A Chinese South Asia Company? It is time for India and the West to think anew

Diplomacy and politics can bring forth delicious ironies and new ideas. This week, China seems to be provoking thoughts that are worth pondering over.

Speaking at Beijing's annual news conference, Chinese foreign minister Qin Gang accused the United States of attempting to "encircle China" through an Indo-Pacific strategy in collaboration with regional countries and form what he called an Asia-Pacific version of the North Atlantic Treaty Organisation (NATO). Not many would agree with the words, though nearly everyone would agree with the facts that led to them. What some would call "containment" of expansionist China, may be read by the mandarins of the Communist Party of China as "encirclement."

Coming in the backdrop of the Ukraine war and Russia's paranoiac obsession with NATO, Qin's talk sounds almost like a dog whistle to Moscow.

But the irony lies elsewhere in this, and this is what India should be concerned about.

India is nowhere near a NATO-style arrangement, thanks to its own nuclear weapons, its sovereign security doctrine, and its on-and-off engagement with the West on issues in a manner that suggests strategic neutrality. It is indeed a member of the so-called Quad, the Quadrilateral Security Dialogue between Australia, India, Japan and the United States, but not exactly as an Uncle Sam sidekick.

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To be sure there is a lot about China that India must think about. China's frequent hostility towards Taiwan, its annexation of Tibet, its border war with India in 1962, its claim of Arunachal Pradesh in India as part of Tibet, and its Line of Actual Control violation at Galwan in 2020, are proof enough that Beijing's outreach borders on aggression and is not a figment of anyone's imagination.

China's engagement with both Nepal (where Maoists are politically powerful) and Myanmar's military junta are such that India has as much reason to talk of a regional encirclement by China.

Now comes news of China helping both Pakistan and Sri Lanka with significant economic aid as they wrestle with economic crises that are not easy to resolve because the International Monetary Fund (IMF) imposes tough conditions that may be fiscally sound but politically and socially painful.

Officially Sri Lanka is said to be on the verge of receiving $2.9 billion from the IMF but Beijing is not far behind India in aiding the island nation. "China is ready to work with relevant countries and international financial institutions to play a positive role in helping Sri Lanka cope with its current difficulties," a news agency report this week quoted foreign ministry spokesperson Mao Ning as saying.

This is significant because it appeared last year that China had almost a hands-off policy on helping Colombo through its current crisis. But it had already dug its heels in the previous decade. Apart from its Asia-wide Belt and Road Initiative (BRI) that puts economic muscle into its diplomatic ambitions, Beijing had befriended the Rajapaksa family whose mismanagement led Sri Lanka into its crisis.

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When the US ended military aid to Sri Lanka in 2007 following human rights abuses, China offered about a billion US dollars as a donor and backed it up with fighter jets and sophisticated weapons that led to the crushing of the Liberation Tigers of Tamil Eelam separatists. China also stood up for Colombo in the UN Security Council and also pushed Pakistan to sell arms and train pilots in Sri Lanka.

Now comes news that China is now helping Pakistan with money in addition to its previous engagement through the China-Pakistan Economic Corridor which has so far involved an estimated investment of $65 billion or more in infrastructure projects.

Last week, the Industrial and Commercial Bank of China Ltd approved a rollover of a $1.3 billion loan to Pakistan, in addition to a recent $700-million loan from China to boost Islamabad's foreign exchange reserves.

Here's where India has to legitimately fret over what might be a case of Chinese encirclement of India. We only have to recall the influence of East India Company, a commercial entity that eventually led to British political control of India, to realise that politics and economics are often joined at the hip.

It is possible to imagine the CPEC, the BRI and Beijing's economic clout in Sri Lanka as a latter-day South Asia Company for China. Today's economic reality might become tomorrow's political influence. For India, with all its proud posturing of sovereignty and neutrality, it would not be wise to pretend that Chinese for financial support for Colombo or Islamabad is just another bilateral aid episode -- especially after the military influence Chinese money has wielded in Sri Lanka. India has always been kind to Sri Lanka, despite the fact that not much of a quid-pro-quo has happened for India to feel comfortable with Colombo's rulers.

Now comes the big question: What should India do? My thought is out of the box, but highly relevant in a changing context. Pakistan is increasingly a democracy and much is happening there to suggest that it might have learnt some hard lessons from its past misadventures with India. At least, significant portions of Pakistan's public opinion seem to suggest that. It is time for India to redefine Pakistan not as an "enemy country" but as a difficult neighbour and open Track Two talks that might make it amendable to an Indian idea of a peaceful South Asia. Even the US may shed its recent coldness to Pakistan if India becomes a confident, positive agent of change in the region.

Washington must see India not through the old cliche of Pakistan and India being rivals (they most certainly are not and proof is no longer needed). India should be seen as a strategic power through whose guidance the US engages with Pakistan and Sri Lanka. As India holds the presidency of the G20 group, this sounds like a new-normal way for America's South Asian diplomacy -- if only the State Department gets the message.

For this to happen, there are layers of change required all over in three or four countries. It is a tough task, but not an impossible one and most certainly desirable in the emerging context. To get deeper into this, we need to understand the social and economic details of Pakistan as well as Sri Lanka. That would be another story.

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