Indian Diplomacy under Modi Governance and Sino-Indian Relations

Lan Jianxue Associate Research Fellow of China Institute of International Studies
In May 2014, Narendra Modi became Indian Prime Minister after the Bharatiya Janata Party won an overwhelming victory in the general election, hence the beginning of “Modi Era” in Indian political arena. There have been some adjustments in Indian foreign policies and strategies, with “progressiveness” and “assertiveness” showing more prominence. Under the new situation, with world multipolarization accelerated, a large number of emerging developing countries are rising in groups, becoming a significant variable affecting the change of the political landscape of the world. As the principal representatives of the emerging forces, China and India have entered a crucial period of transformation of bilateral relations. In a speech delivered at the Indian Council of World Affairs in September 2014, President Xi Jinping used “three partnerships” to describe future China-Indian relations, which were also endorsed by the Indian side, i.e., “China and India should become closer partners for development who will jointly pursue their respective national renewal; China and India should become cooperative partners for growth and jointly promote Asia's prosperity and revitalization; China and India should become global partners for strategic coordination and work for a more just and equitable international order.” This attests to the strategic judgment of the top leadership of China and India about the nature of Sino-Indian relationship and charts the right direction for future development of the bilateral relations.
I. The Strategic Orientation of Indian Diplomacy under Modi Governance 
Some new changes have taken place in Indian diplomatic strategy since the NDA headed by Bharatiya Janata Party under the leadership of Modi assumed power in May 2014. Generally speaking, the Modi diplomatic team is operating around two axes: “inter-power diplomacy” and “economic diplomacy”, in an effort to “remake India”. 
A. Politics of strength and pragmatism are gaining more lustre in Indian diplomacy. The Modi diplomatic team stresses that Indian diplomacy needs “Shanti” (“peace”) as face and “Shakti” (“power and influence”) as lining and that diplomacy must closely serve the interests of internal affairs and the needs of India’s big power dream. It stands for expansion of contacts with cooperative partners and draws red lines for strategic adversaries. Pragmatism coupled with a more confident assertion of Indian interests is likely to be the hallmark.  It does its best to prove to the world the importance of India, puts less emphasis on non-alignment in Indian diplomacy, casts away verbiage and carries out substantive business with major countries in the world. It steps up military deterrent capabilities against the external world, neighboring areas in particular, believing that only those foreign policies with strong military backing will succeed. 
B. Pursuing a “Neighbor First” policy, India consolidates its spheres of influence in South Asia and the Indian Ocean. After Modi came to power, he took “Neighbor First” as the corner stone of its foreign policy.  He selected Bhutan and Nepal as the destinations of his first external visits, dispatched a “China hand” to serve as Indian ambassador to Bhutan, stepped up connectivity of infrastructures with Nepal, reached a “historic” agreement with Nepal on cross-border trade on electricity, and permitted Nepal and Bhutan to carry out trade with Bangladesh via Indian territory. India has also expanded the scale of assistance to Afghanistan and actively provided Sri Lanka and Maldives with training and equipment supplies, to buttress India-Sri Lanka-Maldives joint coastal defense system. In addition, it has actively nurtured relations with  countries along the coast of the Indian Ocean, in an attempt to play the role of “net provider” of regional security of the Indian Ocean and to create an “Indian Ocean Maritime defense chain” under the leadership of India, showing India’s leading role in that region. 
C. India brings forth an ambitious Indian version of “pivotal to Asia” Strategy. It has upgraded its version of Asia-Pacific strategy version, turning from “Looking East” to “Acting East”. At the beginning of 2014, it reached important agreements with Japan on security strategy, maritime cooperation, trade and investment and other areas. Its “eastward” strategy echoes Japan’s “southward” strategy. It has expanded its influence in Myanmar in such areas as economic and trade connectivity, “democracy export” and technological cooperation, and greatly increased as conspicuously increased economic and trade contacts as well as defense cooperation with Mongolia and ROK. It has established strategic partnership with Viet Nam, getting involved in the exploration operation in the disputed oil-gas areas of South China Sea, and actively pushed for FTA talks with ASEAN and striven for the development of “Ganges-Mekong Regional Economic Corridor”. It has also signed defense cooperation framework agreements with Australia and Indonesia. In addition, it also actively buttresses “Indian-Pacific Oceans” strategy to build up strategic superiority of a “two-ocean country”. 
