Rajdeep Sardesai Hosts Debate: Has India Took A U-Turn On China? | India-China Ties | West Asia War

0:00 I want to start with you, Brahma, for a moment because you've often said that China should be seen as India's biggest security concern. But now as the war in West Asia escalates, we've just seen the Union Cabinet ease investment rules for Chinese companies in terms of FDI. Do you see a connection that India is now trying to de-risk itself from putting all its eggs in a way in the Western basket, particularly in the US basket, and look at China as a potential economic partner? This shift began much before Trump's Iran war. It's OK to improve relations with China, but what is not OK is to make abrupt reversals in policy

0:49 without any debate. India's China policy should be guided by a cleared-eyed strategic mission. Excessive personalization of foreign policy or abrupt policy reversals cannot safeguard, let alone advance India's long-term interests. From Nero to Modi, we have seen repeated reversals in China policy. Now, under the present government led by Modi, India's China policy has undergone two major U-turns in 2020 After we discovered China's stealth territorial encroachments in eastern Ladakh, India's stance completely changed. India restricted Chinese investments, banned apps, tightened procurement rules, and called for reducing economic dependence on China. Now, a second U-turn is underway.

1:39 It began last year. Those same restrictions that were imposed in 2020 are quietly being dismantled without any public debate. India's China policy, under the same government, has moved from engagement to confrontation and now back towards accommodation all within a span of five to six years. And I think it raises several key things. First, India had pledged, the present government had pledged that relations with China cannot normalize until the border normalizes. This was said not once, not twice, but multiple times. What we are seeing now is the opposite.

2:27 Economic normalization, despite the border situation not being normal. The second is the strategic contradiction. India is trying to balance China geopolitically while becoming more and more dependent on China economically. How can this contradiction hold indefinitely? But the most important point is that allowing deeper Chinese penetration of key sectors, whether it's power grids or EV infrastructure, increases China's potential leverage over Indian policy decisions. Economic integration with China is never purely economic. It carries geopolitical implications.

3:15 And we have seen a reason why we need to be cautious. China has repeatedly used trade and economic leverage as geopolitical tools against other countries, whether it's Australia, South Korea, Mongolia, or even tiny Lithuania. China has never hesitated to use its economic leverage as geopolitical weapons. India cannot assume that economic interdependence will remain purely economic. I've taken your point, but significantly you're saying this predates Trump's war in Iran. Kavul Sibyl, you want to respond to that, the contradictions that are now emerging. We at one level have been pushing for a trade deal with America. Now we don't know

4:00 the status of that given the war that's taking place. That's clearly in pause button. But Ibramah Chalani is right. We seem to be cozying up to the Chinese for some economic partnership, but as he says, There are strategic concerns that will be also involved. We have not fully resolved our border issue. We've gone ahead. Do you see this as de-risking this new multi-alignment that we are striking various relationships with different countries independent of each other? Well, Brahma has a point, but I think the situation is a little more complex. As he himself said quite rightly, that the opening towards some... enhanced economic ties with China began to be voiced, to be supported

4:47 before this war with Iran and our problems with Trump. As you know, the economic advisor in his last year's report on the state of the Indian economy very strongly supported opening up towards China. At that time, it was still fluid. The government still was not supporting the economic advisor's view, but he's been repeating this view Number two, our... But isn't that a huge shift from five years ago when we were banning TikTok, when we were threatening to boycott Chinese companies? Have we gone too far to the other side? Look, our bilateral trade with China is $130 billion. And in fact, even the deficit is $100 billion. No country has been able

5:34 to de-risk itself completely from dependence on China. even the United States, despite its policies. Every country, including Europe, they are smarting under the fact that they can't delink themselves from China, but yet they have no option. Similarly, India is also dependent on China for many of the intermediate goods which are very necessary for our own exports, because China has become the manufacturing hub of the world. You just cannot delink yourself from it. And now, in fact, nobody is talking about decoupling. You know, this is not part of the narrative. Then our medium and small enterprises have been complaining that they need vital inputs from China because they are the only ones who can supply these provisions at cheaper prices. But the process of giving permissions is very slow.

