Indo-China: Churning in the belly of the dragon

Published: December 17, 2013 - 14:34 Updated: February 3, 2014 - 00:40

The internal ideational flux in China impels it to behave like an independent superpower. India needs to discover what it wants in a changing international environment
Zorawar Daulet Singh Delhi 

When former Chinese president Hu Jintao visited India in November 2006, he pronounced that China would not seek “selfish gains” in South Asia and called for an “early settlement of the boundary issue”. Subsequent Chinese words and deeds gave little credence to a shift in Chinese policy. China’s posture on the border seemed to harden with ill-timed rhetoric by high officials. Regionally, with an open-ended Western military presence in South Asia, Beijing seemed content with playing second fiddle to
regional geopolitics.

By December 2010, when China’s former premier, Wen Jiabao, arrived in Delhi, the focus had shifted to geoeconomics. The trade imbalance had become palpably distorted in China’s favour and India Inc. seemed to have emerged as the swing factor in India’s China policy. India’s core geopolitical concerns seemed to have been swept aside. China’s unfriendly position on Kashmir, where its rhetoric challenged India’s sovereignty even on territory east of the Line of Control, coincided with Jiabao’s visit. Overall,
China seemed uninterested in serious geopolitical engagement on areas of regional discord.

Chinese Premier Li Keqiang’s May 2013 visit suggests China is pursuing a renewed approach of engagement. Retracing China’s internal political dynamic might help in understanding the evolution of Beijing’s perceptions and worldview.

China’s internal re-orientation

Despite adaptation, ideology remains an integral element of China’s political structure. The essence of Chinese domestic contestations is about interpreting and adapting the Marxist template as both a legitimator and a guide for China’s one-party state.

By recasting Marxist ideology and Mao Zedong thought in 1982 but not completely repudiating it, Deng Xiaoping paved the way for a permanent structural feature of China’s political system that still prevails. The core ideological contest is between reformers and leftists who compete over the evolution and interpretation of the post-Maoist system that Deng adapted after 1978.

The reformers prefer an open-ended transition from socialism by liberalizing the political economy that is expanding the non-state sector and decentralizing power toward the provinces, but are unable to articulate a political or institutional template for a post-Communist Party China. The leftists also accept Deng’s re-interpretation of the Maoist system as “socialism with Chinese characteristics”, which enables China to leverage the world capitalist system and the market for economic growth. However, according to the leftists, in this socialist-modernization process, the red line of one-party state rule must not be diluted. This also implies clear differences between the reformers and the leftists in evolution of China’s political economy.

For leftists, non-state sectors and multi-ownership systems can co-exist in the political economy but must remain subordinated to the dominant state sector. Reformers are either agnostic or receptive to new class formations that emerge outside the state sector because of privatization and deep involvement with the international political economy. Leftists, in contrast, remain committed to ideologically preserving China’s ‘socialist’ identity and counteracting the effects of parallel class structures with epistemic and capital linkages to the West.

Since the Deng era of economic openness, the factional balance has favoured the reformers. After Tiananmen in June 1989, the exuberance of the liberal reformers confronted an ideological backlash and Deng  was compelled to accommodate the leftists who were aghast at the prospect of a Soviet-style implosion. Deng accommodated these voices and shaped a new consensus where Communist Party dominance would be unquestioned to enable a single-minded pursuit of economic growth. Deng’s last and decisive political act was his famous 1992 southern tour to the coastal provinces to jump-start the reform process and take the initiative away from the resurgent leftists.

The post-1992 line was that China’s greater danger came from the leftists who should not be allowed to derail the managed liberalization of China’s economy. Both ideological factions disavowed political reform but, on political economy matters the reformers under the Jiang Zemin-Zhu Rongji leadership played a significant role in expanding the non-state sector through privatization of state assets, and, promotion of foreign-invested enterprises in coastal China. The social composition of the Party was also altered as private entrepreneurs entered the organization. This balance more or less lasted until the Hu Jintao-Wen Jiabao tandem assumed power in 2002, and after 2004, the official discourse began to highlight rising inequalities between coastal and inner China and social unrest, and the imperative for balanced development. The reformers remained ascendant but were tempered by the leftist discourse over rising social inequalities. Externally, China’s integration into the global economy proceeded rapidly, and Western, Japanese, South Korean and Taiwanese MNCs enjoyed an unprecedented profit boom through their China operations.

