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China’s impact on South Asia: A discourse on India, Pakistan, and Nepal

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China’s influence continues to shape the conflict dynamics as well as the prospects for sustainable peace and development in South Asia. The elements of Chinese foreign policy take into account China’s geostrategic rivalry with India, economic expansion within the sub-continent and situation at the Sino-Indian border.  This article looks into China’s influence on the Indian subcontinent through its evolving relationship with India, Pakistan and Nepal.

The deterioration in US-Pakistan relations: Strategic Shift towards China 

Since its formation in 1947, Pakistan has been highly dependent on foreign aid, particularly from the US due to its influence on Afghan politics and proximity to the Persian Gulf.  Due to Pakistan’s strategic interests, it consistently provided refuge to the Taliban and refused to fully comply with American demands despite being its frontline ally in the War on Terror. Some of Pakistan’s policies to modulate the conflict dynamics in Afghanistan strained its relations with Washington D.C. and the resultant vacuum would be filled by Beijing’s strategic and economic support, which has grown manifold over the last two decades. The vision culminated in the form of China Pakistan Economic Corridor (CPEC), a $60 billion infrastructure megaproject linking Xinjiang with Pakistan’s Gwadar port. The Gwadar port in Pakistan serves as a potential hub for fulfilling China’s trade ambitions with the Gulf and Africa, however, such projects in Pakistan have been plagued by security concerns due to the ongoing insurgency in Balochistan.

Resultantly, China’s presence in South Asia jeopardized India’s quest to establish herself as a credible regional power and compelled India to keep her military strength divided between Pakistan and China. In the past, particularly after the 1962 Sino-Indian war, China began providing Pakistan with intensive military aid and diplomatic support in the international fora. Among many other interests, Beijing’s engagement and collaboration with Pakistan are highly shaped by two key goals:  

1) the interest to secure a distinctive economic, trade, and energy corridor linking the Gulf region and Africa,  

2) the urgency to establish strong resistance to the Uighur separatist movement.  

Pakistan’s rivalry with India and India’s troubled ties with the other neighboring South Asian countries have undoubtedly been some of the major reasons behind China’s deepening interest in South Asia. China’s supply of nuclear technology to Pakistan also contributed to increased tensions between India and Pakistan.  Even though many economists opined that the CPEC deepened the cleavages within the Pakistani economy and the existing inter-regional divide, the project continues to go ahead. 

China Pakistan Economic Corridor (CPEC) as state-space 

The China–Pakistan Economic Corridor (CPEC) was designed to connect Pakistan with China through a wide network of 3,000 km comprising roads, railways, and energy and gas pipelines from the Gwadar Port to Xinjiang Autonomous Region (XUAR). The CPEC project was regarded to be a comprehensive project with incredible potential for regional connectivity and integration which would be accompanied by investments in energy, transport corridors and fibre optic network. Some estimations projected that Pakistan would be able to generate 2.3 million jobs and experience a 2.5% point boost to its annual gross domestic product (GDP).  However, in actual terms, investment-driven growth without substantial social sector investments does not necessarily translate into development. Pakistan may draw lessons from China’s investment in Africa and can experience the maximum benefits of CPEC if appropriate policies are introduced to ensure the benefits are distributed equally.  As CPEC raises Chinese economic stakes in Pakistan, China also shares concerns about the growth of insurgency in Pakistan and has assisted Pakistan in the field of counter-terrorism. 

The condition of CPEC in Balochistan 

China’s increasing investment in infrastructure projects and mining rekindled the conflict between Islamabad and the separatists in Balochistan. Most recently, the government extended a $350 million worth copper-gold mine contract to a Chinese company. Furthermore, it has allowed a Chinese mining company to extend its work on a copper and gold mining project in the western Balochistan. The contract extension sparked anger among Baloch separatists who accused Beijing and Islamabad of exploiting the mineral resources of the province while the local Balochis did not their rightful share. To put the federal government into pressure, the Balochistan Liberation Army (BLA) (a separatist outfit) even attacked the Pakistan Stock Exchange Building. 

Despite sharing common concern over China’s rising influence, US-India joint efforts to counter CPEC are weak as the US does not want to pressurize Pakistan beyond a certain point. There is no concrete joint India-US plan to counter CPEC economically. However, New Delhi is emphasizing on cooperating with Kabul and Tehran to connect South Asia with Central Asia through Chabahar port and Iran–Afghan trans-border corridor. Experts believe that CPEC might deliver a stronger impact on regional connectivity and economic development more than the Indian proposed corridor. 

Indo – Nepal ties and China’s looming shadow

The increased presence of China across the Himalayas influenced India to recalibrate its policy towards Nepal. New Delhi began shifting its emphasis towards greater economic delivery and connectivity with its bordering nations. For India, such an approach has been challenging especially as it got embroiled in an existing yet escalatory border dispute with Nepal on the latter’s northwestern borders. The issue of Kalapani and the Lipulekh Pass attained spotlight in 2019, when India announced its new political map after the revocation of Article 370 of its Constitution. Since the partition in 1947, the Indian political map continued to include territories claimed by Nepal, but in 2020, Kathmandu took it up officially and publicly.  