6:23 And then there are those who are saying, that when foreign investors want to come into India, we are going very minutely into the details of who the beneficiaries are and what is the component of Chinese money in that. And this process is very dilatory, takes a long time, and this is impeding investments by non-Chinese investors. but who have in their portfolio money from China, it's impeding their investment in India. And currently we are seeing that not enough FDI is coming. So we have made some partial opening to China, only 10%. And that hedged with so many other conditions. But in a way, this could be called strategic realism. Michael Kugelman, all of this is of course happening at a time when the war shows no signs of ending.

7:11 And there's a fear that if the war continues longer, it will affect countries across the world, including India, a ballooning oil bill, possibly, that could affect the economy. And therefore, we need, in a way, to reach out to the Chinese. Are you seeing all of these? Do you see connections here between what's happening in West Asia, between India's reach out to China? Or do you believe that's completely independent of each other? I think that India is being very pragmatic, and this reflects a common trend in its foreign policy. What I would describe as a strategic pragmatism. I agree with what Brahma and Ambassador Sybil said, that we need to look at the broader context, that we saw India begin its modest rapprochement

8:00 with China not only well before the war on Iran began, but also well before the Trump administration began imposing high tariffs on India. And in fact, one could argue that the India-China rapprochement began even before Trump was re-elected, right? Back in October of 2024, there was a border deal signed between India and China, and a few months after that, there was the initial pledge to begin looking toward resuming direct flights between the two countries. So there is a broader context. But I do think that the Trump factor Setting aside the war on Iran, the Trump factor has strengthened the incentives for New Delhi to accelerate efforts to ease its tensions with China. But I do not agree with some of the commentaries that I've seen in recent months that the Trump factor has essentially driven India back into the arms

8:49 of China. I don't agree with that at all. But that said, turning to the war, no, absolutely. We know that Iran's neighbors and India and its neighbors are all impacted in many ways by this war, and that's certainly one could highlight the issue of energy insecurity, but also broader economic insecurity. So I think it makes perfect sense, it's pragmatic for India to intensify efforts to strengthen what is already a fairly robust commercial relationship with China. Final point I'll make, it was quite some time ago when the Indian economic advisor when the chief advisor to the prime minister on the economy had argued for India to loosen restrictions on new Chinese FDI into India. It didn't move forward back at that point, but we see now when the incentives are stronger that India has actually followed through in that regard. Because I, and

9:38 I'll play this graphic during the show. The fact is that if I look at South Asia, just look at Brahma, how South Asia is playing out in the aftermath while the Gulf War is on. Pakistan finds itself in a bit of a bind because they've got a defense pact that they've signed with the Saudis. They share a large border with Iran. That defense pact means that they are supposed to come in a way to support the Saudis should Saudi Arabia be attacked. They've therefore got a difficult relationship at the moment to deal with. And India, on the other hand, faces the problem of of over-dependence particularly on oil, on LPG that comes through the Strait of Hormuz, for example, and that is already affecting potentially oil supply to this country. So the war is now affecting South Asia in different

10:28 ways. Therefore, each country now needs to take what Michael Kugelman calls strategic pragmatism. Let's see this as strategic pragmatism. India possibly sees China as some kind of a bulwark that we need to work with, as opposed to putting, as I earlier said, all our attention on the United States? You're asking me? Yes, go ahead. Is that a question? Well, yes, economic pragmatism with China is good, but it shouldn't come at the cost of India's strategic interests. India cannot confront China strategically while becoming more dependent on it economically.

11:14 China's trade surplus with India now vastly exceeds India's total annual defense budget. It is 50 percent higher. This is not just an economic statistic. It is a strategic vulnerability for India. The real question is simple. Can India compete strategically with China while simultaneously keeping economic dependence on it? That's the key question. And I think we don't debate that question. We talk about the global situation, Trump's erratic ways as justification for what India is doing. But also we have to keep in mind that since 2020, when China made

12:02 these stealth land grabs in eastern Ladakh, these were the biggest land grabs by China since the 1962 war. Since 2020, China has fundamentally changed the military landscape in the Himalayas. It has built permanent military infrastructure. It has completely changed the situation to India's disadvantage. And before long, it will bring another surprise on India. So let's not You know, we have the same debate in India every few years. Whenever China springs a surprise on India, military surprise on India, we have the same debate. We go over the same points, but the next surprise will be coming despite this latest new turn by the Modi government. You

