Chinese Takeaway: Border Paradox

As it looks at the southwestern frontiers with India and its neighbours in the subcontinent, China stares at a paradox. China has ambitious plans to develop mega trans-border projects with Myanmar in the east and Pakistan in the west. China has already built a twin pipeline system running from Myanmar’s Bay of Bengal coast to the Yunnan province. It is now ready to pour massive resources into the development of a Pakistan-China economic corridor. China has long seen Myanmar and Pakistan as gateways to the Indian Ocean.

Beijing has a settled boundary with Myanmar and has no arguments with Pakistan about their frontier. But political turbulence has made China’s borders with Myanmar and Pakistan increasingly insecure. Despite anxieties on frequent incursions across the disputed portions of the Sino-Indian border, there is no violence on the undemarcated Line of Actual Control that separates Indian and Chinese forces in the Himalayas. Yet, there has been no serious effort to change the economic nature of the Sino-Indian frontier.

In India’s east, the ongoing war between Yangon and ethnic Chinese rebels, called the Kokang, in northern Myanmar has spilled over into the bordering Yunnan province in China. Earlier this month, the two sides agreed to jointly investigate an incident in which Myanmarese bombs fell on the Chinese side of the border, killing a few farmers. This has put Beijing in a dilemma. Beijing can’t appear to be soft in the face of presumed violations of its territorial sovereignty. Chinese leaders also can’t be seen as doing nothing when ethnic Chinese groups are a target of state violence. At the same time, a muscular response will inflame nationalism in Myanmar and make matters worse. It will add Myanmar to the list of Asian countries, including Japan, the Philippines and Vietnam, which have deepening border disputes with China. Beijing had tried in the past to mediate between the Myanmar government and the Kokang.

To our west, China is troubled by the deepening turbulence in Afghanistan and Pakistan, and its impact on the stability of the Xinjiang province, where Muslim Uighurs have become increasingly restive. In order to secure its southwestern frontiers, China is expanding its involvement in the Afghan peace process. It is trying to facilitate a dialogue between the Afghan government and the Taliban, and promote reconciliation between Kabul and Rawalpindi.But Myanmar does not see China as a neutral party and believes there is considerable support from across the Chinese border to the Kokang.

Many analysts around the world believe that Beijing is in a much better position than Washington to nudge all parties towards peace in Afghanistan, given its special relationship with Pakistan — often described as “higher than the Himalayas and deeper than the Indian Ocean”. Others are not so certain. They see the Pakistan army using China to promote Rawalpindi’s interests across the Durand Line, rather than China’s. Put simply, China could merely end up replacing America as Rawalpindi’s new sucker in Afghanistan.

Money and Love
Recent developments in Myanmar and Sri Lanka have undermined the proposition that China can buy political love in the subcontinent by simply investing large sums of money in mega infrastructure projects. It has been conventional wisdom for a while that China is the closest external partner to Yangon and Colombo. But internal political change in both countries has put some key Chinese projects on hold. Uncertainty in Beijing’s bilateral political relations with Yangon and Colombo has inevitably followed.

More broadly, China’s cheque-book diplomacy and project-building in distant lands have come under stress as many of its partners — from Ukraine to Venezuela and Ecuador to Argentina — drift into financial straits and find themselves unable to repay loans. Meanwhile, others in Sri Lanka have questioned the terms and viability of Chinese-supported projects.

Massive hard currency reserves and excess industrial capacity at home, it appeared, had put Beijing in a powerful position to take up ambitious infrastructure projects beyond its borders. But politics and economics continue to complicate the translation of Chinese assets into concrete outcomes.

India Option
As New Delhi and Beijing seek a productive economic agenda for Prime Minister Narendra Modi’s visit to China in May, there is no way of missing the fit between China’s capacities and India’s infrastructure needs, both at home and across borders. While China has been seeking India’s support for its Silk Road initiatives, Delhi has been reluctant to get on board. Modi, however, has signalled a more open approach to economic engagement with China.

Unlike many other countries where China is making risky investments, Delhi is a more credible long-term economic partner for Beijing. If China is ready for a genuine consultative approach with India and is willing to facilitate serious tie-ups between companies in both countries, Modi should embrace President Xi Jinping’s Silk Road initiative.