D. India builds up and utilizes the status of “global balancer” and “vacillater” at the global level. The Indian top level believes that the national identity of “global balancer” and “vacillater” can meet the Indian appeal for interests to the maximum. In this way India will be able to achieve success one way or another and gain advantage from all sides. In diplomatic practice, India follows a hedging strategy regarding China and the U.S., trying its best to avoid public “union with the U.S. against China” while upgrading its traditional “non-alignment diplomacy”. India regards itself as a “Game Changer”, believing its inclination to a certain camp would render advantages to the said camp. 
E. India hopes to make good use of quality resources of all sides to build up an “Indian Century”. Along with the rise of its national strength and international influence, India has more confidence in becoming a stronger power itself, unwilling to take cues from other big powers. After the Modi government assumed power, this tendency became more obvious. Modi claims: it has been recognized that the 21st century is an Asian century, we need to ensure it is an Indian century; India must and will surely play greater roles in world affairs; India’s foreign policy should not be directed by other big powers; it is necessary to build a strong, self-reliant and self-confident India.  At present confidence is prevailing across the whole Indian nation. A global power tour de force seems to have become the sole option of India. 
F. India steps up economic diplomacy and makes it the core of its diplomatic arrangement in the new era. The India top level is aware that national strength in the 21st century comes from all aspects of a good economy and economic index will become the decisive factor in the competition among all countries of the world. After becoming the Prime Minister, Modi energetically played the role of standard-bearer of India’s foreign trade and economic diplomacy. He took part in all sorts of activities to create publicity for “make in India”, focusing Indian foreign policy on providing support to economic prospect, deepening trade links with major countries and pushing for India’s economic rejuvenation and geopolitical rise.
II. Significant Trends in the Evolution of Sino-Indian Relationship Since Modi Came to Power
Along with the profound adjustment of the international architecture, China and India have become two important forces in the world multi-polarization process and effective forces fueling economic growth in Asia and the world at large. Sino-Indian relationship has far exceeded the bilateral domain and is of wide-ranging regional and global importance. In general, the Modi government adopts a two-track policy towards China with more conspicuous double characters: On the one hand, it opens its door to Chinese enterprises for further integration into Chinese economic track. It hopes to learn from Chinese experience in development and makes use of Chinese resources to expand itself. On the other hand, it strengthens its own military preparations and increases strategic cooperation with other countries in order to cope with China’s rise. 
A. The Anchor Role of Sino-Indian Economic and Trade Cooperation Keeps Expanding
Since the end of 1990s, Sino-Indian trade has kept increasing rapidly. It has been regarded as the most powerful and most active supporting force in the course of reconciliation between the two countries. Geo-economics has gradually played a crucial role in pushing forward the Sino-Indian relations. Although the two countries have boundary disputes and take each other as geo-political adversary, trade will become the central consideration in India’s China policy. When Modi was Chief Minister of Gujarat State, neither the U.S. nor Europe was willing to have any contact with him. They even regarded him as “international untouchable”. Whereas, China increased investment in Gujarat State, promoted the improvement of the commercial environment of that state and several times invited Modi to visit China. Modi himself has had a good opinion about China since then and taken an interest to do business with China. 
