Impressions from a Visit to China: Part II

Brig Vinod Anand, 

Senior Fellow, VIF

Tale of Two Chinese Cities

The second part of the trip involved a visit to Shenzhen and Guangzhou; one representing the new resurgent, pulsating China throbbing with economic activity and the second depicting both the old and new elements.Guangzhou, a traditional Chinese coastal city has transformed itself into a new modernized metropolis which is the capital of one of the wealthiest provinces of China. While Shenzhen has made rapid strides in the knowledge age industries Guangzhou is known for both being a manufacturing and trading hub. Guangzhou also houses some of the high end technical establishments like the National Super Computer but it is Shenzhen that is known for innovation and high tech enterprises. At the national level while Beijing and Shanghai are placed as first and second major cities based on a number of indicators Guangzhou and Shenzhen come second and third. But then Shenzhen’s fast paced development over last three and half decades has given rise to the possibility of it replacing Guangzhou as the third major city in mainland China.

Therefore, it was very apt that the Indian delegation of strategic experts and journalists was taken to these two cities of Guangdong province in order to acquaint them with the extent of modernization and development that has taken place in China. The first stop was Shenzhen Museum which showcases the transformation of a small fishing village to the current scenario in a period of slightly over three decades. A city of about 10 million people, its per capita GDP is 22,000 US dollars for 2014 which is more than the per capita GDP Guangzhou (19,000 USD) as also the entire mainland China’s other cities. The museum depicts the history of reforms and opening up of Shenzhen first as a Special Economic Zone and thereafter its expansion by almost four times its original size area wise.

Shenzhen houses top of the line high tech enterprises in China specializing in ICT, automobiles, green energy, electronics, mobile phones and its parts among many other knowledge age products and services. Huawei, HTC, Toshiba and BYD have their facilities and establishments here. BYD Auto is considered as the most innovative national brand that leads the field of electric vehicles with new technologies. Thus visit of the delegation to Huawei and BYD Auto was meant to show the areas where China has made large strides in high end technologies and products.

Huawei: ‘Make in India’ and Cyber Security Concerns

Huawei is a leading ICT solution provider with revenue of 46.5 billion USD in 2014; it claims to support the needs of one third of the world’s population. With its HQ in Shenzhen it has steadily increased its presence in India since 1999. Its first R & D centre in India was setup in Bangalore which is now ‘cloud’ based; there is another centre in Gurgaon whereas it has manufacturing facility in Chennai. Joe Kelly, the Vice President and his team briefed the delegation about Huwaei’s activities in India and its plans and contribution towards ‘Make in India’ campaign. Digital connectivity and broadband network for all is the major objective of the company. He also explained how based on Huwawei’s manufacturing activity in Chennai 115 small size local companies even got listed because of partnership with Huawei. The company was very keen to take part in Prime Minister Modi’s plan to build 100 smart cities across India that would have high-tech communication capabilities. Pointing out the seriousness with which Huwaei looks at CSR obligations the case of Huawei along with Bharti Telecom restoring the damaged telecom infrastructure during J & K floods was recalled.

When questioned about security concerns and suspicions in India (because of its connections with PLA) regarding the telecom equipment of Huawei it was pointed out that there was no such thing as a Chinese, US or some other country specific product as the supply chain encompasses multiple sources, for instance the software could be sourced from India and the hardware could be from a number of other countries. As cyber security is an issue of intense interest to both customers and governments the company has committed that it will collaborate with all the stakeholders in ensuring that there is no place for breach of security. In any case, it is bad for business. Processes that are both externally and internally focused have been introduced that in effect would ensure comprehensive cyber security. Compliance with local laws and regulations, verification of equipment by independent third parties and monitoring of digital signatures were some of the elements of this process.

In fact, in 2013 Huawei had taken out a white paper on cyber security authored by John Suffolk, previously Chief Information Officer in UK’s government and later employed by Huawei (presently, he is Senior Vice President). Apparently, he had been instrumental in assuaging the security apprehensions of the British government in allowing access of Huawei to Britain’s telecom sector.

