Introduction
China’s relations with South Asian countries are generally portrayed as very good. In the same breath, it is also mentioned that India is losing its influence in these countries to China. Both statements may not portray the real situation. China follows a foreign policy of Friendly Neighbourhood. India follows a foreign policy of Neighbourhood First. From these it is clear that both China and India give more importance to countries in their neighbourhood. Therefore, there will also be competition between them to gain influence in these countries. Nepal, Bhutan and Myanmar have boundaries with both India and China. Pakistan which is a neighbour of India has also a border with China through Indian territory that it occupied in 1947-48. Bangladesh, Sri Lanka and Maldives are neighbours of India and China has an interest in them for access to Bay of Bengal and the Indian Ocean. So, when one looks at China in South Asia it is also imperative to analyse South Asian countries’ relations with India. Aim of this paper is to analyse China–South Asia relations.
It is proposed to study each South Asian country’s relations with China in three dimensions. That is, the views from these countries, China’s and India’s relations with each country and then deduce how China’s relations with South Asian countries are likely to go forward in future.
China-Nepal Relations
China has had good relations with Nepal right from the visits of Buddhabhadra, a monk and scholar in fifth century AD from Nepal and Fa Xian (Jin Dynasty) and Xuan Zang (Tang Dynasty) from China.[1] Nepal’s relations with India are also longstanding. The relationship between India and Nepal is termed as “roti beti” (bread and daughter) relationship.[2] This is because most of the trade and important items for Nepal goes from India to provide food and business opportunities. There have been lot of marital ties between Nepalese and Indians. Many in the upper echelons of the society in Nepal have been married to Indians. Hence the beti relationship.
A change in this relationship started with the growth of China and the monarchy giving way to democracy in Nepal. China’s investments in Nepal slowly started increasing. There has been an anti-India sentiment in Nepal post the monarchy. That got aggravated due to the perceived Indian blockade of Nepal in 2015.[3] The blockade was done by Madhesis who felt aggrieved that the new constitution of Nepal has not catered to their expectations. What is not generally known outside Nepal or highlighted is that Biratnagar route to Nepal remained open during that incident. Politically, this agitation by Madhesis affected the bilateral relationship between India and Nepal thus paving the way for a further closer relationship between China and Nepal.
Nepal started moving closer to China immediately after the communists came to power.[4] However, China’s influence has seen periods of waxing and waning. In order to bring the communists to power, former ambassador of China to Nepal Ms Hou Yanqi tried to get the various factions to come together.[5] Nepal joined the One Belt One Road (OBOR) Initiative in 2017. Even though nine projects are listed under OBOR, not even one has been completed so far.[6] There have been many Chinese delegations that have tried to push the OBOR forward. But the Nepal Government has conveyed to them that it will be interested in the projects only if China gives grants and not loans. In contrast, India and Nepal seem to be focusing on pragmatic considerations and working together to enhance cooperation in connectivity and economic integration.[7] India has completed a pipeline that facilitates supply of oil to Nepal from India. Recent purchase of power agreement between India and Nepal will benefit both countries.
In order to get Nepal to its fold, China granted the use of four ports in its Eastern seaboard.[8] However, there has been no trade from Nepal that has used these ports as it is cost prohibitive. Moreover, China closing the Integrated Check Posts in Tatopani and Rasuwagadi for three years due to Covid has not gone down well with the traders from Nepal. In an interaction with this author during his visit to Nepal a year ago, Nepalis conveyed that they are clear in their mind that the trade can take place only through India.
Both China and India have got into boundary issues with Nepal. Due to the Kalapani issue, Nepal published a new map that showed not only Kalapani but also Limpiyadhura in its territory.[9] Recently, Nepal has decided to bring out a new ₹100 note with the new map printed on it.[10] China was not free of intruding into Nepal’s territory. A report leaked to BBC indicated that China has intruded into Nepal territory in Humla District near Boundary Pillar 11.[11]
In the last nine months two military delegations from China have visited Nepal with the aim of resuming the military cooperation that was suspended for three years due to covid restrictions.[12] However, there has been no forward movement from Nepal on restarting the bilateral Sagarmatha exercise. In contrast, India has continued with its military cooperation and training of military personnel from Nepal. India may have to do more in terms of defence cooperation for arms and equipment to Nepal.
Keeping all these in mind, it is clear that China’s influence in Nepal is not overbearing.