Potentials for cooperation are tremendous in the field of bilateral trade. As the annual statistics of China General Administration of Customs show, Sino-Indian trade volume registered 70.50 billion US dollars in 2014, up by 7.9% year on year. In the next 5 years, China will join hands with South Asian countries including India and strive for a breakthrough of the volume of 150 billion US dollars in the two-way trade. China and India are carrying out fruitful cooperation in areas of infrastructure construction including energy and communication, which have become new highlights in bilateral economic and trade cooperation in the new era. Of late, the India side has cared for its increasing deficit in Sino-Indian trade. One should take note that trade deficit is often a common phenomenon in international economic exchanges. There are a number of causes for the imbalance in Sino-Indian trade. There exist structural problems in India’s export to China. For a long time, the export of iron ore has been the large stock. However, in recent years, the Indian government took unilateral actions to restrict the mining and export of iron ores, leading to sharp drop of Indian export volume to China, showing the momentum of imbalance in bilateral trade in the short term. To resolve imbalance in Sino-Indian trade, it is necessary not to follow the wrong path of politicization or trade rescue, but should resort to the means of returning to the market. i.e., the Indian side should take the initiative to expand its sales of commodities and services that suit the Chinese market. When President Xi Jinping visited India in 2014, he decided with Modi on a 5-year economic and trade cooperation plan between China and India, aiming at stepping up cooperation in areas of drugs, farm products and IT industry, to promote the rebalance of bilateral trade. 
In project contracting, India has become one of China’s largest overseas markets in this industry. According to statistics, up to the end of 2012, China had signed in India contracts totaling 60.131 billion US dollars, accomplishing business volume by 33.518 billion US dollars.   By June 2014, projects contracted by China in India had amounted to 63.3 billion US dollars. Under the circumstances that India desperately needs to improve infrastructure, project contracting has become a flexible, applicable and reliable mode of Sino-Indian cooperation in infrastructure building. 
In two-way investment, in order to cultivate domestic manufacturing industry and increase its percentage, the Indian government has in recent years gradually turned its eyes to direct investments by Chinese enterprises. The core of “Modi economics” is to attract foreign investment to develop manufacturing industry and improve infrastructure. Obviously it needs the support of Chinese capital and technology. According to the statistics of the Indian government, from April 2000 to May 2014, Chinese investments in India totaled 410 million US dollars, accounting for 0.18% of the total foreign investment in India. That was almost negligible, ranking 28th place among all countries and regions.  During his visit to India, President Xi Jinping announced that the Chinese side would strive to invest 20 billion US dollars in Indian infrastructure and development projects in the next 5 years, build two industrial parks in India, take part in the upgrading of existing India railways and consider to jointly construct high-speed railways. Taking into consideration the frequent security examinations of Chinese investments in India, the new common understanding reached between China and India in investment is obviously an important breakthrough. It showed that the Indian side has finally emancipated its mind to welcome Chinese capital and technology. In the long run, such a positive change will be conducive to fostering a relatively balanced Sino-Indian trade structure and to promoting “seamless connection” of Chinese and Indian markets. 
In the field of institutionalization of trade and economic relations, Sino-Indian strategic economic dialogue, financial dialogue, economic and trade joint group and other dialogue consultative mechanisms are getting increasingly mature. Pragmatic cooperation between the two countries is expanding from trade in commodities and project contracting to manufacturing industry, trade in services and other areas. In spite of increased frictions in Sino-Indian trade owing to the unfavorable international economic environment, institutional cooperation in the field of economy and trade between the two countries has been kept on the upward track. Bilateral trade in general has remained stable, project contracting going on smoothly and mutual investment potentials gradually brought into play. 
B. China and India make consistent efforts to tackle problems in the strategic area of security and have started to overcome the cask effect 
If the overall Sino-Indian relationship is compared to a cask, the deficit in mutual trust between the two countries is the shortest plate. Practice proves that low-level of mutual trust in security and strategic suspicions were the biggest obstacles to Sino-Indian relations. 
Over half a century in the past, China and India, in the spirit of seeking common ground while reserving differences and taking the overall interests into consideration, froze, managed and controlled major differences in security strategy between the two countries and prioritized the development of cooperation in other areas. In recent years, along with the enrichment and diversification of Sino-Indian relations, the quake-resistance and maturity of bilateral relations have both upgraded. Both sides have come to realize that communications, dialogues and consultations are important channels not only to resolve security conflicts and differences but to promote bilateral relations to a new stage. Under the direct top-level leadership, the two countries, while continuing to tap and expand the interest-converging areas by way of “addition”, actively narrowed the security differences by way of “subtraction”. 