Huawei is in to touch with Department of Electronics and Information Technology and has made first telecom supplier proposal and largely the Indian government seems inclined to go ahead after cyber security assurances and third party verifications. According to Indian media the government is looking to create adequate testing facilities to screen equipment for embedded malware before clearing a proposal by Huawei to set up a Rs 25-crore manufacturing facility at an SEZ in Chennai. This new approach is said to be under consideration by the ministry in consultation with the National Security Council Secretariat (NSCS) and intelligence agencies.

Build Your Dreams (BYD): Clean and Green Solutions

That is exactly what BYD Auto has been doing after its establishment in 2003. Basically an auto brand that integrates advanced technologies from IT industry and is into associated software development it is producing highly intelligent vehicles. In addition it sees itself as a pioneer in new energy solutions and has developed green products such as solar farm, energy storage station, electric vehicles, LED and electronic fork lift etc. It is one of the largest private auto manufacturer that is aiming to expand its share of the electric and hybrid cars and vehicles; as its sale pitch the BYD rep briefed the visiting Indian delegation that it has sold electric buses and taxis to the US and South East Asian countries among other markets. In fact, Shenzhen city has over 500 E6 model electric cars operating as taxis along with recharge stations.

Looking at India’s ambitious plans for solar energy and green products there is a considerable potential for doing business with India in the shape of setting up joint ventures in India. Though some of the green products and production of solar energy was costlier it would need government subsidy as is being done in many countries to promote clean and green energy solutions. In any case, last year in February, Bangalore Metropolitan Transport Corporation and BYD launched a programme that is expected to change air quality over Bangalore. It is at that time the first long-range, all-electric bus of BYD arrived in Bangalore; the bus achieves up to 24 hours of service on a single night-time charge which is longer than any other electric bus in the market today. Success of this initiative is expected to have a cascading effect across the other Indian urban centers that are afflicted with air pollution and thus are looking for clean energy solutions.

Shenzhen University and Cultural Cooperation

In addition to technical and scientific progress reflected by the success of the abovementioned companies Shenzhen University established in 1986 has also come in for recognition at the international level for its academic achievements. It has a Centre for Indian Studies that has courses in Indian literature, comparative studies of Chinese and Indian poets and their works, offers courses in Indian culture, and Indian classics. The Centre has also hosted international conference on Ramayana besides many other social and cultural events that bring India and China together. It also boasts many internationally recognized Chinese Indologists who are well known and well respected in India e.g. Prof. Tan Chung who propagates that with India and China both being civilisational powers it is the geo-civilisation narrative that should dominate the bilateral relationship rather than the geo-political or the geo-strategic discourse.

Prof. Yu Longyu, Director of Center for Indian studies made a presentation on “The Belt and Road” and the New Opportunity for China-India Cooperation. He emphasised on the mutual benefits that can be derived from OBOR initiative that covers several aspects of cultural and economic cooperation. While China has more than ten such centers teaching Hindi and studying India we have been lax in encouraging studies about China in India. This needs to be rectified in an earlier timeframe.

Another visit was to Shenzhen TV where they showcased their virtual studio and explained to the visiting delegation the positive stories they were broadcasting especially about Sino-Indian relations. Interviews with Indian experts and journalists were designed to promote Sino-Indian relations; stress being on convergences rather than divergences. Cooperation with Indian TV entities was possible based on similar lines as MOU signed between CCTV and India’s Doordarshan TV during PM Modi’s visit.

Travelling from Shenzhen to Guangzhou in High Speed Rail

Most invigorating experience during the sojourn to China was that of travelling by the High Speed rail from Shenzhen to Guanghzhou. The journey at the speed of over 300 kms per hour that took only about 30 minutes to cover a distance of 135 kms was smooth. There were no swaying movements or any other uncomfortable jerks, stops or starts. The railway stations at both ends looked more like airports and were pictures of skillful organization, efficiency and cleanliness. Though in terms of Indian purchasing power the cost of ticket of 100 RMB (INR 1000) could be considered as bit steep but this was not considered so by the Chinese standards.

