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Fear of influence


Dec 9, 2008
Fear of influence
By James Lamont and Amy Kazmin

Published: July 12 2009 23:06 | Last updated: July 12 2009 23:06

Hambantota, in southern Sri Lanka, was a sleepy seaside village devastated by the 2004 tsunami. Famous for salt flats and a searing climate, it’s most celebrated building was a British-built watchtower, now home to a fisheries museum.

Gwadar, likewise, until seven years ago, was a fishing town in Baluchistan on Pakistan’s south-western shoreline. An enclave on the Arabian Sea given to Islamabad by the Aga Khan, it was not much thought of as a key staging point between central Asia and the Gulf.

Below: A military message from the new player on the block
Today these little-known towns are fast emerging on to a bigger political and economic map thanks to Chinese finance and engineering, which is upgrading their ports into world-class facilities. They are part of China’s so-called “string of pearls” – the ports, staging posts and hubs that analysts say describe expanding Chinese interests and diplomatic initiatives in south Asia. The outreach – or, to some, apparent encirclement – is underpinned by infrastructure projects, arms supplies, energy routes and diplomatic protection.

Nowhere is this development causing more disquiet than in India. As energy dumps and refineries, jetties and gantries emerge on neighbouring shores, New Delhi fears that Beijing is extending its power to control shipping lanes in the Indian Ocean and Arabian Sea – waves that it prefers to rule. The moves have the potential to intensify the competition – and scramble for resources – between the world’s fastest-growing big economies, both nuclear-armed powers.

China accused of ‘predatory pricing’ tactics - Jun-14China blocks ADB India loan plan - Apr-10India follows China’s path in Africa - Apr-08Chinese dragon roars over Indian industry - Jan-16Analysis: India and China’s taste for luxury - Jan-10The right questions on India and China - Feb-06Arundhati Ghose, India’s former ambassador to the UN, says Beijing’s manoeuvring in south Asia is “causing us a lot of disquiet”. China is “flexing its muscles,” she says. “What they want to do is say ‘We are the big boys here and Asia can only afford one power’ ... The message is that the power in Asia is China, and this is her periphery, and China is the one which will determine what is going to happen here.”

Beijing insists that its intentions are peaceful, aimed at development.

Relations between the two sides have never recovered since a short-lived border war almost half a century ago. In June 1962, Chinese forces overran mountain regions in a bitter, high-altitude conflict.

The episode brought an abrupt end to the vision of Jawaharlal Nehru, India’s first prime minister, of brotherhood between the two countries. It also deeply wounded India’s confidence that it could defend itself.

Today, the cool relationship across the Himalayas continues to do harm. Trade between Asia’s two most powerful emerging markets may have grown, yet distrust allows neither to drop its guard. The territorial dispute still rankles, emblematic of a broader, and potentially more dangerous stand-off stirred by economic dynamism and rising military might.

While the People’s Daily, the mouthpiece of Chinese Communist party, claims Indians view China’s accomplishments with “awe”, Manmohan Singh, India’s prime minister, and his country’s corporate leaders boast that India’s democracy has more staying power than China’s one-party rule.

Friction has risen recently with the two sides sparring over multilateral loans, India’s civil nuclear deal with the US, and trade.

One of the most striking disagreements is China’s holding up approval of the Asian Development Bank’s loan assistance plan to India, on the grounds that it involved finance to territory it claims in India’s north-east. The Chinese opposition to the $2.9bn (€2.1bn, £1.8bn) plan – which earmarked $60m for flood management in the disputed region – is unusual and has left bank officials aghast at the treatment of India, its largest borrower. The Chinese have expressed “strong dissatisfaction” with the ADB saying it had no chance of changing “immense territorial disputes.”

Similarly, China sought to block India’s access to the nuclear supplies as the US administration of former president George W. Bush pursued a civil nuclear deal with New Delhi. That deal brought India’s nuclear programme out of decades of international isolation and was a milestone in its coming of age as a big power.

New Delhi has found ways to hit back. One weapon is trade. India has imposed bans on Chinese-made toys and mobile telephones. Another is troop deployment. It has recently aggravated China by bolstering its forces on the Himalayan border.

But while India can stem the tide of goods, it can do little about what it sees as regional encroachment in newly triumphant Sri Lanka, military-ruled Burma and arch rival Pakistan, and even the former mountain kingdom of Nepal.

Indian defence officials eye China’s activities in Sri Lanka with particular concern. – not least as the island overlooks important shipping lanes that carry much of the world’s oil trade.

Special relationship: Chinese and Pakistani troops on a drill in Karachi. The two nations share a common regional rival in India

Chinese military ordnance was decisive in the final stages of Colombo’s war against the Tamil Tigers, defence experts say. Beijing has increased its aid to Sri Lanka fivefold to $1bn a year and stepped up supplies of sophisticated weapons such as Jian-7 fighter jets, anti-aircraft guns and air surveillance radar.

As well as an arms supplier, China also served as important diplomatic ally to Sri Lanka, helping to deflect western criticism at the United Nations of Colombo’s human rights record in defeating the Tamil Tigers, which cost thousands of civilian lives.

“On both counts – diplomacy and arms supply – China has rendered invaluable help to Sri Lanka in its war effort against the Tamil Tigers,” says R. Hariharan, a retired colonel turned political analyst. Sri Lanka’s president, Mahinda Rajapaksa, cemented relations in 2007 by awarding Chinese companies the contracts for developing the Hambantota port, in his home constituency. The port, deeper than the one at Colombo, the capital, would provide docking and refuelling facilities for, among others, Chinese merchant and naval ships.

Such efforts, says Col Hariharan, could see Sri Lanka emerge as “a friendly cockpit” from which to keep an eye on key shipping lanes – yet another concern for India, which sees the island is the southern vanguard of its strategic defence.

