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Khunjerab Pass on the China-Pakistan border
Khunjerab Pass on the China-Pakistan border
December 14, 2022

China’s Economic Might and South Asian Hedging

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China’s economic might and development financing have laid the groundwork for its expanding presence in the Indian subcontinent. 

Yet China’s mounting presence and influence have also triggered public pushback across the region, leading states to adopt varying strategies to hedge and balance between large powers such as China and the United States. Manoj Kewalramani joins the show to share how his journalism career and experience working for Chinese state media turned into a larger enterprise of studying the rise of China and its implications for India and the Indian sub-continent.

这次采访是用英语进行的。

This fall, we launched the U.S.-China Dialogue Monitor a biweekly newsletter that draws on both U.S. and Chinese sources, with a focus on government statements and media reports. To subscribe to the newsletter, please sign up here.

Eleanor M. Albert: Today our gest is Manoj Kewalramani. He heads the China Studies Programme and is the chairperson of the Indo-Pacific Studies Programme at the Takshashila Institution, a leading Indian public policy think tank. Manoj is also a senior associate (non-resident) and Freeman Chair in China Studies with the Center for Strategic and International Studies. His research interests range from Chinese politics, foreign policy, and approaches to new technologies to addressing questions of how India can work with like-minded partners to deal with the challenges presented by China's rise. Manoj is the author of Smokeless War: China’s Quest for Geopolitical Dominance (2021), which discusses China’s political, diplomatic, economic and narrative responses to the COVID-19 pandemic. As part of his work, he publishes a daily newsletter translating and analyzing discourse from the People's Daily, the Chinese Communist Party's flagship newspaper. Manoj, welcome to the show.

Manoj Kewalramani: Thank you so much. Thank you for having me.

Eleanor M. Albert: Before we dive into the policy, I wanted to ask you how you entered this research space and area of expertise, and how China factors into your broader work on South Asia?

Manoj Kewalramani: All of this began when my dream to become a Bollywood superstar was shattered. As a college student growing up in Bombay, all I wanted to do was be part of Bollywood. When that really didn't work out for me, I ended up studying international affairs; that led me to journalism.

After six, seven years of journalism in India, I had the opportunity to move to China, which is where my father had been running an export business for over three decades. So I got the chance to work with him for a couple of years, travel around China, write on a freelance basis, and then wanted to return back to journalism. So, I made the choice to go to state media in China, which is not really journalism, but it was entertaining because it opened up a whole new world for me. It gave me a new prism into how that country operated, how people thought.

It was an interesting time because the week that I joined state media was the week of the Obama-Xi Jinping Sunnyland Summit, so it was an interesting experience of how China was changing. And that got me much more interested in researching the country in much more detail. I returned to India a couple of years later, again, worked with media. And by the time it was 2016, I was exhausted by being in the media because it's an extremely hectic, fast-paced lifestyle.

I was at a point in my life where I couldn't do that anymore. And also the profile of China and India was changing. In 2017, India and China had an elongated, 72-day standoff at the tri-junction on the boundary with India, China, and Bhutan, which changed the nature of the relationship fundamentally in many ways. At that point in time, China was beginning to be seen as this strategic challenge for India, yet there was very limited expertise in India on China.

So having been a journalist, having lived there, having had some sort of chops on research and understanding of the country, I spent the next few years simply studying in China, understanding Chinese policy much more in detail, looking at primary source material and trying to contextualize what the rise of China meant for India.

Eleanor M. Albert: That's such an incredible experience, to be within state media in China as a foreigner and then to come back and be able to share insights on how that influences public discourse about foreign affairs. I want to dive into looking at China's ties to the region. Obviously India is closest to home for you in terms of your area of expertise, but of course the region is complicated. There's a lot of history. But if you could give a sampling of how China's regional presence is viewed across different countries?

Manoj Kewalramani: A lot of the discussion of China's engagement in this part of the world, I prefer to call this the Indian subcontinent because geographically that's what it is. South Asia is a geopolitical construct. India being the largest entity in this part of the world, China's relationship with India dominates how China also engages or has historically engaged in this part of the world. And that's changed. 

