Nickeled & Dimed

Penny for your thoughts?

We are accepting articles on our new email:

Tracing Chinese Influence In the Indian Subcontinent

By Tanish Srivastava


As the power vacuum in the Indian subcontinent becomes bigger, both the Chinese and Indian governments attempt to seize the role of regional hegemony. The regional hegemonic order is also of prime importance to other powers. India, for one, attempts to preserve its regional power, and it is in the interests of both India and The United States to limit China’s influence, as in recent times the economic and military agreements that China maintains in the region have grown. The meteoric rise of China as an economic power (and hence a defence equipment manufacturing giant) has played a vital role in China’s sudden power in the region. It is important to understand the sudden increase in Chinese presence in the Indian subcontinent. This study attempts to examine the extent of Chinese influence in the Indian subcontinent in contrast to Indian influence. 

I. Introduction 

There is no subcontinent quite as geopolitically convoluted as the Indian, and the local power vacuum, between China and India for the regional influence that is, has not been settled. Two regional powers, both massive in size with similar sized populations are in a battle for who prevails to be the primary regional power. As India provides relief and helps with goodwill based policies, China stands to be the primary economic powerhouse in the region, and the relations between the two powers are strained, at best. Several Border disputes, bloc politics and the constant rivalry for dominance in the Indian subcontinent and ocean are all factors to this. Smaller countries in the region base their foreign policy towards their two neighbours on the grounds of what is in their national interest. This article will analyse the cases of smaller countries in the region, including Nepal, Bangladesh, Pakistan, etc; and will examine their foreign policy towards China and will study the extent of the influence that China enjoys in these states, especially in contrast to India’s influence. 

II. The Belt and Road Initiative

The Belt and Road Initiative, also known as ‘One Belt, One Road’, was the flagship project of Chinese Leader Xi Jinping, and was launched in 2013. It hopes to put a more assertive China on the Global front, and to revive the old silk road trade route in today’s world. The investment in the initiative has already reached around 1 trillion US Dollars, with the China Pakistan Economic Corridor (CPEC) being the biggest investment at about 62 billion US dollars. As the investment in the initiative is speculated to reach around 8 Trillion US Dollars in its totality , the massive economic investment also comes with difficult hurdles that the Chinese have to cross. These include major protests in receiving states such as Pakistan, over issues such as employment in Balochistan, or the receiving states simply not being able to handle the debt that they have to repay, such as in Sri Lanka. Many have dubbed the Chinese aggressive loaning out strategy as debt trap diplomacy, although, the case of whether or not China really wanted its borrowers to default on their debt, is still controversial. Another issue for the Chinese government is the continuous effort of the Indian government to establish its own hegemony in the region. It is in the interest of the Indian government to limit the influence of the Chinese and to establish its own hegemony in the Indian subcontinent and ocean.

III. The China-Pakistan Economic Corridor

There is no doubt that the country closest to China in the South Asian region is Pakistan. China’s Geopolitical ambitions include undermining the power and influence of its regional rival – India, a goal that Pakistan, given its severed relations with India, would not mind helping with . India, on the other hand, is planning to outmanoeuvre them both, with its ever growing close ties with the United States, and its establishing strategy of foreign naval bases. Another important issue that China might need Pakistani assistance with, is the issue of the Gwadar port. One of India’s most important military advantages is the Andaman and Nicobar islands, a Union Territory of India, which hosts the Indian Navy and can be used to block off the Malacca strait anytime India wishes to do so. This is important since most of China’s trade, especially its shipments of oil, are from the Middle East. Therefore, in order to counter this threat, the Chinese started investment in the port of Gwadar, in the Balochistan region of Pakistan. 

The Gwadar port was acquired in 2013 by the state-owned company called China Overseas Port Holding Company (COPHC) for 40 years on  behalf of Pakistan. The port, however, is idle as it has failed to bring any business or trade. What it has bought, however, are domestic issues. When the Chinese company (COPHC) acquired the port, the contract included the terms regarding the port revenue, 90% of which was supposed to go to the company. The labour that was contracted to help develop the port was also not any local labour, but Chinese labour, which meant that there were no new job opportunities for the local workforce. There were other issues such as the presence of the Chinese labour demanding liquor shops, something that is prohibited in Islam, and the interference in the local fishing industry, which was a source of revenue for the local fishermen. The region of Balochistan is also a separatist province in Pakistan, with an active secessionist movement in the state. This led to protests and backlash in the region. All that the Gwadar port attracts now is regional protest, but not the trade it was supposed to bring. 

Other parts of the China-Pakistan Economic Corridor include the construction of a motorway between Sukkur and Multan spanning 392 kilometres in October 2020 and the $ 1.8 billion Sahiwal coal power project which started in 2017. The China Pakistan Economic Corridor (CPEC) is the flagship project of the Belt and Road Initiative, and it properly represents the state of the Belt and Road initiative – unfinished and starved of investment.