12:52 know, can I for a moment, Kapil Sibal, just take you back to six months ago, Operation Sindhur, where China was seen to have completely fused its military with the Pakistani military. And the Pakistanis used that to target India. All of that seems to have changed so dramatically in six months. As Brahma Chalani is saying, it's one thing to be economically pragmatic with the Chinese, but are we aware of our strategic realities on the ground when dealing with China? Well, you know, we've been engaged in dialogue with China at the military level, at the diplomatic level, at the SR level. All these talks have been resumed. There has been some progress in the ground. in terms of defusing the situation, not sufficiently, but some

13:38 progress. Prime Minister has visited Beijing and met Xi Jinping. Some new directions have been given. It is a rerun of the whole situation, but nevertheless, the effort is to try and defuse tensions as much as possible and stabilize the situation. Now, the problem is... Is it a U-turn? Is it a U-turn? Brahma calls it a U-turn. Would you call it a U-turn or not? No, I don't want to debate with Brahma because he has some valid points to make. No, no, no. I'm asking you, sir, former foreign secretary, is it a U-turn? Have we done a U-turn? It's not a U-turn at all. In what way? In what way? A country, as I said, which we wanted an economic boycott, which we boycott, forget about anything else, even TikTok, which we said... was fused with the Pakistani military just

14:25 six months ago in a war against India, suddenly we seem to now be willing to give concessions to Chinese companies. Well, do you know why General Kurela or Admiral or whatever he was, the head of CENTCOM, why was he honored by the field, Marshal Munir? Have you ever thought about it? What was the reason? This happened after Operation Sindhu. What was the reason, you think? I don't think we should gloss over the fact that they didn't receive intelligence about India, massing troops, especially its naval assets, which were about to strike Pakistan. Who gave that information? The Chinese don't have that kind of capacity to follow the movements of maritime... So you're saying the Americans did? Yes. I mean, there's a suspicion that they did.

15:11 Otherwise, why was he given this very big honour? And then Field Marshal Munir went all the way, actually, when he received that cross or whatever he got. honor he got from the United States also. Okay. So I don't think we should simplify matters, but you're right. There was a Chinese hand. What was the degree of Chinese hand is a bit uncertain. Okay. Can I just pivot for a moment, Michael Kugelman, to look at Iran more specifically? After the initial period where India seemed to distance itself or stayed silent on the aggression in Iran. In the last few days, the foreign minister has repeatedly spoken to the Iranian foreign minister. Are you seeing that India recognizes that we need to play a much more balanced, nuanced role, that we

15:57 need in a way to find a way to also reach out to Iran, given that Pakistan, for example, is finding itself in an extremely problematic relationship with Tehran. India needs to play a much more balancing role here. Right, and balancing would, of course, reflect India's foreign policy when it comes to strategic autonomy or whatever you want to call it. But it's tough. I mean, India's in a tough spot because we see how important India's relationship with Israel has become over the last few years. And as we know, the prime minister was in Israel just a few days before the Israeli and the U.S. strikes on Iran began. And I would argue that, among other reasons, Operation Sindor and its impact and its consequences have made India India's

16:42 relationship with Israel all the more important because one of the big focus areas of India-Israel relations right now is on defense cooperation, including air defense systems, which I understand India is looking to acquire from Israel. So that's tough, but absolutely, I mean, we know that given how volatile and potentially explosive this conflict is and given how much India could be impacted, for so many reasons, mainly based on energy equities and of course the several million Indians in the GCC region and the Middle East on the whole. India has to be very careful about its messages itself on this war. But you look at India's foreign relations, it's got very close relations with Israel, it has very close relations with the Saudis, with most of the GCC

17:28 states, but its relations with Iran, even though they've, I think, pulled back over the last few years, particularly since India stopped acquiring, mainly stopped importing Iranian oil in big measure, It's still an important and a friendly relationship. So yeah, I would agree with you that India, it's very difficult, and this is where its diplomatic balancing act will really have to show that it's capable of carrying out these balancing acts. But it's something that it really will need to perfect in this case, just how delicate and potentially explosive this whole scenario is with the conflict. I think you've used a word, delicate balancing act in these explosive times. And we are seeing that balancing act now playing in different ways, in different parts of the world. The latest buzzword is a multi-aligned world. And we're trying to cope up with the

18:16 realities of this multi-aligned world. Michael Kugelman, Kaval Sibbal, and Brahma Chilani, thank you very much for joining me here on my Talking Point tonight.