In the past, I think China's engagement in the region was sort of stops and starts. The economic engagement that we see today was not there. I think this starts to change in the late '80s, '90s, where much more economic engagement begins. You see Jiang Zemin visit countries in the region, and subsequently, you see greater engagement leading down to Xi Jinping.

With Xi Jinping today I think we've seen much more intense engagement in terms of visits by Xi Jinping himself, visits by the foreign minister, visits by other ministers, Chinese embassies are much more active. And the entire gamut of Chinese economic diplomacy is much more intense today. China today is the biggest trading partner for most countries in the region, if not all. It's the biggest investment sort of provider for most countries in this region. For some countries like Bangladesh and Pakistan, the defense relationship with China is significant.

Pakistan is an obvious example, but say for Bangladesh, well over 70% of Bangladesh's defense needs, imports come from China. But when you see the trade, the trade is skewed. People import a lot more than they export to China. But just to step back, the broad prism of how China is seen in the region, I think that at moments, there has been a threat perception with Beijing. Part of that, say if I go back to the '50s and '60s, has to do with the export of ideology clashing with certain nationalisms within the region.

Apart from that, I think there's a perception of challenge and that's more modern, in the context of China's relationship with the United States, the emergence of QUAD [a strategic security dialogue between Australia, India, Japan, and the United States] and the sort of concerns with regard to China's influence operations through its economic might and through its deeper engagement within the domestic politics of countries in the region.

And then there is an opportunity prism, which is that, like I said, it's the biggest trading partner, it's providing tremendous investments. Those investments, as people are gradually learning, come with strings attached which may not be obvious. And countries are learning that and they're adapting and adjusting to that. But still, in some ways, for the smaller states in the region, it [China] is reasonably welcome because it allows you to balance against the big power in the region, which is India. Yet at the same time, they do turn to India for support, and they do want to look at India as an actor that can hopefully become the engine of prosperity for the region.

So it's a complex dynamic where threats, challenges, and opportunities all stay together. If I was to exclude India and Pakistan, and I was to look at the other smaller states in the region…. Beijing looks at the region to expand its influence, and these countries look at Beijing’s engagement from the perspective of potentially hedging and more economic opportunities, while trying to balance the threats.

Eleanor M. Albert: I think that gave a great overview and I want to dig a little bit into the policies. What are some of the policy areas that bind China to the region, and what are the wedge issues and do these vary across states?

Manoj Kewalramani: Primarily what ties countries in the region to China is China's economic diplomacy. This is something that we need to appreciate because economics is probably the most important part of China's foreign policy and its ability to be able to influence outcomes in different parts of the world and in different countries is largely based on its economic might and its material strength.

We've seen intensified investments, starting with the China-Pakistan Economic Corridor (CPEC), the grand announcement was somewhere between $45 and $60 billion, but what we've seen materialize over the better part of the past decade has been about $27 to $30 billion-odd U.S. dollars. And a lot of that has gone into infrastructure, roads, railways, energy, pipelines, some port development in Pakistan.

Some of that has achieved outcomes, but a significant chunk of that is under construction. So I think you can see this model where investments being done in infrastructure, energy, ports, it's predominantly what's been replicated across other countries in the region also. Now, every country has absorbed investment based on its own capacity. But under the Belt and Road Initiative (BRI) we've seen this intensification of financial flows from China.

In terms of trade, while trade has gone up, it's tremendously skewed. For example, China's trade with Nepal: well over about 90% of it is Nepal's imports from China. If you see China's trade with Pakistan, what you're seeing is that a significant, overwhelming, amount of that trade is Pakistan importing Chinese goods as opposed to exporting them.

This is a structural challenge. These countries in the region, even India, [are] exporting primary goods to China and we're importing capital goods, electronics, things like that. That's really never going to change. How much ever cotton or fish you may export, you're never really going to be able to bridge that gap. And so what we are seeing is that, across the region, trade as an absolute number has expanded despite whatever tensions there may have been, yet the balance of trade has become much more skewed.

And I think the pandemic also exacerbated the situation because China was providing a lot more materials with regard to say pandemic containment, so masks, pharmaceuticals, PPE [personal protective equipment], even vaccines to large parts of the region (excluding India because India didn’t authorize Chinese vaccines).