Bhutan
Bhutan is the only country in South Asia in which China does not have an embassy. China’s ambassador in India simultaneously looks after China’s interests in Bhutan. China has been trying hard to open an embassy in Thimphu.[13] China and Bhutan do not have military relations either. However, China and Bhutan have a nagging boundary issue. To resolve that, they started a bilateral dialogue in1984. Twenty-five rounds of talks have been conducted so far. Areas where Chinese claims are, were given out by China in 2017.[14] A number of reports have appeared stating that China is encroaching into Bhutanese territory. At least three villages have been built by China in Bhutanese territory.[15] Though these villages are claimed to be part of the Xiao Kang (Moderately Well-off Society) Villages, they can also be used for security and defence purposes. Former Prime Minister of Bhutan, Mr Lotay Tshering, while giving an interview to a European magazine in March 2023 mentioned that the boundary dispute between China and Bhutan can be resolved in one or two meetings and that there were no construction by Chinese in Bhutanese territory.[16] Immediately after that interview, King of Bhutan visited India. One can be sure that the then PM’s statement would have been discussed. Bhutan expects that India will assist in creating the Gelephu City Project that the former has proposed. PM Modi has assured support for the same. Moreover, India also provides budgetary support to Bhutan. In the interim budget presented for 2024-25, Bhutan has been allocated ₹2,398.97 crore (including ₹1,614.36 crore loan).[17] While there seems to be some progress in the boundary talks between Bhutan and China, two things are clear. One, the resolution of the boundary dispute is still sometime away, and it will take a lot of effort by both sides to finalise it. Two, Bhutan will keep India’s interests in mind while reaching an agreement with China.
While the defence relations between China and Bhutan are virtually non-existent, India has very close defence relations. Bhutan armed forces personnel are trained in India and India has a Military Training Team located in Bhutan.
Overall, it can be said that while China is making some progress on the boundary dispute, its influence in Bhutan can be said to be minimal.
Bangladesh
It is a well-known fact that Bangladesh became an independent country with assistance from India in 1971. That bonhomie lasted till the demise of Bangabandhu Sheikh Mujibur Rahman on 15 August 1975. From 1971 to 1975, the relations between China and Bangladesh were not good and China blocked the entry of Bangladesh into the UN during that period. Immediately after the new government came to power, China recognized Bangladesh on 31 August 1975.[18] From that time onwards there has been constant efforts by China to increase her influence in Bangladesh. Before the recent elections there have been reports suggesting that China is wooing Awami League, Bangladesh Nationalist Party, and the Jamiat Ulema e Islam. However, the results of the election indicate that China is still not a major factor in Bangladesh.
Initially the trade between China and Bangladesh was not much. Now, “Bangladesh-China trade is highly lopsided with China exporting goods to Bangladesh worth $22.90 billion against its imports of $677 million”.[19] Even though China has waived of tariffs on 98% of the items that Bangladesh exports to it, Bangladesh has not really been able to benefit from it.
During the visit of Mr Xi Jinping to Bangladesh in 2016, Bangladesh joined the One Belt One Road Initiative. Mr Xi promised an investment of $26 billion to Bangladesh during his visit. However, China in the decade from 2013 – 23 has invested only $7.07 billion. China has released only $4.45 billion for 35 projects under OBOR.[20] However, these figures came into question when the Chinese ambassador to Bangladesh claimed that the Padma River Bridge was a project under One Belt One Road initiative. Immediately the Foreign Ministry of Bangladesh clarified that it was not funded by China under OBOR.[21]
China is the major arms supplier to Bangladesh. In the 2010-19 period, China accounted for 72% of Bangladesh’s total arms imports.[22] Two Ming Class submarines have also been supplied by China. China has also built a submarine base in Pekua. This has given China a presence in Bangladesh for a period of approximately three decades for assistance in spares, training and maintenance. However, all is not well with Chinese equipment. There have been complaints about the performance of Chinese defence equipment from China.[23] However, the first China Bangladesh exercise named Golden Friendship 2024 was to be held in May 2024[24] with the aim, may be, to assure the Bangladesh armed forces about the quality of the Chinese equipment. However, the exercise has still not taken place.
Bangladesh has been cautious about accepting Chinese loans.[25] This seems to be a result of Sri Lanka having to give Hambantota port on 99-year lease to China due to her inability to repay the loans it owed to China. This is also one of the reasons as to why China’s investment in Bangladesh has been less.
Due to the explanations above, it can be seen that China’s influence in Bangladesh is not a given.
Sri Lanka
China—Sri Lanka relations go back to the times of Fa Xian and Admiral Zheng He. However, it really started improving from 1952 with the Rubber Rice agreement between Sri Lanka and China. A number of high-level visits from both sides have stabilised this relationship.[26] China supported Sri Lanka in its Eelam war with supply of small arms and other equipment. Post the Eelam war there have been Chinese companies that have won projects in Sri Lanka. Many of them have not been profitable ones.[27] Of late, China—Sri Lanka relations have been oscillating with change in governments in Sri Lanka. The Rajapaksas favoured China whereas Mr Sirisena initially tried to strike a balance between China and India and later favoured China. With the economic crisis removing the younger Rajapaksa, Gotabaya, from power in Sri Lanka, China’s influence started waning a bit. However, it seems to be getting back on track now.
