Magazine March 23, 2020, Issue

India as Counterweight to China in Asia

Donald Trump shakes hands with India’s prime minister Narendra Modi in New Delhi, India, February 25, 2020. (Adnan Abidi/Reuters)
The importance of Washington’s relationship with New Delhi

Just ten days after Chinese Communist Party (CCP) chairman Mao Zedong inaugurated the People’s Republic of China in 1949, Indian prime minister Jawaharlal Nehru landed in Washington for a three-week tour of the United States. Time magazine called it “one of the century’s most important visits of state”—a statement that would have been inconceivable a few years earlier, when India was still a British colony of limited geopolitical consequence for the U.S. But after the loss of Beijing to Communist rule, the newly independent India suddenly became, as the New York Times put it, “potentially a great counterweight to China.” Though American leaders made overtures to Nehru, India’s policy of neutrality during the Cold War, as well as its recognition of Mao’s government, precluded a full-fledged alliance between the two countries.

Seventy years later, India has once again emerged as a possible bulwark against a rising China. Beijing loomed large as Indian prime minister Narendra Modi received President Trump at Sardar Vallabhbhai Patel International Airport in Ahmedabad on February 24. Trump neglected to call out China by name during his stay, but his references to countries that “seek to claim power through coercion, intimidation, and aggression” left no doubt as to China’s influence on the U.S.–India relationship. Though marred by ongoing religious violence in the streets of Delhi, the visit exhibited the mutual affinity between Trump and Modi that may finally turn intermittent alignment into lasting alliance.

After India gained independence, it often found itself strategically aligned with the U.S. Despite India’s Cold War neutrality, Washington provided economic aid to the country throughout the 1950s, reasoning that “if the United States helped India succeed and win the development race versus China, it could demonstrate to the ‘uncommitted’ world that democracy and development could co-exist and thrive,” according to the Brookings Institution’s Tanvi Madan.

As Beijing grew more hostile to Delhi in the late 1950s, the U.S. and India engaged in military as well as economic cooperation. In 1959, skirmishes erupted on the Sino–Indian border, and an uprising in neighboring Tibet alarmed Indian leaders. These disputes culminated in the 1962 Sino–Indian War, during which the Kennedy administration provided military assistance to Nehru’s government. The following year, Nehru and Kennedy signed an air-defense agreement that included arms provisions and joint training exercises, as well as a somewhat veiled commitment to defend India against Chinese attack.

But differences in the two countries’ strategic outlooks stood in the way of a lasting bilateral alliance. India’s reluctance to become dependent on the U.S. led to its collaborating with Moscow, while disagreements as to the nature of the Chinese threat impeded more robust cooperation. Vis-à-vis China, Washington prioritized its long-term struggle against Communism, whereas Delhi focused on the urgent threat of Chinese encroachment on its border. Soon thereafter, the Nixon administration’s policy of rapprochement with China nullified the latter’s role as a mutual adversary of the two countries. Over the ensuing decades, India became functionally a client state of the Soviet Union, and the U.S.’s support for Pakistan soured relations between Delhi and Washington.

After the Cold War, India’s economic liberalization in the 1990s and concerns about terrorism in the 2000s aligned the two countries’ interests—up to a point. For one thing, the U.S. and Pakistan remained allies; for another, in keeping with its history of avoiding strong alliances, India preferred a diversified “portfolio” of partners to call on as needed.

Today, Beijing’s increased belligerence has the potential to change that. Through its Belt and Road Initiative, China has expanded its reach into the Indian Ocean with a naval base in Djibouti, strategically located on the Gulf of Aden, and investments in Sri Lanka and the Maldives. Because both India and China depend on energy resources transported through the sea-lanes of the Indian Ocean, control of the region’s infrastructure and trade routes is of utmost strategic importance. On land, border disputes persist: In 2017, China’s attempt to build a road through Doklam, on the border of India’s ally Bhutan, led to a two-month military standoff between the two countries.

These simmering tensions provided the backdrop for the meetings between Trump and Modi in late February. Modi rolled out the red carpet for his fellow populist, hosting an extravagant state dinner and parading Trump around the Taj Mahal. The “Namaste Trump” rally held at the world’s largest cricket stadium, in Ahmedabad, drew a crowd of 125,000.

The two sides announced an expanded defense partnership, including $3 billion in arms sales. With the Indian military largely reliant on Russia, Delhi’s purchase of American helicopters points to a belated reorientation of India’s Cold War alignment. For its part, the White House’s agreement to transfer sensitive military technology to Delhi is a sign of trust in the Modi government. The deal also includes industrial collaboration and—in a rebuke of Chinese telecommunications giant Huawei—collaboration on 5G networks.