What we are seeing beyond this dynamic of investments and trade, physical infrastructure and connectivity, road and rail, energy, pipeline, ports. You will see variations in some of these investments, and you will see pushback from many countries around these investments.

Just to give you one example, there is a port in Pakistan in which China has invested, which is the Gwadar Port, which is supposed to be strategically significant. It's a gateway to the Indian Ocean for China. For anybody who sees the map, you will know that access to the Indian Ocean for China is extremely tricky. We are seeing some of that taking place. We are also seeing tensions because, initially, the idea was that the port would be built and it would have all sorts of facilities, but it would also help local populations by enabling local fisher folk to go and fish in the waters. But what we are seeing is, privileged rights being given to Chinese fisher folk and that's led to tensions.

But that's one port, which is secretive and where we anticipate that there will be dual use facilities. The other port that I want to talk about is not Hambantota, which I presume most people know about by now, which is in Sri Lanka, but the port of Payra in Bangladesh. This is also a deep seaport, but it's not one of those BRI projects where there is this controversy. The location of the port, it's extremely difficult over there to have naval activities. And so there's been no pushback, no criticism.

It's worthwhile for anybody who's studying this region and Chinese investments to look at different investments and why they provoke responses and provoke anxieties. But that's been the general trend, investment in these domains as part of BRI.

Beyond that, I think what we're seeing today, Beijing is quite smart to leverage its influence. Firstly with regard to COVID-19, we've seen intensified pandemic diplomacy, vaccines, PPE kits, all of those things. The Chinese Foreign Ministry arranged a meeting of foreign ministers of all South Asian countries, excluding India, to have a conversation around recovery, support [with] regard to the pandemic.

One key component of that was cooperation in best practices to deal with poverty. Again, this is a region with tremendous challenges with poverty. And what we are seeing is Beijing using its success at home, of having alleviated absolute poverty and trying to see what it can do with regard to that to try and gain influence abroad.

I can't think of any significant initiatives that they have launched, but then this is early days. Officially, absolute poverty was alleviated in China at the end of 2020. But I think we are going to see much more of that also as part of the Global Development Initiative that Xi Jinping has announced.

In terms of the wedge issues, I think there is a growing recognition of the challenges that come with Chinese investment, the challenges of this skewed trade, the potential political influence that's come with Chinese money.

Beijing constantly talks about non-interference in internal affairs. But what we've seen is that there has been tremendous influence that it now wields in the domestic politics of many of these countries in the region. This is very different from, say, the influence conversation that's happening in the West, in Australia, around, say, inserts in media ownership, or, say, the Chinese Communist Party’s engagement with Chinese diaspora in the Western world.

I think this is much more severe in our part of the world, and that's because it's not so much attracting the diaspora, but if you look at, say, Chinese embassies and Chinese ambassadors in Nepal, in Pakistan, they are far more deeply engaged with the political leadership across the spectrum, particularly at the times of crisis.

Obviously, all of this is reported, and it sounds above board, but we do know that when there are political crises and you have a foreign ambassador who's engaging with different entities to try and broker the solution, that's not non-interference.

In Sri Lanka, there was tremendous Chinese money that went into the campaign of the Rajapaksas before they got reelected and before they were again ousted from power earlier this year. Likewise, if you look at BRI, in Pakistan again the Chinese ambassadors have been extremely active across provincial governments trying to build consensus for BRI investments, trying to soothe anger and anxieties, because a lot of the push and pull around BRI in Pakistan has been around who gets the meat of the goods that are coming in? Who gets the money that's coming in? And if there's an investment in a province, do locals benefit, do provincial authorities get access to funds, or is it the federal authorities that execute things?

At the same time, in Nepal, in Sri Lanka, in Pakistan, you've got these all-party forums that the CCP engages with. Last year when we had the Communist Party's hundredth anniversary, it's worth going and seeing that in Pakistan and in Sri Lanka in particular, there was an all-party meeting to issue a statement supporting and congratulating the Communist Party of China, which again is a measure of influence across the political spectrum within these countries.

