In recent years, China has been  an agent of globalisation and  a growth model in South Asia. Accordingly, there has been a marked change in its approach and strategy. In the last 60 years, China has transformed itself from an astute proponent of ideological influence and covert supporter of insurgency to a builder of cross-border infrastructure and a market grabber. It disrobed itself of a socialist paradigm and now ignores Maoism. Yet it hesitates to accept that it is in the capitalist mode and insists that democracy and development have no correlation. South Asians devour this ambiguity of China, as the subcontinent itself is a reservoir of scattered thinking, ambiguous planning and actions based on marginal utility. A potentially powerful neighbouring South Asia only realised the wider usefulness of China when the later displayed a meteoric rise in terms of growth, global market influence, investment ventures and as an advocate of exclusive Asian values where soft power retains its importance.

There are three abiding and powerful objectives in China’s emerging ‘forward policy’ in this region. These include: expansion of its military base and strategic access; economic and commercial penetration into the huge South Asian market and through it to Middle East and Central Asia; and tackling its internal instabilities.

By the mid-1980s, China had greatly realised that national security could be ensured through mulin zhengce, a better relationship with neighbouring countries. As a country in a ‘diverse region’, the end of the Cold War brought an opportunity for China to broaden its foreign policy options. It faced an enigmatic challenge of remaining “a regional power without a regional policy”.  This is where Deng Xiaoping’s advocacy of comprehensive zhoubian zhengce (periphery policy) became useful and far reaching.

China started consciously designing a clear regional policy and determinants like political system-ideology linkage and  super power alliance, which remained the fundamental basis and hallmark of its foreign relations, were increasingly abandoned. A new China has been trying to woo South Asia in much the same way that it has successfully wooed other neighbouring regions. The model has three levels of engagements: local, national and regional.

Local, national, regional

China has been consciously trying to make economic dents at the very local level. It has extensively used the border trade as its main instrument to realise this goal of local economic integration. It is broadly estimated that border trade through its 120 inland towns and ports constitute nearly half of China’s total foreign trade. The total border trade revenue of China with Vietnam, Cambodia and Laos alone is estimated to be $30 billion in 2016. It draws its strength from “Provisions of Administration on Border Trade of Small Amount and Foreign Economic and Technical Cooperation of Border Regions” promulgated by the Chinese Ministry of Foreign Trade & Economic Cooperation and China’s Customs General Administration in 1996. Such policies do not exist among South Asian countries.

The completion of 1,142km railway from Golmud city in Qinghai province to Lhasa and overland access through Sichuan-Tibet Highway transformed the entire physical accessibility to and from mainland China for Tibet, the neighbouring provinces like Sichuan and Yunnan as well as the neighbouring countries. This could further be consolidated by the railway line that has been brought to Shigatze and further down.

Besides the older Kathmandu-Kodari Highway trading arrangement into the Tibet Autonomous Region, there are other seven important transit trade posts between Nepal and China and they are being strengthened. With the agreement for the 30km radius zone as a Trade Free Zone (TFZ) within the epicentre of the Tatopani Custom Office, the Nepal-China trade through this route has acquired a robust dimension. Nepal’s exports to Tibet increased to Rs 52.18 crore in 2000-01 and to 149.17 crore in 2013-14 and imports of Rs 1140 crore and Rs 1849.53 crore during the same time period. 

China has a history of using other countries as a base for exporting goods. The proposals to use Nepal as a transit point for India-China trade and to seek access through the Karakoram highway in Pakistan connected to the Gwadar port are designed in the same way.

At the national level, economic interests of both South Asia and China coincide deeply. The Chinese would gain tremendously through market access to South Asian countries and those countries, in turn, will get access to the Chinese market.

A significant national level integration in terms of trade, investment, tourism and infrastructure projects has taken place between China and South Asia over the last two decades. China’s trade with South Asia has grown from a mere $1.18 billion in 1990 to $12.07 billion in 2003 to $111 billion in 2015.  Unsurprisingly, China has become the largest trading partner of India, Pakistan and Bangladesh, and the second largest partner of Sri Lanka and Nepal.

Similarly, Chinese investment in South Asia reached a whopping $13 billion last year. Besides elevating relations from a closer comprehensive partnership to a strategic partnership of cooperation between China and some South Asian countries, the $46 billion China-Pakistan Economic Corridor and $24 billion credit line commitment to Bangladesh are indications of China’s deepening foray into South Asia. Six member states of the South Asian Association for Regional Cooperation (Saarc) are party to the China-led Asian Infrastructure Investment Bank (AIIB) and China’s One Belt and One Road (OBOR) Initiative scheme that literally garlands South Asia with connectivity projects which could lead to a massive pouring of infrastructure funds in the region.

Gradually taking root

At the regional level, China’s silent quest to enter into Saarc has partially been fulfilled with its ‘observer’ status in the regional forum. This is another route through which China could effectively and expansively enter into the South Asian market. China has never been a part of the sub-continental past; its political ethos and cultural panorama and may not even fit into this region’s complex socio-economic composition and political culture. Possibly to camouflage this Chinese oddity, the US, the EU, Japan and South Korea have also been given the same status in Saarc. China, however, can make a big difference in either consolidating Saarc through substantive cooperation-integration action or erode the functioning of the regional body through counteractive action against the traditionally established pivotal role of India. However, if both India and China decide to move together, South Asia will be the biggest gainer and a region to reckon with.

China’s Saarc venture is again very parallel and germane to its membership of the Association of South East Asian Nations (Asean), whose full-fledged membership it is doggedly pursuing. In fact, in China’s South Asia mission, the traditional goal of enhancing its national power remains intact. But what has changed is the compulsive reality. This has resulted in the sophistication of diplomacy, diversity of means, deployment of newer instruments and variety of engagements as fresh inputs to strengthening national power. It is still anybody’s guess whether the change in Chinese attitude towards its crucial neighbour India will be sustained by protracted moves and actions in terms of resolving the core boundary disputes. However, the wherewithal of economic diplomacy it has deployed could not be withdrawn like the military arsenals in peace time. They are gradually taking root, thereby making deeper inroads into China’s own political culture and social dynamics.

Lama, a professor in the School of International Studies, Jawaharlal Nehru University, New Delhi, is the co-author of “Rethinking India-China Borderlands and Security” published by the Michigan University Press