In recent years, China and India have made breakthroughs in a number of sensitive security issues. For instance, the two sides decided to hold the first round of maritime cooperation dialogue, to exchange views on maritime affairs and maritime security. The subjects include anti-piracy, navigation freedom and cooperation of the two countries’ maritime agencies. The two sides also decided to hold consultations on disarmament, non proliferation and arms control affairs, and to maintain regular exchange of visits between defense departments and military leaders of the two countries. The two sides agreed to establish regular meeting mechanisms between the headquarters of the two armies, between neighboring military commands and border defense troops, to increase meeting spots at border areas of the two countries, establish a hotline between the headquarters of the two armies and establish telecommunication between the frontline border troops of the two countries. The two countries also agreed to hold joint drills by land, navy and air forces at appropriate times, to step up cooperation in such areas as peace-keeping, counter-terrorism, navigation escort, maritime security, humanitarian rescue and disaster reduction, personnel training and think-tank exchanges.   The above demonstrates that China and India have actively cracked hard nuts in the sensitive and complex area of security for the sake of buttressing the shortest plate in the cask of Sino-Indian mutual trust. 
C. China and India actively cooperate in handling and controlling boundary disputes, consistently accumulating variables conducive to the resolution of disputes
Boundary issue is yet another major issue in Sino-Indian relations. Like a thorn in the flesh, it often hurts the national feelings of the two nations. More often than not, this issue is utilized by some external forces which try to bad-mouth and sabotage Sino-Indian relations. To resolve the boundary issue, both sides need to maintain strategic patience, meet each other half way, proceed gradually but surely and jointly create and accumulate all kinds of favorable conditions. Just as Chinese Foreign Minister Wang Yi said, “At the moment, the boundary negotiation is in the process of building up small positive developments. It is like climbing a mountain. The going is tough and that is only because we are on the way up.”   When confrontation occurred occasionally in the disputed areas, the two countries timely and effectively prevented escalation of the incident through consultation and coordination mechanism concerning boundary affairs such as the Agreement on the Establishment of Consultation and Coordination Working Mechanism Concerning Sino-Indian Boundary Affairs and the Border Defense Cooperation Agreement 2013. 
D. Cultural and people-to-people exchanges between the two countries are becoming more and more frequent. 
Cultural and people-to-people exchanges are an important means to foster popular kinship for each other and to consolidate the foundation of the will of the people of the two countries. Such issues as economic and trade relations, popular recognition and quality of cultural and people-to-people exchanges – issues of low political nature – will gradually gain more and more importance. It is reported that, in spite of strong opposition from some conservative departments, the Indian government is considering to provide facilitation for Chinese citizens’ tourism and conference visas. When President Xi Jinping visited India in 2014, the two countries agreed to launch the “China-India Cultural Exchanges Program”, covering tourism cooperation, exchange of visits of youth, exchanges of museums, language teaching, mutual translation of classic and contemporary works and exchange of film and TV culture.   In governmental documents of China and India, more and more space is devoted to clauses relating to cultural and people-to-people exchanges and cooperation conforming to the common aspirations of the people. This reflects that both sides are aware of the added value and strategic significance of cultural and people-to-people exchanges to bilateral relationship.
III. Focus of Further Upgrading Sino-Indian Relations in Future 
While China and India develop themselves and adjust their respective external strategic orientation, the connotations and extension of Sino-Indian relationship have both greatly expanded. Along with the expansion of the capacity of bilateral relations, more and more details need to be handled by the two countries. Therefore, the two countries need to do some solid ground work: 
A. Buttress strategic cooperative partnership under top-level leadership. Owing to special historical and current factors, Sino-Indian relationship needs the leadership of super political wisdom and skillful diplomacy so as to constantly inject cardiac stimulant to the relationship. In October 2013, President Xi Jinping put forward the “four integrations”, i.e., “it is necessary to promote the integrations of Sino-Indian relations with the international situation, with the respective needs for development of China and India, with the process of revitalization of the two countries and with the rejuvenation of oriental civilization.”   In September 2014, P. M. Modi set forth a new idea of “Inch toward Miles” concerning Sino-Indian relationship. “Inch” represents India and China, “Miles” mean “Millennium of Exceptional Synergy”   In pushing forward the implementation of the Belt and Road Initiative and the construction of China-India-Myanmar economic corridor, China and India can connect their respective development strategies and regional cooperation initiatives, promote the smooth communication of policies, and inter-flow of roads, trade, currencies and will of the people. Top-level planning will provide bilateral cooperation with a powerful platform and pull bilateral relations in continued upgrading. 
