By Paras Ratna, Research Associate – Strategic & Foreign Relations Practice at Rashtram

This article was published in the 9 Dash Line

The source of the image is Vision India Foundation

The scuffle on 15 June between the Indian Army and the People’s Liberation Army in the Galwan region saw casualties on both sides. This represents a significant escalation in the decades long relationship between two of Asia’s largest economies, both of whom are equipped with nuclear weapons. This event, the first loss of life on the border since 1975, will reverberate far beyond the Himalayan frontier.

Unsurprisingly, there has been a demand from across many quarters in the media and civil society for the Indian government to visibly stand up to Beijing’s brinkmanship. As Thomas Schelling notes “If you are asked to play chicken and you don’t, you have already played”.  Although de-escalatory talks are now underway between the two armies, the calls within India for a limited escalation makes it imperative to analyze the escalation matrix in order to allow for informed decision making.

Playing Chicken: India’s options

From a military standpoint, it is argued that the Indian armed forces should consider reciprocal forward movements along the other side of the LAC. A move intended to put equal pressure on both sides in order to resolve the stand-off i.e. India would seek to negotiate with China from the position of strength, rather than suffer from the unilateral pressure from Beijing. It would also serve to signal to China the costs associated with further border transgressions by the PLA.

Recent escalation with India highlights the fact that, for many, China has long abandoned the “peaceful rise” approach. In fact, China’s external relations can be seen to have come a full circle from Deng Xiaoping’s “hide your strength” to Xi Jinping’s “strive for achievement”

Diplomatically, sustained engagement and even alignment with Western partners to build domestic capacity is also being emphasized. As China acts to realise its vision of a unipolar Asia with Beijing at the centre of power, there are suggestions that India should contemplate a tighter embrace of like minded democratic countries especially Quad states such as the US, Japan, and Australia. The US State Department notably called out China for its action with respect to the current standoff. In contrast both Japan and Australia’s responses to the standoff have been tellingly reserved. It can be argued that India itself is apprehensive about any external involvement, and at the highest quarters it intends to downplay things domestically with a view toward diplomatic de-escalation. Therefore the ability of the Quad as an instrument to deal with China’s aggression in the Himalayas remains to be seen.

Some have recommended the ratcheting up of pressure on China by shedding an ambivalent approach to the One China policy vis-a-vis Hong Kong, Tibet and Taiwan. A similar line of reasoning for the South China Sea has also been advocated for quite some time. India could consider joining the D-10, a consortium of 10 like-minded countries proposed by the UK as a means to avoid dependency on China’s Huawei for 5G services.

Economically, New Delhi’s banning of Chinese social media apps is seen as attempt to explore ways to impose further costs on Beijing’s brinkmanship. India has already shifted its foreign direct investment (FDI) rules aimed at the predatory takeover of its firms. The curbs, which were already in force for investments from Pakistan and Bangladesh, have now been expanded to China and its citizens but its impact has been questioned. Recent reports indicate that Chinese investment in India is being routed through subsidiary entities in third countries like Singapore – outside of the measures. Another important dimension is that significant Chinese investment comes to India through start-up capital. Key unicorn start-ups such as Paytm, Ola, Delhivery etc all have Chinese investors.

Besides India’s telecom sector the Pharma, Power and Solar Energy sector(s) (just to name a few) are all dependent on Chinese imports. India is also dependent on China for capital goods. Therefore the unease of automobile giants such as Bajaj and Maruti Suzuki is understandable. Targeting the import of cheap capital goods would shoot up production costs and adversely impact Indian manufacturing. Coercive economic diplomacy could lead to supply-side bottlenecks and risks being counterproductive. Therefore, to an extent, India needs to aim for graded de coupling from Chinese economy.

Counter moves

India’s response is bound to attract counter moves from China along the same lines and it should therefore be prepared for escalation along the entire stretch of the border, from Ladakh to Arunachal Pradesh. Both India and China have previously engaged in Naku La in Sikkim (a settled frontier) and therefore New Delhi may need to reinforce the Himalayan frontier in order to deal with such contingencies. Developing an appetite for the military cost that comes with escalation may soon need to be realised.

According to a report from Harvard’s Belfer Center, the superiority of India’s conventional forces vis-à-vis China remains under appreciated. The report argues that PLA forces are engaged and/or reserved for Russian tasks or are countering anti insurgency in Xinjiang and Tibet. While India’s armed forces are deployed at forward positions aimed at countering China. As far as airpower is concerned the report notes that “China’s western air command has 101 4th generation aircraft (including reserves for Russian taskings), While, India has 122 comparable aircraft dedicated for China”. Geographical factors too restrict PLAAF’s airpower projection. Therefore, it seems conventional escalation would inflict substantial costs on both sides. Beijing would do well to factor the Sino-Vietnamese war rather than that of 1962.

Next, the boycott of Huawei’s 5G network and recent banning of apps could lead to coercive economic practices like the diminishing supply of API for pharma industries. In 2018-19 India imported approximately 68 per cent of bulk drug and drug intermediaries from China. This could further complicate the current situation as India struggles to deal with the COVID-19 pandemic. Cyber attack on critical institutions from North Korean, Chinese and Pakistani servers is yet another front for which India needs to be prepared.

Similarly, rare earth metal supplies could be weaponized by China as was recently signalled to the US and Japan. According to a study by the Centre For Energy, Environment, and Water (CEEW); India is heavily dependent on critical minerals such as Beryllium, Germanium, Rare Earths (heavy and light), Tantalum etc. These minerals are crucial for solar power plants, hybrid and electric vehicles and the defence industry. India has no domestic reserves for the majority of these critical minerals and is therefore dependent on China. Further, India’s previous agreement for a WHO probe was met by China who in turn targetted Indian pigmeat on the grounds of swine fever.

It is worth noting that China’s exports to India account for approximately 2-3 per cent of its total exports. Any loss in exports can be compensated by markets in Africa, East Asia, and Europe. Therefore any economic fallout with India would not be sufficient enough to harm Beijing’s interests in any substantial manner and it seems China’s escalation strategy has already taken note of it.

It is likely that any reappraisal of the ‘One China’ policy would lead to Chinese backlash in Jammu and Kashmir and Ladakh or across the North East. It is important to note that Beijing (through the China Pakistan Economic Corridor or by control of the Shaksgam Valley) has always undermined India’s territorial integrity. Further, Beijing can activate Ethnic Armed Organizations to flare insurgency in the North East. This in turn highlights the futility of India’s consideration of China’s sensibilities.

Asymmetry and the limits of escalation

Recent escalation with India highlights the fact that, for many, China has long abandoned the “peaceful rise” approach. In fact, China’s external relations can be seen to have come a full circle from Deng Xiaoping’s “hide your strength” to Xi Jinping’s “strive for achievement”. Therefore, attributing the recent aggressive Chinese behaviour to the change in the status of J&K or the modest improvement in infrastructure is rather incidental and discounts Beijing’s wider strategic shift. It runs the risk of missing the woods for the trees. The widening rift between India and China in economic and defence capabilities has further complicated the scenario. It seems then, that managing the asymmetry of power differential, and the safeguarding of core interests would be a major challenge for India’s new China policy.

The above scenario is by no means definitive. However, it tries to explore the unravelling of escalation that could follow on the military, diplomatic and economic front. Finally, India’s response towards Chinese aggression needs to assess its ability to impose and withstand costs in the event of yet further escalation.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Paras Ratna is a Research Associate at the Vision India Foundation, New Delhi. The author would like to thank Sanjay Pulipaka, Sr. Fellow, Delhi Policy Group for his inputs. Image credit: Ministry of External Affairs/Flickr.