Is China the real Pakistan? - The Honest Truth By Ajit Dayal

Is China the real Pakistan?

19 MARCH 2019

Every government has a set of known geographical, human, and financial resources which it needs to build out a future for its citizens. Norway, sheltered by the support from US and NATO defence forces during the Cold War, was anointed with oil reserves that it has used expeditiously to build a super-rich country. Many European nations, using "stolen" assets from their colonies added to their own wealth and enhanced the living standards of their citizens - overcoming two horrific world wars that took a toll on their finances and people. In this scorecard of ability to focus on developing an economy, India has been hindered by the existence of a failing state at its doorstep: Pakistan.

The BJP and Prime Minister Modi keep reminding us how much damage Jawaharlal Nehru has done to India. As a sarcastic video doing the rounds of social media suggests, the BJP wants us to blame Nehru for everything: from traffic light that don't work, to potholes, to schools that don't have teachers - you get the point.

Yet, has Modi multiplied the error that Nehru made in trusting China? Nehru had little historical experience to go on when dealing with China. On the face of it, there was some commonality in the early days of engaging with China: India had gained independence from the Imperial British in 1947 and Mao had led a popular uprising against a foreign-backed regime that was oppressing the Chinese. So, maybe Nehru's comforting words towards China may be excused. But, with decades of Indo-China relationship since the 1950's has the BJP miscalculated the threat that China poses to India's sovereign interests?

Modi's frequent hugs, handshakes and meetings with the Chinese leadership have led to India being pincered into a weak position between two nations who actively support Pakistan. After travels to nearly 50 countries, India's best friends seem to be Saudi Arabia (we need the Made in Islam oil) and China (we need to keep an aspiring superpower happy). This despite the fact that the Indian Army had a tense 2-month stand-off against the Chinese army in 2017 in Doklam as India came to the defence of its ally, Bhutan.

Nehru misreads China.

The meeting between Mao and Nehru in Beijing in 1954 reportedly gave hopes to a new era of two old civilisations spearheading the future of a post-Colonial world after liberating their countries from the shackles of the imperialists. The phrase Hindu-Chini bhai bhai conjured up images of two large countries, walking hand in hand, influencing the course of the world. But by the end of 1959, India and China were engaged in border skirmishes seemingly triggered after the fact that India decided to give refuge to the Dalai Lama and his followers who were escaping the brutality of the Chinese army in Tibet. The unsettled border dispute with Arunachal Pradesh - long claimed by the Chinese as their territory which has been wrongly occupied by India - did not help. The Indo-China war broke out in October 1962 which China was winning and abruptly withdrew having taught a humiliated nation and Nehru "a lesson".

That vast superiority of a Chinese army in 1962 (despite the fact that millions were dying in China from famine after Mao's Great Leap Forward) can only have multiplied over the decades. China's economic power and foreign currency reserves dwarf that of India. On every count, barring number of times an Indian citizen can cast a vote, China overwhelms India. And China, unlike India, is deliberately and methodically working towards replacing the United States as the most powerful nation in the world.

While, China still has border problems with India and is particularly troubled by the presence of the Dalai Lama in India, it knows that fighting a direct war with India is not in China's immediate interest. It has battles over territory in the South China Sea and needs to win land mass in the Middle East and Africa through soft and financial diplomacy. Is it possible that China knows that fighting a proxy war using Pakistan and its legions of terrorists is a far cheaper way to hold India back and ensure that India can never stake a claim to be a global superpower? The fact that India and USA jointly conduct Malabar Naval exercises to patrol the contested South China Sea angers China - and they show this anger by blocking India's various resolutions including attempts by India to join the 48-member Nuclear Supply Group which monitors trading in nuclear materials.

But China must also be gaining comfort that India has bred its own enemies and probably celebrates the fact that successive incompetent governments in democratic India, led by the Congress and the BJP, have ensured that India remains a poor country and is unable to claim any sort of real global superpower status - barring the images that circulate on social media. Still, the Chinese probably don't want to take the chance that a million gods will, via a democratic election, finally reward India with governance and government machinery that actually begins to work for the betterment of its people! Sending a few winks to Pakistan to keep the jihadist fire alive and remain a constant threat to India may be far cheaper and effective way to tie India down to its past and prevent the electorate from aspiring for a better future.