To India’s east, China has emerged as the closest ally and international protector of Burma’s isolated military junta, which is shunned by most western governments and subjected to sanctions. China is Burma’s largest trading partner, and was long rumoured to have a listening post in southern Burma on the Bay of Bengal.

“I don’t think there is some nefarious Chinese scheme on Burma, but with western sanctions, there has been a vacuum in Burma and China has been happy to fill that vacuum,” says Thant Myint-U, an authority on the relationship between Burma, China and India.

Beijing, which has repeatedly shielded Burma in the UN Security Council, is being repaid with access to some of Burma’s rich trove of natural gas at “friendship” prices, according to some Burmese analysts. China is beginning the construction of a pipeline that will carry oil from Sittwe, on the Bay of Bengal, to China.

For Indian policymakers – some of whom still recall when Mandalay, Burma’s second city, was the eastern-most city in British India – Beijing’s close ties to the Burmese generals are a cause of deep concern.

“In Burma, the most atrocious and evil government is supported by China, and India has no choice but to do something about it so we are not totally zero there,” said one senior retired Indian diplomat, who asked not to be identified. “But we can’t be party to people [China] wounding and needling an animal in our forest and then leaving us to handle the wounded tiger.”

China is also allied to what many Indians consider their greatest threat: nuclear-armed Pakistan. Beijing provides financial and technical support to Islamabad and is described by some western diplomats as the Islamic republic’s most special relationship. Relations have deepened over the 40 years since Pakistan was slapped with US economic and military sanctions following its 1965 war with India.

“Pakistan considers China a well-trusted friend. There are virtually no issues between us,” says a Pakistani foreign ministry official.

The Gwadar port project, one of the highest-profile examples of Chinese assistance, envisages a naval anchor, and transport and energy transhipment links reaching all the way to Xinjiang province in China’s west.

China has also emerged as Pakistan’s largest supplier of defence hardware, and is helping renew the country’s jet fighter strike force.

Such links have prompted India’s more hawkish commentators, traditionally focused on the threat from Pakistan, to turn their attention to their more powerful neighbour. Some warn that China is an unstoppable results-driven business machine with little time for democratic niceties. “Each mayor and party secretary has objectives relating to investment, output and growth, which are aligned to national goals,” says Gurcharan Das, a Delhi-based political analyst and former chief executive of Procter & Gamble India.

Naresh Chandra, India’s former ambassador to the US and former cabinet secretary, says Beijing has little interest in partnering with New Delhi to develop a common regional approach.“They fail to recognise their own power to do good in Asia. Their entire thinking is based on the People’s Liberation Army” he says.

New Delhi’s anxieties have been exacerbated by growing deference to Beijing by western powers, particularly the US, who look to China’s economic dynamism to rescue the global economy from its current crisis.

“We are not in a position to take them on militarily, economically and now not even politically,” says Ms Ghose. “The only option we’ve got is diplomatic. At the moment, the US is of no help. ”

Many Indian officials prefer to be more bland in their comments about China, and its “string of pearls”. Kamal Nath, a senior cabinet minister and former trade negotiator, says India and China follow two different models but need not be antagonistic in pursuit of growth and power.

“It cannot be India versus China. It has to be India and China,” he says.

Additional reporting by Joe Leahy and Farhan Bokhari


After the return of the Chinese naval expedition to fight piracy off the Somalia coast in May, Rear Admiral Du Jingchen, the commander of the fleet, declared the mission accomplished. “It was safe, smooth and satisfactory,” he said.

In truth, for China and the countries clustered around the Indian Ocean, the mission was much more, writes Richard McGregor.This was the first time Beijing had used its navy to escort vessels sailing under its national flag at such a distance from its homeland. The fact that Chinese ships transited through the Indian Ocean, an area New Delhi regards as its backyard, gave the event an extra geopolitical edge.

“The Indian Ocean is very important – it gives [China] a broader space,” says Bud Cole, a professor at the National War College, and an expert on the Chinese navy.

Like most displays of Chinese power, the naval mission said more about the future of Beijing’s influence than its authority today. The navy has little capability to conduct sustained missions far from home. As Mr Cole points out, it has only a handful of supply ships essential to such missions, and is not rushing to build many more.

But there is little doubt Beijing harbours long-term ambitions to build a navy with a capability that matches both its ambitions to be a great power and its swelling global economic interests.

The People’s Liberation Army and its naval wing moved beyond a singular focus on Taiwan “several years ago”, according to Alex Huang, of the Center for Strategic and International Studies in Taipei. “They are sending a message that the Chinese navy is going places, and that they are the new player on the block.”

Rear Admiral Yin Dunping, the vice-commander of the anti-piracy expedition, said in an interview on the mission’s conclusion that China needed a strong navy to safeguard its national interest.

“It is important to accelerate and improve the navy’s abilities to cross the ocean [to] escort, rescue and evacuate Chinese nationals abroad, maintain peace, and a variety of other military tasks,” he told Xinhua, the state news agency.

It is not just India and its neighbours that are feeling the effects of China’s rise. The US and its allies in the Pacific, including Japan, Australia and the Philippines, have all been forced to adjust their strategic outlook to take account of Beijing’s ambitions.

But few regions have been so methodically mapped out by China as the Indian Ocean and its environs, where Beijing has built or financed ports from Burma to Pakistan to draw a line of influence – the so-called “string of pearls” – from south-east Asia all the way to the Middle East.

Every new display of the navy’s latest hardware is accompanied by a statement from the Beijing leadership reassuring neighbours about China’s desire for peace and co-operation.

But as military strategists have long known, China’s mere presence in the region is a statement in itself. Once it is accompanied by military hardware, the power of the message will only be redoubled.
Copyright The Financial Times Limited 2009

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