John Elliott: When India and China Compete, India Always Loses

The Dalai Lama at the Yiga Choezin ground in Tawang District near the India-China border in Arunachal Pradesh, April 10, 2017. John Elliott writes that despite all that has been achieved developing a poverty-stricken country to an increasingly modern economy, India has yet to develop the confidence or the ability to be significant in its own region and on the world stage. BIJU BORO/AFP/Getty

This article first appeared on the Riding the Elephant site.

While international attention has been preoccupied with Donald Trump and his reactions to North Korea's nuclear capability and the war in Syria, India and China have been provocatively needling each other over their long-running and potentially explosive border dispute in the Himalayan mountains.

The world need not worry, however, because, instead of nuclear strikes or even, as often happens, troops crossing the undefined border, China last week issued new names for places in India's north-eastern state of Arunachal Pradesh, which it claims as its territory.

This was in response to India allowing the Dalai Lama, the Tibetan Buddhist spiritual leader who lives in India in exile, to go to the state earlier this month for a high profile eight-day pastoral tour.

India is not strong internationally and does not often score against China, its larger and more powerful neighbor. China usually has the upper hand – for example, by blocking India's membership of the little-known but significant Nuclear Suppliers' Group in Geneva, and encircling India by developing close relationships and investing in countries that India regards as its bailiwick.

China is also planning a massive "One Belt One Road" economic trading and transport corridor between Asia and Europe that has exposed India's diplomatic weakness because the government does not know how to react.

India has, however, scored three times this month: first, by allowing the Dalai Lama to go to Arunachal which China calls Southern Tibet; then by laying out the red carpet in quick succession for state visits by Sheikh Hasina, the prime minister of Bangladesh, and by the president of Nepal. China is constantly trying to wean away these two Indian neighbors.

Last year, China undermined India's regional role by striking $25 billion agreements with Bangladesh, including the supply of two submarines. India struck back during Sheikh Hasina's visit with a $9 billion bundle of agreements including $4.5 billion line of concessional credit. India also scored a point with Nepal by persuading it to scale back a ten-day military exercise with China that was taking place during the president's visit.

China invests $2bn in Bangladesh gas

Yesterday, however, it was announced that two Chinese corporations are buying from Chevron gas fields in Bangladesh that account for more than half the country's total gas output, with a price tag of $2 billion. This is especially significant because it is China's first energy investment in South Asia.

Related: The Festering Religious Violence That Underpins Modi's India

China showed unusual irritation, even anger, over the Dalai Lama, who has led a largely uncontroversial life in northern India since he fled from China in 1959. It always objects when he receives high profile welcomes abroad, which sometimes leads to countries such as the US and UK toning down the reception he receives.

He has previously visited Arunachal six times since 1959, the last being in 2009, and Beijing always issues strong and ineffective complaints. This time it stepped up its (again ineffective) protests by summoning India's ambassador in Beijing to warn, as the foreign ministry spokesperson put it, that it would "take necessary means to defend its territorial sovereignty and legitimate rights and interests".

India should "immediately stop its erroneous move of using the Dalai Lama to undermine China's interests" because, by permitting the visit, it had "escalated the boundary dispute" between the two countries.

China claimed that Modi had allowed the Dalai Lama to go to the area for the first time in nine years to provoke Beijing (at a time when relationships have been worsening), which, of course, India denied. The visit was particularly sensitive because the Dalai Lama was boosting his role as the people's spiritual leader with a long road journey through towns and villages to a monastery at Tawang that is the focus of Beijing's territorial claims.

A day before he reached Tawang, where he had stayed when he fled from China, the official China Daily warned that Beijing "would not hesitate to answer blows with blows" if he was allowed to continue, which of course he was and did.

China retaliates

The more controversially outspoken Global Times suggested that China could retaliate by supporting the anti-Indian militancy in Kashmir – which, Delhi would say, it already does by condoning Pakistan's role in the area's currently escalating unrest.

