ASIAN REVIEW
October 19, 2015 7:00 pm JST
Anita Inder Singh
India, US, China prove politics and trade not natural partners
President Barack Obama and India's Prime Minister Narendra Modi shake hands during the luncheon at the United Nations General Assembly in New York on Sept. 28. © Reuters
The strength or weakness of trade ties between countries does not determine the tone of political partnerships, as starkly illustrated by the September visits to Washington of Chinese President Xi Jinping and Indian Prime Minister Narendra Modi.
China is America's second biggest trading partner after neighboring Canada, with two-way trade in goods accounting for $386 billion in the eight months to August this year, according to the U.S. Census Bureau, which tracks trade statistics. By contrast, India is America's ninth biggest trading partner, with just $46 billion in two-way trade in goods over the same period.
Xi, in his first state visit to the U.S., did considerably more business than Modi. Beijing will pay Boeing $38 billion for 300 jets, while China's state-owned Commercial Aircraft Corp. signed a cooperation agreement with Boeing to build a 737 aircraft assembly center in China. Just before Xi's visit, the U.S. personal computer maker Dell announced plans to invest $125 billion in China over the next five years.
China's Boeing transaction is worth more than 15 times the $2.5 billion that India will spend on 22 Apache attack helicopters and 15 Chinook helicopters, both of which are also made by Boeing. But the Indian deal has wider strategic significance. It reinforces the status of the U.S. as one of India's top military suppliers. It confirms that, along with Israel, Washington has dislodged India's Cold War friend Russia from its well-established position as New Delhi's main arms vendor.
Growing commitments
Modi, who was meeting U.S. President Barack Obama for the third time since September 2014, urged American business professionals to invest in India, and visited California's Silicon Valley, the development of which Americans of Indian origin have played an outstanding role. The prime minister was rewarded with support from Silicon Valley giants for a recently announced "Digital India" initiative, which aims to improve Internet connectivity.
Reinforcing Modi's digital campaign, Google confirmed plans to launch free Wi-Fi in 500 Indian railway stations, and Microsoft pledged to install low-cost broadband in 500,000 Indian villages. Qualcomm, a U.S. digital technology group, announced a $150 million investment in Indian start-ups.
According to the U.S. State Department, two-way trade in goods between China and the U.S. grew from $33 billion in 1992 to more than $562 billion in 2013. China is the third largest national market for U.S. exports, after Canada and Mexico, and the U.S. is the largest market for China's exports. In 2013, American companies invested $61 billion in China, up from $54 billion in 2012, mainly in the manufacturing sector.
Meanwhile Indo-U.S. two-way trade, although significantly behind, is also increasing rapidly, from $19 billion in 2000 to $100 billion in 2014, including services. U.S. exports to India totaled $38 billion in 2014, supporting some 181,000 U.S. jobs, according to the U.S. State Department. U.S. foreign direct investment in India was $28 billion in 2014, with about $41 billion expected over the next three years, according to the U.S.-India Business Council. The U.S. and Indian governments both say they want to increase bilateral trade and open new sectors to private investment.
In business terms both India and China appear to be "pivoting" to the U.S. But the political divide between China and the U.S. will endure, even if their economic relationship remains significantly larger than that between India and the U.S.
Threat of force
The main reason for this is China's propensity for expansion, reflected in its claims to territories belonging to or counter-claimed by many of its neighbors, including India. China frequently invokes its own version of history to back its demands. Xi asserted in Washington that, "Islands in the South China Sea since ancient times were China's territory." It follows that Beijing will continue to stake territorial claims, backed by the threat of force, that exacerbate insecurity in the Asia-Pacific region.
There are other political differences between Washington and Beijing. As the world's second largest economy, China wants recognition as a great power. In Xi's words, China wants to build with the U.S. "a new model of major-country relationship" without conflict, and "win-win cooperation" is a priority in China's foreign policy. But Washington is not inclined to dignify Beijing's expansionist aims by hailing China as a global partner. Moreover China's authoritarianism and allegations of Chinese cyber attacks on U.S. interests are widening the political gap between Beijing and Washington.
In contrast, Obama and Modi have stressed shared democratic values in all their meetings. India views the U.S. as its principal partner in Modi's quest to make the country an influential world power. In September 2014, both countries affirmed for the first time a joint commitment to freedom of navigation and overflight throughout Asia, especially in the South China Sea, in accordance with universally recognized principles of international law. During Obama's official visit to India last January, and again during Modi's recent trip to the U.S., the two leaders underlined the need to craft a common strategic vision to address challenges in the Asia-Pacific and Indian Ocean, and to strengthen their partnership with Japan to enhance maritime security.
Common values
In June 2015, the U.S. and India decided to expand defense cooperation for a decade amid America's attempts to rebalance its ties in Asia to contain China and reduce tensions in the South China Sea. American companies, including those in the defense-manufacturing sector, are expected to engage actively with Modi's "Make in India" program to expand manufacturing, including through technology transfer arrangements.
There is a clear link between domestic policy and geopolitical weight. That is why the domestic issues of infrastructure, taxation, governance, labor reforms, capacity building and skills development are key issues in India's foreign policy -- and in Indo-U.S. relations. But those problems do not stop the U.S. from stressing that common values, people-to-people ties and pluralistic traditions make India a friend and partner.
Looking at India as a potential global power in the 21st century, Washington wants to deepen economic, political and military cooperation with New Delhi. For India, as for most Asian countries, the U.S. remains the pivot on which Asian security will turn, and an essential counter to Beijing's aggrandizing tendencies.
Despite China's robust economic ties with the U.S. and India, its military challenges to maritime safety and to existing international frontiers with India and other neighboring Asian countries will increase political tensions in Asia, pushing India and the U.S. closer together in the years to come. For Washington and New Delhi, the insecurity fomented by Beijing's territorial ambitions outweighs the benefits of economic collaboration.
Anita Inder Singh is visiting professor at the Centre for Peace and Conflict Resolution in New Delhi
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