Echoes at Doklam: 

Echoes at Doklam: 

Context:

Chinese President Xi Jinping unveiled his vision to make China a great power so that it “leads the world in terms of the composite national strength and international influence.”

Introduction:

• Mr. Xi stressed that China did not “pose a threat to any other country”, he reiterated the centrality of China’s territorial integrity and called on the People’s Liberation Army (PLA) to go hi-tech, saying that technology is at the core of combat strength.
•  Recently, the Indian Air Force chief, Air Chief Marshal B.S. Dhanoa, expressed hope that Chinese troops who were in the Chumbi valley for their annual summer exercises would move back at the onset of winter.
•  The Army believes that there could be increased transgressions by China at other vulnerable points along the over 4,000km long Line of Actual Control (LAC).

Military reforms and tensions:

•  In the last couple of years, the PLA has been systematically stripped of its power by Mr. Xi, first through the formation of the theatre commands and later in a series of changes in the top leadership.
•  In 2015, Mr. Xi announced reorganisation of the seven military regions into five theatre commands with all three services effectively integrated, which reduced the clout of the PLA generals by bringing the military under stronger grip of the Central Military Commission chaired by him.
•  Mr. Xi looks toward consolidating his grip on the Party and the crucial Politburo Standing Committee, it is in his interest to project himself as being firm and decisive in preserving core Chinese national interests.
•  Beijing has used local disputes to establish a permanent presence, it can be argued that the PLA may stay put in the Chumbi valley using Doklam as a ruse.
•  The 2012 stand-off with the Philippines over the Scarborough Shoal is an example.
• India had no option but to prevent the change of status quo by preventing the PLA from drastically altering the balance at the strategic location
• Adding to this are other issues of disagreement such as India’s refusal to be a part of Beijing’s grand plans with the Belt and Road Initiative, citing sovereignty issues apart from deepening engagement with the U.S., and a jostling for space in the Indian Ocean Region.
• The stalemate has been generally viewed as a victory for India and China would not want to be perceived to be weak by other countries in the region.

India- China border Issue

• Sovereignty over two large and various smaller separated pieces of territory have been contested between China and India.
• The westernmost, Aksai Chin, is claimed by India as part of the state of Jammu and Kashmir and region of Ladakh but is controlled and administered as part of the Chinese autonomous region of Xinjiang.
• The other large disputed territory, the easternmost, lies south of the McMahon Line. It was formerly referred to as the North East Frontier Agency, and is now called Arunachal Pradesh.
• The McMahon Line was part of the 1914 Shimla Convention between British India and Tibet, an agreement rejected by China.

India China Trade:

• Trade deficit with China continues to balloon, which is currently over $51.09 billion
• India exports basic material to China and buys relatively more sophisticated products from it.
• India only sells raw materials to China and buys finished consumer goods in return.
• India sells basic stuff such as iron ore, cotton, copper and inorganic chemicals to China. It buys mobile phones, telecom equipment, power generators and engineering goods from China. The trade pattern suggest the position of the two countries in global value chains that dominates modern manufacturing.
• China can continue to maintain its export competitiveness despite a strong currency if its productivity is growing faster than the productivity of its trading partner.
• According to the statics, the Chinese currency has actually appreciated against the Indian currency over the past 15 years. One Chinese yuan could be bought for Rs5.88 in August 2002. The exchange rate was Rs8.76 per yuan a decade later. It is Rs9.53 per yuan now.
• Chinese imports from countries such as Germany, Japan, South Korea and Taiwan are far higher than the exports it ships to them. These countries make the more valuable parts of various gizmos which are then sent to China for cheap assembly.
• Thus, India’strade deficit with China is thus not a result of exchange rate but of the inability to either boost productivity or to plug into the international supply chains that span the world.