Financial Express, May 31, 2013

India’s China puzzle

 The recent visit to India by China’s new Premier, Li Keqiang, led to a statement of cooperation covering a wide array of topics, and was followed by much sceptical analysis in the Indian media. Aside from history (the harkening back to the 1954 Panchsheel Treaty seems particularly ironic), the recent Chinese actions in Ladakh made the Chinese premier’s goal of trust-building somewhat more difficult to accept on the Indian side. An extreme pessimistic position is that China is engaging in diplomacy that will allow it to pursue its long-term strategic goals, by making promises to India of good things to come from cooperation. The Chinese leader’s visit certainly did seem to come across as a charm offensive, with one Indian academic describing him as “exuding warmth.” The rhetoric of the two population giants cooperating for peace and stability and for economic development is certainly appealing. On the other hand, strategic analyst Brahma Chellaney has termed China’s approach as coercive diplomacy, strengthening its hand on border issues with its incursion, while appearing to be magnanimous in its official diplomacy.

India has no choice but to talk with China. Their geographic proximity and the range of issues where their interests intersect make that imperative. The problem is that the deck is stacked against India in many dimensions: whether it is China’s economic advantage, its military prowess, or its geographic position (particularly with respect to trans-boundary rivers). Cooperation may lead to mutual gains, but how those gains are divided depends on the relative bargaining strengths of the two parties. On almost every dimension, India is in a weak bargaining position. In some cases, as in the boundary dispute, China can almost completely call the shots. India has to change the game it plays.

In analyses of the Chinese premier’s visit, it was certainly well-recognised that China wishes to counter India’s attempts at economic or strategic closeness to the United States, and also, to some extent, to Japan. But it is precisely ties such as these that will give India some leverage in its dealings with China. Indeed, there is a long list of Asian countries with which India should be pursuing closer economic or strategic relations. In dealings with these countries, India has an advantage over China, which has a trust deficit with many of its neighbours, not only with India.

I outlined a strategy for India in two columns last year (August 14 and 22, 2012) that emphasised broader engagement with other countries as alternatives to China, as well as a concerted effort on the domestic front, in areas such as infrastructure. In the joint communiqué this time around, the Indian side encouraged Chinese investment for infrastructure development. But relying too much on the Chinese for India’s critical needs in this sector will be a mistake, precisely because it fails to reduce the asymmetries in bargaining power between the two nations, even if there are mutual gains from cooperation. Increasing India’s economic strength will take time, and physical infrastructure is not the only area in which India is weak relative to China: health and education also stand out as sectors where India lags more than it should. Fixing all of these areas will take time.

One area where the financial resources needed are relatively small (although there may be other, non-financial hurdles) is that of India’s foreign policy institutions, in particular the Indian Foreign Service. If India is to pursue a strategy of global engagement, in which China is just one of many partners—its influence counterbalanced by networks of foreign ties—the size of the IFS and its quality will need to increase. It is well-recognised that the IFS is small relative to India’s size, even allowing for the country’s relative poverty. Brazil and China have larger numbers of diplomatic personnel, and even tiny Singapore has almost as many professional diplomatic personnel (as opposed to support staff) as India.

There are many areas of improvement needed, besides adequate numbers: a 2009 article by Daniel Markey in Asia Policy makes a telling and unfavourable comparison of India’s training of its diplomats with the case of China. Markey also highlights the relative strength of China’s foreign policy think tanks. And the comparison of universities across the two countries only emphasises India’s weakness.

The puzzle for India is that it cannot avoid China, but it is currently ill-equipped to engage with its neighbour in a manner that protects and enhances its own interests. To deal with China, India needs a strategy of broader economic and strategic engagement, but it also needs the means to design and implement that global engagement. To accomplish that, India needs to invest very specifically in the human and organisational capital required for that task. This is not a trivial task, but it does not require the scale of resources directly needed for domestic economic growth. The challenge will be to overcome institutional inertia, but raising the size and status of, and support for, India’s diplomatic corps should be easier than the broader reform of the bureaucracy that is also needed.