China-India rivalry warms up in South Asia

For all the bilateral co-operation and warmth within the BRICS and other institutions, the intense China versus India rivalry remains as competitive as ever in South Asia.

Being the stronger and more developed country, China generally takes the initiative in the race for regional supremacy and sets the pace. Its latest move, an offer for an investment of $7.3 billion into infrastructure projects in Myanmar’s troubled Rakhine state will certainly set alarm bells ringing in New Delhi.

This puts China in a directly confrontational course with India, because major Indian groups like Essar and others, are committed to investing over $3 billion in Rakhine – and in infrastructure projects too. These projects are a critical core of India’s much publicised ‘Act East’ policy. Their importance, not only to India’s expanding economy but also its strategic outreach, are among the reasons why India has not attacked Myanmar too strongly over the Rohingya crisis that threatens South Asia’s geo-political stability.

Critics of Indian policies and of Prime Minister Narendra Modi suggest that the major reason for the surprisingly bland joint statement issued at the end of Modi’s visit to Myanmar was Delhi’s keenness not to upset Naypyitaw too much. “Not to the extent where the Burmese authorities were irked to cancel or re-examine the terms of the projects lined up bilaterally,” says a Kolkata-based analyst.

Ironically, even as they jostle to win greater political space in the South Asia region, on one point India and China are united – both are competing to stand by Myanmar in its hour of crisis to the consternation of other countries.

For China, the timing of its proposed move into the Rakhine makes very good sense. Myanmar is almost completely isolated in the international community because of its hardline approach towards the Rohingya.

Naturally, Myanmar is not in a dominant bargaining position to discuss favourable trade and other terms. Naypyitaw is more likely to capitulate to ‘suggestions’ from bigger aid-giving neighbours on specific projects – unless it manages to play off one against the other. Naypyitaw wins valuable breathing space, thanks to Beijing and Delhi.

This has clear and worrying implications for Bangladesh and other countries. China sees a major role for Bangladesh in its future geo-political strategy for the region. Only days ago, in the influential Global Times daily, it was proposed that China could set up major industrial production centres ‘around India’ to pressure Delhi into making more investments for regional development. The article mentioned Bangladesh as one of the areas where such centres could come up.

Such a move, it is argued, would pressure India to ‘co-operate more’ with its neighbours. ‘Not a bad thing,’ the write-up concluded on a smug note.

Within days of the article, now China spells out a new development plan for the Rakhine, a clear signal that there would be no delays in the implementation of its projects. It also sends a clear message to Dhaka and Delhi that Beijing means business.

These developments leave Indian policymakers and rulers deeply worried. They are well aware that they cannot compete with their bigger neighbour in terms of finance or other resources. Bangladesh, like Myanmar, will also be able to play off one country against the other, which will not be relished by Delhi.

However, this does not mean that China will have everything going its way either. Thanks to the cancellation of the massive dam building and other related projects at Myitsone, Myanmar is well aware of the nature and consequences of Chinese aided investment: a ruined environment, no sharing of technology or generation of attractive jobs, accepting Chinese labour on their own territory and having little control of project implementation matters or eventual market access.

Already in Pakistan, experts are questioning how their country would benefit in any way. There are over 250 textile mills closed in Pakistan because of a power shortage, falling production and failure to rev up exports, ousted by Chinese, Indian and Bangladeshi competition.

Now China is setting up textile units in its West, very close to the Chinese terminal of the CPEC economic corridor. “This should drive the last nail into the coffin of our home textile industry,” a Pakistani analyst said in a recent TV programme. “Far from boosting Pakistan’s economy and helping its production, these Chinese units will grab whatever remains of our domestic market,” he warned.

The expert mentioned the experience of Sri Lanka, which was forced by the fear of running up huge debts, to agree to Chinese proposals to the point where 90% of economic benefits from the Hambantota Port and related projects, would go China’s way. Others cited the example of how Venezuela is currently ruing the terms of its agreement with China, originally intended to help it tide over a difficult economic situation.

Delhi-based analysts think that given their experience of ‘doing business with China‘, Naypyitaw would be circumspect with Beijing when it comes to working out new deals. They remain equally confident that Bangladesh too will never become a ‘Chinese colony’ either. Dhaka had earlier turned down proposals from the World Bank and China as the terms were not favourable.

“At least the present Awami League government, headed by a strong nationalist leader like Shiekh Hasina, will never take dictations from foreign powers or be railroaded into disastrous economic deals,” says one analyst.

Also, India would remember that it cannot have everything its own way in Bangladesh – which, to echo the punchline of the Global Times article, would be ‘not a bad thing’.

Source: Dhakatribune

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