Undeterred by the Chinese diplomatic threat, India's trade with China nears USD 100 billion. India runs a trade deficit of over USD 40 billion with China - so India helps the factories of a nation that may actually be troubling India by supporting Pakistan! A bit like the US sending arms to Pakistan only to find that Pakistan houses the Taliban and others who target US troops!

China's game: A weak India?

The refusal of China to support a resolution of the Security Council of the United Nations banning the JeM is a slap on the face of India. To be fair, nothing really happens from any such resolutions - other terrorist organisations banned by the UN still continue to flourish in Pakistan.

So, why did China not support this mostly useless and symbolic resolution? To show India that Hindu-Chini are not bhai, bhai. To remind India that, even if the US withdraws from being the largest funder of Pakistan, China is willing to support Pakistan economically and militarily. Pakistan's ports will not only provide China access to the Persian Gulf via the build out of the China-Pakistan Economic Cooperation Pact and the One Road One Belt project, but that a well-funded Pakistan means that India will be forced to spend 10% of its annual budget (about 2% of GDP) on defence and military equipment. Every rupee spent on guns by a poor country (and, please don't fool yourself, India is a poor country) is one less rupee spent on education and development. China has amassed a stash of reserves and has money to spend on guns and on food - and has ambitions towards being a global superpower. To be sure, China has many challenges but money is not one of them.

India is, meanwhile, surrounded by an Axis of Evil: the Middle East led by the Saudi form of Wahabbi Islam, Pakistan, and China.

Table 1: Chutney sandwich: The reality of being in this part of the world

  Saudi Arabia Pakistan India China
Type of Government Monarchy Migraine# Democratic One party system
Foreign ex reserve US$ bn 487 10 402 3,053
GDP US$ billions, est 690 180 2,556 12,000
Money spent on defence, % to GDP 10.0% 4.9%** 2.5% 1.9%
Money spent on defence, US$ bn 69.0 8.8* 63.9 228.0
% of total trade of Pakistan 9.0%  NA 3.0% 16.9%
% of total trade of India 2.7% 0.5% NA 8.4%
Sources: Defence data from Stockholm International Peace Research Institute, 2017/8;
*The Diplomat; **World Bank; trade data from Wikipedia;
#Former Secretary of State, Madeleine Albright on December 2008 called Pakistan an "international migraine"

The recent Asian tour of the Crown Prince of Saudi Arabia, Mohammed bin Salman (MBS), is interesting. MBS landed in Pakistan on February 16, which was 2 days after the JeM inspired attacked that killed 40 CRPF personnel in Pulwama. While in Pakistan MBS promised them money. Then he landed in India on February 18 and promised India money. From India, MBS flew to China on February 21 where he promised China oil and more trade. And, he did not criticize China for locking up millions of Muslims (the minority Ughur have been detained in concentration camps) and re-educating them. Ironically, MBS is trying to break the link between the Saudi state and the preaching of Wahabbism, which is credited with inspired the creation of Al Qaeda. MBS is known to support a more liberal role for women in Saudi Arabia - but is suspected of having a role in the murder of journalist, Jamal Khashoggi on October 2nd at the Saudi consulate in Istanbul. According to Al Jazeera: "China has the right to take anti-terrorism and de-extremism measures to safeguard national security," MBS was quoted as saying by the state-owned CCTV.

And as NDTV notes on the ongoing visit of Foreign Minister of Pakistan to China: Mr Qureshi who reached Beijing on Monday is visiting China, days after Beijing for the fourth time blocked a bid in the United Nations Security Council on Wednesday to designate Pakistan-based chief of Jaish-e-Mohammed (JeM) terror group Masood Azhar as a "global terrorist" by putting a technical hold on the proposal, a move India termed as disappointing. The JeM has claimed responsibility for the February 14 Pulwama attack that left 40 CRPF personnel dead and escalated tensions between India and Pakistan.