The announcement fits into the Trump administration’s policy of a “free and open Indo-Pacific,” which sees the Indian and Pacific Oceans as a “single strategic arena” in the ongoing confrontation with China. Twice in the past two years, the White House has held high-level discussions with Indian defense officials, in addition to reviving “the Quad”—an informal strategic dialogue among the two countries, Australia, and Japan.

China has taken note, but much as in the 1960s, competition between Delhi and Beijing remains most consequential on the ideological rather than the military front. The Chinese have largely avoided responding to India’s strategic realignment, in order not to lend credibility to India’s democratic system. Georgetown professor Oriana Skylar Mastro argues that confronting India would undermine the CCP’s assertion that “there is no developing country in the world that achieves prosperity and stability under Western-style democracy.” Economic supremacy outranks military strength in the Indo-Pacific struggle.

But on the critical economic front, the U.S.–India relationship has deteriorated. In May 2019, the White House stripped India of its preferential trading status under the Generalized System of Preferences, which had exempted Indian imports to the U.S. from billions of dollars in tariffs. New U.S. tariffs on steel and aluminum, which reduced Indian exports of steel products by 46 percent, drew retaliation from Modi.

At the 2018 World Economic Forum in Davos, Modi cautioned world leaders against protectionism, saying, “Many countries are becoming inward focused and globalization is shrinking, and such tendencies can’t be considered lesser risks than terrorism or climate change.” Yet his government has steadfastly rolled back the slow liberalization of trade that took place under its predecessors.

India’s Most Favored Nation applied tariff rate is the highest of any major economy, and that rate has increased over the past two years. Modi’s 2018 budget raised duties by up to 20 percent on items ranging from auto parts to toiletries. While the country had previously made progress in unifying tariff rates across products—which streamlines customs and reduces uncertainty for importers—the Modi government’s incoherent, ad hoc approach has created huge variation in duties. The country also places strict limits on foreign ownership of businesses, a policy that squelches competition domestically.

Having once overtaken China as the world’s fastest-growing major economy, with consistent growth of 8 percent, India has seen its GDP growth fall to its lowest rate in the last eleven years. Starting in the early 2010s, massive red tape and corruption began to weigh on production, bringing growth rates down to 5 percent. Modi ran on a platform of “minimum government, maximum governance,” promising to liberalize the economy. His government has introduced some encouraging reforms: reducing barriers to foreign investment, cutting subsidies, and unifying India’s states into a common market. In a country still suffering from a half century of socialism, these measures—though limited—are not inconsequential.

Yet by mimicking Beijing’s protectionist trade policies, Modi’s government evinces a lack of commitment to earnest economic liberalization. This is not surprising, as Modi’s brand of populism, much like Trump’s, is committed to strengthening domestic manufacturing, protecting small businesses, and promoting domestic agriculture. A greater hazard is his religious nationalism, which has ignited social strife that could become a broader upheaval. The biggest story out of India during Trump’s visit was attacks by Hindus against Muslims who were protesting a new citizenship law—the last in a series of nativist measures that have rolled back social progress in India. Modi’s assault on religious freedom may permanently taint Indian democracy.

If the Indian government corrects course, the country is well positioned to grow by liberalization rather than central planning. Its dependency ratio—the proportion of children and the aged relative to the working-age population—is projected to shrink to 47 percent by 2050, when China’s will hit 63 percent. Moreover, India sorely lacks the high-quality infrastructure that exists in China. Inadequate infrastructure is low-hanging fruit for the Modi government, which need only make room for private-sector investment. And if it enters the multilateral trading system in earnest, India will boost its subpar export numbers and streamline domestic production with more competition.

In the run-up to Trump’s visit, officials on both sides had hinted at a “phase one” trade deal that would roll back some tariffs and pave the way for a broader free-trade agreement. Though that didn’t happen, the two sides committed to concluding the current round of negotiations promptly. Trump’s love for tariffs makes negotiating with India difficult: the president has little credibility to dissuade Modi from protectionism. But observers still expect a trade truce in the near future. For that truce to become a free-trade agreement, the two sides will have to prioritize addressing the Chinese threat over playing to their political bases.

There is a difference “between a nation that seeks power through coercion” and one “that rises by setting its people free. . . . And that is India,” Trump said during his visit, extolling the “natural, beautiful, enduring friendship” between India and the U.S. That free nations prosper remains critical to world order. Beijing is determined to prove the superiority of its development model; its increasing belligerence has starkly demonstrated the choices facing the developing world. However challenging, an upgraded U.S.–India relationship remains possible. Consummate populists though they are, Modi and Trump have an opportunity to build a future for the free world—one that channels national grievances toward the pursuit of shared international interests.

This article appears as “The Counterweight To China in Asia” in the March 23, 2020, print edition of National Review.

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