India sees chance to edge ahead of China

Chinese President Xi Jinping and Indian Prime Minister Narendra Modi. Picture: AFP

Monkey impersonators have thankfully scared scavenging rhesus macaques away from the New Delhi venue for the G20 summit. The business of global governance can proceed this weekend without a screeching accompaniment. But Xi Jinping won’t be there, frightened it seems not of marauding monkeys but of losing face. That’s the same Chinese leader who has attended every G20 since 2013, the man whose mission is to rewrite the rules of global trade and governance. Why is he missing in action?

China has to deal with a cascade of poor economic indicators and is no longer an obvious and inevitable candidate to take over from the United States as top dog. The country’s growth, once a very brisk annual 8 per cent, may struggle this year to reach 3 per cent. Consumer confidence has been hit rather than spurred by successive Covid lockdowns; China slid into deflation for the first time since 2021. There is a deepening property slump: Yang Huiyan, once Asia’s richest woman, is seeing her billions evaporate. Youth unemployment reached a record 21 per cent; last month the authorities stopped publishing data.

The China boom could at this rate turn into a China bust, with spillover effects across the world. At home it’s impossible to ignore a sense of national stagnation. There’s even a word for it: neijuan, which translates into “life twisting inwards without real progress”.

Little wonder that Xi is reluctant to turn up in India (the premier Li Qiang is going instead). At the G20 he would have had to fight for the vision of his Chinese dream, reach out to the non-aligned in the great stand-off between the US-led West and those countries dependent on Beijing’s patronage. Now, it seems, he doesn’t feel up to it.

In the US, meanwhile, wages are up; inflation has slowed. Heavy investment in the defence of Ukraine seems to show that Washington will stick up for its friends. Vladimir Putin’s absence from this week’s summit – perhaps because he has developed an understandable fear of flying – helps make the point. The continuation of the Ukraine war adds to the fuel, fertiliser and food burden of the global south, yet Xi has sworn a limitless friendship with Putin.

Many in the G20 don’t want to make a choice between Biden and Xi and the US president will not have a home run in New Delhi. Still, he comes with an advantage and has the added edge of being the guest of Narendra Modi, who is at loggerheads with Beijing, frustrated by Xi’s serial snubs.

A residential complex built by Chinese real estate developer Vanke in Zhengzhou, in China’s central Henan province. Picture: AFP

Modi and Xi talked recently at the Brics summit but failed to agree on anything. China later said the meeting had been at Modi’s request, making the Indian prime minister seem like a supplicant. Then satellite pictures showed China was constructing an underground bunker system on the Himalayan massif, on the Indo-Chinese border. And in the run-up to G20 China published a map claiming not only Taiwan but also a chunk of India as Chinese possessions.

You can see why the Beijing leadership might be undergoing a fit of pique. India’s population has recently overtaken that of China, where low birth rates are now part of its problems, an Indian lunar landing has just underlined its great power ambitions, its economy is humming and Modi seems well positioned for re-election next year. While he is still noncommittal on supporting Ukraine, he seems ready to work together on strategies to blunt and circumvent China’s control of global supply chains.

India cannot be a one-for-one replacement for the still-huge Chinese economy but it can help diminish the world’s overdependence on Chinese goods. And the West seems ready to help Modi stand tall if Xi’s military tries to bully the country.

The supply chain workaround is happening. Big western shipping and logistics groups are rushing to invest in ports and warehouses in countries such as India and Vietnam to suck in the offshore manufacturing that would have gone to China. Biden is scheduled to go to Vietnam for a day next week precisely to encourage it to play a bigger role in the economic front against Beijing.

There is talk of the Vietnamese offering to make the US a “comprehensive strategic partner”, alongside China. If that happens, Japan and Australia could follow. The US commercial secretary visiting Beijing the other day warned the Chinese leaders that they were – through intellectual property theft, counter-espionage laws, police raids and unclear privacy rules – making China “uninvestable”.

The argument being made against Beijing within the G20 and other forums is backed by security promises. India is clear on what it wants from the US: a permanent presence in the Indian Ocean (it has a base in Diego Garcia but perhaps not for much longer), alert monitoring of the dozen or so Chinese vessels in the ocean, especially if it bulks up into an aircraft carrier force, and closer scrutiny of India’s neighbours, such as Pakistan and Sri Lanka, who are in deep with China.

There’s no reason why the US, and Britain, should not support these reasonable requests. The point is to present robust choices to members of the global south. Everyone inevitably has some degree of commercial relationship with China. The aim has to be to ensure that trading with Beijing does not become a dangerous instrument of control.

That’s why Xi’s absence from the G20 has to be taken seriously. He may consider that he is threatened by closer ties between Modi and the West, that the G20 is a hostile environment. The truth is that India, for all its flaws, is a more palatable and more stable partner than China.

The Times