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The tiger needs to become extra alert as the eagle and dragon have begun to cosy up. The foreign policy and national security teams of India are concerned at the moves of American President Joe Biden to remove the punitive customs duty rates imposed by his predecessor Donald Trump three years ago against import of Chinese goods, including steel and aluminium.
Biden has announced that he would be very soon speaking to Chinese President Xi Jinping on normalising relations between the two of the largest economic powerhouses of the world. The stunning U-turn by the US president, who has been thundering against China's expansionist policies for the last one year, has more to do with the high rates of inflation in his country, caused both by high cost of imports and disruption in supply of goods. This has been compounded by the restrictions on global imports of Russian oil as well as wheat from Ukraine and Russia following the latter's invasion of Ukraine.
How Trump dealt with China and India gained
Trump, who has been the most aggressive US president on trade issues with China, had accused Beijing of harming American manufacturing and jobs, and had tightened screws. He had also persuaded major economic partners in Asia like Japan and South Korea to be tough with their big surly neighbour which had been aggressive in encroaching into the South China Sea.
Trump's threat to tax American companies which exported jobs to China, also had forced many multinationals to opt for India as an alternative centre. This had suited Indian Prime Minister Narendra Modi's ambitions to raise the domestic GDP to five-trillion dollar. His Cabinet had announced many concessions to foreign investors, including a massive production linked incentive scheme, and setting up of hardware technology parks. Every time an American company announced plans to set up base in the country, India's Minister of Commerce and Industry Piyush Goyal had celebrated it as the proof of the government's dynamism The states of Telangana and Gujarat are also actively pushing for investments in their industrial zones.
Border clash and the aftermath
The Galwan Valley clash between Chinese and Indian troops two years ago on the international border also turned the national mood against China, which was earlier dominated by the 18 friendly meetings of Modi and Xi, including ones in Ahmedabad and Mahabalipuram.
The huge deployment of the Chinese troops in Ladakh and the eyeball-level confrontation meant that New Delhi supported the aggressive moves of the US government, even though India did not question the Chinese crackdown on dissenters in Hong Kong, or the military threats against Taiwan, as India recognises both islands as part of the People's Republic China.
India also overcame its initial hesitations about the Quad grouping of India, US, Japan and Australia, and agreed for its expansion. (The Quadrilateral Security Dialogue between the four countries is known colloquially the Quad.) It was Biden who pushed for virtual and later physical meetings of the Quad leaders — first in Washington and recently in Tokyo — as a grouping which would economically and technologically challenge Chinese moves.
Modi is the longest serving of the four Quad leaders, as Biden is just 17 months in office, while Japan and Australia have new prime ministers. In Japan there is continuity of the ruling party, but the US has seen Republican Trump replaced by Democrat Biden, while in Australia, the conservative Scott Morrison lost to Labour's Anthony Albanese.
China-watchers in New Delhi have been surprised that even as Biden was shaking a stick at China, his team was indulging in back-channel diplomacy with Beijing, where President Jinping has not travelled outside since the COVID-19 oubreak in the late 2019. The new American ambassador to China Nicholas Burns is a familiar figure in India, as he was President Barack Obama's pointsman for improving relations with India.
What spurred the US shift
As the US Treasury Secretary Janet Yellen realised the catastrophic consequences of the Ukraine War, including the crippling effects of sanctions against Russia on the global supply chain, she has been lobbying for relaxing import tariffs against China, so that America again can get cheaper Chinese goods, which would douse the fires of inflation in the country. She has strong support of major European countries which are also affected by inflationary tendencies, especially as economic powerhouses like Germany depend on gas from Russia.
Though he has expressed support for Russia against the sanctions, Jinping has been careful not to endorse the logic of Russian President Vladimir Putin for invading Ukraine. The negotiations Burns is conducting with the Chinese Government would look at other points of friction, and as China is keen to fully access global markets, it might ease pressure on Taiwan and its neighbours.
What India needs to do
The warming of relations between China and the United States means once again New Delhi has to recalibrate its China policy. Perhaps, if the Chinese are looking at economic goodwill with America and its Quad partners, it would be an opportunity for India to push for longer disengagement in Ladakh, including reduction of Chinese troops, removal of new constructions and other concessions. Indian diplomacy may be compelled to adopt a tigerish speed rather than a slower elephant walk.
