India and China Step Back From the Brink—for Now

Welcome to Foreign Policy’s South Asia Brief, the weekly newsletter that keeps you up to date on a region that is home to one-fourth of humanity. Today: India and China try to ease tensions after a deadly skirmish, Nepal approves a new map including land controlled by India, and coronavirus cases tick ominously higher.

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Top diplomats in New Delhi and Beijing are signaling a desire to calm tensions after a deadly skirmish between Indian and Chinese soldiers in the Ladakh border region on Monday. The two countries’ foreign ministers held a call on Wednesday and reached an agreement that “neither side would take any action to escalate matters and instead ensure peace and tranquility.”

The question is whether that message trickles down clearly enough to the restive troops stationed on either side of the disputed border.

Gory details have emerged of the high-altitude clash between Indian and Chinese soldiers. According to one image circulated on social media, Chinese forces allegedly used iron rods studded with nails to beat their Indian counterparts. Both sides refrained from using firearms, in part because of a 1996 agreement prohibiting the use of guns in the disputed area. Remarkably, as Indian Foreign Minister S. Jaishankar pointed out, India’s troops were carrying arms—they just didn’t use them, despite the nature of the fighting.

India has confirmed the deaths of 20 soldiers, the first combat fatalities on the disputed border since 1975, but China has remained silent. As FP’s James Palmer writes in China Brief, this may be because “Beijing wants to keep its options open—and it doesn’t want to be trapped by public opinion calling for escalation.” No such luck for India, where the media is calling for a stronger response, as James and I explained earlier this week.

Asymmetric powers? It is conventional wisdom, as this newsletter has pointed out, that China has become a bigger global power than India. While the two countries had similarly sized economies in 1975—when they last marked combat deaths—today China’s GDP is five times that of India. Beijing also spends four times as much as New Delhi on defense. But does that really mean the countries are asymmetrically matched on a hypothetical battlefield?

According to a March report from Harvard University’s Belfer Center for Science and International Affairs, India has 270 fighter jets compared to China’s 157, which along with the positioning of their respective air bases gives New Delhi the advantage of a “stronger regional air position.” And China’s “combat proficiency may be significantly weaker than often estimated” because of an overdependence on ground commands, the report adds.

There may be a similar dynamic regarding ground troops. Both countries have between 200,000 and 250,000 soldiers in the border regions, but India’s troops have more direct experience with war—albeit mostly in small skirmishes. China’s army has not experienced combat since 1979, when it fought with Vietnam. Soldiers who saw active duty back then are now in their 60s.

So the two countries may be more evenly matched than is commonly believed. That might be some source of comfort if it leads to deterrence, because it is up to New Delhi and Beijing to de-escalate on their own. It’s difficult to imagine the United States or the United Nations mediating between the two nuclear powers.

Meanwhile, New Delhi and Beijing are encircling each other. India has grown its ties with the Quad—a loose military alliance with the United States, Japan, and Australia—while China has poured resources into Pakistan, Sri Lanka, and Nepal, building important new friendships on the subcontinent.

Watch out for the trade impact. India is planning to raise import duties on about 300 products from China, according to government documents seen by Reuters. The plan, under review since April, will affect imports worth as much as $10 billion. Trade between the two countries amounted to $88 billion last year. Economics may be the next frontier of tensions between the two countries—and New Delhi will find willing participants among its citizens, given growing nationalism.

Coronavirus cases are rising across South Asia, where lockdowns have largely been lifted. India recorded 12,881 new infections on Thursday. It has also seen a sharp rise in the number of deaths in recent days, with Mumbai blaming accounting “discrepancies” for a sudden revision to its numbers. Meanwhile in Nepal, hundreds of people gathered in Kathmandu to protest against the government’s pandemic response. The police arrested 10 people, including seven foreigners.

As shown below, India is still behind Russia, Brazil, and the United States in terms of total coronavirus cases, but it will likely rise higher over the summer. Pakistan and Bangladesh are not far from breaking into the top 10.

Bangladeshi officials recently reported a 25 percent year-on-year decline in remittances from citizens working abroad. The World Bank expects a similar decline for the full year.

That brings me to my question this week: What percentage of Bangladesh’s GDP comes from remittances?

A) 2 percent
B) 7 percent
C) 12 percent
D) 25 percent

Scroll down for the answer. 

Nepal’s new map. As if border clashes with China were not enough, India now has to contend with Nepal, whose parliament approved a new map on Thursday that includes land controlled by India. The dispute came to the fore last month after India opened a new road along its border with Tibet. Nepal says about 12 miles of the road passes through its territory, an assessment India disagrees with.

Beijing likely has an indirect role in the matter: When he visited in October 2019, Xi Jinping became the first Chinese president to go to Nepal in two decades.

Afghan peace talks. The so-called intra-Afghan dialogue—the proposed peace talks between Afghanistan’s government and the Taliban—may begin soon after the two sides agreed on Doha, Qatar, as the venue for talks. If the negotiations go ahead, it will be the first official meeting between the leaders of the two sides in years. But violence continues to stalk Afghanistan. On Friday, a blast at a Kabul mosque killed four people. No group has claimed responsibility.

Pakistan’s budget. The coronavirus pandemic has cost the Pakistani economy $300 billion in losses, according to the country’s Minister for Industries and Production. But at the presentation of its annual budget last Friday, the government of Prime Minister Imran Khan presented a rosy outlook, predicting the economy would expand by 2.1 percent in the next fiscal year. The World Bank projects Pakistan’s economy will contract.

Jio’s $1.5 billion cash infusion. Now it’s Saudi Arabia’s turn to get in on the action. The country’s Public Investment Fund bought a $1.5 billion stake in India’s Jio Platforms, the digital services business run by the billionaire Mukesh Ambani’s Reliance Industries. The Saudi fund joins Gulf entities such as the Abu Dhabi Investment Authority and Mubadala, as well as U.S. private equity firms and Facebook, in investing in India’s digital future.

Jio has raised $15 billion since the start of the pandemic, cushioning a blow to its traditional business in energy.

B) 7 percent.

According to the World Economic Forum, about 10 million Bangladeshis living abroad sent nearly $18 billion home in 2019, often in amounts ranging between $300 and $600 a month. A 25 percent decline in these remittances—because of pandemic-related income losses—will have a significant impact on families that rely on the deposits. And it will likely have an adverse secondary effect on overall economic activity.

That’s it for this week.

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