There is a new Cold War in the world. It is not between the United States and Russia; that is a diplomatic war between a presumptuous ‘sole super power’ and a chastened but proud country that has lost its pole position. It is not between the United States and China; that is a trade war that will be resolved in due course according to the rules of world trade.
The new cold war is between India and China. The war stems from two clashing points of view: India looks upon China with envy, China looks upon India with disdain. India believes China is a hegemonist, China regards India as an upstart. None of the Modi Rules of Engagement—hugplomacy, Gujarati hospitality, etc—is working.
Envy is meaningless
To understand the friction, one must acknowledge some hard facts.
I say it with much regret, but there can be no argument which is the stronger and more prosperous nation. It will take many years before either or both can claim to be a middle-income country that has abolished poverty. Between the two, however, China is ahead of India in that race.
China’s Grand Strategy
China, by all accounts, has a grand strategy. A key aspect of China’s strategy is dominance of its neighbourhood that includes large parts of Asia and some parts of Europe. China sees itself as the clear and unchallenged leader of a large and growing system of countries—in the same way as the erstwhile Soviet Union did and in the same way many European and Asian countries saw the United States before Mr Donald Trump.
India, and perhaps Japan, Australia and some south-east Asian countries, see it as hegemony; China flatly denies the insinuation. The Belt and Road Initiative (BRI) is the signature initiative of President Xi. India and a reluctant Bhutan are among the few countries that are holding out against joining the BRI.
China has entered into comprehensive economic partnerships with Bangladesh, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka—countries that surround India. China’s trade with and investment in these countries have increased. Bangladesh’s top trading partner is China. Goods originating from China top Sri Lanka’s imports. China is making huge infrastructure investments in Pakistan, the most notable being Gwadar port. Sri Lanka has ceded 70% ownership of Hambantota port that could, over time, turn into a naval base like Djibouti. In October 2016, China signed a $24 billion funding agreement with Myanmar and is building a deep-sea port in Kyaukpyu. The KP Oli government in Nepal, with a strong Marxist influence, is expected to lean in favour of China. Claiming equal rights with India vis-a-vis Maldives, China has effectively stalled any action by India in those troubled islands.
How India failed
Observers have pointed to several strategic mistakes committed by India. The most serious mistake was the flip-flop policy toward Pakistan that is still passed off as ‘foreign policy’ and that has pushed Pakistan fully into the embrace of China. If there is another war, it will not be a war with one neighbouring country, it will be a war on two fronts. India’s stand-off with Nepal on the new constitution of Nepal was handled in such an abrasive manner that it hurt nationalist sentiments in Nepal and created fissures (especially with Mr KP Oli’s party) that will take a long time to heal.
In Maldives, India has made a quiet retreat, leaving all opposition parties in that country bewildered. In Sri Lanka, the ruling coalition of Maithripala Sirisena-Ranil Wickremasinghe feels slighted by the benign neglect; a rebounding Mahinda Rajapaksa is openly hostile.
That leaves only Bangladesh, a country divided between two political parties so hostile to each other that India will never be regarded as neutral in the bitter political fight between them.
Is there any surprise that the Indian neighbourhood is an inviting field to China, that has enormous resources, no domestic opposition to its government, an omnipotent leader and a bagful of guile? (Recall also that President Xi is the only leader who has made it clear that he does not favour a hug from Prime Minister Modi.) It is obvious to most observers that China will not—as long as it can have its way—allow India to become a member of the UN Security Council or the Nuclear Suppliers Group. China regards itself as the sole super power in Asia and hopes to become a co-equal power with the United States (with help from a bumbling Mr Trump!).
There is a long-term strategy that India can pursue: to become an economic power equal to China. That requires collective economic wisdom, bold, structural reforms, radical policy changes and determined implementation that will lead to sustained and high (8-10%) economic growth over a period of 20 years. That is a challenge beyond the one-man band called Mr Narendra Modi.