Guangzhou: Capital of Guangdong Province

Last stop of delegation’s visit was Guangzhou, the capital of Guangdong province. With a population of around 107 million the province posted a GDP of 1.06 trillion US dollars in 2014. Now this is almost half of India’s total GDP in absolute numbers. These figures and other information were given out during briefing by Mr. Wu Ken, Deputy Secretary General of Guangdong and later on by Mr. Li Jian DDG of Guangdong Foreign Affairs office along with a number of other senior officials from Planning and Industry Policy Division, Trade, Commerce, Agriculture and tourism Departments among some others. Guangdong has been posting the highest GDP amongst the Chinese provinces for over 25 years. While the structure of Guangdong’s economy (percentage of population in primary sector: 4.7, secondary sector: 45 and tertiary sector: 48.2) indicates that the province is highly industrialized and increasingly moving towards becoming a knowledge age society yet it has income disparities. Rural population i.e. 34 percent of 107 million, however, had a per capita income of 12,246 RMB (approx 2000 USD) which was much less than the average per capita income of around 10,000 USD.

The government officials explained the various cooperative arrangements that already exist between both sides and the potential for enhancement and diversification. Trade figures between Guangdong and India were highlighted. Recommendations were made by Indian side to allow access to Indian pharmaceutical, IT and agriculture products and services. There was also potential for enhancing cooperation in area of energy and establishment of industrial parks (as proposed during PM Modi’s visit). Increased cooperation between chambers of trade and commerce of both sides was mooted. Interestingly, cooperation in terms of anti-corruption drive and learning from each others’ experiences was viewed as another area for sharing ideas. The Guangdong officials also mentioned that a 21st century Maritime Silk Road Expo is being organized soon to push our two way investment and trade. While Guangdong and Gujarat had become sister provinces and Guangzhou and Ahmadabad as sister cities during President Xi’s visit to India last year it was time to cement the relationship further.

Conclusion

The overall objective of the organizers in acquainting the visiting delegation with the advances made by China both in terms of development, achievements in the field of infrastructure and the fast paced economic growth was amply brought home to the visitors. The OBOR and explanation of the concept and the mutually beneficial aspects of was done in almost all the briefings that were undertaken by the government officials and even by non-government entities. Throughout the visit the points about bilateral strategic dissonance were only discussed almost in passing; the stress was laid over and again on enhancing economic cooperation. Obviously, China sees in India an emerging market opportunity that can absorb Beijing’s gargantuan manufacturing and other surplus capacities. Recently, Chinese ambassador to India Le Yucheng has said that China’s latest manufacturing campaign 'Made in China 2025' can be aligned with India’s 'Make in India' initiative. How will that be done or how can it be done is another question for another day.

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Published Date: 29^th June 2015

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Vivekananda International Foundation)

Will President Xi Jinping’s Visit change the Contours of Sino-Indian Ties?

Brig Vinod Anand, 

Senior Fellow, VIF

The coming visit of President Xi Jinping is being viewed as a visit that could define the next decade of engagement between the two Asian giants. It is generally accepted that Sino-Indian relationship could turn out to be more important than the Sino-US engagement if leadership of both the countries were to cooperate and give substance to the conception that the locus of global economy and power has shifted to Asia. Notwithstanding the fact that there is dissonance between the two countries on a number of issues, both nations do share common perceptions on many of the international issues and especially so on the nature of the emerging world order.

Further, the visit also needs to be seen in the backdrop of the unprecedented two summit meetings between PM Li Keqiang and Manmohan Singh last year, recent visit of Vice President Hamid Ansari to China to celebrate 60 years of Panchsheel and not to be left behind the visit of Indian Army Chief Gen. Bikram Singh to China in first week of July (after a gap of 9 Years). All these engagements were topped by Xi and Modi meeting on the sidelines of BRICS where both leaders established a good rapport. These multifarious engagements have already brought to fore the Indian concerns and have indicated the direction in which both countries want to proceed further. One thing which is certain is that no dramatic breakthroughs in the relationship should be expected.

