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CWA # 1178, 31 December 2023
The World This Year
China and South Asia in 2023: Advantage Beijing?

  ​​​​​​​Ashok Alex Luke
Ashok Alex Luke is an Assistant Professor at the Department of Political Science at CMS College, Kottayam.

China has engaged with various countries in South Asia in different capacities. From fostering close ties with Pakistan and the Taliban in Afghanistan to going ahead with the connectivity projects and trade with Nepal and Bangladesh, offering aid to debt-stricken Sri Lanka at the same time having little political engagement with India and Bhutan. It continues to have stakes in the Indian Ocean Archipelago of Maldives.

Major Developments in 2023
With Afghanistan, in September 2023, China became the first country to formally appoint a new ambassador to Afghanistan since the Taliban takeover in 2021. The signing of the USD 540 million oil deal between Xiangjiang Central Asia Petroleum and Gas Co with the Taliban in January 2023 has given Beijing access to the Amu Darya basin in northern Afghanistan. An issue for China in Afghanistan is the presence of the Eastern Turkistan Islamic Movement in Afghanistan (ETIM); in May 2023, the Taliban pledged that it would not allow ETIM to conduct attacks against China from Afghanistan. China has also expressed concerns over the attack on its nationals in Afghanistan, mainly from the Islamic State of Khorasan Province (ISKP). In October 2023, Afghan officials were invited to attend the Belt and Road Forum in Beijing. China has proposed that Afghanistan link up with the China-Pakistan Economic Corridor by building a cross-border railway network from Peshawar to Kabul and Quetta to Kandahar.

With Pakistan, it was ten years of the China-Pakistan Economic Corridor (CPEC) in 2013. It was a win-win situation for both China and Pakistan, where the former would have the shortest trade route and access to the Indian Ocean through the Gwadar port, and the latter would have access to the much-needed infrastructure. Even after ten years, the much-hyped USD 62 billion CPEC, which is part of the Belt Road Initiative (BRI), has not materialized due to reasons such as the political and economic instability in Pakistan, terrorism and rampant corruption. In a meeting in May 2023, the two foreign ministers rejected the perception that Pakistan is a victim of "debt trap diplomacy" and the assertions that China targets struggling economies through unsustainable loans to pursue its geostrategic goals. Pakistan's former envoy to the United Nations stated that her country would have defaulted without China coming to the rescue. In the context of a bailout deal with the IMF, China has provided relief by rolling over debt and parking funds there to boost dangerously low foreign exchange reserves. China holds USD 30 billion of Pakistan's USD $126 billion external foreign debt and is Pakistan's single biggest lender, owing a third of its external debt.

With India, China's relationship remains tense. When China's new foreign minister Qin Gang met India's minister of External Affairs, S Jaishankar, in March 2023, he emphasized that China and India should implement the important consensus, maintain dialogue, properly deal with differences and promote bilateral relations to improve as soon as possible and steadily move forward. In August 2023, the two leaders, Prime Minister Modi and President Xi met at the BRICS summit in South Africa, where they agreed to intensify efforts for disengagement and de-escalation to restore a normal relationship between the two countries. China states that "improving China-India relations serves the common interest of the two countries and peoples, and is also conducive to peace, stability, and development of the world and the region". At the same time, India stressed that respecting the LAC is essential to normalizing India-China relations. However, in August, China released a map showing the entire state of Arunachal Pradesh and the Aksai Chin region within Chinese borders. In September, President Xi kept away from the G20 summit.

With Nepal, in September 2023, China signed 12 agreements, including seven MoUs, to enhance bilateral cooperation in trade, road connectivity and information technology during the meeting between Premier Li Qiang and Prime Minister Pushpa Kamal Dahal Prachanda. MoUs were signed on the Hilsa Simkot Road and Nepal-China power grid interconnection projects. However, Nepal has expressed its lack of desire to join China's Global Security Initiative, though it is willing to cooperate with Beijing on connectivity projects. China is Nepal's second-largest trading partner after India and the largest source of foreign direct investment. China has made massive infrastructure developments in Nepal, including its Pokhara International Airport. Presently, China is Nepal's biggest creditor.

With Bangladesh, Beijing's relations have grown stronger, mainly because of China's economic assistance and the growing anti-India sentiment in Bangladesh. China has become Bangladesh's top trading partner. In 2023, Prime Minister Sheikh Hasina unveiled the country's inaugural submarine base, constructed by China at the cost of USD$1.2 billion. Bangladesh has become China's second-largest arms importer, second only to Pakistan. The meeting between Sheikh Hasina and President Xi Jinping on the sidelines of the BRICS meeting in Johannesburg urged the two sides to set up cooperation in infrastructure, information technology, energy and agriculture. Sheikh Hasina thanked China for providing invaluable support in its fight against Covid-19. The Chinese president also invited Bangladesh to join the BRICS and expressed hope that the Rohingya issue will be solved as soon as possible through a dialogue between China, Bangladesh, and Myanmar.

