The following is a combined report of two seminars organized on 16 and 23 October 1998 by the IPCS on Sino-Indian relations. The seminars were organized by the IPCS on Sino-Indian relations following the return of the speakers/resource persons after attending the “Summer Workshop on Defence, Technology & Cooperative Security in South Asia” that was held in Shanghai from September 21-29.

 

Speakers:

 

Prof. P.R. Chari, Co-Director, IPCS

 

Dr. Giri Deshingkar, CSDS

 

Mallika Joseph, Research Officer, IPCS

 

Sudha Passi, Senior Reporter, Press Trust of India

 

Radha Kishore, Executive Officer, Confederation of Indian Industry (CII)

 

Observations on Chinese economy

 

P.R. Chari related his impressions about the Chinese economy. The slowdown in activity of China ’s construction industry is evident. An approximate 20 million, mostly male, workers were involved in building skyscrapers and highways. In many places construction has stopped. The skyscrapers are barely occupied since the rents are too high. Construction workers have returned to the countryside since the buildings have no buyers highlighting the recession that has appeared in this particular sector. He said that the Chinese economy cannot be expected to be unaffected by the economic crisis in South East Asia . There are an estimated 140 million workers in state enterprises, of which nearly half are idle, and living on social security. State enterprises are being sold for raising revenue. The differences in wages within the state enterprises has caused social unrest . Giri Deshingkar added that demonstrations by workers for not getting their wages mark the countryside.

 

Chari reported that experts expect a 16-20 percent devaluation of the Yuan. In a worst-case scenario, that would lead to competitive devaluation in Japan and South East Asia . This may well be postponed by the reported pledge of China to President Clinton that it would not devalue its currency till next January. Analysts tend to focus on the American dependency on cheap Chinese goods and its huge investment stake in China , but there is a converse Chinese dependency on the US especially with Japan halting its investment in China and routing it to South East Asia . The Communist Party of China (CPC) is believed to be planning to invest $200 billion in rural areas to reflate the economy. A belief also obtains that the urban economy's buoyancy can be attributed to the `DINK’ factor i.e. Double Income No Kids families, who tend to be free spending individuals.

 

Radha Kishore outlined the strengths of the Chinese economy by highlighting the enormous foreign direct investment in China that amounts to $289 billion. The infrastructural growth is startling, with an addition of 15 million telephone connections each year. The defence expenditure amounts to merely 1.8 percent of the GDP while the average income is expected to be around $100-125 per month. The Chinese industrial strength and their integration into the world economy makes it near-impervious to the kind of economic crisis witnessed in South East Asia , he said.

 

Chinese Political Leadership and Political Dissent

 

Chari felt that the Chinese elite/leadership was willing to take large risks with the political economy unlike India owing to a discernible internal discipline. The leadership is also willing to candidly appraise the populace of unpleasant choices. There is no evidence of any attempt to enlarge political rights in China . People may desire a measure of democratic pluralism. The Communist Party, to placate democratic simmers resorts to an “anti-corruption” drive wherein people and the press are encouraged to expose corrupt public officials. This would deflect their attention from demanding political reform.

 

Deshingkar reckons that Chinese leaders believe that as long as the people have access to the good life they will not make democracy demands. There are two contrasting impulses in Chinese political life. One, a clamour for a greater pluralism and a drive by the radical left to return to Maoist rigor. The older generation Communist leadership is more hard-line than its Russian counterpart. The leftist faction in mainland China should not be overlooked. However, the Chinese people may have a certain sense of indifference to political pluralism, as the West understands it. Some elections at the village level are being permitted though.

 

He stated there need be no necessary linkage between economic liberalization and political reform as assumed by Western political theorists. Take the example of Hong Kong where the overwhelming number of Hong Kong Chinese are apparently indifferent to political expression. The Chinese leadership, however, recognizes the danger of corruption and appears intent on exposing it in high places. The mayor of Shenzhen has become one of the prominent accused during this drive. The people normally take their cue from newspapers and there is no laying down of the party line. Instead the party directives are circulated to the media and propaganda institutions. Still, there are glimpses of unrest. The one-child policy continues to be unpopular. The IOUs handed out by the government are not redeemable. There are constant demonstrations by peasants in rural China . While dissent regarding administration is tolerated, the fundamentals of communist governance is not open to dissidence, Deshingkar said. The Chinese political elite is more liberal than its Romanian equivalent under Nicolae Ceaucescu. The fall of Ceaucescu had provoked anxiety and intensive debate within China .

 

Sudha Passi, whilst acknowledging the cultural conformity in China , wondered how reasonable it was to expect $1 billion people to go along together, conforming to existing political structures.

 

Chinese Perception of India ’s nuclear tests

 

Chari : The official line is in tune with the Chinese Ambassador's speech delivered in the India International Centre, New Delhi after the tests. The envoy had conveyed China ’s dismay at being mentioned in Prime Minister Atal Behari Vajpayee’s letter to President Bill Clinton, in which the former made a veiled reference to the Chinese threat whilst explaining India ’s motivation for Pokhran '98. The Chinese Ambassador’s statement that “the fictitious charges by India have hurt the Chinese” encapsulated the Chinese position. The general feeling was that the tests were India ’s own business, but felt that India had no business naming China in the letter to the US President as a threat. For them, such an action merely confirmed the American stereotype that China is an irredentist and irresponsible nation, endowed with the self-perception that it is the revisionist power capable of taking on the US in the next century.

