China and India’s neighbourhood
China’s economic power has enabled it to build up its presence on India’s northern and eastern borders by cultivating good relations with Nepal, Bangladesh and Myanmar. China’s long-term strengthening of ties and its connectivity with these countries have been especially obvious over the last six months. The enhanced tie with Nepal was marked by President Xi Jinping’s recent visit to Kathmandu, immediately after he left New Delhi in mid-october. Earlier, in July, Bangladesh’s Prime Minister Sheikh Hasina paid an official visit to Beijing. In April, Myanmar’s State Counsellor Aung San Suu Kyi signed agreements on trade and technology when she attended the Belt and Road (BRI) meeting in Beijing.
All three countries are India’s friendly neighbours. But do they have stronger ties with a more prosperous
China? Unlike India, all three have joined China’s BRI, which aims to advance Beijing’s economic and strategic interests. China is also the largest investor in all three countries.
Two of them — Bangladesh and Myanmar — are among China’s top three arms buyers. Myanmar buys 60 per cent of its weapons from China, Bangladesh 70 per cent. All are strategically important to China: Bangladesh and Myanmar can increase its access to the Bay of Bengal, from where it could challenge India’s traditional clout.
The BRI stems from China’s progress over the last 40 years. The reality is that Beijing has been able to build trade and investment ties with Nepal, Bangladesh and Myanmar to a degree that New Delhi has not been able to because India is an economic slowcoach. China has gained ground by investing in important sectors for which these countries have failed to get comparable funding from India.
Mr Xi was the first Chinese president to visit Nepal in more than two decades. During his visit several agreements were signed. One of the most important accords seeks to promote connectivity by railway between China’s Tibet and Nepal through the Himalayas. Mr Xi assured Nepal that the rail project would transform it from a land-locked country to a land-linked one.
Nepal and China also signed security agreements expanding cooperation between the police, intelligence, border management and law enforcement agencies. Beijing has helped Nepal to build and upgrade highways, airports and power plants. Following Mr Xi’s visit, it was announced that China will give the Nepalese army about $21 million in unspecified “disaster relief materials” over the next three years.
Further to India’s east the amicable tie between China and Bangladesh became visible last July when Ms Hasina and Mr Xi signed a slew of agreements which overcame the hesitations of history. In 1971, India created Bangladesh by breaking up Pakistan. But China supported Pakistan in the Bangladesh Liberation War, vetoed its admission to the United Nations and recognised the new state only in 1976.
History, though, is about change. As South Asia’s fastest-growing economy, Bangladesh has welcomed China’s investment of $38 billion. That is China’s largest investment in South Asia, after Pakistan, where it has invested $46 billion. Moreover, China has established itself as the largest trading partner of Bangladesh. The total volume of trade between the two countries was $12.4 billion in 2017-18. Trade between India and Bangladesh amounted to $9.5 billion in the same year. Twenty-two per cent of Bangladesh’s imports come from China and only 1.3 per cent from India; a mere 1.7 per cent of its exports come to India, and 2.3 per cent to China.
China’s ties with Myanmar tell an analogous story about its roles as a trading partner and developer of infrastructure and ports. A third of Myanmar ’s imports come from China, a mere 5.2 per cent from India. China buys 33 per cent of its exports, India 3. 5 per cent.
China has made a huge investment in building a deep-water port in Kyaukpyu, at the western tip of Myanmar. Strategically important Kyaukypu is the terminus of oil and natural gas pipelines running to China’s Yunnan province. That will help China to receive its energy supplies from the Middle East by avoiding the overcrowded Strait of Malacca. China is also developing an economic zone in Kyaukpyu.
Beijing has shown flexibility when corruption and the BRI “debt trap” have threatened projects. Last year Bangladesh threw out a Chinese road project to develop the 226-kilometre Dhaka-sylhet road following allegations of bribery by state-owned China Harbour Engineering Company, which was awarded the contract to widen the highway. Bangladesh also complained about the cost of the project. It will now finance the road-building itself at a reduced cost.
Meanwhile, Myanmar scaled back plans for Kyaukpyu port , sharply trimming the cost of the project. At Myanmar’s request the initial $7.3 billion demanded by China was lowered to $1.3 billion.
India’s inability to be the financier of choice for these three strategically important neighbours is compounded by its red tape and poor record of implementing projects. Common problems in India itself, they also slow down the implementation of its Act East policy.
New Delhi must contend with these realities. If India wants to enhance its influence it must accelerate and sustain its economic progress. It must also keep the promises it makes to its neighbours. Until then, China is likely to retain its economic and strategic vantage point in Nepal, Bangladesh and Myanmar.