To me, that's far more dangerous, far more pernicious than the kind of influence conversation that you're having in the West, yet I don't think in this part of the world we are having that conversation unfortunately. But to me, that's your big wedge issue because when you saw the ouster of the Rajapaksa regime earlier this year in Sri Lanka, you did see a lot of criticism of China. When you saw the ouster of the Yameen government in Maldives a couple of years ago, you did see a lot of criticism around China and Chinese influence. Amongst the populations of these countries, that's an issue that concerns them. In Pakistan, the cultural difference between the Chinese and the Pakistanis is an issue. It's not something that's easily papered over and it's invited extremist action. These are all challenges that Beijing has to deal with.

The final wedge issue is debt and sustainability. We're seeing signs of [this] in Sri Lanka. While I do agree that the crisis in Sri Lanka was not necessarily the fault of Chinese lendingSri Lanka, the debt to China that it owes, 10% of its overall external debt, so it's not an overwhelming amountbut I think the normalization of investments which are politically beneficial to local politicians, so “in my constituency I'm ringing in money which may be beneficial for me electorally, but the project is a boondoggle project….”

That creates debt issues also, where it becomes a culture of being okay with unproductive debt. And at the end of the day, money has to be paid back. It enables bad politics, bad political decision-making, bad economic decision-making. So I think that debt and debt sustainability issue is also something that we're going to hear about continuously for years to come.

Eleanor M. Albert: I want to tease out a little bit more on the issues with domestic politics because I think this is an important one, and you yourself said that it's not really as much of a conversation in the region as it maybe should be. Could you lay out some examples of how positions perhaps taken by leaders in countries in this region are politicized and domestic politics? It's one thing to have criticism, but is it influencing electoral results? Are some of Chinese projects being targeted as a proxy perhaps in environments where the government can't be the target of criticism?

Manoj Kewalramani:  This is really hard to do because it's very difficult to draw direct links, but say in the case of Pakistan, what we do see is that there's a lot of anger and resentment with regard to Chinese investments in Balochistan. There's a lot of frustration with regard to what they see as exploitation of Baloch land, Baloch resources, which are not necessarily benefiting the local population.

Now to me, that is a predominantly domestic Pakistani issue. It's a restive province, it's had its issues, likewise in Gilgit-Baltistan, which again is a bigger complication because India claims sovereignty over that part of the region, as part of Jammu and Kashmir. But yet, we've seen Chinese investments, we've seen issues with regard to say again resource exploitation, issues with cajoling of people to agree to certain decisions, acquisition of land and things like that. All of which are domestic political issues in which Beijing is now embroiled in: leveraging federal governments and not so much in Pakistan, not so much the federal government, but actually the army, because the army is the guarantor of all of this.

It's far more deeply engaged within the domestic politics of Pakistan than it has been historically. And I don't think Beijing is terribly comfortable with that, but I don't think it has any other choice. If I was to look at where decisions are directly influenced and where electoral outcomes are influenced, I think the better place to go to is Maldives. In the Maldives, what we saw with the Yameen government was a clear case of pushback against an authoritarian regime which was boosted and propped up by Beijing.

In 2017, an FTA between Maldives and China was signed, that FTA was passed through the Maldivian parliament within hours of negotiation. And not even a negotiation: a thousand-plus-page document was handed over to parliamentarians and within an hour it was passed and there was no real conversation. And that sparked much more annoyance and that led to an outcome in an election where nobody thought Yameen was going to be ousted, although he was deeply unpopular. And his unpopularity, again, there are many factors in it, but one of the biggest factors was his proximity to China.

In Bangladesh, Bangladesh's politics has its own momentum to it and one party has been dominant for a fair amount of time. And to me, I think that party has a far deeper understanding with India. So there's a certain amount of hedging, but there's also a certain amount of balancing China with India.

In India, one of the reasons why I'm saying that we don't necessarily have this conversation as much is because in India we tend to believe that Chinese influence operations, if they're taking place, are a failure.

If you were to look at surveys of Indian public perception of China, a Pew survey in 2008/2009 said that about 33% of Indians had a favorable view of China, 33% didn't have a positive or negative view, and about 33% had a negative view. That is the best that China has ever done in Indian public perception. Other surveys in India, including one of the surveys that I had done during the pandemic in 2020, showed that there was deep suspicion.

I'm sure that if Pew was to do a survey today, it would be well below 20% or single digits, in terms of favorability for China.  Our perception is that China has lost the public imagination in India. A decade and a half ago, there was a time when Indian Prime Minister Manmohan Singh would give a speech, say things like, "We want to make Mumbai into Shanghai." But that's gone today. The admiration that China's development used to evoke no longer exists.

