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China’s Bid to Join SAARC: Lessons from Shanghai Cooperation Organisation

In an exclusive analysis to the USI blog, Raj Kumar Sharma defends the Indian position against extending SAARC membership to China, as such a move will undermine Indian influence in its neighbourhood and could potentially strengthen the China-Pakistan nexus against India in South Asia.

By Raj Kumar Sharma

China has been knocking at the doors of South Asian Association for Regional Cooperation (SAARC) for permanent membership. China became an observer at SAARC in 2005. Supporters of China’s case argue that extending SAARC membership to China will bring economic prosperity to South Asia. Opponents say that this will undermine Indian influence in its neighbourhood and could potentially strengthen the China-Pakistan nexus against India in South Asia. This article argues in favour of the latter drawing some lessons from China’s conduct in the only regional grouping of which it is a permanent member – Shanghai Cooperation Organisation (SCO).

China undermines Russia in Central Asia through SCO

China has used SCO and its bilateral relations to increase its economic clout in Central Asian Republics (CARs), overtaking even Russia which has been the dominant power in Central Asia since second half of the 19th century. China has become biggest trading partner of (CARs), except Uzbekistan. China’s trade and investments stood at $ 45 billion in Central Asia in 2012. In comparison, Russia’s trade totalled to $ 27.3 billion. A close examination of China’s trade and investments in Central Asia reveals that China has invested in areas that matter to its own economy. It has invested in energy pipelines and transport (building highways). Central Asian states are being reduced to mere producers of raw material while China is slowly pumping its consumer products in these countries. Some Chinese scholars have hailed SCO as an example where two great powers (Russia and China) cooperate for the benefit of the region. However, they forget that the economic domination of China has led to fears in Russia and Central Asian countries that the small economies in this region could end up as being Chinese protectorates. That is why; Russia and the CARs have been opposing the Chinese proposal of free trade zone among the SCO countries.

Both China and Russia have competing projects for regional economic integration in the region. China is enthusiastically promoting its concept of ‘Silk Road’ in the region while Russia is putting its efforts behind the Eurasian Economic Union. China’s bubble of peaceful rise and pure economic approach in Central Asia is busted by US military and Central Asia expert Stephen Blank. He quotes Russian military expert Vladimir Mukhin as saying that China had made quiet yet definite inquiries about gaining access to Karshi-Khanabad military base in Uzbekistan in 2005 after US was asked by Uzbekistan to leave the base. Blank also claims that China had also explored possibility of establishing a military base in Kyrgyzstan in 2005.

China’s SAARC bid and Implications for India

South Asia has been slowly but gradually getting higher importance in China’s strategic calculus. It remains important for China’s efforts to overcome its Malacca Dilemma, Indian Ocean trade and security projects and efforts to stabilise Xinjiang and Tibet. China’s trade with SAARC countries has gone up from $ 6.5 billion in 2001 to $ 73.9 billion in 2012. However, it should be mentioned that China is also biggest exporter of arms to Indian neighbours. It is biggest arms exporter to Pakistan and Bangladesh. Around half of its arms exports go to Pakistan. Two percent of its total arms are sold to Sri Lanka. In total, around 70 percent of China’s arms exports land up in Indian neighbourhood.

If China gets SAARC membership, it would be its 2nd membership of a regional grouping after SCO. As explained in the earlier section, China has already made itself a stakeholder in South Asia. Indian neighbours are showing standard balancing strategy in a regional sub-system having presence of two or more big powers.  Hence, these countries see China as a balancer against India in South Asia. Well aware of this fact, China is following its ancient strategy of ‘hexiao kongda’ (cooperate with small countries to counter the big one) in South Asia against India.

Similar to its SCO strategy, China is using its emphasis on economy to further its own strategic interests in South Asia. India’s bid for SCO membership offers interesting lessons for India in assessing China’s similar attempts for SAARC. Russia and CARs see India as a balancer to China in Central Asia. Aware of this fact, China ensured that Pakistan gets an observer status with India. Now, China wants membership for Pakistan as well in SCO, in order to balance India’s membership. India could explore interest of countries like Japan, South Korea and even US to join SAARC.

