Come December, and there is not much to indicate that China is preparing to back off from its aggressive stance at the Ladakh border, even while it strengthens itself, with a torrent of reports true or untrue, regarding its acquisition of new technology and capabilities. While India is in no mood to give in, the fact remains that with the cost of just maintaining one soldier for one turnaround year estimated at Rs 10 lakh, the price of logistics alone is likely to be enormous. That all of this is occurring at a time when the Indian economy is under strain, only makes the need to find imaginative solutions more pressing. Maybe it’s time not just to ban Chinese companies, but in tandem, invite certain ‘private’ players into non-strategic areas, and complicate decision-making in Beijing. And yes, maybe do a little snooping of our own.
Delhi’s actions so far
At one level, New Delhi’s actions have been praiseworthy. Even while girding itself for a possible war, the Narendra Modi government has also taken the unprecedented decision to ban 267 apps Chinese apps, put limitations on Foreign Direct Investment from neighbours including China, and further scrutinise Foreign Portfolio Investments, among other moves. The extent of Chinese private companies’ investments into India is not entirely clear, and, as Ananth Krishnan observes, is likely to be at least 25 per cent more than official figures pegged at $8 billion. Private money comes in through diverse ways, and not all of it is being stopped anyway. Reports note that the Shanghai Tunnel Construction Co, headquartered in Singapore, which provided the lowest bid, received the contract to build a rapid rail corridor project in June this year. That’s sound business sense. And when the government banned Chinese firms from participating in highway projects in July that was sound strategic sense.
Also read: Not just China, Modi govt is also blocking investments from Hong Kong after Ladakh tension
The CCP wants more
All of this comes at a time when the Chinese Communist Party (CCP) is moving towards formalising its control over the private sector. The move is also aimed at showing the party’s ability to protect companies, as the US continues to sanction new Chinese entities. The directive calls for the formidable United Front Work Department — an organisation that has been accused of many mala fide actions, from stealing technology to espionage abroad— to increase ideological influence in the private sector. Remember that private enterprise is in a ‘60/70/80/90‘ situation in China, which means it accounts for 60 per cent of GDP, 70 per cent of innovation, 80 per cent of urban employment, and 90 per cent of new jobs. This is this engine of power that the CCP wants to harness for itself.
Not that organisations like Tencent and others are not already involved in assisting the party with surveillance. This augurs a much higher level of control, which is not likely to be viewed with complaisance. In 2015, a jubilant Jack Ma proclaimed: “In the past 20 years, the government was so strong. Now, they are getting weak. It’s our opportunity; it’s our show time, to see how the market economy, entrepreneurship, can develop real consumption”. That was all those years ago. Now it’s payback time.
Also read: China’s comrade billionaires: Even Jack Ma must pledge loyalty to CPC to do business
Chinese weakness to Indian strength
New Delhi has an opportunity for some careful selection at this juncture. That involves letting in certain Chinese private industry into investing in high growth and completely non-strategic areas. For instance, this could include solar power and infrastructure to power the shift to electric vehicles (EVs). Both are areas where China has a huge capability, as well as sectors which the Indian economy needs urgently. The need for reliable power is self-explanatory. Also consider that we continue to rely on dirty coal for 53.4 per cent of total power supply, evident in the onslaught of pollution every year. What is relevant here is that China has begun restricting expansion of its solar industry due to overcapacity. Their situation could encourage deals that stress the ‘Make in India’ option in photovoltaic products, encouraging the vulnerable Chinese industry to kickstart the ailing solar industry in India, even while reducing its own costs.
Another example is the electric car segment, the Economic Survey has proposed that India become the Detroit for electronic vehicles (EVs), with an action plan to ban internal combustion engines for two and three-wheelers by 2025 and 2023 respectively. The Survey however notes that the poor network of battery charging facilities has impeded this sector. At the Beijing Auto Show in September, China released 785 new models of new energy vehicles (NEVs) of which 160 were electrified, and 11,32,000 charging stations already operational in the country. But as experts point out, the sector is heavily dependant on subsidies, even as it struggles to catch up with giants such as Tesla and Mercedes. The tie up is obvious. Both countries want lower oil bills, and China at least is concentrating on cleaning up the environment. Unlike India, it has realised the economic costs of heavy pollution.
These are just two examples, but there are a hundred other sectors where Chinese private sector is ailing, and which are entirely non-strategic, where it is difficult to envisage the fell hand of Chinese snooping or influence-creating difficulties.
Also read: China’s Hikvision controls India’s surveillance market. Modi needs to do more than ban apps
Have your cake and eat it too
The point here is that India – together with several developed countries – is already heavily interwoven into the Chinese manufacturing and industrial capabilities, including even in mundane areas like Paracetamol and Ibrubrufen, to make complete ‘decoupling’ almost impossible. In that case, we may as well encourage specific private companies that are in trouble at home to find a nest in India, to an extent that they will be future ‘leverage’ in difficult situations, which are certain to come up. It may even be that a sufficient private role – imbued with a heavy government hand – may have a deterrent effect on military adventuring in Beijing. It can be argued that India is too small a market for that impact. But equally, our border disputes are also in the same bracket of ‘small incursions’ unlike the serious potential problem of the South China Sea.
It could more seriously be argued that this could work in reverse, to allow China to ‘play’ us with economic engagement. That’s where the economic strategists of ‘Make in India’ need to weigh in, making sure that Beijing will pay a price for such activity. Meanwhile, India should draw in Chinese businesses for achieving our larger objectives, even as we need to hone up our capabilities to do some snooping of our own. Two can play at that game. Meanwhile remember that in 2008, it was a Chinese stimulus that rescued the world from a financial crisis. Use China to get where you want to go, together with careful scrutiny on just who should be invited in. In simple words, New Delhi should aim to have its cake and eat it too. That’s the best economics there is.
The author is former director, National Security Council Secretariat. Views are personal.