As Narendra Modi lands in Wuhan for a much-anticipated one-on-one with Xi Jinping, it is worth exploring the motivations that have driven China to the discussion table. It is a stretch to assume that Beijing, which refuses to consider India as its equal and never fails to be condescending about the economic and military power differential, would suddenly warm up to its neighbour out of “goodwill”. China doesn’t do “goodwill”.
Its actions (not just under Xi but specially under him) are guided by a pragmatic cost-benefit ratio, and are based on a Sino-centric geopolitical strategy that seeks — through assertive maritime, expansionist and revisionist policies — to restore the Middle Kingdom to its “lost glory”.
As Stratfor contributor Zhixing Zhang writes in Forbes: “Beijing’s assertive maritime policy is an attempt to secure its access to overseas markets and prevent a challenger from emerging to threaten its multiplying interests around the world. And like the Han and Tang dynasties before it, China today will run up against other empires as it pursues its geopolitical strategy in the surrounding region and farther afield.
A ‘great power aspirant’ that aims to challenge and eventually replace America’s global dominance in every field from ideology, culture, geopolitics, military, technology to political system and economy — replacing the dollar with renminbi as the premier mode of global exchange for one — it is inconceivable that China would court ‘middle power’ India out of goodwill. Xi is more likely to interpret such a gesture as weakness.
India should be under no illusion that this “reengagement” or “reset” (whatever it’s called) is borne out of China’s desire to listen to India or try and understand its concerns and red lines in the path of mutual growth and development. These might be good slogans for framing the dialogue but we should look for motivations elsewhere. A good starting point would be the flux in international order and two recent developments that have thrown a challenge at Xi and diminished his ability to play the power broker in Korean Peninsula.
The first one pertains to Donald Trump’s decision to impose tariffs on Chinese imports to correct an imbalance in bilateral trade. North Korean dictator Kim Jong-un’s decision to suspend all testing of nuclear weapons ahead of his proposed meeting with the US president presents the second challenge for Xi. Both developments are inextricable and demand a set of hard choices from the Chinese president.
Limiting the irritants in India-China bilateral ties may result in a more manageable relationship, which in turn should allow China more legroom to exploit the world’s fifth largest and fastest growing major economy. Xi’s decision to sit across the table with Modi arises primarily from this compulsion.
To a certain extent, Trump’s faith in direct threats than quiet diplomacy has constrained China’s hands and squeezed Xi’s bargaining space. The US President’s move to slap tariffs worth $50 billion on Chinese imports and threats to slap another $100 billion unless China gives better market access to American firms and allows the US to export more cars, aircraft, soybeans and natural gas into China to remedy the $375 billion deficit has prompted a conflicting response from China.
Xi has made some conciliatory noises on lowering tariffs on American cars and opening the domestic market but he has simultaneously moved to impose a retaliatory $50 billion tariff on American goods, raising the spectre of a trade war.
A set of action and reactions have followed. The US has announced that it is ready to talk to China over the issue and accordingly a meeting was set up in Beijing between Xi, vice-president Wang Qishan and Chinese officials on one side and US treasury secretary Steven Mnuchin and National Economic Council head Larry Kudlow on the other on 3 and 4 May. Latest reports, however, indicate that a resolution might not be in sight. Trump has added two more hawks to the US delegation amid a buzz of “more action” against Beijing.
Hong Kong-based South China Morning Post has reported that US trade representative Robert Lighthizer and White House trade adviser Peter Navarro will join the delegation. Both Lighthizer and Navarro are “fiercely critical” of Beijing’s stand on the trade deficit. The move is in addition to steps by the USTR (United States Trade Representative) to probe China’s cloud computing sector and US Treasury Department’s decision to “restrict Chinese investment in sensitive sectors in the US and control American exports to China”, according to the report.