Outside of Pakistan, Chinese influence continues to grow in the Indian subcontinent. Myanmar for example, has seen heavy investment under the China – Myanmar Economic Corridor (CMEC). Other countries such as Nepal and Bangladesh, both countries with close ties with India, have also seen an uptick in Chinese investments. It is important to understand how smaller countries such as Nepal decide their foreign policy with regards to bigger neighbours. 

IV. The Case of Nepal

In Nepal the constant foreign policy shift from a Pro-India government and a Pro-China government depends on the ruling party. Nepal does not have one singular party that is neutral towards both the countries, rather it is the National Congress (NP) that is seen as a more Pro-India government and the Communist Party of Nepal, which is seen as a party which wants warmer ties with Beijing. Chinese Envoy; Chen Song arrived in Nepal in January 2023, and mentioned infrastructure projects including the Pokhara International Airport and the proposed Trans-Himalayan Railway Network, both under the Belt and Road initiative. The comfortable Chinese influence was also due to Prime Minister Pushpa Kamal Dahal of the Communist Party of Nepal, which had been diluted in the previous presidential elections where Ram Chandra Poudel of the National Congress enjoyed a heavy majority. 

V. The Extent of Influence in Bangladesh

Another important case is that of Bangladesh. Historically, China and Bangladesh did not have the best of relations. China, due to the cold war and its politics, was aligned alongside Pakistan and was against Bangladesh’s independence. China used its first United Nations Security Council veto to deny Bangladesh its independence in 1971. However, the relations between the two states have changed ever since as China has now become Bangladesh’s biggest military supplier, accounting for about 71% of its military imports from 2013 to 2017, and Bangladesh has become China’s second largest military equipment buyer, right behind Pakistan. In terms of economic cooperation, Bangladesh has attracted around $38 Billion in Foreign investment from China, which is about 10% of its total Gross Domestic Product. A huge step forward in trade would be the Chinese allowing Bangladesh a duty free market for 97% of its products. 

VI. Sri Lanka and the Question of Debt Trap Diplomacy

In the aftermath of the civil war in Sri Lanka, there was a period of growth and development. In contrast to the interventionist role that India played in Sri Lankan affairs in the 1980s, it was China that now took a leading role in the Sri Lankan economy. Chinese investment in Sri Lanka reached around $12 Billion between 2006 and 2019. Important Ports, deep sea harbours, etc were being developed by the Chinese in Sri Lanka. While it is important to study the military context of ports that can be used as naval submarine bases, the likeliness of there being further Chinese influence in Sri Lanka is on hold for now, given the default Sri Lanka has had on it’s $26 Billion of debt, out of which $7 Billion is owed to the Chinese. Sri Lanka’s debt default ended up with the important port of Hambantota being seized by the Chinese.

While organisations such as the International Monetary Fund, The Paris Club and countries such as the United States have played an important role in Sri Lanka’s economic restructuring and debt repayment after the default, it is the Chinese that have been largely unwilling to help. Their offer of $76 million is minute compared to India’s $4 Billion. While India attempts to return to play an influential role in Sri Lanka, China tries to distance it from the West and from India, asking Sri Lanka to repay its owed debt first. 

While one side argues that the Port of Hambantota and its seizure was very much an intended move by the Chinese under their strategy of bombarding a lender with debt and seizing their assets (dubbed debt trap diplomacy), another side argues that the issue of Hambantota port was a one time cautionary one, and that the terms behind the development of the port were very feasible at its inception. The idea of debt trap diplomacy still is a heavily debated topic, what is clear however, is the debt repayment structuring that countries like Sri Lanka and Pakistan are in dire need of. 

ViI. Conclusion

The battle between India and China for further influence in South Asia seems to be at its peak in recent times. China does have an economic and military edge over India. China’s ability to manufacture high level defence equipment and its hegemony in the trade sector in south asia, helps it become the bigger trading partner (compared to India) of countries such as Bangladesh and Pakistan, which are the two biggest economies in the subcontinent after India. It is important to note that India has still attempted to counter the regional rival. India, for example, is moving to establish its first string of foreign military bases in response to Chinese naval bases in the Indian ocean. India is also providing economic relief packages, for example, it provided Sri Lanka with a $5 Billion economic relief package after Beijing declined to provide any more loans, given the exorbitant debt Sri Lanka already owes to China. India’s advantages over China could include a more reliable helping hand, less aggressive interest rates and longer periods for payback of loans. India’s history of positive relations with most South Asian states also proves to be an important factor. There are pro India governments in both Nepal, under President Poudel, and Bangladesh with Sheikh Hasina’s steadfast support for India, where both are still under heavy Chinese influence, at least in the economic sphere. While it is a difficult battleground for India, given China’s strategic advantages and economic size, India’s economic growth and strategic alliances could perhaps give it an equal chance at establishing its influence in the region, and being the hegemon in its  own subcontinent. 

About the Author

Tanish Srivastava is a first-year student at the Jindal School of International Affairs and is very interested in issues related to security and economics. 

Image Source

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: