Dealing with Japan and China

13 Aug, 1999    ·   237

Sushil J Aaron reports the IPCS Friday Group Seminar held on 30 July 1999
Sushil J Aaron
Rangachari started by stating that enough attention is not paid to Japan in India . Japan can scarcely be ignored being the second largest economy in the world. It is a powerhouse by any standards with the top 10 companies in the Fortune 500 list being Japanese. By any indices " whether it be the liquidity of funds in its banks, scale of economic growth, or social sector achievements " Japan ranks far above any other country. Correspondingly, China is the No. 2 military power in the world. It is crucial to deal with China skillfully at this juncture when it is trying to flesh out the contours of its relationship with the US and also Japan.

 

 

India-Japan Relations

 

 

Japan remains an intriguing dilemma for Indian foreign policy. The meeting of the Foreign Ministers in Singapore was an attempt to put the relationship back on track after the Pokhran nuclear tests derailed relations. Japan has been using the nuclear tests as a stick to beat India diplomatically. Japan might also be using the nuclear issue as a launchpad to project itself as the conscience keeper of the world. It used the Kashmir issue as a bait for persuading Pakistan to desist from conducting the Chagai nuclear tests. It reportedly volunteered to raise the Kashmir issue at the UN, offered its mediation on the issue, in addition to suggesting that it would cancel Pakistan 's loans to Japan . India pointed out that this was a misreading of the South Asian situation by Japan . Its Ambassador was reported in The Times of India as saying that Japan 's statements in the immediate aftermath of the May 1998 tests were born out of "inexperience."

 

 

Japan made the mistake of "choking all dialogue with India ." Tokyo called off a visit by the Defence Secretary. It refused to arrange a meeting in Tokyo for Union Minister Sikander Bakht with the MITI minister which was wholly insensitive. Japan denied India the opportunity to explain its compulsions for conducting the tests and proceeding to cancel loans, projects and cooperation ventures that were planned. It has been slow to resume the process of dialogue unlike the United States , Russia and France with the result that Japan is more isolated than India is in the international community so far as perceptions of the May 1998 tests are concerned.

 

 

Japan has since cautiously agreed to support India's loan application to the World Bank, which it had earlier opposed, linking the grant to India's signing the CTBT. The Japanese have also supported a World Bank loan to Andhra Pradesh. Concerning Kargil, Japan ventured to speak as a possible mediator or as host for talks between India and Pakistan . Aligning with G-8's stance, it asked for an immediate ceasefire, and respect for the LoC. Japanese diplomats were emphasizing to the lack of clear evidence about the identity of the intruders.

 

 

Japan has clearly allowed its relations with India to be hijacked by the non-proliferation agenda. They have hinted that Prime Minister Vajpayee would be invited to Japan only after India signed the CTBT. Linkages are the order of the day. On its part, India has not criticized Japan 's position on nuclear issues despite glaring contradictions. For instance, when China conducted its nuclear tests in 1995-96, Japan suspended 50 percent of its loans, while it chose to suspend all the loans granted to India . Japan reckons NPT is the way to reach the goal of a nuclear weapons free world while India harps on global disarmament, including weapons of mass destruction. The debate within Japan is veering around to India 's position; the Mayor of Hiroshima has gone on record recently stating that global disarmament is the only viable route to eliminate nuclear weapons. The Japanese have locked themselves into a dilemma in dealing with India by adhering to the NPT paradigm whereby China is a nuclear power according to the Treaty while India is not. The Japanese are even flirting with the idea of introducing a non-proliferation criteria for membership in the Security Council which is absurd.

 

 

Japanese Economy

 

 

Japan remains vital for India owing to its economic prowess. It has a trade surplus of $5 billion and is the largest source of foreign exchange since it possesses around $ 400 billion in reserves. It has not borrowed from the World Bank since 1964 when the Bullet Train project was underway. Its trade with India is abysmally low at $1.5 billion since 1991 when compared with South Korea with whom its trade is worth $1.5 billion since 1996. There are moves to increase trade. The Vice-President of the Ministry of International Trade and Investment (MITI) is expected soon. There is a glaring Japanese absence in the telecommunications sector. Details regarding the reported Indo-Japanese security dialogue are awaited.

