xix Leifer, Michael, 37 Narayanan, K. R., 321 liberal democracy, 242 Natalegawa, Marty, 75 Liberation Tigers of Tamil Eelam National Socialist Council of Nagaland (LTTE), 251–53 (NSCN-K), 278 Line of Actual Control (LAC), 321 national strategy: China transformation London Times, 248 of, 99–101 Look East policy, 44, 342; India’s nation-forming process, 69 profile, in Asia–Pacific region, nation states, 69 60 Nehru, Jawaharlal, xviii, 259, 378, 380 Mahathir concept, 33 Nepal: relationship between: China Majumdar, R. C., 377 and, 261; India and, 261 Malaysia: challenges before, 215; New International Economic Order strategic interests, 222–24; strat- (NIEO), 314 egic puzzle, 224–26 Newsweek, 243 Manmohan Singh–Wen Jiabao Joint Non-Aligned Movement (NAM), Statement (2005), 387 314 manufacturing, 70 non-aligned Sino-phone experts: Marcos, Ferdinand, 36 China, on, 120–24 McMahon Line, 284 non-polar world system, 306 Menon, Shiv Shankar, 249 norm entrepreneur, 22 see also Military Technological Revolutions Association of Southeast Asian (MTR), 71 Nations (ASEAN) Millennium Development Goals, 306 North Atlantic Treaty Organisation Ministry of External Affairs (MEA), (NATO), 54, 197, 391 310, 313 North Korea: incorporation into Soviet miracle economies, 82 Union, after Cold War, 201 multilateral collective defence security North theory, 128 mechanism, 54 NSCN-IM, 278 multilateral institutions: advantages Nuclear Suppliers Group (NSG), of, 23; disadvantages of, 23 336, 392 multilateralism, 56; Asia, in, 6; attraction for great powers, 32; Obama, Barack, 32, 57, 106, 110, 206, deﬁ nition of, 22; objective of, 29; 213, 227, 243, 260, 352–53 as organising principle, in inter- open-door policy, 99, 143 Downloaded by [University of Defence] at 01:36 24 May 2016 national relations, 24; origin of, 6; Organization for Economic Cooper- properties of: diffuse reciprocity, ation and Development (OECD): 26; generalised principles of import to markets of: by China, conduct, 25–26; indivisibility, 25 80–81; by India, 81 multi-layer cooperation: China’s Orientalism, 120 dynamic approach towards, outsourcing service centre: India as, 106–10 66 Myung-bak (MB) government: South Korea bilateral alliance with USA, pan-Asian country(ies): revival of emphasis on, 202 visions, 2–3 412 Emerging China

Panchsheel Agreement, 241 revisionist power by omission, China Pan-Tokin Gulf Economic Zone, as: and Japan response, 191 175 revolutionary historiography, 128 partnership: aspects in, building up, Roy, Kartik, 81–82 349–50; between China–India, Rudd, Kevin, 42 348–49; approaches for building, Ruggie, J. G., 25, 28 363–66; common interests as Ryutaro, Hashimoto, 216 bedrock of, 350–51; factors responsible for forging close, San Francisco Conference, 383 366–70; international background Schumpeter, Joseph, 71 of, 351–53; rationale for building, Severino, Rodolfo, 27 356; reasons for lack of, 355–56; Shanghai Cooperation Organisation steps for building strategic, (SCO), 7, 53, 251, 391 see also 371–74; meaning of, 349 Shanghai Initiative Pax Sinica, 187–88 Shanghai Initiative, 7 peaceful development (internally) see Sharma, Kamlesh, 243 foreign policy, themes of China’s Sheridan, Michael, 396 People Liberation Army (PLA), 217 Singapore: Chinese: investment in, People’s Action Party (PAP), 39 228; population in, 228; presence People’s Liberation Army (PLA), 217, in, 229–33; relationship since 223, 278 1980s, 233–35; trading partners, People’s Republic of China (PRC): 238–39 India–Japan Declaration on Singh, Jaswant, 321 Security Cooperation (see India– Singh, Karan, 310 Japan Declaration on Security Singh, Manmohan, 199, 241, 243 Cooperation); regional security, Sino-phone China study, 118–19 stress on, 53 Sino–US Strategic and Economic Pohang Steel Corporation (POSCO), Dialogue, 58 210 Six Party Talks, 8, 31, 201, 212, poor people rate: China, in, 170 218, 326 postcolonialism, 120 Smith, Adam, 66 Provisional Transnational Government soft power, 307, 316–17; and foreign of Tamil Eelam see Liberation policy, of India, 308–309; culture Tigers of Tamil Eelam (LTTE) capacities and capabilities, 309–10; political values, 310–13 Qureshi, Mahvash, 79, 81 South Asian Association for Regional Downloaded by [University of Defence] at 01:36 24 May 2016 Cooperation (SAARC), 8; Decade Rajapaksa, Mahinda, 245 of Intra-regional Connectivity Ramesh, Jairam, 335 (see Decade of Intra-regional Rao, Narasimha, 321 Connectivity); and China, 254– Rao, Nirupama, 244–45 55; India’s support to, 315 Red Guard demonstration, 246–47 Southeast Asia: challenge before, 40 regional community: Japan preference Southeast Asia Treaty Organization for, 34 (SEATO), 38 regional security: and ASEAN multi- South Korea: attention towards India, lateralism, 26–30 201–202; and China: strategic Index 413

partnership between, 203–208; ULFA, 278 incorporation into American bloc, UN Democracy Fund: India’s par- after Cold War, 201; and India: ticipation in, 311 partnership between, 208–12 United Malays National Organization South–South Cooperation Conference, (UMNO), 39 242 United Nations Development Program Soviet bloc: collapse of, 2 (UNDP), 216 spiritual civilisation see foreign policy, United Nations Security Council themes of China’s (UNSC), 23, 191 Sri Lanka: and China, relationship United States: relationship between: between: advanced productive China and, 258–61; India and, forces, 247; economic imperative, 258–61 248–50; external ramifications United States National Intelligence of terrorism, 252–54; historical Council (USNIC), 242–43 legacies, 245–46; multi-party US National Defense Strategy (2008), relations, 246–47; people-to- 62 people nexus, 250–51; political dimension, 251–52 Vajpayee, A. B., 260 State Law and Order Restoration Vajpayee–Wen Jiabao Joint Statement Council (SLORC), 272, 276 (2003), 387 Stockholm International Peace Research Institute (SIPRI), 92 Wan, Guanghua, 79 Straits Exchange Foundation (SEF), Warsaw Pact, 215 179 Wirajuda, Hassan, 44 World Trade Organization (WTO), terrorism, 62 169 textile clothing, 79 World Uygur Congress (WUC), Tharoor, Shashi, xxi 253–54 Third Plenary Session of the 11th Central Committee: Communist Xiaoping, Deng, 271 Party of China (CPC), of, 168 Tiananmen Square crackdown, 99 Yongnian, Zheng, 126 Tianxia system, 130 Yongtu, Long, 264 Tong, Goh Chok, 259 Youwei, Kang, 298 trade relations: between China and India, 71; growth of, 72–73 Zakaria, Fareed, 243 Downloaded by [University of Defence] at 01:36 24 May 2016 Treaty of Amity and Cooperation Zemin, Jiang, 169 (TAC), 32, 40, 104 Zone of peace, freedom and neutrality Treaty of Nanking, 184 (ZOPFAN), 29, 225 trust deﬁ cit: India–China relations, in: Buddhist connections, overemphasis on, 296–99; cultural route to, confidence building, 300–4