NEWS

The Chinese Checkmate?

June 07, 2006
Cynical Nerd

Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership
- Deng Xioping

We are concerned that a country of India's stature lacks a full-time Minister of External Affairs. Prime Minister Manmohan Singh handles relations with the United States while Pranab Mukherjee, the Minister of Defence, appears to now handle all other matters pertaining to foreign affairs. We are not sure whether this is due to the increased clout of the West Bengal administration in the current multi-party coalition in New Delhi or not. For one, India's Nepal policy has been increasingly orchestrated by West Bengal's ruling Communist Part of India (Marxist). Regardless, what is missing under the current administration is a far sighted calibrated vision of India's national interests in the international arena. This is seen both with regards to the proposed Indo-American nuclear deal and Sino-Indian relations.

It is in this context that we examine the emergence of China.

Economy:

China with its area of 3,691,500 square miles (i.e. 9,560,900 sq km) has thrice the land area of India. It is India's only challenge and threat in the long term. China is the fastest growing economy in the world today. It had a per capita income of $1,702; a GDP of $2,224 bn; and an annual growth rate of 9.9% in 2005. This contrasted with India's per capita income of $714; a GDP of $775 bn; and an annual growth rate of 8.3% in 2005.

The foreign exchange reserves of China total $875 bn and its exports are approaching $1,000 bn in 2005. It is the largest trading partner of almost every country in East and South East Asia today. It signs massive energy deals in Central Asia illustrating its policy vision to consolidate its influence in the medium term.

And yet the picture is not entirely rosy. A recent Ernst & Young annual global survey that was hurriedly withdrawn under Chinese pressure revealed that the Chinese banking sector's total liabilities for non-performing loans might be as high as $900 bn. This introduces an element of risk in macroeconomic forecasting. Another risk for China is the decline in demographics and the associated labor shortage which could affect the current pace of its blistering investment-driven economic growth. A Pricewaterhouse Coopers report on the emerging markets predicts that by 2050, Chinese GDP growth will slow down and attain 95% of the U.S. GDP in contrast to the relatively younger India attaining 60% of the U.S. GDP (both at market exchange rate).

Defense:

The lack of reliable data on the economic front is witnessed once again in the Chinese defense program. The Pentagon estimates an annual Chinese defense budget of between $70 bn and $105 bn compared with India's budget at $19 bn. This is the second highest in the world after the United States. The Pentagon's annual report to the United States Congress reveals that China is in the process of buying the S-300 PM2 long range air defense system from Russia. It is developing DF-31 - a three stage 4,505 mile (7,250 km) intercontinental ballistic missile capacity with the first stage to be operational this year itself. Per Aviation Week & Space Technology magazine, the road-mobile DF-31 has a much survival chance and precision over its silo-based counterparts CSS-3 and CSS-4.

The Pentagon surmises that China intends to improve upon this with DF-31A 7,000 mile range (11, 270 km) missile that becomes operational in 2007 and a submarine-launched ballistic missile JL-2 by 2010. China's inventory of short-range ballistic missile has increased from an estimated 650 to 730 in 2005 to between 710 to 790 this year. Meanwhile, the current Indian administration is reluctant (some say cancelled) to test the Agni-3 missile with a range of only 3,000-4,000 km (1,864 to 2,485 miles) for fear of antagonizing international opinion! Even the United States with its perfected arsenal keeps testing its Minuteman III ICBMs several times every year to this date. India hasn't tested a ballistic missile since August 2004.

Like its economic performance, the growing military clout of China has its downside. It lacks an aircraft carrier, deep water anti-submarine capabilities, anti-aircraft warfare capabilities and a true blue-water nuclear attack submarines. It is deeply vulnerable to international energy shortfalls. Moreover, 80% of its hydrocarbon requirements flow past the Indian peninsula and travel between the Andaman and Nicobar islands making it vulnerable to a potential Indian stranglehold. But it has recognized the importance of building a strong navy and is constructing an aircraft carrier battle group, submarine bases in Hainan Island and Jianggezhuang in Yellow Sea, constructing its "string of pearls" naval bases around the Indian Ocean

Indian Subcontinent:

China has a policy of encircling India with strategic interventions in Burma, Maldives, Nepal and Pakistan.