 

 

Observations on Chinese economy

 

 

Around the time China started its economic reform process in 1978-79, India 's foreign trade figures were on par with China 's at $20 billion. China is now transacting $325 billion worth of foreign trade while India is around $75 billion. In 1980 China set out to double its existing GNP by the year 2000. It achieved that target in 1995, and now intends to double the 1995 mark by 2010. If it succeeds then the Chinese economy will have grown eight times since 1980. Notwithstanding the huge strides made, the social consequences of rapid economic growth is an area of concern for the Chinese leadership. The Chinese are lately experiencing a decline in the levels of foreign direct investment. China has around $40 billion trade with the US and EU, $50 billion with Japan and $20 billion with S. Korea . The economy is currently characterized by severe over-production and policies are being initiated to stimulate spending. It has invested 1 trillion Yuan on infrastructure last year. But the investment is not garnering returns. For instance, there are no toll returns on the huge six lane Shanghai-Hangchu highway. The Yuan is experiencing at least 15 percent devaluation at present. Economic reform does not have any relation with political reform. Government employees are underpaid, and pilots who strike can lose their jobs unlike in India . The economic success can be attributed to quick conversion of many ministries into corporations which enjoy significant autonomy and the power to sack employees.

 

 

Sino-Indian Relations

 

 

Notwithstanding, the chill in relations following India 's nuclear tests, both countries have had frequent meetings lately. Foreign Minister Jaswant Singh met his Chinese counterpart in Beijing in June and later at the ASEAN meet in Singapore last month. The Joint Working Group has met both in June and July this year. A joint-secretary level delegation had earlier met in Beijing in February to plan for these meetings. The Chinese were keen to resume the dialogue sooner than later. The reason for this eagerness may fit an empirical pattern whereby an upturn in Sino-Indian relations is often a result of a downturn in Sino-US relations. The latter needs mending following the NATO bombing of the Chinese embassy in Belgrade . The damage to the American embassy in Beijing was obviously orchestrated since placards to direct people to the embassy were seen on the streets. The outrage against the Americans is the first of its kind since the Cultural Revolution. Surprisingly, there was support for this kind of vandalism in an editorial of The Hindu. Whatever the provocation, an attack on an embassy ought not to be condoned. The Chinese may have decided to have India on their side in the face of perceived increasing American adventurism.

 

 

Asked about the then Russian Premier Yevgeny Primakov's idea of a strategic partnership between India, Russia and China, the speaker said bilateral relations between each of these countries have to develop a lot further before a trilateral strategic framework can be put in place. As of now major differences persist between Russia and China when dealing with India . The former supports India 's bid for permanent membership in the UN Security Council while the latter opposes it. Trade realities do not permit such a framework yet. While Sino-US trade amounts to $50 billion, Sino-Russian trade is $7 billion and Sino-Indian trade is $2 billion.

 

 

Border related discussions and Line of Actual Control (LOAC) clarifications are expected to come in future talks. Cultural activities will be a lot more visible next year to mark the 50th anniversary of Sino-Indian relations, including a joint expedition to climb Mt. Everest. Trade ought to be a priority issue since Sino-Indian trade amounts to only $2 billion, which is a fraction of China ?s overall $375 billion world trade and India 's $75 billion.

 

 

It is unclear to what extent the Chinese would discuss nuclear weapons since they do not recognize India as a nuclear power. The Chinese have a policy of no-use against a non-nuclear power and a no-first use against a nuclear power. This means that the Chinese cannot factor India into their nuclear doctrine yet. On the transfer of nuclear technology to Pakistan , circumstantial evidence points to Chinese help though there has been no tangible evidence like the North Korean ship containing missile components amid sugar cargo, which is now being detained in Kandla port. The Chinese issue bland denials of any involvement, as do the North Koreans.

 

 

On the Kargil issue, the mainstream Chinese press eventually upheld the inviolability of the LoC. But there was no reference to the LoC till July 1 i.e. after Sharif visited Beijing and until the ground situation was clear which makes one wonder whether the Chinese talked of the LoC only when India was in danger of crossing it and not Pakistan . The overall coverage was factual while the headlines were on occasion mischievous. The coverage in PLA Daily was quite interesting and expectedly hardline. The argument was on the lines of the US using the Indo-Pak conflict to exercise influence at China 's doorstep. The difference of coverage in China Daily, Peoples Daily and PLA Diary revealed differences within Chinese decision-making elite. India tends to pay more attention to the civil-military divide in Pakistan and gloss over the same divergence in China .

