NEW DELHI: India should reduce its engagement with China in three main areas, but dispense with “myopic jingoism”, a new report will say on how India can meet the China challenge in the wake of Galwan and Chinese invasion in eastern Ladakh.
“Strategic Patience and flexible policies” a study authored by former ambassador to China, Gautam Bambawale, former finance secretary Vijay Kelkar, former chief of CSIR R. Mashelkar, economists Ajit Ranade and Ajay Shah of the Pune International Centre, will be released later this week.
India, the paper says, will have to reset its China policy. “By taking military action in 2020, China has clearly indicated that she does not desire a stable, balanced, forward-looking relationship with India and that she is willing to use military coercion to resolve her disputes with India. China has decided the nature of the future India – China relationship: she appears to desire a conflictual, unbalanced and tense relationship with India.”
India, the study says, should build coalitions with 20 countries, those with who India shares values and interests. “Three groups of countries are our natural partners in such coalition-building: (a) the major democracies of the world, (b) the countries in the Indian region and (c) countries that share a border with China, including major powers such as Russia, who are our natural partners in this venture. Building such coalitions including the Quad and others is the need of the hour.”
The study details three areas where there is a case for a retreat from engagement with China: “There is a case for introducing restrictions against companies controlled by the Chinese state from having a controlling stake in a hotlist of sensitive infrastructure assets; There is a need to avoid locking into Chinese-controlled technological standards; and, India must police against and block Chinese state surveillance of Indian persons, which appears to often be done through backdoors in network equipment.”
China is currently ahead of India in economic thinking and in military affairs. But India boasts of certain advantages — the demographics work in India’s favour, as China greys fast. “The Indian financial system allocates capital better than the Chinese financial system. This gives India an edge in translating the flow of investment into increased GDP.” Third, India’s exports are “grounded on the true competitive advantages of operating in India.”
However, the study also shines a light on three “critical challenges” that India faces, which it describes as “(a) The increased tendency towards government micromanaging the economy, (b) The expanding administrative state and (c) a growing erosion of the rule of law.”
Thousands of global firms, the authors observe, are presently in the process of reviewing the extent of their exposure to China. This has created an opportunity for greater FDI into India. “The barriers that inhibit FDI into India consist of capital controls, taxation, regulation and rule of law. Fundamental reforms to these areas, based on root cause analysis, will simultaneously help the domestic economy and influence the decisions of global firms…”
The report flags a growing dimension of the India-China relationship — cyber crime led by state actors. “China is one of the countries which have created cybercrime and cyber warfare capabilities, which are termed `advanced persistent threats’ in the field of computer security.””
“This creates danger of attacks by state actors upon systems in India — government or private — as vehicles for inflicting harm upon India. Second, there are linkages between this problem and the greatest Indian export: software and processing services.”
Ultimately, the study recommends, that India should adopt a “progressive “Less China” approach, by taking adequate security precautions and yet staying away from myopic jingoism and realising that China is a major source of new technologies… which will be necessary inputs to our growth in the short term.”