Asia accounts for 38.8 percent of the GDP of the world, and the figure is expected to swell to 45 percent by 2025, according to Oxford Economics. Such an achievement is certainly possible if the continent is not hit by undesirable events like disease outbreaks and terrorist attacks. Unfortunately, just as the Indian and Chinese economies are soaring, so is their military and IT ambitions. Moreover, the Indian Ocean and the South China Sea have become potential flashpoints of conflict due to territorial disputes and claims to territorial waters. This has triggered an arms race in the region. 

Beijing’s military budget has jumped from $146 billion in 2015 to $151.43 billion in 2017-18. Only the US has a higher military budget, amounting to $603 billion. Japan’s defence spending too has risen sharply. It is estimated to be as high as $44 billion. Likewise, according to the Institute for Defence Studies and Analysis of India, New Delhi’s defence budget has been hiked by 10 percent to $53.5 billion in 2017-18. However, Russia has slashed its defence budget by almost 25 percent due to its economic situation, and totals about $42.2 billion for 2017-18. 

Urgency of the situation

India and China are rivals in the region in certain respects, but they have an incredible policy of competing with each other while promoting functional cooperation between themselves. Beijing and New Delhi have disputes over territories and waters, and both face separatist movements, terrorism and ethnic strife. China shares a 210-km long border with Afghanistan, also known as the Wakhan Corridor, and stability in the neighbourhood is critical for its internal solidity. China’s concern lies in the western province of Xinjiang where the Uyghur ethnic group is carrying out a separatist movement. 

Likewise, India is highly concerned about Pakistani-based terrorist groups such as Lashkar-e-Taiba, which carried out the infamous Mumbai terror attacks in 2008 and systematically hurled bombs at the Indian Embassy in Afghanistan in 2008 and in 2013. As a consequence, specifically during the Manmohan Singh administration, New Delhi and Beijing felt an urgency to join hands to confront common challenges of terrorism and separatism. They even exchanged views on mutual concerns in Afghanistan for which foreign secretary Sujata Singh had to travel to China. 

On the economic front too, India and China have developed a number of institutional mechanisms for enhancing economic cooperation. The China-India Joint Economic Group on Economic Relations and Trade, Science and Technology and the China-India Strategic and Economic Dialogue are two of them. Trade between India and China has jumped from $3 billion to $100 billion over the last decade. Moreover, there have been additional promising developments since summit-level engagements have also taken place. Indian Prime Minister Narendra Modi and Chinese President Xi Jinping have met not less than five times, which has generated optimism for greater bilateral economic ties in the near future. 

Understanding the urgency of the situation, Beijing has proposed a four-point initiative for furthering bilateral ties: Start negotiations on a China-India Treaty of Good Neighbourliness and Friendly Cooperation, restart negotiations on the China-India Free Trade Agreement, strive for an early harvest on the border issue and explore the feasibility of aligning the One Belt One Road Initiative (OBOR) with India’s Act East Policy. How New Delhi will respond to these proposals is yet to be seen.

Flexible diplomacy

Of late, Russia has become the cementing force between India and China and they have held several trilateral conferences under its aegis. India’s flexible diplomacy, which basically rests on engagement with key world powers rather than sticking to a particular country, also played a vital role in making this happen. India’s grown-up diplomacy advocated a negotiated settlement to resolve disputes over waters in the South China Sea. Likewise, it has also participated in the Russia-sponsored third round of consultations, recently held in Moscow, on brokering peace in Afghanistan. 

India took part in the conference which was attended not only by representatives from Afghanistan, China, Iran, Kazakhstan, Kyrgyzstan, Turkmenistan, Tajikistan and Uzbekistan, but also Pakistan which India has charged as harbouring terrorism. Yet, India, which appears to be neutral on the deployment of the Terminal High Altitude Area Defence (THAAD) missile system in the region, has invited Pakistan too to be part of a South Asian satellite programme. 

Due to a number of overt and covert reasons, Asia’s prosperous economies are either engulfed in war or involved in issues amounting to conflict such as reclaiming of territories and waters. As a result, the Indian Ocean and South China Sea too have become flashpoints of possible squabbles. In the recent past, North Korea’s aggressive posture fuelled an atmosphere that prompted trilateral security cooperation between Japan, South Korea and the US, which was followed by the deployment of THAAD in the region. This might have given some level of confidence to the trilateral alliance, but it has spread anxiety and misunderstanding in Seoul and beyond with China and Russia strongly protesting the deployment of the missile system. 

The prospects of Asia turning into a certain economic powerhouse are bleak, and the chances of diverting from an ascending economic course are high due to disputes and distrust. The first victim of the ongoing political stress will be trilateral economic cooperation between Japan, China and South Korea, which together account for about 20 percent of the world’s trade and commerce, and economic organisations such as Asean-plus-Three. Therefore, in Eastern, Northern and South Central Asia, building confidence among the major powers and extricating the region from the morass of a potential outbreak of deadly conflict are formidable challenges.

Chalise is a former foreign affairs adviser to the prime minister and a former ambassador to the US and the UK