 

 

A participant asked about the dangers that Islamic fundamentalism poses to China in Xinjiang and how that would affect China-Pak relations. The speaker responded by saying that the Chinese are aware that militants spillover from Pakistan into Xinjiang. China erected a fence on the border to preempt that. The Chinese reckon that Pakistan is likely to cooperate and curb militant activity in the near future. Islamabad handed over Islamic militants who were involved in terrorist activities. China is not too worried about Islamic militancy. It continues to build oil pipelines in Kazakhstan which is a larger source of militancy. India 's Oil and Natural Gas Commission (ONGC) is also building a pipeline there and may well sell oil to the Chinese at a later date. The concern over militancy in Xinjiang arose over a bomb blast in a bus in Beijing whose origin was traced to Xinjiang. Apart from that incident the Chinese remain unperturbed.

 

 

In response to a question whether India could use the Dalai Lama as a lever to extract concessions from China on outstanding issues, he said the Chinese will note India 's consistent stand on Tibet . For instance, India did not allow the entry of a special coordinator on Tibet appointed by the US . But the 150,000 Tibetan refugees in India will remain a permanent source of friction in Sino-Indian relations.

 

 

China currently finds it difficult to put India into any mold. The nuclear tests do not threaten China military, but they may have bridged a notional gap about India capabilities. China ought to realize that the cost of maintaining close relations with Pakistan is proving to be greater than the benefits by developing close relations with India . Pakistan has little relevance for China , and it does not represent a military option for China vis-a-vis India . China is well aware of the problems that Pakistan has become famous for breeding, namely drugs and transborder terrorism and hence no reason to presume that China-Pak relationship will be an ever unchanging one.

 

 

A participant observed that India is the only that has a border dispute with China and wondered whether the impasse in Sino-Indian relations bothers the Chinese. He suggested that India urgently solve the issue of sovereignty over Arunachal Pradesh. The speaker countered saying that India is not the only country having a border problem with China   Kirghizstan and Vietnam have border disputes as well. China is far more exercised over disputes in the South China Sea . The difference is that India has claims over both the Western and Eastern sector, while China is flexible on the eastern sector but resolute on the Western sector. However, the 1993 and 1996 agreements between the countries which state that force will not be used to resolve border tensions. The Chinese are not likely to infringe on the LOAC like Pakistan did in Kargil since altering the status quo through an armed conflict would deflect attention from the Chinese leadership's social and economic goals in the near future.

 

 

The Chinese have thus far been unwilling to commit resources to alter the status quo on the border. There is no significant reinforcement of troops, just a routine upgradation has occurred. Sikkim has already been dealt with extensively by both countries. Arunachal Pradesh has to be a part of the border settlement.

 

 

A participant whilst pointing to the lack of transparency in border negotiations all along suggested that India push for a settlement dealing with the entire border at one go rather than settle sectorally as is being done now. She suggested that India should be willing to give up some of its claims in the Western sector in return for Chinese concessions in the east. The speaker replied saying that the idea exaggerates the depth of Chinese goodwill since they have given no clear indication that they seek a border settlement. Besides, this is a political gambit which no political party is likely to play for fear of domestic recrimination.

 

 

A participant asked about the rationale for naming China as a threat rationale for Pokhran in Prime Minister Vajpayee's letter to President Clinton. He also questioned Defence Minister George Fernandes naming China as a threat. Rangachari stated that the letter does not point to China as a rationale for the bomb. China is mentioned as part of the larger argument that seeks to justify India 's security perceptions. Journalist Karan Thapar, on whose television show the Minister made the purported threat assessment, had written in a newspaper column that Fernandes was pressed relentlessly about the China threat. After repeatedly denying that China was a threat, the minister was asked if it was a 'potential threat' to which he said yes. And that statement was blown out of proportion by the media. The reaction of China is surprising since India 's Defence Minister is entitled to talk about possible threats as do his Western counterparts. In any case, a country does not need a nuclear threat to justify nuclear weapons, just as US does not have a nuclear threat, but still holds on to 20,000 nuclear warheads.

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