China is Burma's biggest supplier of weapons. The long open border between the two countries enables the import of millions of dollars of Chinese weaponry and US$ 1 bn worth of Chinese consumer goods each year. The Chinese had sought a naval base in the Greater Coco islands off Burma (that Nehru had short-sightedly gifted to Burma in 1954) to monitor Indian naval movements and missile program. Beijing envisions Burma as providing its landlocked province of Yunnan access to the sea.

The Maldives leased Marao to China in 1999 reportedly for maritime traffic management. Marao is the largest of Maldives 1,192 atolls. The Chinese use the island to monitor Indian warships.

Turning to Nepal, the Maoists are poised to have increased influence. Reports suggest that the Communist Party of India (Marxist) helped shape the current Indian administration's policy towards Nepal. The Chinese intend to invest in a new highway to link Nepal with Lhasa. Construction of the proposed Syafrubesi-Rasuwagadhi highway is to start shortly. Nepal intends to seek funds from the Asian Development Bank to link that highway with its internal road network. The specter of improved Chinese troop mobility vis--vis India's exposed northern frontier is now real.

Beijing sponsored Islamabad's nuclear and missile program to check India. It invested in the Karakoram highway. It is now building a naval base that overlooks the Arabian sea in the Balochi port of Gwadar. India is being encircled.

Following the Indo-US nuclear agreement, China has demanded India to abandon its nuclear weapons and sign the NPT as a non-nuclear state. It has been actively working to thwart any fuel supply agreement in the Nuclear Suppliers Group (NSG). Meanwhile, China shows every willingness to modernize its strategic forces. Per Jane's Intelligence Digest dated June 1 2006, "Beijing is unlikely to limit the expansion and modernization of its own nuclear arsenal in the light of US plans to develop the capability to preemptively destroy China's nuclear forces and command-and-control infrastructure."

Indic Myopia:

The current administration in New Delhi is conceptually incapable of understanding the nature of the Chinese challenge. This is witnessed in Pranab Mukherjee's recent statement that China poses no threat to India! In fact, it is the reverse which is the case. He then claimed that there was room in Asia to accommodate the strategic aspirations of both China and India. But yet the post-independence history of India belies that.

China annexed Tibet in 1950. It annexed Aksai Chin in 1957. It invaded Arunachal Pradesh in 1962. It claims further Indian territory. Beijing refuses to accept Indian suzerainty in Kashmir. It sponsored Pakistan's nuclear and missile program with a view to containing India. These are the lessons of history that the UPA administration cannot wish away. The current strengthening of Chinese military capabilities is of concern to India. Beijing's intentions might be difficult to fathom and could quickly change, but what matters in the final round is its capacity to strike. And that remains ominous.

India needs to take note of developments on its eastern frontier in light of earlier border disputes and protect itself. For one, it needs to strengthen the emerging naval alliance with Japan. India needs to reinforce trading links with Taiwan. This should be upgraded to diplomatic relations when the international opportunity presents itself. New Delhi should reach out to Mongolia. The current plans to join a multilateral peace keeping exercise there called "Khanquest" is a good step. The reported plans to establish an air base in Tajikistan should be pursued with renewed vigor. India and Singapore had carried out join naval maneuvers in the South China Sea last year. This needs to be followed up on a more regular basis to counter Chinese efforts to encircle India. Recently, Singapore has welcomed India's offer in protecting the Malacca Straits. The idea is to take the competition to China's own borders and ensure that China is kept busy in its immediate neighborhood that has had its own share of resentments.

Further Reading:

"World Economic Outlook", International Monetary Fund, April 2006

John Hawksworth, "Long-term Growth Prospects for Large Emerging Economies", UK Economic Outlook, Pricewaterhouse Coopers, March 2006

"Military Power of the People's Republic of China" - Annual Report to the Congress, U.S. Department of Defense, 2006

"Mapping the Global Future", Central Intelligence Agency, December 2004

D. Wilson and R. Purushotaman, "Dreaming with BRICs - The Path to 2050", Goldman Sachs, 2003


Co-authored by Jaffna and Cynical Nerd

The author writes at National Interest
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The Chinese Checkmate?

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