US-China rivalry makes for complex Indo-Pacific power dynamics

India ought to tread cautiously in aligning with the US as a counterweight to China, writes Mayank Mishra for South Asia Monitor

Mayank Mishra Aug 05, 2021
US-China flags (File)

Indo-Pacific, the term used in the natural sciences to study marine biology, zoology and oceanography, has made a resurrection in geopolitical discourse in the last couple of decades. The term Asia-Pacific is used for the states around the Pacific Ocean that formed Asia-Pacific Economic Cooperation (APEC), a 21-member intergovernmental organization. It is perhaps the only multilateral institution representing Asia-Pacific, predominantly an economic conceptualization rather than a security one.

However, with the rise of two economic powerhouses, India and China, in the Asian continent and increasing assertiveness of China in the region, the concept of Asia-Pacific was broadened geopolitically by the US to include states around the Indian Ocean with a focus on India, and thereby the term Indo-Pacific (a 24-nation regional framework) has gained traction in recent years underpinning the region’s politico-economic and security dimension.

 Washington and Tokyo brought New Delhi into the turf to counterbalance Beijing, which, however, does not acknowledge the presence of any term called Indo-Pacific. Though the concept is still evolving, it exhibits a paradigm shift in power from the West to the East. 

The term has gained traction because of the expanding role of China, India and the US in the region. The western nomenclature of India as a South Asian nation and China as an East Asian country somehow blurs the picture of how geopolitics unfolds in the Indo-Pacific region.

SAARC, a dysfunctional South Asian regional forum hit by India and Pakistan’s mutual antagonism, has made South Asian countries move to what is often informally attributed as SAARC minus Pakistan, i.e. Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Formed in 1997, it comprises India, Thailand, Myanmar, Nepal, Bangladesh, Sri Lanka and Bhutan. Furthermore, with saturated markets in the West, India actively pursued the Look East policy. These two developments have made the South Asian region ‘drift’ towards the Indo-Pacific.

Why the Indo-Pacific? First, it covers a vast diverse region enveloping Southeast Asia, South Asia and the littoral nations of the Indian Ocean and the Pacific, the emerging economic powerhouses. Second, the rise of China, its outward assertiveness in the region e.g. the South China Sea has increased the geopolitical tensions between the US and China. Third, though China is expanding its influences across the oceans, Indo-Pacific remains a significant home turf.

US, EU’s aggressive trade push

The US and the European Union, to check substantial trade imbalances and reduce the growing politico-economic clout of the Chinese over Asia and Africa, are now aggressively pushing their trade and investment interests. From human rights violations in Xinjiang (the autonomous Xinjiang Uygur Autonomous Region) to flouting of labor laws in Chinese factories and violation of intellectual property rights by the Chinese companies, the West is pugnaciously linking economic to socio-political dimensions in trade to checkmate China.

In 2019, the US Department of State officially stated that the US “is and always will be an Indo-Pacific nation … nations (around Indo-Pacific) face unprecedented challenges to their sovereignty, prosperity, and peace”. Eyeing the Indo-Pacific, in 2019 the US, alongside Japan and Australia, launched the Blue Dot Network (BDN) as a counter to China’s ambitious Belt and Road Initiative (BRI) – a global infrastructure development and connectivity corridor envisaged by Beijing.

The BDN is also seen as a touchstone for assessing whether a project is sustainable and not exploitative, thus promoting market-driven, transparent, and financially sustainable infrastructure projects. It does not provide public funds or loans for infrastructure development like the BRI.

Instead of countering the mammoth quantitative investments of the BRI, BDN seeks to gauge the quality of investments. Furthermore, the US has passed a law titled Uyghur Forced Labor Prevention Act to ban all imports of goods manufactured in China’s Xinjiang province citing human rights abuses against the Muslim Uyghur community.

As Chinese state-owned enterprises (SOEs) play a predominant role in trade and investments, the proposed Comprehensive Agreement on Investment (CAI) between China and EU intends to create a level playing field for EU investors by “laying down very clear rules on Chinese state-owned enterprises, transparency of subsidies, and prohibiting forced technology transfers and other distortive practices” as per the European Commission.

The EU leadership, has, however, laid down conditions related to climate change, political imbroglio in Hong Kong and human rights violations in Xinjiang province before the promulgation of the CAI.

Diversification of Chinese imports

Faced with stubborn opposition from the EU and the US, the Indo-Pacific region has become of paramount importance to China in diversifying its imports, given its expanding domestic economy and the need to sustain its transcontinental multi-trillion-dollar BRI.

The Communist Party of China (CPC) Central Committee’s development proposal on the long-term objectives, popularly known as the Vision 2035, aims to develop megacities that will help foster more robust regional trade and investment partnerships with ASEAN and developing economies the world.

The main products that the United States exported to China, for instance, in 2019, are electrical machinery and appliances, vehicles and aviation equipment, which form approximately 40 percent of the total share of Chinese imports from the US. China plans to reduce this dependency on the US through the China Vision 2035 centering around “new industrialization, IT application (and) urbanization”.

China’s indigenously developed Comac C919 (though with imported engines), a narrow-body aircraft, is touted as a competition to most popular aircrafts American’s Boeing 737 and Europe’s Airbus 320. COMAC’s C919 plane has already received 1000 provisional orders primarily from Chinese airliners, with Chinese flyers almost likely to triple over the next two decades. With governments around the globe aggressively pushing for Electric Vehicles (EV), China tops the charts as it produces 44 percent of all the EVs manufactured globally. However, Europe still leads in sales followed by China.

In 2018, the General Office of the State Council of China forwarded the notice of the Ministry of Commerce and other departments issuing new import guidelines to “actively” explore the import resources of countries along the BRI. The departments were directed to actively pursue the expansion of imports through the diversification of sources.

According to the World Bank and the United Nations Conference on Trade and Development (UNCTAD) data on imports by China, the imports from the US are witnessing a constant decline. From 8.51 percent in 2016, it fell to 5.96 percent in 2019, with a marginal increase to 6.6 percent in 2020.

However, imports from East Asia and the Pacific saw a steep jump from 38.7 percent in 2016 to 45.2 percent in 2017, 43.8 percent in 2018, and a marginal decrease at 42.3 percent in 2020. According to China’s General Administration of Customs (GAC), the total trade from 2014-2019 between China and BRI member countries has registered an annual growth rate of 6.1 percent, making it the biggest trading partner with 25 BRI countries. The total trade stood at the mammoth USD 1.34 trillion in 2019. 

Caution for India

Interestingly, the US and China are the top two trading partners of India, respectively. Despite the geopolitical standoff and anti-China rhetoric, Sino-Indian trade continues to soar by more than 70 percent year-on-year to over USD 48 billion in the first five months of 2021.

India ought to tread cautiously in aligning with the US as a counterweight to China. Given its intensive trade with the two antagonistic global players, India must chalk out a strategy so that it does not hurt itself economically.

Beijing has made a new move to counter the increasing influence of the US and India with a possibility of CRIP (China, Russia, Iran and Pakistan) - a de facto emerging strategic alliance of authoritarian regimes - as a counter to the QUAD (Quadrilateral Security Dialogue comprising India, the US, Australia and Japan) that aims to ensure a free and open Indo-Pacific.

With the presence of a host of multilateral organizations coupled with the activities of global powers, the Indo-Pacific is emerging as a region with complex power dynamics as opposed to a traditional multi-polar world where different actors struggle to preserve and extend their spheres of influence.

(The writer is pursuing Ph.D. from Jawaharlal Nehru University (JNU), New Delhi. The views expressed are personal. He can be contacted on Twitter @MayankMisshra)

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