By Pramod Sedhain.
Rivalry between China and India in terms of strategy and economy in the South Asian region has seen a dramatic rise in the last decade. This is sure to influence the entire South Asian region, including the South Asian Association for Regional Cooperation (SAARC). Most of the SAARC member states have geographical proximity and share borders with China and India. Both countries are concerned with each other and try to demonstrate their priority and influence in the region. What is evident is that these two powerful countries are competing not only for geographical interest. There are some more factors, including strategic, energy resources as well as economical and political. However, both the countries are competing to establish their influence, their policy, goals and objectives in an aggressively. Both are increasing their approach and traditional role in the region. China’s growing economic activities and influence in the region, including the SAARC have rapidly decreased Indian regional influence in the last decade.
China’s growing economy and strategic influence in the SAARC region to get a full-fledged member in the SAARC has not been welcomed by India. Growing influence in the SAARC will benefit India significantly to garner international image in terms of economy, strategy, water and energy need.
Since 1985, SAARC has been working significantly towards the region’s mutual interest as well as enhancing cooperation among the SAARC member states. However, progress seems to be at a snail’s pace due to wide differences and political divides within the member states.
Despite the understanding, issues revolving the South Asia Free Trade Area (SAFTA), greater road, rail and river water connectivity for trade have not gathered momentum. China in recent times has significantly increased financial assistance to SAARC nations overtaking the western traditional donors. China’s growing financial efficiency will in the long run overpower India’s influence in the region. China’s economic reach in the South Asian region picked up dramatically in the first decade of 2000. China is the largest trading partner of SAARC member states. It is also the largest foreign investors in Sri Lanka and Nepal. China’s trade with SAARC countries has nearly doubled compared with India.
China has been an observer nation in the SAARC Summits since 2005 and is cautiously engaged to secure permanent membership. China is seeking full-fledged engagement in the SAARC to present itself in potential political, economic and security dimensions. Increased interests with countries having close ties have been given due attention in the name of development projects, including construction of sea ports, railway lines, creating new trade and ties link opportunities in the region. Chinese People’s Daily reported on July 29, 2014 that China will extend railway line linking Tibet with borders of India, Nepal and Bhutan by 2020.
As part of Chinese government efforts to boost own Tibetan development and an aim to connect with the rest of the bordering countries, China opened railway in Tibet’s capital Lhasa in 2006. Such significant projects hold a very potential market for regional countries. Chinese emerging footprints in the SAARC has already overtaken India in terms of trade.
India
China is India’s largest trading partner with nearly $70 billion bilateral trade. India recorded the largest bilateral trade deficit of a whopping $39.4 billion. Bilateral trade reached a record $74 billion in 2011, when China became India’s largest trading partner, over $66bn in 2012. The two sides have agreed a new $100bn bilateral trade target for 2015. Amid the military standoff in the Himalaya border region, Chinese Premier Li Keqiang chose India for his first state visit on May third week of 2013. During the visit, China and India reached nine agreements along with the most important signing of the landmark border defense agreement to maintain peace and tranquility on the Line of Actual Control. Such visit indicates that China’s new leadership wants to minimize the long-standing boundary dispute, strengthening friendship and trust and promoting the trade with neighboring nations.
Pakistan
Pakistan’s geo-political location with Arabian Sea can help both countries’ relation both in terms of economy and military. China is also the largest investor in strategic Pakistan’s port at Gwadar. Nearly 60 percent of China’s oil comes from the Gulf by ships traveling over 16,000 kilometers in 2-3 months time if Gwadar could reduce the distance to 2,500 kilometers. China is the biggest trading partner and biggest foreign direct investor of Pakistan. Energy and infrastructure project of China-Pakistan Economic Corridor is under progress. China’s trade with Pakistan has doubled in the last decade and in absolute terms it increased by 5.5 times. Bilateral trade between the two nations has been over $12 billion. China has pledged to invest $32 billion in energy, transport and infrastructure projects in Pakistan in the next five to seven years.
Bangladesh
China-Bangladesh relation has been growing at an unprecedented level while heading to closer comprehensive partnership of cooperation. Bangladeshi Prime minister Sheikh Hasina Wajed visited China in June 2014 and signed a number of agreements which led to closer comprehensive relationship and cooperation between the two countries. China’s investment to strategically develop and modernize Chittagong Port and the proposal to build a deep-sea port in the Sonadia Island off Cox Bazar remain vital. It is significant for sea lanes of the Indian Ocean linking China with the strategic Persian Gulf and the Strait of Hormuz.
Another issue of vital importance is the road link that is making progress. According to new plans, a 128-kilometer railway line to connect Gundum, a border town of Bangladesh through Burmese and other highway connecting Bangladesh with Kunming in China through Burma territory will be constructed. Such road link and sea link will be significant for trade as well defense purpose. China provides financial assistance to Bangladesh’s infrastructure, roads, railways, a coal-based power plant, and factories. According to open available figures, Bangladesh is the second-largest arm importer of Chinese arms. China exports arms to nearly 35 countries. Bangladesh buys light lethal weapons to heavy boats, fighters, anti-ship missiles, tanks,and fighter aircraft from China. China is the largest trade partner of Bangladesh and Trade volume between two countries reached 10.3 billion US dollars in 2013.
