Written by Pieter-Jan Dockx.

In his book ‘China and India: Prospects for Peace’ Jonathan Holslag argues that an increase in nationalism in both countries eventually led to the Sino-Indian war of 1962.  To safeguard the national identity of both their countries, Nehru and Mao placed economic progress at the centre of their respective nation-building projects. However, the 1958-59 financial crisis and the drought years of 1959,1960 and 1961 in India and the failure of the Great Leap Forward in China, ushered in a period of economic decline. This led to a major dependence on foreign policy for the preservation of national pride. As a result, when the Indian border police discovered a Chinese road construction at the Aksai Chin plateau in Ladakh, this became a matter of national importance demanding a strong foreign policy response which, in the end, culminated in the 1962 war.According to this reasoning, a possible absence of nationalism during the 2017 standoff could be the defining factor why the recent clash did not escalate.

China bombarded India with nationalist rhetoric insisting that India must withdraw its troops from ‘sovereign Chinese territory’ before talks could commence. However, a diplomatic outcome was reached without an Indian retreat taking place, invalidating the idea that a unilateral Indian withdrawal was imperative.

However, nationalism is equally, arguably even more, present in contemporary India and China than it was in 1962. For example, in November 2016 the Indian supreme court ruled that citizens should respect the national anthem, making it mandatory for it to be played prior to film screenings in movie theatres. When, in a Kerala cinema, a group of spectators refused to stand up for the national anthem, they were arrested by the police. Another example of increased nationalism is the arrest of JNU Student Union-leader Kanhaiya Kumar for allegedly raising anti-India slogans during a rally at the university. In 2017, JNU Vice Chancellor Jagdesh Kumar suggested that a decommissioned battle tank should be installed on the JNU premises in order to “instil love for the army” and nationalism in the students.

In China, a similar rise in nationalist sentiment has come out into the open. In 2012, friction over the disputed Senkaku/Diaoyu islands caused massive anti-Japanese protests in various Chinese cities. People gathered in front of the Japanese consulate, attacked Japanese restaurants and destroyed Japanese cars. In July 2016, the Hague court ruling against Chinese claims in the South China Sea led to a boycott of American products. People protested outside KFC and McDonalds restaurants and ‘smash your iPhone’ trended on social media. This surge in nationalism was also visible in Chinese newspapers during the recent Doklam standoff. For example, the Global Times called for India to be ‘taught the rules’, mocked the Indian armed forces, reminded the Indians of the 1962 debacle and even trivialised the Indian originated practice of yoga.

Thus, it can be argued that nationalism was still very much present in both countries prior to the Doklam confrontation, and does not explain its nonviolent settlement.

 Increased Trade

What has changed between the past and present episodes of tension is the increase in trade and openness experienced by both economies.

Because of India’s experience with British colonialism, the newly independent state had embarked on an economic project to firmly secure the country’s independence, and thus economic independence, from foreign powers. Inspired by the Soviet Union, Nehru had launched a state-led economy aimed at rapid industrialisation to generate high growth rates, reduce inequality and also to substantially reduce foreign influence over the national economy. A similar current of scepticism towards export-led economic growth was present in the ranks of the Communist Party of China (CPC). With state-directed plans such as the Great Leap Forward, Mao intended to detach the People’s Republic from the Soviet Union, which he had come to see as unreliable. This process, combined with the trade embargoes that were imposed on the country by a hostile West, steered Beijing in its quest for self-sufficiency.

In 1978, as the failure of Mao’s Great Leap Forward and Cultural Revolution crippled the legitimacy of the CPC, new Paramount Leader Deng Xiaoping commenced on a programme of liberalisation to recover the lost legitimacy. He promised new riches to the Chinese population, that would be delivered by opening up the economy to outside investment and trade. Following a balance of payment crisis and India’s subsequent bailout by the IMF in 1991, Prime Minister P.V. Narasimha Rao initiated economic reforms aimed at transforming the country into an open market economy with a strong private sector. As investors from the US, UK and Japan came flocking in, India converted itself into a capitalist state with a current trade to GDP ratio that stands at 39.8 percent.

This transformation of both nations from anti-capitalists to proponents of free global trade was followed by a realignment of foreign policy goals. In India, economic objectives and integration in the world economy replaced third-worldism and anti-Westernism to become the main drivers of its foreign policy. Within the Ministry of External Affairs (MEA), economic units such as the Economic Relations Division and the Economic Coordination Unit were brought to the forefront. In China, the Ministry of Foreign Trade and Economic Cooperation was established and sub-national governments were allowed to promote their economies to outside investors. China’s foreign policy became obsessed with external stability, as is shown by its approach to the conflict on the Korean peninsula.

As external trade was a marginal activity prior to the 1962 conflict their bilateral relations were, at best, a loosely-defined affiliation based on a shared drive for national sovereignty over foreign domination. This changed in the 1990s when economic ties between the countries strengthened. As bilateral trade quadrupled, consulates were opened in Mumbai and Shanghai and there was a marked increase in trade posts at the Sino-Indian border. Later, in the 2000s, enthusiasm for strengthening economic relations moved beyond the political level to include business interests and local stakeholders. All this led to a dramatic growth in bilateral trade – from a meagre $2.92 billion in 2000, it went up to $71.5 billion in 2017, making China India’s largest trade partner.

Although the economic consequences of conflict would be detrimental for both economies, China would be hit even harder. Out of the $71.5 billion in bilateral trade, $61.3 billion consists of Chinese exports to India, making China especially vulnerable to an interruption in the trade relationship. This asymmetry was noticeable in the resolution of the standoff. China bombarded India with nationalist rhetoric insisting that India must withdraw its troops from ‘sovereign Chinese territory’ before talks could commence. However, a diplomatic outcome was reached without an Indian retreat taking place, invalidating the idea that a unilateral Indian withdrawal was imperative. The Chinese also agreed to freeze their road construction, thus calling into question their former claim on the Doklam plateau as sovereign Chinese territory.

To conclude, after gaining independence both Beijing and New Delhi pursued autarky – establishing inward-looking economies, disconnected from the outside world. In 1962, without having to worry about bilateral trade ties, border disputes were able to escalate into a full-blown conflict. However, this had changed by 2017. While in India economic interests became the main driver of foreign policy, in China regional stability for economic purposes became paramount. It is this change in the economic and trade relations of both nations that prevented the Doklam standoff from leading to a war. Finally, the concessions made by the more economically-invested China to bring an end to the conflict further substantiate the claim that it was indeed economics that was the crucial differentiating factor between the present conflict and that of the 1960s.

Pieter-Jan Dockx graduated from LSE with an MSc in Conflict Studies. His main research areas include Middle East and South Asian politics. Read more of his blogs at www.pieterjandockx.com. Image credit: CC by NASA/Flickr.