On the economic front, “As per 2020 statistics, China is the leading import source for 2020 with a share of 22% of Sri Lanka’s total imports, followed closely by India with a share of 19.2%. However, in terms of exports from Sri Lanka, China only accounts for 2.35% of total exports from the island whereas India imports 6.11% of Sri Lanka’s total commodity exports (Trend Economy, 2021). In other words, maintaining amicable relations with India and China is imperative for the continued growth of Sri Lanka’s foreign trade”.[28] In 2023, China is the 10th export and 2nd import destination for Sri Lanka. The total export value from Sri Lanka to China was $257.73 million in 2023 and total imports from China to Sri Lanka for the same period were $3089.55 million.[29] China and Sri Lanka have been negotiating a Free Trade Agreement (FTA) from 2014. The FTA is primarily not progressing because China is not yielding on three issues: tariff list, level of liberalisation, and a review process. They recently resumed talks on the same as China seems to be showing some flexibility.[30] However, there have been issues that brought some negativity in the economic relationship between these two countries. First one was the Hambantota Port. Hambantota Port was given to China on a 99-year lease in exchange for $1.12 billion which was used to replenish the dwindling foreign exchange reserves of Sri Lanka. However, the five loans given by China for the construction of the Hambantota Port are still to be paid by Sri Lanka. This is seen as a debt trap orchestrated by China to get Sri Lanka into its fold. However, many Sri Lankans feel that it was their government that did not do due diligence and China is not to be blamed for the present state of Sri Lanka.[31] Second, is the fact that China did not come to the help of Sri Lanka, when Sri Lanka was going through a financial crisis in 2022. In contrast, India provided assistance to the tune of approximately $4 billion. However, later China agreed to reschedule her loans so that IMF can lend $3 billion. China’s version of the assistance to Sri Lanka during the financial crisis is that “China provided emergency humanitarian assistance to Sri Lanka and played an important and active role in the subsequent debt restructuring process, helping Sri Lanka to ease its financial difficulties and achieve debt sustainability”.[32] Presently, both India and China have agreed to reschedule the dues from Sri Lanka paving the way for the IMF bailout.
Militarily, China has been supplying equipment to Sri Lanka. It also operates a small arms warehouse facility in Sri Lanka. In the five years from 2019 to 2023 China supplied arms and equipment worth approximately $3.2 million to Sri Lanka.[33] There have been apprehensions about the Hambantota port becoming a naval base of China. This is because of Chinese naval and research vessels docking frequently into that port. However, Sri Lanka’s defence minister has ruled it out.[34] To cater for India’s sensitivities, Sri Lanka has prohibited the visits by foreign military (including Chinese) ships for a year. India also has very good defence relations with Sri Lanka. Hundreds of officers and men of Sri Lanka’s armed forces are trained in India.
Sri Lanka has been playing the balancing game between India and China. There have been periods where Sri Lanka seemed to be pro-China. That was due to the assistance it received for the Eelam war, political elite capturing and credit driven investment in infrastructure.[35] Many of the infrastructure projects have not been profitable.[36] However, China’s inability to bail out Sri Lanka quickly during the financial crisis of 2022 has cast some shadow in this relationship. Sri Lanka also realises that it needs to cater for India’s sensitivities. Therefore, it is likely to seek a balance in its relationship with both the countries. This is aptly depicted by the figure given below:
Historical records show that Maldives and China were having diplomatic and trade relations from 7th century CE. The present-day relations started with the establishment of diplomatic relations in 1972. Chinese embassy in Maldives was opened on 20 August 2007.[38] In comparison, India recognised Maldives after it attained independence in 1965 and established diplomatic relations with it 1972.[39] Ever since, the relations between the two countries have been improving. India has been the first responder to Maldives’ requirements during the coup attempt in 1988, after Tsunami in 2004, drinking water crisis in 2014, Measles break out in Maldives in 2020 and Covid 19.[40]
China started investing in Maldives after it established diplomatic relations in 2007 and thereafter there has been a balancing of relations by Maldives between India and China. While President Nasheed seemed to favour India, Mr Abdullah Yameen who succeeded him clearly favoured China. During Mr Solih’s regime, the pendulum moved towards India and now with Mr Muizzu in power, it seems to be shifting back towards China. Mr Muizzu’s first state visit to China which resulted in signing of 20 agreements is indicative of this. Moreover, he also decided not to renew the hydrological survey agreement with India. However, Maldives realises that India will always be the first responder in terms of its need and therefore cannot be wished away. While the President of Maldives seems to have achieved one of his election manifestos of removing Indian military personnel who were posted to man the air assets placed there, the number of high-level delegations that have visited India from Maldives reveals the importance of this bilateral relationship. Recent visit of Maldives Foreign Minister to India saw India extending the budgetary support to Maldives of $50 million for another year by rolling over the Treasury Bills.[41] India also allocated ₹600 crore as grant to Maldives which is 50% more than last year’s budget estimates.[42]
Tourism is the main stay of Maldives’ economy. Indians are the largest number of tourists to Maldives. Due to derogatory statements made about Mr Modi by some Maldives politicians, the number of Indian tourists visiting Maldives has reduced by 40%. In terms of exports and imports the data in the table below[43] reveals that the FTA signed by Maldives with China[44] will only favour China. The FTA is yet to be ratified by the Parliament of Maldives.