 

On the strategic and military worth of India ’s n-tests

 

Chinese experts do not believe that the Indian tests provide it with any capacity to weaponize or deploy nuclear weapons. And even if they do, the Chinese do not consider them as a threat. The Chinese perceive the tests to be conducted less for their strategic or military worth and more for the prestige that they supposedly convey. The Indians may have considered the tests as a useful tool to secure a permanent seat in the UN Security Council.  The Chinese appeared to be intrigued that the 1962 conflict got a mention in Vajpayee’s letter. They felt that it would have been wiser to talk instead of the rapprochement achieved through the agreements of 1993 and 1996 that articulate a commitment to maintain peace and tranquillity at the border areas.

 

Deshingkar offered in this regard that the kind of letter that Vajpayee wrote would have had an impact in China had it been written two years ago, not now when Sino-US relations are better. Chari felt that China draws a distinction between the Bharatiya Janata Party (BJP) and India . The Chinese also perceive that India is seeking to enlist the support of the United States by stressing the Chinese threat.

 

Mallika Joseph felt India 's nuclear status does not disturb the Chinese but they are concerned about the their implications for the global disarmament regime. Passi reckoned that India does not fit into China 's strategic calculus as much as China fits into India 's. Another discussant agreed with the notion that economic development may be currently more important than nuclear weapons technology, but wondered what would happen if China asserts itself as a regional power after gaining economic dominance in the global economy.

 

Possible Chinese reaction to India 's weaponization

 

A discussant asked the panelists of their estimate of China ’s reaction if India weaponizes. Deshingkar said the Chinese perceive India ’s tests as a  matter between itself and the rest of the international community and not specifically related to China . The Chinese are capable of viewing Sino-Indian relations without reference to the nuclear question. They are aware of the implications of an Indo-Pak nuclear arms race and hope that it will have no adverse impact on China . If India is declared a NWS they will doubtless discuss regional security with India , but the fact remains that they are not viewing Pokhran ’98 in terms of Sino-Indian relations.

 

    Gen. Dipankar Banerjee indicated that it is the Peoples Liberation Army (PLA) which will determines the security and military dimension of Chinese policy and thus decide the response to India 's weaponization. Deshingkar disagreed with this view by pointing out that the politburo does not have a single PLA representative. At the strategic level it is the Central Military Commission which decides policy. Gen. Banerjee argued that the CMC is entirely composed of individuals from a PLA background, apart from President Jiang Zemin. Chari urged that an adverse reaction can be expected if India weaponizes, and said that China will obviously note the development of Agni I and Agni II whose range would include China as a possible target.

 

A discussant moved the discussion forward towards a consideration of China 's motive for helping Pakistan in its nuclear program. The Chinese reckon that their missile and technology transfers do not violate the Missile Technology Control Regime (MTCR) which stipulates that the range of missile know-how should not to exceed 300 kilometers while the M-11’s range is about 280 kilometers. They also state that India is making a fuss over what is essentially a commercial transaction. Some Chinese policy makers acknowledge that they were on a “learning curve” during the period of their help to Pakistan . Deshingkar stated that China ’s nuclear weapons technology transfer probably began after 1974. “ China has gone through a learning process about nuclear transfers. When they reckoned that the transfers were coming in the way of good relations with India there was a readjustment in policy," he said. China has since made policy adjustments and pledged to President Clinton in June 1998 not to make any further missile technology transfers.

 

In the discussion on the scope of co-operation between the two countries, Chari said that Chinese diplomacy operates on the premise that capabilities are unimportant whilst intentions are of the essence in contrast to the opposite convictions of the Indian policy makers. He said that unless India exorcises certain fixed ideas in its mindset, no progress on Sino-Indian relations is possible. A compelling need is to exorcise the 1962 conflict and candidly discuss what happened. Gen. Banerjee referred to the fact that the War Studies Division study on the 1962 Indo-China War has not been published. Chari pointed out that the official histories of the 1965 and 1971 Indo-Pakistan wars are yet to be published. Gen. Banerjee said that the military history of the conflicts is available, but the political and diplomatic story remains to be told. He also lamented the absence of Chinese expertise/interest in India regarding China .

 

Joseph outlined certain differences between Indian and Chinese approaches to diplomacy and national security. Chinese defence and nuclear policy appears to have a focus and a clear vision of the future in contrast to the lack of consensus on issues of national interest in India . This sense of vision may be born out of a secure sense of national identity that India still struggles with.

 

Passi stated that there was a feeling in Chinese circles that China should take the initiative to allay misperceptions of Chinese intent. They reckon that greater trade and business links; people to people exchange and CBMs can play a role in bringing about a rapprochement. Another discussant stated that the Chinese individuals in the workshop did not go beyond the `establishment line'. There was a lack of free discussion on foreign policy.

 

Another discussant spoke of India 's paranoia of the Chinese threat. The specifics of Sino-Indian differences ought not to cloud the principles that govern their total relationship. There is no China threat as far as one can see. He disagreed with the import of Prime Minister letter to President Clinton and said such antagonistic declarations should be avoided and lamented the infrequency of interaction between the Joint Working Groups (JWG). He said the onus for renewing friendship with China lies with India .