"With a GDP several times higher than that of India, military capabilities that can reach the Indian Ocean and having good relations with India's peripheral nations, coupled with the fact that India's turbulent northern state borders China, will Beijing lose to New Delhi?" the newspaper taunted.

Eventually, however, China did no more , at least overtly, than renaming the places – about which, of course, India complained.

The Dalai Lama tending to his Buddhist flock, and China's response, are just a by-play in a much larger story of India's dwindling regional clout, which contrasts with the apparent strength of Narendra Modi's government that aims to make the country internally and regionally strong and internationally important.

India has for years aspired to be a player on the world stage and covets a seat on the United Nations Security Council, which China opposes. But, as its leaders recognize, it will not become such a player until it overcomes its economic and social problems at home, in particular its hundreds of millions of undernourished and undereducated poor.

I was struck by this weakness after attending a series of recent conferences and seminars in Delhi. Many of the points are not new, indeed I covered them in detail in my book IMPLOSION: India's Tryst with Destiny a couple of years ago. But they strike home three years into the Modi government, which should be making a better job of making India achieve its potential.

It started at a London School of Economics conference in Delhi where a discussion on India moving from being a "third world to regional power" showed that it wasn't moving very far, even though it has the world's fastest growing economy at around 7 percent. Ashley Tellis, a leading US academic who was reported earlier this year to be on Washington's list for America's next ambassador to India, said that the country was not "moving at a pace" that would enable it to take on China or enjoy the international clout of other world powers.

Vikram Sood, a former senior Indian diplomat, said it was inevitable that India's neighbors would not like it because they were so much smaller. He might have added that India's diplomats have not learned how to woo their smaller neighbors and are outclassed by China's money-led diplomacy, though Sri Lanka has recently found China infrastructure investment terms too onerous.

A few days later, it was India's failure to cope with "One Belt One Road" – the Belt Road Initiative (BRI) as it is also known – for highways, railways, sea links and pipelines to Europe that emerged strongly at the Observer Research Foundation (ORF), a leading Delhi think tank.

China's ambitious aim for 2049 is to utilize its surplus industrial and financial capacity, to develop trade and financial markets and to extend its sea power and diplomatic reach by linking as many as 65 countries and 4.4 billion people in Asia, East Africa, the Middle East and Europe. It builds on the ancient Silk Road and Trans-Siberian railway and other existing projects, as well as including China's contentious claims to control the South China Sea.

This is a challenge for India because the project brings all its neighbors closer into China's orbit. The plan also includes a separate project to built a China Pakistan Economic Corridor (CPEC) linking the ancient city of Kashgar in western China with Pakistan's Gwadar port (built by China) on the Arabian sea close to the border with Iran.

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India has objected to this because it goes through the northern region of Pakistan which India claims as part of Jammu and Kashmir. India does not seriously expect to ever gain this territory, but it lodges the claim in response to Pakistan wanting India's part of Kashmir. It objected without any success over 40 years ago when China built the Karakoram Highway, which forms part of the corridor, in Pakistan's Northern Areas.

"For India, blocking the BRI is not feasible; ignoring it would be self-defeating," said Manoj Joshi, a leading journalist and senior ORF fellow at the seminar. "New Delhi needs to work with like-minded states on a strategy that can use BRI to its own ends and minimise its downsides to its own economic and geopolitical standing" .

The next day, at a Carnegie India seminar, there was anxiety about whether US-India ties, which have been developed over the past decade, would not be so important to Donald Trump. That could significantly weaken India in its dealings with China.

And the day after that, at the Vivekananda International Foundation which is close to the BJP government, there was concern about how badly India sells itself to the world – and provided no real answers about how that could be improved.

Those few days, together with the Dalai Lama spat and the neighborly visits, put the India story in context as it approaches its 70th anniversary of independence.

Despite all that has been achieved developing a poverty-stricken country to an increasingly modern economy, India has yet to develop the confidence or the ability to be significant in its own region and on the world stage.

It is increasingly losing out to China and there is no sign of that changing.

John Elliott writes from New Delhi. His latest book is Implosion: India's Tryst With Reality (HarperCollins).