China, again

Prime Minister Manmohan Singh’s four-day sojourn in Kuala Lumpur has brought India’s twin Asian challenges into sharp focus: trade liberalisation and China’s emerging primacy in the region. The very fact that India has been invited to the first East Asian Summit (EAS) amidst Asia’s growing expectations of a deeper partnership with Delhi is good news. But the bad news is that India does not yet have its Asian act together. Unless India’s economic and security policy makers wake up to address challenges on these fronts quickly, India could find itself increasingly marginalised in the rapidly evolving Asian dynamic.

Economic integration in Asia has begun to acquire momentum as the 10-nation Association of South East Asian Nations (ASEAN) brings down tariff barriers within the organisation and accelerates the negotiations on free trade arrangements with both China and Japan. That India has been out of sync with the trend came out into the open, if only inadvertently, when Commerce Minister Kamal Nath presented a list of no less than 1,414 items to be exempted from free trade with ASEAN. While India says it wants to implement a FTA with the ASEAN by 2007, its seriousness about the project is in grave doubt. Indian industry and its cohorts in the commerce ministry insist that domestic economic reforms must take place before free trade with ASEAN can be effected. Promising to make amends, Manmohan Singh insisted that Indian industry should get ready for competition and can no longer hide behind a protective wall. The quicker he gets the commerce ministry to ensure that Indian industry falls in line, the better it would be.

Whichever way one assesses the first EAS, there is no getting around the reality of growing Chinese political clout in Asia. At the last month’s South Asia Summit in Dhaka, China leveraged its close ties with Pakistan, Bangladesh and Nepal to muscle in as an observer against Delhi’s wishes. At the EAS, China succeeded in keeping the US out and preventing India, Australia and New Zealand from playing a central part in driving Asian economic integration. Thanks to Beijing, EAS will remain a talking ship while the ASEAN, along with China, Japan and South Korea, will guide economic community building in Asia. As China acquires a veto over future economic and political arrangements in Asia, an Indian national security debate on the implications of a rising China is long overdue.