With geoeconomics in command globally, the reformers in China remained comfortable in their ability to hold off the leftists who sought to more actively rebalance the economy and strengthen Beijing’s control over the decentralization that the reformers had encouraged to enable wealth creation in the provinces. The global economic shock of 2008 and the re-surfacing of global economic imbalances represented a turning point in every sense. To avoid a hard landing, Beijing re-centralized the economy after a massive fiscal expansion using state-owned enterprises and banks. The post-crisis turbulence in western markets reinforced the leftist influence over financial and economic policy.

In 2012, the Bo Xilai crisis erupted. While the picture is hazy, at a structural level Bo arguably represented an effort by the crony-capitalist political economy to craft an informal alliance with sections of the security services and the PLA leadership to emerge as a political axis, bypassing the formal Party command structure. At first glance, this dynamic represented a potential systemic challenge to both the reformers and the leftists who are united on the primacy of Communist party rule. However, the leftists, since they are ideologically committed to the state-led model and the socialist ethos, could have been more adversely affected had the Bo  experiment succeeded. This new political force would probably have aligned with ideologically agnostic reformists and accelerated the private expansion of the non-state sector. Apparently, reformers associated with Jiang Zemin’s followers in Beijing were supporting Bo Xilai before his downfall and “more than half of the 25-member Politburo visited Chongqing to endorse Bo’s policies”. This also included a powerful domestic security chief, Zhou Yongkang, who was subsequently purged. With the leftists weakened, the ideological and institutional erosion of single party dominance would probably have followed.

It is unclear if the leftists sought to leverage the Bo  scandal to re-shape the balance of power before the leadership transition. Presumably, new red lines over the domestic landscape must have been drawn. The restoration of Party control over the PLA and greater centralization of political power has been one evident outcome of this crisis. After a period of intense inter-factional bargaining, the Party presented a united front to the world at the 18th Party Congress in November 2012. Hu Jintao even relinquished his leadership in the Central Military Commission, the highest political-military decision-making body, to enable the Xi Jinping regime to acquire full control over the political and military system.

A majority of the new Politburo Standing Committee (PSC) members represent, at least on paper, connections to the liberal reformist faction with perhaps Xi indirectly affiliated to that group. Li Keqiang, a protégé of Hu, is said to represent the leftist faction. In the provinces, leftists dominate with leadership in 21 provinces up from five provinces, in 2002. While the reformers are overrepresented in the PSC, in the larger 25-member Politburo, the leftists dominate. Of the 14 Politburo members eligible for promotion in the 19th Party Congress in 2017, nine members are with the leftist group of Hu and five with the Jiang  faction.

This core ideational contest between reformers and leftists remains a structural feature of post-Dengist China. The global political economy flux, and the Bo scandal have undermined the dominance of the reformist worldview. The Communiqué of the Third Plenum of the 18th Congress held in November 2013 underscores the ideational tilt in favour of the leftists.

China’s external re-orientation

China’s foreign policy no longer reflects the accommodative pro-Western line of the reformers. On major geopolitical questions, especially after NATO’s Libyan intervention, China has been adhering to an independent anti-intervention principle with Syria as the most recent example. On geoeconomic issues too, while the private sector might recover the ground it lost after the 2008 state expansion, Beijing has not acquiesced to Western neoliberal norms while resolving economic imbalances. Also, there has not been much headway in US market access to China’s high-value services sectors. Clearly, China’s ideational perceptions have changed.

David Shambaugh, a noted Sinologist, recently suggested that there is an intense identity contestation within China and there was “anything but continuity in Chinese foreign policy”. Interestingly, Shambaugh argues that since 2009, China’s identity and worldview are being shaped by realist and leftist voices. Harry Harding, another leading Sinologist, when asked to explicate Xi’s worldview, replied it mattered little because collective politics was the determining factor in China’s behaviour.

What is this collective politics? It is no longer “economics in command”, a phrase used to describe the Dengist era. In China, factional preferences have been transcended by a collective worldview. The Deng  consensus of a low profile and passive China absorbed by capital accumulation has been displaced by a self-image of a great power. To be sure, China has always had a dual self-image as a big power and as a developing state. The former self-image has now become prominent.

Li was representing this new China on his May 2013 India visit. Is the new China less selfish? At first glance, this is a paradoxical question. Every indicator suggests a China that is pushing back, is less timid, and even less concerned about Western mainstream constructions of China’s behaviour. But, perhaps the one important element that the new China brings is a more strategic approach to its external environment. Deng’s priority on economic growth shaped the prism through which Chinese policymakers viewed and interacted with the world. China defined itself through its modernization effort, and defended a narrow conception of national interests where its concern for global and regional geopolitics was relatively ambivalent or muted. The transition to a great power then brings geopolitical and strategic issues into the fore for Chinese foreign policy.