India and Maldives have had good defence relations with a number of Maldives National Defence Force personnel getting trained in Indian defence training institutions. With the signing of the defence agreement between Maldives and China in March 2024, they may also be trained in China. In addition, China will be supplying non-lethal defence equipment to Maldives.[45]
People of Maldives rely mainly on India for medical treatment. Nearly 61% of the Maldives people travelling for medical assistance come to India.[46] China is nowhere in the list of countries where Maldives people go for medical treatment.
Therefore, however much government of Maldives may want to swing away from India, it is really not feasible for it to do so.
Pakistan
China Pakistan relationship is “higher than the mountains and deeper than the ocean”, said Mr Li Keqiang, then Premier of China on 13 May 2013.[47] However, the press in Pakistan has been critical of China Pakistan Economic Corridor (CPEC).[48] Pakistan has kept quiet on the Xinjiang issue because of China’s assistance to it.[49] There have been protests in Pakistan against the CPEC.[50] There have been attacks on Chinese engineers and workers in Pakistan.[51] Uighur wives of Pakistan men were detained in China.[52] Sindh province saw protests against the CPEC and forced disappearances.[53] Delay in bailing out of Pakistan in its debt crisis by China was a matter of discussion in Pakistan.[54] A similar thing happened in 2022 also. However, China bailed Pakistan out later on both the occasions. China has not supported Pakistan in its conflict with Afghanistan.[55] The list can go on. Therefore, even the so called “iron clad” relationship between China and Pakistan has rusty patches.
India in South Asia
India follows a foreign policy of neighbourhood first. “India’s ‘Neighbourhood First policy’ guides its approach towards the management of relations with countries in its immediate neighbourhood, that is, Afghanistan, Bangladesh, Bhutan, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka. The Neighbourhood First policy, inter alia, is aimed at enhancing physical, digital and people to people connectivity across the region, as well as augmenting trade and commerce”.[56]
To substantiate this, India has increased her assistance to the countries in her neighbourhood less Pakistan in terms of Lines of Credit, loans and grants. In eight years preceding 2022 India’s soft loans to her neighbourhood had increased from $3 billion to $15 billion. Mr Shringla, former foreign secretary in a conference in 2022 said that “Our trade with our neighbours has increased by almost 50% in the last few years. Today, Bangladesh is our fifth largest trading partner and Nepal is emerging as our tenth largest”.[57] So India seems to be doing what it needs to do for its neighbourhood, albeit within the constraints that it has financially. In addition, India has also maintained good political relations with most of the South Asian Countries, its relations with Maldives notwithstanding. Her defence relations with all the South Asian Neighbours barring Pakistan are very good.
Conclusion
From the deliberations above, it can be clearly seen that relations between China and South Asian countries including Pakistan cannot be said as overwhelming. At the same time, India cannot be said to be losing out on its relations with her neighbours. Most of the narratives that say that India is losing out to China in her neighbourhood seems to come from lack of in-depth analysis. However, India cannot be complacent and needs to maintain the momentum in maintaining good relations with her neighbours barring Pakistan and China for well-known reasons. Even there, if there is positive approach from Pakistan in terms of stopping the cross-border terrorism and from China, if it agrees to resolve the problems that she created in 2020 also agrees to maintain peace and tranquillity along the India—China Line of Actual Control, there may be a rethink of India’s policy towards them. Moreover, India needs to assuage the apprehensions in the minds of its smaller neighbours (only in size and not in stature) that the former is not a hegemon but only a big brother.
It is also clear that the trend of each South Asian Country protecting its own interests and trying to make the best of both India and China for their own benefit is likely to continue.
Lt General SL Narasimhan is the Adjunct Distinguished Fellow for National Security and China Studies, Gateway House.
This paper was first published in the Journal of the Centre for Land Warfare Studies.
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