The informal summit at Mahabalipuram, Tamil Nadu, has some unremarkable, if solid, agenda items. But these could have appeared in any bilateral state visit between the heads of government of India and China. These concern trade, investment, technology, tariffs, visas, broad-based terrorist threats and so forth. Such matters can, and do, also get taken up at other venues and summits that dot the annual calendar. These, jointly and severally, afford handy delegation-level talks on their sidelines. But an informal summit like the one in Wuhan, China, and the one now, which allows several hours of one-on-one informal meetings, can work on medium-term strategic issues better than most other formats. Much as there is a Pakistan lurking behind the scene.
The defensive positions and formal reservations can be set aside as already read, as both leaders come to them extremely well briefed. The type of work they individually and jointly do at such summits, therefore, may not emerge into the official lexicon on either side, let alone the public domain, for a considerable time after. Even if certain sensitive things are agreed upon, the enabling actions that are put into motion, also take time to fructify. However, as a consequence, a confidential tête-à-tête as a diplomatic construct can truly tackle game-changer issues. Which is possibly why India and China have begun to hold them soon after the lengthy stand-off at Doklam.
In a broader context, that is no doubt impelling, China is under considerable financial pressure and stress even as its economic growth has halved from peaks of a few years ago. This is a widely held perception in strategic circles, though details of how tough the situation is are hard to come by, given China’s opaque systems of governance. But it is safe to assume that China carries massive debt, most of the legacy amounts from its high growth years being internal debt, as otherwise if it were external, the world would be privy to it. Suffice is to say, its foreign exchange dollar/euro reserves, though it runs into trillions, is not even a fraction of what is the position here.
There are also the massive amounts owed to China by a host of impoverished or fairly poor nations that have availed of China’s offer to build large infrastructure in their countries. Yet other countries have sold China their land and mines. China’s ongoing liabilities are considerable without commensurate revenues to balance it.
That China has obtained masses of such infrastructure on long lease in these countries when they have been unable to pay instalments against their debt, inclusive of tax holidays and other favourable terms, does not, as yet, help its cash flow. Nor does it make China popular in this day and age, because it smacks of colonial-style imperialism.
Nevertheless, to get this reality going into economic viability, China needs people to use, and pay for the facilities they have created. But even a couple of years after Hambantota and Gwadar are operational, next to nobody has come to call at these ports.
In the case of Gwadar, the resentment against both the Pakistanis and Chinese felt by the Balochis makes it a volatile prospect for trade that needs to pass from that port through and from Pakistan.
In the case of Sri Lanka, nobody else seems to want to use a Chinese port, when China has gone out of its way, in the garb of helping, to menace most of the countries bordering the South China Sea, and even further afield in the Asia-Pacific and Indian Ocean region.
The China-Pakistan Economic Corridor (CPEC), that will absorb at least $ 60 billion of China’s money, is also in financial trouble. Investment from China has slowed of late as a consequence, and the costs of keeping what has been put on the ground secure have risen exponentially. It is also extremely vulnerable to a conventional war between India and Pakistan. This could well be provoked by cross-border terrorist attacks and the belligerence against India of Pakistan’s armed forces along the international border or line of control (LoC).
Pakistan, on its part, is unhappy that the CPEC has not generated very many Pakistani jobs, or contributed substantially to its economy while saddling it with massive debt. A politically unstable Pakistan, run, de facto, by its all-powerful army, is near bankrupt. It is totally dependent on loans from the multilateral lending agencies, and China. Aid is also taken from whichever quarter it can secure it. This makes the future prognosis even bleaker.
Besides, like the Palestinians before them, fellow Islamic nations are reluctant to fund Pakistan. It is widely seen as a basket case and bottomless pit, that carries the opprobrium of being terrorist central too. America’s strategic dependence on Pakistan, because of its long-standing involvement in Afghanistan has diminished. And this to the extent that the US is pulling out of the region irrespective of the consequences.
The prospect of piggybacking on an “Islamic nuclear capacity” is no longer as alluring as it once was, given the fate that engulfed Col. Gaddafi of Libya, and the pressures being exerted on would-be nuclear Iran.
And using seconded or retired Pakistani troops, trainers and advisers, in Saudi Arabia and the UAE, has not yielded very good results versus the Houthi rebels, or even for routine security work internally.
As Pakistan’s sole benefactor cum colonizer today, things are not going very well financially for China. It is forced increasingly, to protect its sunk investment, to prop up the Pakistani military with money, planes, guns, and tanks. This, at its own expense, to all intents and purposes.
China’s tariff negotiations with the US, its biggest export market still, are not going very well either. President Trump is determined, like none other before him, to wring unprecedented concessions out of the People’s Republic. This is altering the status quo drastically. This more so because Chinese exports to a slowed US economy and a recessionary Europe have dwindled over the last several years. There is little upside in prospect even in the medium term. China’s production costs have also risen substantially occasioning many foreign manufacturers to emigrate to Vietnam, Bangladesh, and India. It is in urgent need of finding other markets, and India, with its size and population, is a good prospect despite a handsome trade surplus in China’s favour already.
India, on its part, has steadfastly refused to join China’s belt and road initiative, unlike Nepal, because the CPEC runs from Xinjiang via PoK and Gilgit-Baltistan, which are both Indian territories that it intends to reclaim. This, more so, after the abrogation of Articles 370 and 35A and the reorganisation of J&K into two union territories for now.
In is thought, in the strategic thinking of the Government of India, that it is impossible to remove Pakistan’s Kashmir obsession until the rest of the territory is reclaimed from Pakistani occupation as well.
India has vowed to do so of late, at the opportune time. It has also made it clear to China that any infrastructure it has built or is in the process of building in PoK and Gilgit-Baltistan, is without its expressed permission. This includes the road and associated infrastructure, a dam in PoK and so forth. The native people of the region are also unhappy with the Pakistani-Chinese occupation and want to revert to India at the earliest.
The time is ripe, therefore, and perhaps the matter has been, or will be, discussed between Prime Minister Narendra Modi and President XI Jinping at Mahabalipuram.
If China tacitly approves of India reclaiming PoK/Gilgit-Baltistan and uses its good offices to hold Pakistan to a token resistance; a case can be made for India joining the belt and road initiative in return.
This will give new life and strength to the whole enterprise, without compromising China’s abiding support to its ally Pakistan, and the latter’s legitimate territorial integrity.
That Baluchistan that contains the port of Gwadar, will chafe at the bit and seek independence from Pakistan, is a real, if separate, issue, and China will have to come to terms with it later, perhaps in league with India.
However, subduing Pakistan’s aggressive instincts, its calls for jihad, including its cross-border terrorism, is as much in China’s best interest as India’s.
Trade cannot flow between Xinjiang and Gwadar, and all points of the compass within India, and via Pakistan, if peace and tranquillity is not secured. China can make this happen if it undertakes an about-turn from the long-held policy of using Pakistan to bait India.