Over the last few years China has increased its economic footprint in South Asia, most notably through the Belt and Road Initiative. In addition to this, Beijing has also expanded its political, security, and people-to-people engagements in the region. This raises the questions: What kind of challenges do countries with vast gaps in capacity with China face as they engage with Beijing in diverse ways? In what ways are these states vulnerable, and how does the interaction between Chinese engagement and these vulnerabilities play out? And finally, what lessons have the partner countries learned, including those with comparative relevance within the region?

Carnegie India hosted Deep Pal for a discussion on the nature and dynamics of Chinese influence in South Asia. The discussion was moderated by Srinath Raghavan.

Discussion Highlights

  • China’s Impact Network: Participants examined the nature of Chinese engagement in four South Asian countries: Bangladesh, the Maldives, Nepal, and Sri Lanka. Although, Beijing’s involvement in South Asia is frequently assessed from the economic vantage point of the Belt and Road Initiative, participants unpacked other characteristics of Chinese influence in South Asia including political exchanges and people-to-people engagements. Participants assessed the levels of vulnerabilities persisting in these four countries based on the fragility of state institutions, the presence of civil society organisations, and captured or capturable state systems i.e., how vulnerable a state is to foreign penetration. They noted that China’s engagement with these countries varied depending on their strengths and vulnerabilities.
     
  • How South Asian Countries Engage with China: Participants discussed how “vulnerabilities” in the countries in South Asia are affected in the way they engage with China. Participants explained that changes in the states and systems are a result of the interaction of their vulnerabilities with Chinese engagement. However, such changes are incremental and contingent on the countries’ economic progress and institutional strength. Participants also elaborated on how countries in South Asia are learning from each other while calibrating their engagement with Beijing. Overall, participants indicated that Chinese influence in South Asia is consistently evolving as countries in the region continue to refine their relationship with China.
     
  • China’s Engagement in South Asia: On comparing China’s engagement in the region with the way other powers, such as the United States, Britain, and India, engage in the region, participants noted that China has been able to pre-empt the needs of South Asian countries. Further, unlike western powers, China approaches partner countries in South Asia as equals and focuses on common challenges. Participants also mentioned that Beijing’s outreach to South Asian countries remains indifferent to factors such as democratic values and human rights. Participants explained that in general, China is viewed as a partner in the region—one that undertakes development projects at a faster pace and makes larger investments compared to other powers. Participants also highlighted that China should not be viewed as an inherently devious actor. Instead, China’s engagement with South Asian countries should yield lessons of comparative relevance which might be important to western powers.

  • A Debt Trap? Participants emphasised that countries in the region do not believe their financial relationship with China to be debt trap. They pointed out that not all South Asian countries are heavily reliant on China for all forms of investment and economic assistance. Many of them have sought financially sound alternatives. For instance, Nepal has opted for loans from the World Bank and not from China to tackle the impact of the coronavirus pandemic and to aid in its economic recovery. Participants also noted that South Asian countries have agency in terms of regulating their infrastructure development by choosing partners in accordance with their infrastructural demands.

This event summary was prepared by Anahad Kaur Khangura, a research intern at Carnegie India.