Modi 3.0 Faces the Dragon

IN THE JUMBLE of statistics contained in the government’s Economic Survey 2023-24, there was a tantalising proposition of greater economic engagement with China. The document suggested that inviting Foreign Direct Investment (FDI) from Chinese companies could help India improve its participation in international sup­ply chains through exports. It held out two propositions: one in which we continue trading with China that results in an ever-widening trade deficit. The other is getting the optimal ratio between commerce with Beijing and Chinese investment, with the hope that India could address the trade deficit, leveraging the geopolitical trend of the West shifting away from its erstwhile partner. The Survey cited the case study of East Asian econo­mies like South Korea and Vietnam that have received a double bonanza of the US redirecting manufacturing from China, and these nations also getting large FDI flows from Beijing. However, the government was quick to reject speculation that there was an intent to loosen Chinese capital inflows, with Union Commerce and Industries Minister Piyush Goyal stating that there was no review of India’s stance on Chinese investments into the country. It has been four years that Indian and Chinese armies have been locked in a tense standoff, which has had a bearing on their larger relationship. The Indian government assesses that China’s bid to repeatedly change the status quo along the border through the use of force has “violated the basis” of relations between the two nations. Foreign Minister S Jaishankar termed the India-China relationship as “abnormal”. Thus, the government has pointed to the centrality of resolving the border impasse over economic and cultural engagement. Prime Minister Narendra Modi stated that there was a need to resolve the prolonged situation along the borders. China’s foreign ministry’s reaction to the Prime Minister’s statement was that India would work with China to keep building trust. However, words have not been matched by deeds In the run-up to the 2024 Indian General Election, there seemed to be a sliver of a thaw. Amidst the electioneering, China named Xu Feihong as its new ambassador in Delhi after a long hiatus, which gave rise to speculation that there could be a resolution to the standoff. In an interview to Newsweek , Prime Minister Narendra Modi stated that there was a need to resolve the pro­longed situation along the borders. China’s foreign ministry’s reaction to the prime minister’s statement was that India would work with China to keep building trust. However, words have not been matched by deeds, and China has used military coercion to send a signal to India ahead of the election. Reports have surfaced that China has deployed its state-of-the-art Chengdu J-20 stealth aircraft in Tibet, and reportedly conducted military exercises near eastern Ladakh in March 2024, less than a month before the first phase of voting. When the election results showed that Modi would form a government in a coalition, strategists began to debate the contours of Modi 3.0’s foreign policy, especially with respect to China. The concern was that domestic issues would consume Modi 3.0’s bandwidth, leaving less space for the robust foreign policy dealings witnessed in his previous two terms. But proving naysayers wrong, S Jaishankar is back in the saddle at the foreign office, and India’s resolve to combat China does not seem to have flagged. India is striding close to China’s red lines on Taiwan, Tibet, and the South China Sea.