The proposal to designate Azhar under the 1267 al Qaeda Sanctions Committee of the UN Security Council was moved by France, the UK and the US on February 27.

"As neighbour, China would like to see easing of tensions between the two. We would like to see the two countries continue to engage in dialogue for the peace and stability of the region," Chinese Foreign Ministry spokesman Geng Shuang told a media briefing.

"I believe the issues causing regional tensions will be discussed," Geng said.

To another question whether the issue of listing of Azhar would figure in the talks specially in the backdrop of Chinese Ambassador to India Luo Zhaohui expressing confidence that it would be resolved, Geng said, "well I can't prejudge the topics" that are going figure in the talks.

"But they will discuss issues of bilateral, regional and international issues of mutual concern," he said.

Regarding the listing of Azhar, "China will continue to deal with the issue with a responsible and constructive manner and will maintain close communication with all parties, including India and Pakistan," he said.

Lu on Sunday exuded confidence of resolving the sticky issue of designating Azhar as a global terrorist through consultations.

"I am quite sure this matter (listing of Azhar by the UN) will be resolved. This is only a technical hold and the matter can be resolved through continued consultation," Luo said on the side-lines of an event at the Chinese embassy.

According to reports in the Pakistani media, Mr Qureshi, which is on a three-day visit to China, will hold comprehensive discussions on the entire range of bilateral relations, including the China-Pakistan Economic Corridor (CPEC).

In summary, India is stuck in a bad geographical space. The reality of dealing with an active Pakistan, supported by China, will ensure that India will always be short of money to spend on guns, food and development - fiscal deficits and weak government financials are here to stay. Inflation will be higher than global averages and the Indian Rupee will remain a fundamentally weak currency, depreciating by 2.5% per annum on average, as it has over the past few decades. Just as children cannot determine the parents and the households they are born into, India was unable to determine the geo-political map in which it was created.

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Disclaimer: The Honest Truth is authored by Ajit Dayal. Ajit is Founder of Quantum Advisors Pvt. Ltd and Quantum Asset Management Company Pvt. Ltd. The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and has not been authenticated by any statutory authority. The author, Equitymaster, Quantum AMC and Quantum Advisors do not claim it to be accurate nor accept any responsibility for the same. Please read the detailed Terms of Use of the web site.

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3 Responses to "Is China the real Pakistan?"

R. Ramesh

Mar 20, 2019

Dear Sir

You always support Congress view. Nehru did lot of mistake and it is true and history. Due to those costly mistakes, we are still suffering. This is also true. Since Independence, BJP ruled only 10 years. How can you blame them? 60 years are ruled by single family except few years by others with support of Congress. Please do not write like this. Your views should be very balanced and convincing.


Dilip Rajadhyaksha

Mar 19, 2019

The article, despite highlighting some stark truths, fails to trace the history of events that have led India to this unenviable position. The obsession of successive post independence governments with socialism, political naivete in engaging with some dubious allies, and the near perpetuation of one family rule in India's formative years, have all played a role in the emasculation of the nation.
China owes its financial might in no small measure, to the mad rush of Western nations and their allies to use it as a factory employing cheap labour. How the Dragon has craftily turned the situation to its advantage is too well known to be repeated here. India missed the bus, and how! When we finally woke up and tried to break free of the shackles of socialism, it was too little, too late. So much for our present economic predicament.
Nehru's weak foreign policy and pursuit of non-alignment reduced India to a vulnerable nation, a soft target for hostile neighbours to take potshots at.
It's these legacies the nation has to unload, before it can rise to genuine strength and greatness.


Vikram Bhatt

Mar 19, 2019

The last paragraph of the article is most important. This shows the mirror and reality.
Important is that possible solution steps to face this reality and meet the challange must be listed down and a nationwide movement started to bring all Indians together to meet this challenge
Vikram Bhatt

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