The prism had shifted from that to threat. Therefore, we tend to think that China's influenced operations—even if they're spending billions of dollars to try and influence Indian public discourse—it's not really working out well. But I think what we are missing in that is that it's not necessarily around perceptions of China.

That's an important objective, but the war in Ukraine I think has given at least me some pause for thought. [To a] certain degree, we've seen Beijing trying to amplify narratives which are pro-Russian and thereby anti-American, [to] leverage the positive sentiment for Russia to promote anti-American narratives in India. One example of that is from the state where I'm based, in Karnataka, in India. 

A couple of months ago, there was a controversy around India-China Friendship Association, which is not terribly active, but its Karnataka chapter was doing an event in which it said that it was going to be hosting the former chief minister of Karnataka. And the event was talking about U.S. imperialism in the context of the Ukraine war. And the former chief minister of Karnataka went out publicly to say that, "This is nonsense, I'm not party to this event, I never agreed to any of this stuff." But the fact that they were trying to do this tells you a little bit about how you can leverage some of these sentiments.

Political influence in the domestic politics of each of these countries is different. It's about actually influencing policy decisions in these countries.

I'll give you one last example. In Sri Lanka, for the last couple of years, the United States has been locked in somewhat of a controversy around the renegotiation of a status of forces agreement. And it's led to some degree of protests and things like that, but we've seen Chinese warships, we've seen Chinese spy ships, dock in Sri Lanka.

A couple of months ago, it was a huge issue with India, in August, where a Chinese spy ship was supposed to dock in Sri Lanka. The Sri Lankans vacillated, said no, and annoyed Beijing. Finally, they agreed and the ship came in; it annoyed the Indians. So you can see that some of this is playing out and as China, the PLA Navy, becomes much more active in the Indian Ocean region, you will see much more of this.

Eleanor M. Albert: We just introduced the idea of the U.S. and its presence in the region, and I wondered how the U.S.'s relationship to the Indian subcontinent and its broader articulation of the Indo-Pacific framework shapes regional dynamics vis-a-vis China. I think China's engagement with different countries in the region waxes and wanes pretty significantly.

Manoj Kewalramani: Let me just first address the question of the United States. Different countries have welcomed U.S. engagement to different degrees and there's been tremendous caution also. For example, in India, there is a broad consensus with regard to U.S. policy.

Over the last twenty-plus years, we've seen continuity in India's policy with regard to the U.S. Yes, we have our bust ups, we have our disagreements, often; our media gets extremely excited about potential insults from the U.S.; but all said and done, I think that at a political level and at a strategic level, there is a deep understanding within the political elite in India that the relationship with the United States is a defining relationship for India and for India's own ambitions.

We've got tremendous challenges with regard to lifting 300 million people out of poverty, improving the lives of our citizens. And I think that we understand that the United States across the board, economically, defense, from a technology point of view, is critical to that end.

In Pakistan, the Indo-Pacific has been bit of a challenge because I think that they see it as a sharpening of the competition between the U.S. and China, which on one hand provides some opportunities, but on the other hand has also been extremely problematic for Pakistan.  

Proximity between the U.S. and India [puts] some degree of pressure on Pakistan. It’s not been a break in the relationship, and to Pakistani politicians and mostly the generals’ credit, they've been able to manage American politicians for decades really, really well. And I think that they continue to do that despite the strain in the relationship. And the strain in the relationship intensified. It started particularly during the Obama administration over tensions with regard to Afghanistan and terrorism, but I think it worsened under Donald Trump and under Biden. We are seeing some degree of rebalancing, much to the chagrin of New Delhi.

The general trend is the idea that Pakistan is going to face much more pressure from the United States on a whole range of issues. One simple example of that is over the last few years, you've seen much more active engagement between the U.S. and India with regard to, say, the listing of Pakistan-based terrorists. So you're seeing Pakistan also figuring out where its bets lie.

I think that the U.S. withdrawal from Afghanistan raised Pakistan's profile as a potentially useful partner for the United States, yet to balance that with India and India as a partner with regard to China… I think that's the challenge for U.S. policy.

