India and China have a complicated relationship. Though the two nations — home to over one-third of the world's population — are partners in a $70 billion trade relationship, they are also rivals. As China's economic and military clout has grown, it has worked to increase its influence in South Asia, undertaking infrastructure projects in countries including Pakistan, Bangladesh and Sri Lanka. In the process, however, it has encroached on what India traditionally considers its sphere of influence. It is within this context that Indian Foreign Secretary Subrahmanyam Jaishankar kicked off a three-nation tour Feb. 18, during which he participated in India's first strategic dialogue with the Chinese government. In fact, India's relationship with China colored the whole trip: Even Jaishankar's stops in Sri Lanka and Bangladesh, the other destinations on his trip, highlighted the economic and strategic competition in South Asia between the two countries.
Over the past year, India's historically rocky relationship with China has gotten rockier. Jaishankar aimed to smooth over some of the problems by discussing militancy, India's entry into the Nuclear Suppliers Group and the disputed region of Kashmir with China's state chancellor and foreign minister. The Indian government has been frustrated by China's refusal to approve the U.N. Security Council motion to sanction Masood Azhar, founder of Pakistani militant group Jaish-e-Mohammad. It is similarly vexed that China vetoed India's accession to the Nuclear Suppliers Group during last year's plenary session and that Beijing is moving forward with plans to build the China-Pakistan Economic Corridor (CPEC) through Pakistan-administered Kashmir. (India objects to the CPEC, part of China's One Belt, One Road initiative, because it claims that by routing the project through Pakistan's share of Kashmir, China is implicitly recognizing Pakistan's sovereignty over the contested area.) Whatever the explicit focus of the talks, the subtext was clear: Pakistan is complicating China's relationship with India.
Bizarre Foreign Policy Triangle
In fact, the growing tension between India and China in 2016 roughly coincided with the flare-up between India and Pakistan in Kashmir. Pakistan is an important economic and strategic partner for China. The CPEC, which will connect China's underdeveloped Xinjiang province with Gwadar port in Pakistan's Balochistan province, will offer China another export outlet to the Arabian Sea. China recognizes, moreover, that its strategic alliance with Pakistan makes any military threat from India easier to manage for the simple fact that two nuclear powers are stronger than one. With that in mind, China started supporting Pakistan's nuclear weapons program in the 1980s.
So long as China is pursuing enhanced ties with Pakistan, it will continue to block India's requests to blacklist Azhar, admit it to the Nuclear Suppliers Group and modify the CPEC project. Beijing understands that yielding to the pleas from India and the United States to sanction Azhar, a proponent of Kashmiri secession, would hurt Pakistan's interests. Similarly, China vetoed India's accession to the Nuclear Suppliers Group in part to protest Pakistan's exclusion from the organization. (China cited India's failure to sign on to the Nuclear Non-Proliferation Treaty as the official reason for its vote.) It is unlikely that Jaishankar managed to sway Beijing on any of these issues during his talks with Chinese leaders Feb. 22.
Furthermore, the matters that Jaishankar raised in the strategic dialogue are only a few of the factors straining India's relationship with China. As part of his "Make in India" campaign to boost manufacturing in his country, Indian Prime Minister Narendra Modi introduced the "Neighborhood First" policy to strengthen India's trade ties with its neighboring countries. Interregional trade accounts for just 5 percent of total economic activity in the South Asian Association for Regional Cooperation, a bloc that comprises India, Sri Lanka, Pakistan, Nepal, the Maldives, Bhutan, Bangladesh and Afghanistan. (By comparison, trade among the members of the Association of Southeast Asian Nations accounts for 25 percent of the organization's trade, and EU members conduct 60 percent of their trade within the bloc.) Modi hopes to increase trade with countries in South Asia, not only for economic gain but also to counter China's economic influence in the region.
Putting the Neighborhood First
China's sway in Sri Lanka has been increasing since 2005, when it increased its military aid to the island nation's government in Colombo. The support eventually helped the Sri Lankan government win its decadeslong civil war against the Tamil Tigers in 2009. Sri Lanka returned the favor by granting China control over key port projects, including the Hambantota port and the surrounding 6,000-hectare (15,000-acre) industrial zone. But as recent protests against the project revealed, many Sri Lankans are wary of China's growing involvement in their country.
India hopes to launch infrastructure projects of its own in Sri Lanka to offset China's endeavors in the country. To that end, India's Export-Import Bank granted Colombo an $800 million loan for the Northern Railway Rehabilitation Project. The initiative is part of New Delhi's effort to help members of the ethnic Tamil community living in Sri Lanka's northern and eastern regions, many of whom are still struggling after the war. Like China, however, India will have to navigate the delicate balance between Sri Lanka's Tamil minority and its majority-Sinhalese government — a challenge Jaishankar gamely accepted on his visit to the country. Meeting with leaders of the opposition Tamil National Alliance on his first stop in Sri Lanka, Jaishankar urged them to soften their calls to join the northern and eastern provinces into a Tamil-majority province. The party has been lobbying Colombo to include the merger in the country's new constitution, which aims to balance the competing demands of Sri Lanka's various political and ethnic groups.
On the last leg of his trip, Jaishankar stopped in Bangladesh, another South Asian country where China and India are investing in infrastructure. Chinese President Xi Jinping signed $24 billion in agreements with the government in Dhaka in 2016. Among the 27 deals he clinched was an agreement for a thermal power plant in Patuakhali district. India, meanwhile, has projects of its own in Bangladesh, including the Indo-Bangla Rampal plant, a 1,320-megawatt coal-based power plant close to the Sundarbans, the world's largest mangrove forest. In addition, Modi granted Bangladesh a $2 billion line of credit during a visit to the country in 2015.
Jaishankar's visits to Sri Lanka, China and Bangladesh touched on important themes in Indian foreign policy and highlighted the areas in which they run up against China's priorities. Though Modi regards South Asia as India's neighborhood, China — which borders five countries in the region — has made it increasingly clear that it feels the same way. The mounting competition between the two powers will doubtless continue to shape South Asia's strategic and economic trajectory for decades to come.