Modi’s mantra is development and growth and that has been the basis on which he has come to power. Having had firsthand experience during his visits to China as Gujarat Chief Minister, he has been thoroughly impressed by the development and economic growth of China and especially its infrastructure in terms of roads, ports, highways and some of the new cities and towns. Therefore, he is keen to conclude agreements with the visiting President regarding Chinese infrastructure companies undertaking projects in India. India is looking for infusion of China’s surplus funds in Indian infrastructure and in other avenues of investment. Though an MOU for setting up an Industrial Park has been signed by our Trade and Commerce Minister during Vice President Ansari’s visit to China, it is just a small step; Modi is looking for a framework agreement on investment by China. Modi is keen to push infrastructure development by the Chinese in Gujarat, Madhya Pradesh and Tamil Nadu.

India’s requirements of funds are a huge one trillion US dollars as per its current Five Year Plan and it is hoped that China can contribute possibly 30 percent of such requirement over a period of time. But a Sino-Indian agreement for anything closer to 30 billion USD or even somewhat lesser amount in the coming visit could be a game changer. There would be some problems like the absorption capacities and many other difficulties connected with the local environment but all such issues can be overcome provided the political will is there from both sides. Recently, a country like UK offered 1 billion pounds (around 1.75 billion USD) for infrastructure development in India. Obviously, China’s capacities are much beyond this amount.

Second agreement that could give a positive momentum to Sino-Indian ties needs to be in the field of trade and commerce. The trade imbalance between the two nations is now to the tune of around 35 billion USD which needs to be addressed. In all the previous top level political engagements, while promises have been made to come to grips with the issue, no substantial progress has been made. Therefore, in the coming visit, New Delhi is looking forward to an agreement that grants greater access of Indian goods and services to the Chinese market, for instance Indian pharmaceutical products, IT enabled services, cotton textiles & home furnishings etc. There are many non-tariff barriers on Indian exports of goods and services. Removal of these would enable India to close the trade gap; though it is also not expected that the trade should always be balanced yet another way is that China invests in India. Under the present circumstances, it appears unlikely that the projected bilateral trade figure of 100 billion USD by 2015 can be achieved.

Thirdly, whenever a bilateral visit takes place, there is a pattern of behavior from China’s side which needs to be avoided. Such a behavior has been exhibited with regularity on the eve of all previous political visits. Before the Indian Vice President’s visit, a controversial map was released by China besides transgression by PLA troops in Pangong Lake. Last year before PM Li Keqiang’s visit to New Delhi, there was the Depsang valley intrusion. In fact, it is difficult to recall any visit where before the event there has been no negative incident. Largely, the perception is that such events/incidents are deliberately planned to put Indian decision-makers on the back foot and in order to test their resolve.

Though it may not be necessary to have any written agreement on the above aspect, both leaders can reach an understanding that such incidents should be avoided in order to give positive atmospherics to the bilateral meets.

While many agreements have been signed culminating into Border Area Development Cooperation (BADC) agreement of 2013, the border incidents continue to take place. Several incursions in Ladakh sector by Chinese troops have taken place since January 2014. PLA’s posture has become increasingly very assertive and it has been attempting to expand its claimed areas (which are in any case ill-defined). After the signing of BADC, such incidents should have been a rarity; both leaders need to reach an understanding on the same and need to enforce their writ; any fresh formal agreement on the issue would not be of any avail if the previous agreements are not adhered to in their true spirit. There is a need to arrive at a mutual modus vivendi on the issue. Peace and tranquility along the border remains an important element for growth and development. This has been recognized so in the previous agreements.