In response, much to India’s chagrin, Nepal’s upper and lower houses passed a new map, making it as part of the Nepali constitution. Nepali nationalists believe that passing a constitutional amendment on a new political map, expressing strong support towards China’s economically-interventionist policies, and internationalizing the issue of the disputed territory at the United Nations will influence India to back down. However, it can be opined that in realistic terms, New Delhi will never cave in to any such demands or coercion from Kathmandu. Despite all of its political rhetoric and diplomatic pressure, the Nepali government may continue to emphasize on the importance of diplomatic dialogue. 

Nepal’s foreign policy is becoming increasingly politicized, followed by increased levels competitive nationalism among the leading political parties. The government was successful in mobilizing public opinion and playing up nationalist sentiments against India. While introducing a new political map is symbolic to some extent, Kathmandu has gone further with the deployment of troops on its borders with India. 

On this matter, Beijing maintains silence for the time being, but its future calculations could change depending upon the regional geopolitical situation. The Kalapani dispute between India and Nepal is also a near perfect mirror image of the 2017 Doklam crisis between China and Bhutan, where India increased its military forces in the region to reinstate the status quo. 

Problems and Prospects of India-Nepal Border 

The 1800 km long Nepal-India border is a porous one, and Nepal imports more than two-thirds of all its basic necessities through this border. There is a regular movement of people across the border on a daily basis because of shared cultural and family ties on both the sides. An estimated 279,000 Nepali migrant workers have jobs based in India and cross the border to and from work every day. 

The worsening India-Nepal diplomatic relations have caused major disruptions, with several thousands of workers being stranded along both the sides of the border . The border has been exploited for terrorism, smuggling, narcotics, and human trafficking. The Government of Nepal has periodically faced questions about inadequate border controls and lenient immigration systems. Custom services are not integrated with immigration and sophisticated databases linking passengers and goods entering Nepal have not been introduced. The US State Department’s Country Report on Terrorism 2018 highlight the lack of efficient security controls as a result of which “Nepal has been, and could continue to be, used as a transit or staging point for international terrorists”. 

China’s increasing political influence in Nepal 

Besides the economic aspects of the relationship, China’s influence has grown especially after the abolition of monarchy. Before the abolishment of the monarchy, China largely relied on the king to secure its financial and security interests in Nepal.  During Nepal’s constitution drafting process from 2008 to 2015, China showed distinctive concerns over the federal structures in Nepal. After the constitution’s promulgation in 2015, two communist parties formed a coalition government in 2017 and contested elections as a single entity. China had a pivotal role in strengthening this coalition government. The coalition government signed a Transit and Transport Agreement with China, which, in principle, signalled Nepal’s quest to reduce her dependence on India for its supply chains. 

New Delhi’s cultural, political, and economic influence in the last decade has been faced growing challenges. Over the years, the Sino-Nepali relations have improved to a large extent and Kathmandu accepted Beijing’s proposal to make Mandarin mandatory in the Nepali national school curriculum.  

Resetting India-Nepal Relations 

It is not a matter of denial that India is an important partner to Nepal, and India needs to improve its communications and understanding with Nepal. Instead of objecting to the increased political presence of China in the Nepali political spectrum, India must focus on advancing its relationship with Nepal through substantive actions. 

India should come up with policies to build a pragmatic and realistic partnership with Nepal for the future. This alliance should focus on common interests in terms of economic ties and mutual gains on grounds of the foreign policy of the two nations to maintain a robust relationship. India needs to re-invent its public diplomacy, rather than micromanaging Nepal, and such an approach has indeed undermined India-Nepal ties. 

India may attempt to help the Government of Nepal to strengthen its development projects and commence advanced infrastructure that advocates connectivity through the Himalayas. In 2019, the trade volume between China and Nepal reached 1.5 billion dollars and China emerged to become the second-largest tourist source in Nepal. China invested 106 million dollars in Nepal, and Chinese collaboration emerged as the highest donor among all multilateral and bilateral development cooperation partners of Nepal. While India makes use of its cultural ties and soft power in Nepal, China has been ambitiously establishing relations with the landlocked nation through economic diplomacy. 

Conclusion

The South Asian region is home to one-fourth of the world’s population and is one of the least economically integrated regions in the world. The World Bank on various occasions has stated that intraregional trade remains well below its potential due to historical political tensions and mistrust, and the crisis is worsened by cross-border conflicts and security concerns. China is known to have the engineering prowess that can counter any challenges posed by geography and manpower. The implementation of CPEC and other mega projects in South Asia can realign the economic capacity of the Indian sub-continent and it can be analyzed and proclaimed to a large extent that Chinese influence would continue to grow in the future.  It is clear that these countries have tried to balance their relationship with India by engaging with China, wherein China has proactively provided many of the countries of the Indian sub-continent with substantial technological and economic support in response to India’s SAARC project. While Sino-India rivalry continues to animate South Asia’s politico-economic trajectory, one can still be optimistic about increasing cooperation and attaining
economic progress and peace in the sub-continent.

Shadman Sadab has worked as a Global Shaper at the World Economic Forum. Presently, he is the Director of Good City Foundation.

Md. Nazmus Sakib Khan is a Research Assistant at the Institute for Need-Led Innovation, Oxford and a Project Associate at the Global Shapers Dhaka Hub of the World Economic Forum.