B. Accumulate consensus to lay up conditions for the resolution of issues left over by history including the boundary question. Tibet- related issues and the boundary issue, historical burdens left over to China and India by the colonialists, have pinned down considerable energy of the two governments. To resolve issues left over by history calls for superb negotiating skills and diplomatic wisdom. The two countries need to treat and handle this question from a strategic height. They need to have the courage for mutual concessions and the ability to guide public opinions. It also needs the positive change of international environment. The two countries need to make appropriate use of various kinds of boundary-related mechanisms, adopt more mutual-trust measures in the border areas, appropriately handle and control boundary disputes and narrow differences in the cognition of the line of actual control of the boundary. The two governments have responsibilities to cultivate consensus and an atmosphere of public opinions for leeway inside their own country. Only through patient, painstaking and peaceful negotiations featuring mutual understanding and mutual accommodation, will China and India be able to shape a clear-cut and friendly boundary that is recognized by the people of both countries. 
C. Rationally handle competition and cooperation in bilateral relations beyond zero-sum game. How to rationally look at the other side’s growing strength and face up competition and cooperation with an open mind will be a “new-normal subject” in future Sino-Indian relations. In recent years, different Indian high officials have stressed at different occasions that Sino-Indian relations are not confrontational “zero-sum game”. The world is large enough and can accommodate both China and India on rise. It is an indisputable fact that competitions exist in areas of comprehensive national power and international influence between China and India, however the two side need to subject such competitions to a benign and controllable scope. Just as former Indian P.M. Singh said, India and China should interact with the other side in the spirit of equality and friendship. The theory of alignment and containment is already outdated. India and China cannot be contained. The two countries should not seek mutual containment. Cooperation can bring much more good than the presumed benefit brought about by containment. 
D. Carry out pragmatic cooperation and broaden the basis for common interests of the two countries to the maximum. China and India should continue to carry out relevant consensus already reached, step up pragmatic cooperation in all areas, and reinforce the trend of converging interests. The two countries should learn from each other in the expansion of infrastructures and exchange experience in urbanization. They should take advantage of each other’s strength in manufacturing industry and service industry. They should work together to cope with energy security, cooperate to cope with food security, join hands to safeguard and develop a stable international trade system, jointly meet the challenges of climate change, coordinate efforts to safeguard global strategic stability and step up cooperation in areas of peaceful surrounding environment. China and India should promote trade and investment cooperation in parallel so as to achieve balanced development. They should start negotiations on the regional trade arrangement as early as possible, strengthen cooperation in the construction of industrial parks, railways and other infrastructures. They should promote the integration and connectivity of the two large markets of China and India and give full play to the “anchoring” role of economic and trade cooperation in stabilizing the bilateral relations. 
E. Build a cooperative network with multiple pillars and covering major stakeholders. Exchange of high-level visits is an efficient instrument for promoting bilateral relations. The two countries need to maintain institutional exchanges of visits at the supreme political level and ensure regular exchanges of visits by officials at various levels. The militaries and strategic research circles of the two countries need to maintain high-quality, non-confrontational dialogues on regular basis, reduce strategic misjudgment and enhance strategic mutual trust. Along with the increasing interaction and overlapping of overseas interests of the two sides, the two sides need to build a certain kind of communication and coordination mechanism for overseas interests. In addition, the facilitation measures for dialogues between the academic circles, media and cultural circles as well as for people-to-people exchanges of the two countries are also of far-reaching significance to the sustainable and healthy development of bilateral relations.