Fourthly is the question of lack of Chinese sensitivity to India’s core concern of Kashmir issue. Since nineties till 2005, China had been following somewhat of a neutral approach but after 2005 or so, there has been perceptible difference in China’s approach with its tilt towards Pakistan. China’s developmental and other activities in Pakistan occupied Kashmir have a negative impact on India’s security. It also needs to be remembered that even Pakistan considers Kashmir as disputed therefore; if China wants to reduce dissonance with India, then China’s return to a neutral stand would add to positivity of Sino-Indian relationship.

Fifth is the Tibet question. This year is being celebrated as the 60th year of Panchsheel Agreement. India is not much enamored with the Panchsheel Agreement as it recognized China’s suzerainty over Tibet without any concession to India in the bargain. It is considered as a lack of strategic vision on part of Nehru. While the Five principles of peaceful coexistence are quite all right, it was the preamble of the agreement that became more significant than the clauses in the main text. The fact that India was represented at the celebratory event in China by its Vice President is also some kind of message that Panchsheel does not hold that level of significance. In the bilateral summits for last three years or so, even though India has been adhering to one China policy, the same is not being mentioned in the Joint Communiques issued after the summits. This has been largely as a response to China’s failure to recognize Jammu & Kashmir as part of India. There have been many other irritants like the stapled visas issue to residents of Arunachal Pradesh.

Further, the presence of Lobsang Sangay, Kalon Tripa / Sikyong of Tibet Administration at Modi’s swearing ceremony also indicates the current government’s stance in some measure though there is no change in Indian government’s policy that Tibetans cannot carry out any political activities in India etc.

Another significant issue that needs further discussions is the damming activities on Yarlung Tsangpo/Brahmaputra River; some discussions took place during VP Hamid Ansari’s visit to Beijing; the two governments signed an implementation plan on provision of hydrological information on the Brahmaputra River in flood seasons by China and India. Expansion in areas of cooperation in this field has to take note of the interests of lower riparian nations like Bangladesh and India. So far Chinese policies on the issue are not conducive to good relationship.

Coming to the regional situation, the most important issue would be that of Afghanistan post 2014. Both sides largely share similar perceptions on the emerging scenario and have common concerns on the security implications of the unfolding scenario. There is a JWG on the subject; both sides are expected to explore practical ways of cooperating in Afghanistan so that peace and stability is brought to that nation. However, on the question of terrorism, China still continues to see through Pakistani prism. While the Americans, the Western nations and possibly the Chinese have seen through the double game of Pakistan, they feel constrained to take any action against Pakistan for a number of geo-strategic reasons. The negative role of Pakistan needs to be recognized by China otherwise peace and stability in the region including in Xinjiang would remain elusive.

While at the international level, both nations largely identify with each other’s aims, objectives and interests in the multilateral forums, on climate and trade issues, WTO etc. yet, China is yet to endorse India becoming a permanent member of UNSC as also a member of the Nuclear Suppliers Group. Meanwhile, China led by President Xi Jinping has become increasingly aggressive and assertive in Asia both militarily and economically indicating that it aspires for leadership role in Asia. Promotion of a number economic corridors and silk roads, offering funding by establishing Asian Infrastructure Development Fund, Shanghai Cooperation Organisation Development Fund and many other economic initiatives by China are aimed to enhance its strategic presence.

On the other hand, China needs India on its side for the success of its view of the new Asian security architecture where according to Chinese perceptions the US and the others have no role. India favours a strategic equilibrium in Asia whereas China is anti-status quo aspiring to dominate the Asian firmament. Thus, Modi’s visit to Japan, Australian PM Abbot’s visit to India before President Xi’s visit and later Modi’s visit to the US need to be seen in the context of India attempting to balance the emerging strategic equations.

Overall, the forthcoming visit of President Xi is unlikely to change the fundamental nature of Sino-Indian relationship as China is not ready to relent on issues considered by India to be part of its core national interests. Some advances on economic and connected issues are possible. Modi’s approach includes management of the conflict areas between the two nations while at the same time striving to have enhanced economic, political, diplomatic and people to people engagements.

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Published in Vivek: Issues & Options, July-Aug 2014

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Vivekananda International Foundation)