Sri Lanka
China is the largest investor in Sri Lanka’s infrastructure projects. It has provided 4 billion U.S. dollars loan for development projects. The projects include a 1.2-billion-U.S.dollar coal power plant, a new international port in southern Sri Lanka, an international airport and several highways and railways. Sri Lanka was the first country to express its support for the Maritime china concept Silk Route policy. A Free Trade Agreement (FTA) between the two countries is expected to be signed by the end of 2014. Sri Lanka shipping route on the way to Maritime Silk Road will have an easier connectivity across the Indian Ocean in terms of economy as well strategy. As a vital strategic geographical location, China has funded all large-scale projects in Sri Lanka. Sri Lanka’s government started the regional hub concept with five-hub strategy including focus on the Maritime, Aviation, Knowledge, Energy and Commerce centre. Bilateral trade between China and Sri Lanka in 2013 was $3 billion.
Nepal
As a strategic geo-political location, Chinese presence is growing in Nepal. China’s investment in Nepal doubled from 2007 to 2011. In the first time, China has overtaken India when it comes to foreign direct investment contributor of foreign direct investments at $174 million. Sino-Nepal trade is rapidly growing and the annual trade of Nepal with China is over 2 billion US dollar.
China has active participation in sectors, including transport, infrastructure, and hydroelectric power projects as well as in wider transportation network. China has announced plans to extend the Qinghai-Tibet Railway to Nepal by 2020. According to Xinhua, China has given continuity to the construction of the infrastructure near the Nepali border point of Rasuwagadhi. Along with different infrastructure to open the border point for trade, China has committed to upgrade the track between Nepal’s Syaphrubesi and Kerung in Tibet at a cost of $20 million. Similarly, China is constructing the 60-megawatt power plant on the Trishuli River. It has also committed a $1.6 billion 750-megawatt joint venture on the Seti River by 2019.
China also expressed willingness to enter the Indian border region of Nepal- Tarai. Recently, Chinese Ambassador to Nepal, Wu Chuntai said, “Our support now will not remain limited to the capital but we will make our own efforts to support the socio-economic development works in Nepal’s Terai plain”. In 2013, Chinese tourist arrival was 89,509, which is 11.22 percent growth than previous years. Chinese tourist holds 24.5 percent of total tourist arrival in Nepal and the second largest number of tourists visiting Nepal.
Afghanistan
China’s door-step and the war-torn country Afghanistan is also a key security priority. Stable Afghan is China’s concern and it is vital to the security of Xinjiang. After the downfall of Taliban regime in 2001, China supported Afghanistan in reconstruction and security training. China expanded relations with Afghanistan rapidly and involved in a landmark $3 billion deal in 2007 to produce copper in Afghan’s Aynak copper mine project in eastern Logar province. Mineral experts estimated Afghan mineral deposits valued at up to $3 trillion. Similarly, Chinese National Petroleum Corp signed a 25-year contract of Afghanistan’s oil and gas reserves estimate worth more than $700 million.
Beijing signed strategic partnership with Afghanistan in 2012. With an effort to stabilize Afghanistan, China appointed special envoy to Afghanistan. Western firms hesitate to invest because of security concerns. However, China took the risk of investing in Afghan’s mining, construction and tele-communications. China is also interested to invest in hydropower, agriculture and construction sector as well as building direct road link to China across the remote 76-kilometer border between the two countries.
In May 2014, Chinese President Xi Jinping met with Afghan President Hamid Karzai in Shanghai. President Xi vowed of additional assistance to facilitate the construction, among Silk Road economic belt. Likewise, the Chinese government also announced to offer 10 million yuan (1.62 million U.S. dollars) in humanitarian aid to Afghanistan. According to Xinhua, China- Afghan trade volume expands ten-fold during 2002-2009, USD 20 million to 214 million. On the occasion of the 60th anniversary of bilateral ties, China and Afghan have boosted cooperation and witnessed high-level exchanges for mutual benefits.
Maldives
China strengthened diplomatic, trade and cultural ties with Maldives. Located in the heart of the Indian Ocean, Maldives government too is keen in establishing special economic zones. China’s keen interest to invest in infrastructure projects in strategic importance and world’s most important shipping channel between East and West. Chinese new leadership initiation “maritime silk road” is also a key focus and priority in Maldives. This aims to deepen China’s economic presence in the region. China wants rapid expansion of maritime cooperation with other countries and wants to establish Maldives as another hub for trade between East and the West.
Maldives is highly dependant on tourism and since 2010 China became the biggest source of tourist arrivals in the island nation. In 2013 alone, more than 330,000 Chinese tourists visited Maldives. Chinese tourist flow has increased leaps and bounds in the past half decade. Tourism accounted for 28 percent of GDP on average in the past five years in Maldives. China has carried out different projects in Maldives under concession loans. Until 2002, the two countries did not have any significant trade or business but the volume of trade has increased significantly in recent times. According to the Embassy of Maldives in China, the figure volume of trade with imports from China reached USD 17.354 million and exports reaching USD 584,000.
Bhutan
Bhutan has diplomatic relations with 52 countries around the world but not with China. India, Bangladesh, Kuwait and Japan have established embassies in Thimphu, Bhutan’s capital. China is keen to have direct diplomatic link with Bhutan. Former prime minister of Bhutan, Jigmi Y. Thinley wanted to expand Bhutan’s diplomatic relations with China. The then Chinese Premier Wen Jiabao and his Bhutanese counterpart Jigmi Y Thinley met on the sidelines of the UN Conference on Sustainable Development at Rio De Janeiro in 2012 to discuss about establishing diplomatic relations. China shares 470-km-long border with Bhutan. The two countries held 22 rounds of talks to resolve the border disputes. Bhutanese New government announced not to establish diplomatic relations with China. However, Chinese tourists visiting Bhutan is the third after Japan and the United States since 2011.