China no longer perceives the international system as unipolar or that its economic development demands an accommodative posture towards the West. China’s Vice Foreign Minister summed up China’s posture as “we will not create troubles, but we definitely do not fear any trouble”. The image of great power interdependence has become Beijing’s new philosophy since Xi’s February 2012 speech calling for “a new type of relationship between major countries in the 21st century”.

Perceptive US Sinologists recognize a new China will not bend to US coercion, and argue that to arrest a deterioration of the security dilemma, Washington should engage China on a more equal footing. On a broader level, US military leadership, such as chairman of the Joint Chiefs of Staff Martin Dempsey is recognizing the “need to adjust our ambitions to match our abilities”. US elite perceptions of its own power and prestige in the global system, however, suggest Washington is reluctant to re-construct a new global role that is not based on international primacy. The Obama-Xi Jinping summit in June 2013 exemplified this impassé. between the self-image of a rising China and the US.

Implications for India

China is seeking to reshape the geopolitics on its southern periphery. Beijing is confronting a complex geostrategic environment, especially in East Asia, with an ongoing dispute with Japan and a larger strategic competition with the US. It is logical for Beijing to ensure a stable southern periphery in order to engage with the larger political-military challenge from the east. Indeed, historically, Beijing has sought to forestall a geopolitical scenario of a united anti-China coalition. China’s active engagement with Russia, South Korea, ASEAN and India are indicative of this regional geostrategy.

Li’s rhetoric of “Do not do unto others what you do not want others to do unto you”, a Chinese scholar’s reference that a “beggar-thy-neighbour policy is intolerable” and a Chinese editorial suggesting that the “level of mistrust could be gradually reduced with good faith in each other’s strategic intentions” are all intended to project a cooperative image to the Indian political elite.

The ultimate proof of this proactive geostrategy is whether India and China can discover some common ground in their ‘overlapping peripheries’.

This would include issues such as negotiations on the border dispute, stability on the Himalayan frontiers, cooperation under the BCIM (Bangladesh, China, India, Myanmar) Regional Forum, maritime cooperation over the commons, cooperation over Afghanistan’s future, and countering terrorism and extremist ideologies in the neighbourhood. It is only through a reciprocal recognition of Sino-Indian security interdependence that the security dilemma can be managed. The onus is more on China since it has historically pursued a selfish approach to its southern periphery.

In the economic sphere, India’s qualitative asymmetry with China is unsustainable. After excluding oil imports, China accounts for nearly 50 per cent of India’s trade deficit. If engaging with China’s economy is a humbling experience, India’s internal distortions have further made it embarrassing. India’s Commerce Secretary recently admitted, “There is little we can do to stop imports from China, as there is a genuine demand from the Indian industry.”

The deficit reflects India’s imbalanced domestic industrial and manufacturing base that remains stubbornly stuck at 16 per cent of GDP for the past two decades. Further, when India’s social infrastructure — healthcare, education, social security — is dispassionately appraised, the asymmetry with even middle powers is high. This is a systemic crisis that is yet to be holistically confronted.

Aside from market access, where India’s niche capabilities are limited to a select few sectors, the only viable solution, given India Inc’s dependent position, is through a proactive strategy of steering Chinese investment into capital-starved and capacity-starved sectors. Without a policy framework, this too could get stuck in inertia. Plainly put, without strategic adjustments, India’s economic model cannot compete with China’s.

As Delhi introspects on its China policy it needs to assess the type of relationship it wants to build with a stronger, more self-assured but not necessarily a hostile China. The global balance of power and prevailing alignments in Asia will not put China on a unilateral path to security. In one global triangle, India has inadvertently attained a position where its equation with both Washington and Beijing appears more stable than the US-China relationship. India has some agency to maintain this position, and, perhaps even benefit from a multipolar world.

India needs to recognize the upper limits of an external balancing strategy, which cannot resolve the deep structural problems in India’s political economy, institutions, and state capacity.  

The writer is a Doctoral candidate at the India Institute, King’s College London and co-author of India China Relations: The Border Issue and Beyond, Delhi: Viva, 2009.


The internal ideational flux in China impels it to behave like an independent superpower. India needs to discover what it wants in a changing international environment
Zorawar Daulet Singh Delhi 

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