With Bhutan, there were not any significant developments in 2023, despite in October, the Bhutanese foreign minister Tandi Dorji becoming the first minister to travel to Beijing, where he met foreign minister Wang Li. The latter advised Bhutan to establish diplomatic relations with it and resolve the boundary dispute as soon as possible to transform the relations between the neighbours into "legal form". Wang Li also stated that the establishment of diplomatic relations will serve the long-term interest of both the nations. The Chinese press release also noted that Dorji expressed Thimphu's backing for President Xi Jinping's Global Security Initiative. In 2023, despite not having formal diplomatic relations, both countries have taken steps to sort out their differences. Bhutan is aware of the massive infrastructure projects that China is undertaking through its Belt Road Initiative.

With the Maldives, the election results in September 2023 are welcome news to Beijing as the new president, Mohammed Muizzu, is widely known for his pro-China stand. Xi Jinping's special envoy, Shen Yiqin, had met Maldivian president Mohammed Muizzu and had assured China's willingness to promote Belt and Road Initiative projects and strengthen bilateral ties. Mohammed Muizzu, who went for the "India out "campaign during his election, has demanded the withdrawal of Indian troops from the island during his meeting with Indian Prime Minister Narendra Modi on the sidelines of the COP28 summit in Dubai in December.

With Sri Lanka, the Exim Bank of China had agreed to cover about USD 4.2 billion of its debt. In June, Sri Lanka's foreign minister, Ali Sabry, visited Beijing and had discussions with Chinese foreign minister Qin Gang and assured Sri Lanka would uphold the One China policy, promote Belt Road Projects and intensify multilateral coordination. The President of Sri Lanka, Ranil Wickremasinghe, attended the third Belt and Road Forum for International Cooperation in China from October 16 to 20, 2023.

2024: Looking Ahead
First, despite the Western criticism, China-Afghanistan relations under the Taliban regime are likely to grow manifold. China assumes that by actively promoting peace and stability in Afghanistan, it can become a mediator between the Taliban and the world community. For China, a mineral-rich Afghanistan located geo-strategically in its neighbourhood is crucial to defuse tensions in the volatile Xinjiang province.  

Second, with Pakistan, there are tensions with the CPEC investments in Balochistan. Apart from the attacks on Chinese citizens in the past, this year, the Baloch Liberation Army set six Chinese mobile towers on fire. Many fear that though the CPEC has benefited Pakistan in the infrastructure and energy sectors, the long-term involvement of China in Pakistan can again cause Pakistan to slip into the debt trap. With minimum resources, Pakistan is likely to go forward, especially when it has obligations to complete the USD 62 billion CPEC. China, too, needs Pakistan for its geostrategic interest in Afghanistan.

Third, with India, despite the political differences, the India-China trade has been bourgeoning through to China's advantage. India's trade deficit with China from January to November 2023 stood at USD 90.27 billion, which is USD 2.16 billion lower than last year. India's exports to China from January to November 2023 were USD 16.99 billion, while Chinese exports to India in the same period were USD 107.27 billion. Without sorting out the border issue, India-China relations are not likely to move any further. China's continued engagement in South Asia worries India, while the latter's closeness to the United States and its involvement in the Indo-Pacific through forums like the Quad worries China.

Fourth, China-Nepal relations are expected to improve despite the map controversy due to ideological convergence and the need for infrastructure improvement funds. Prime Minister Prachanda's visit to China in 2023 comes only second after his first visit to India last year, which shows Nepal's unwillingness to be in the Chinese orbit. Sandwiched between India and China, Nepal is looking towards getting maximum benefit from India and China. China has an influence over Nepal's communist parties, which is likely to harm Indian interests in the long term.

Fifth, both the US and China are luring Bangladesh into their orbit. The United States has invited Bangladesh to participate in the Indo-Pacific strategy, whereas China has asked Bangladesh to be part of the Global Security Initiative. As a state with tremendous compulsions due to climate change, economic growth, and infrastructure development, Bangladesh will likely keep its options open by not siding with the United States or China and becoming its satellite state. At the same time, owing to its close geographical proximity, Bangladesh is likely to engage more without antagonizing its relations with the United States or India.  

Sixth, with Bhutan, China is looking to lure Bhutan away from the Indian orbit through its carrot-and-stick approach. While China has resolved its land border issues with 12 countries, India and Bhutan are the only countries where it still has border disputes.

Seventh, with the Maldives, Beijing expects a pro-China approach in all its foreign policy matters. Compared to India, China has more resources to invest in the archipelago.

Eighth, with Sri Lanka, China is willing to offer aid whenever it is in crisis. Though India has come forward to provide help, it is more aligned with China than India as the BRI offers more benefits.  

About the author
Ashok Alex Luke is an Assistant Professor at the Department of Political Science at CMS College, Kottayam.

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