For the rest of the region, I think that there's a lot of anxiety with regard to what they see as tightening competition between the U.S. and China because if this competition becomes sharper, it reduces the scope for hedging for these countries. And therefore what you've seen them try to do is try to find ways in which you avoid choosing, yet keep the option open.

So an example, a couple of years ago in Bangladesh, the Chinese ambassador to Bangladesh had quite publicly said that, "We will not welcome you partnering with the QUAD, becoming even not a member, but engaging with the QUAD, that would be seen as an anti-China thing to do." That's been Beijing's narrative. It's painted the QUAD as so-called Asian NATO, which is complete nonsense. But it's done that with express intention of trying to dissuade others from partnering with the QUAD. And you've got a response to the Bangladeshi foreign minister saying, "Well, look, we are a sovereign country, we make our own decisions. Who are you to tell us?"

At the same time, I think it was earlier this year, at the Munich Security Conference, the Bangladeshi foreign minister asked the Indian foreign minister who was on a panel discussion, saying something to the effect of, "We need capital, we need infrastructure, we need development. When I go back to my people, they ask me, 'We need these things. What do we do?’ If I'm not getting money, if I'm not getting capital in finance from other places? And here's China, which is offering me money to be able to build that infrastructure, which we desperately need. What do you want me to do?"

Those two examples represent the challenges for these countries but also their political adeptness at navigating some of those challenges. Often in these conversations we tend to see the larger states, China and the United States, we accord far greater agency to them and far lesser agency to the smallest states. I think there's tremendous agency, but that's their challenge. And China's public opposition tells you a little bit about the challenges that these countries need to face. That's how they look at it. The sharper this competition, the lesser opportunity; the more blurry this competition, the greater opportunity to hedge. But if I was to put it in a tangible example, if the United States was to get up and say, "No Huawei" then there's no lines left in between; you have to make a choice. How do you balance between having Huawei but not having Huawei?

So that's what they hope to avoid. And I think what we've seen particularly with the Biden administration is that there is some degree of a pivot, not just stylistically, but also substantially, with the Indo-Pacific Economic Framework, the idea that you can pick and choose. That's beneficial, but it's too little.

I find American domestic politics potentially moving in a direction which is far more antithetical to free trade, far more antithetical to economic engagement abroad. That's going to be a challenge for DC. We began this conversation with me saying that China's economic diplomacy is where the source of its power is. I think that United States needs to get its act together in that far quickly.

Eleanor M. Albert: We've really focused a lot on dyadic interactions and China does have a preference for bilateral engagement, but at the same time, there are some regional fora. India and Pakistan became members of the Shanghai Cooperation Organization. Separately, China is an observer of the South Asian Association for Regional Cooperation (SAARC). Are these productive vehicles for exchange, or are they simply symbolic?

Manoj Kewalramani: I think SAARC is basically dead. Whatever the reasons may be, good, bad, the fact is that the organization is ineffective because the two biggest countries can't seem to talk to each other and they've gone through this period, particularly over the last 20 years, of talking, stopping, talking, stopping, potentially getting close to war, talking, stopping.

It's unlikely that you're going to see anything productive come out in SAARC. Therefore what you've seen is that India has pivoted to BIMSTEC [Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation], which is an alternative regional organization. At least through that, there has been some degree of economic engagement, more conversation on terrorism and things like that.

I think the Shanghai Cooperation Organization is an interesting space to be. India's entry into the Shanghai Cooperation Organization, whatever the official reasons may be, to me, there are two purposes that it serves. The government of India has quite often celebrated what it calls its diplomacy of multi-alignment, a revamp of non-alignment, which is that we will be on every table that we can be.

We celebrate the fact that the prime minister was at the SCO and next, he was at the QUAD leaders meeting. What we are doing in the SCO, to me, is essentially being part of a conversation with regard to continental security in the Indo-Pacific. Because often, in the U.S. particularly, the Indo-Pacific is predominantly maritime. For India, the continental security matters as much as the maritime.

And with the U.S. withdrawal in Afghanistan, you've got China, you've got Russia, you've got Iran, you've got the Central Asian countries, all of them have a stake in this region. And for India to not be at that table means that you're missing out on the conversation in shaping that regional architecture. And India's objective has been to try to be part of that conversation.