China, which had earlier responded to Trump’s tariffs with a vow to take “comprehensive countermeasures” and had promised to “take on the US” if it insists on carrying out “unilateralism and trade protectionism” has reportedly begun delaying licence approvals and reviewing mergers and acquisitions, as well as dragging its feet over clearing customs.
China’s ZTE, which has been at the receiving end of a US order banning American firms from selling goods to the Chinese smartphone maker, has told its suppliers that Trump’s trade dispute with Beijing could be the real reason behind the ban, though US has insisted that it was a “law enforcement” measure to discourage ZTE from selling goods to Iran despite sanctions, according to Reuters.
Whatever be the reason, US-China relationship has suffered a setback over the trade dispute and China hopes to rope India on its side with whom it enjoys a broad alignment on this issue. Trump has also berated India for enjoying surplus trade with the US and has indicated multiple times that India, like China, is a ‘trade cheat’.
That “Trump’s policies have brought India and China closer” has been suggested by China’s state-controlled media. Though Global Times has sought to portray the development as Modi’s overture to fix the ties, in reality Xi is equally eager to ease the strained relationship.
The biggest indication came when China’s foreign ministry spokesperson told media on Monday that Beijing wants India’s backing to mitigate the risks of a US-led trade war.
“We have a lot of shared interests, concerns, and positions,” The Times of India report quoted Lu Kang, as saying. “They (Modi and Xi) will discuss the latest trends of the world so there is a stable global development. I believe you will hear positive voices. China and India… are newly emerging markets as well as developing countries with big populations, so we believe the two countries will continue to uphold the globalisation so that it is more inclusive.”
In seeking India’s support against the US, two motivations are at work for China. The first one pertains to finding common ground with India and making it more agreeable for enhancing bilateral trade (which is hopelessly skewered in favour of China) and the second motivation pertains to weaning India away from US sphere of influence because New Delhi’s growing closeness with Washington has been a cause of great heartburn for Beijing.
China seeks better ties with “new large markets such as India’s as the Trump administration gets tough on China’s unfair, predatory trade practices,” says professor Mohan Malik of the Asia-Pacific Center for Security Studies in Honolulu, Hawaii, according to a report in Forbes. “Indian officials see China pursuing a “beggar thy neighbor’ policy and undermining India’s manufacturing sector by dumping cheap, subsidised goods in the Indian market while importing raw materials from India,” he was quoted, as saying.
In order to enhance bilateral trade with India, Beijing knows that it must address India’s growing concerns over ballooning trade deficit that stands at $51.1-billion in 2016-17. China has predictably made some conciliatory noises to placate India, though it remains to be seen if these promises are met.
Xi would also be mindful of the possibility that India would be in a good position to exploit any repercussions of a US-China trade war. If Washington closes its doors even partially to imports from Beijing, New Delhi would be more than happy to fill that space.
Amid these realities, China’s diminishing role in the Korean Peninsula has added to Xi’s complexities. With Kim now deciding to stop testing of nuclear weapons and warheads and setting up a meeting with Trump, Xi has largely been rendered ineffective. That, in turn, has made Trump less dependent on Beijing’s manouvers which otherwise could have prevented him from moving against unfair Chinese trade practices.
A reconciliation between Trump and the two Koreas leaves China on the roadside and diminishes the role of Xi, who has fashioned himself as the power broker.
As Zhang Baohui, a professor of international relations at Lingnan University in Hong Kong, told The New York Times, “The loss of prestige is a big problem for China and Xi, who wants everyone else to view China as an essential actor of international relations, especially in the Northeast Asian context… Now, suddenly, China is no longer relevant.”
There is also the possibility, in case of a Korean reconciliation, that calls for American troops to be withdrawn from Korean Peninsula are no longer raised. North Korea has already “dropped its demand for the departure of the 28,000 United States troops stationed in the South as a condition for denuclearisation,” points out The New York Times report. This cannot be a favourable outcome for China which has never been shy of objecting to American presence near its borders.
When Modi sits down with Xi across the table on Friday, he would know that better cards in this game of poker lies in his hands.