Like China has initiated Silk Road project in Central Asia, it has also announced Maritime Silk Route in South Asia. The Chinese argument is that these projects will bind the concerned regions in economic interdependence and bring prosperity. However, the probability is high that as the CARs have been reduced to raw material producing economies, similar could happen with small economies of South Asia as well. The trend is already evident as in 2012; South Asian countries’ total trade deficit with China was more than $ 47.8 billion, out of total trade of $ 73.9 billion.

The big question, however, is can China’s entry in SAARC increase cooperation among South Asian countries and remove mistrust among them? It is next to impossible that China will give up its policy of using Pakistan as a proxy to keep India engaged in South Asia, hampering its aspirations for playing a global role. When Pakistan does not agree for economic engagement with India before solving Kashmir issue, will China’s entry change Pakistan’s policy? Even worse, days after making its SAARC bid, China’s state run and official news agency, Xinhua, called Pakistan Occupied Kashmir (PoK) as part of Pakistan. In fact, Pakistan would seek China’s assistance in resolving Kashmir issue if China becomes a SAARC member. Former Indian Prime Minister, Dr Manmohan Singh had spoken about China’s potential use of Pakistan and other South Asian countries against Indian interests in South Asia. He said in 2010 that China would like to gain a foothold in South Asia and India needed to be aware of this reality. He said China could be tempted to use India’s soft underbelly (neighbourhood), Kashmir issue and Pakistan to keep India in low-level equilibrium.

China has been openly taking ‘pro-Pakistan’ stance in some of the worst terror attacks on India carried out by Pakistan. Chinese media pointed to sectarian strife and farmer suicides, suggesting that it was not Pakistan but others within India who carried out Mumbai attacks in 2008. China has a dual policy on terrorism. It ignores other terrorist groups (which attack India and the West) and seeks Pakistan’s help in tackling East Turkestan Islamic Movement (ETIM), an extremist group in its Xinjiang province.

Even when Indian consulate in Herat was attacked on May 23, 2014 by Pakistan-based terror outfit Lashkar-e-Taiba (LeT), China said that it believed Pakistan government or any responsible agency of Pakistan (ISI) will only fight against terrorism instead of being involved with any terrorist groups. Despite serious threats of nuclear terrorism, China continues to support Pakistan’s nuclear program, so that the balance of power does not decisively tilt in India’s favour. Given such a dual policy on terrorism, China’s SAARC membership will further boost Pakistan’s proxy war on India, hardly bringing peace and economic prosperity to South Asia.


Membership of multilateral organisations gives China access to institutional set up to dominate the groupings like SCO. Same could happen to SAARC if China is given membership. The much publicised Chinese investments in some countries in South Asia are in fact Chinese loans at high interest rates. A case in point is Sri Lanka where the government has been trying to show Chinese loans as investments. The question is – what will China do if these countries are not able to repay these loans in the stipulated time? Will it use its leverage to further its security interests in South Asia? In Central Asia as well, China tried to establish military bases and similar developments in South Asia cannot be ruled out.

Geopolitics trumps geo-economics in South Asia. China’s bid for SAARC membership seeks to further its own interests and contain Indian influence in the region. Indian neighbours who are clamouring for China’s SAARC membership are already enjoying benefits of China’s economy and nothing new is expected for them if China gets SAARC membership. They, however, will find a balancer to India in SAARC as along with permanent membership, China will also get veto power in SAARC.  China could use its veto power to block projects that offer strategic and economic advantage to India. It has already restrained Asian Development Bank and Japan from investing in Arunachal Pradesh. China would also try to break already fragile solidarity in SAARC, as it has been doing in ASEAN. It would also continue its policy of dealing with each SAARC nation bilaterally, in order to squeeze them one by one.

The time does not seem right for China’s SAARC membership, especially when a recent report by Border Security Force (BSF) claims  that the Chinese troops have been seen training the Pakistani army personnel in ‘weapon handing techniques’ opposite the Line of Control in Rajouri sector of Jammu and Kashmir. Apart from greater engagement with the South-East Asian nations, India should also focus on the idea of ‘Indo-Pacific’, to take on China Silk Road strategy in South Asia.

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