The other reason that I think India is in there: obviously it's a greater opportunity to engage with Central Asia. We don't have systematic forums to engage with Central Asia countries. And it's only after our engagement through the SCO that you had the Indian prime minister hold a first-ever dialogue with the leaders of Central Asian countries. So that's a step forward in that process.

And finally, the reason that we are in the SCO is because it is in Russia's interest to have us in the SCO, as much as it is in China's interest to have Pakistan there. So there's a bit of China and Russia interface that's created an opportunity for India. I don't think necessarily the SCO is an effective regional organization to create public goods, to create frameworks for governance. I think it's an opportunity for countries to discuss security issues that primarily affect them along their borders.

I don't think it's really feasible to identify a broad sub-continental body which will function effectively. I think what you're going to see is much more fluid arrangements like the QUAD, other mini-laterals, like, say, India-Japan-France, India-Indonesia-France, looking at specific issues, whether it's marine debris, whether it's pollution… To me, those are likely to come up with much more interesting outcomes than some of these big bodies which have secretaries and things like that.

Eleanor M. Albert:  So some version of kind of piecemeal, ad hoc policy, area-oriented engagement…  To conclude, I want to ask you to look forward a little bit in the future, and where do you see regional relations between China and the Indian subcontinent going? Is there one particular dynamic that you are following or concerned about?

Manoj Kewalramani: Again, I go back to that framework of influence and hedging. I think that's the sort of engagement that you're likely to see. What you're likely to see is the smallest states in the region wanting to maintain their autonomy and wanting to be able to balance, yet still gain economically from India's drives, from China's drives, and from the U.S.-China competition and the engagement that that brings. At the same time, I think there's going to be far more friction politically in each of these countries, because engagement with Beijing comes at a cost.

The more Chinese influence increases, you're likely to see other countries, India and the United States, get much more engaged politically within these countries. So that, to me, is one big factor.

If I was to look at India and China, I think that relationship is going to remain extremely volatile for the foreseeable future. The fact that it's been two-plus years and the tension that started in April and May 2020 on the borders between the two countries is still unresolved.

The border went from being not at all militarized to being militarized across the board. You don't step back from something like this very easily, particularly when both sides are building infrastructure to stay there for the long haul. And that's going to have an impact on the rest of the region. It's also going to have an impact on China's engagement with Pakistan because Pakistan remains a strategic asset for China, particularly in terms of its desire to keep India boxed into the subcontinent, rather than looking beyond it.

For Pakistan, in the last two years, there have been two significant terrorist attacks on Chinese personnel in Pakistan. That's led to a big conversation around, what's the kind of security arrangement that's needed? That said, in 2015, Pakistan had created a special reserve force of its army to protect Chinese projects and civil Chinese workers. Despite that, this has continued.

I think that resentment is going to be a key factor, continuing. Economically, CPEC has not yielded the outcomes that were required. Yes, there have been gainsthere has been far more energy capacity added, there's been far more industrial capacity added, there's been better roads builtbut the productivity of those investment is not equivalent to what it should be. That's going to be a source of friction, but that doesn't mean that the strategic purpose of that alliance between China and Pakistan goes away, it remains.

Finally, one of the big factors going forward will be whether there is more economic damage, particularly given the war in Ukraine and its downstream effects on the economies in the region, from food to energy prices, to commodity prices.

Does that generate greater nationalism? Does that exacerbate a pushback against what is seen as unsustainable investment? And what does that do politically? So I don't see an optimistic next few years for the region, I see a really difficult time for everyone. But I do see China is here to stay. It's going to be a big actor in this part of the world. It's going to be a far more active player in the Indian Ocean region, and that will exacerbate tensions.

The views and opinions expressed are those of the speakers and do not necessarily reflect the position of Georgetown University.

Outro

The U.S.-China Nexus is created, produced, and edited by me, Eleanor M. Albert. Our music is from Universal Production Music. Special thanks to Shimeng Tong, Tuoya Wulan, and Amy Vander Vliet. For more initiative programming, videos, and links to events, visit our website at uschinadialogue.georgetown.edu. And don’t forget to subscribe to our podcast on Apple podcasts, Spotify, or your preferred podcast platform.