How South Asian states are managing Chinese influence

Deep Pal & Saheb Singh Chadha

Deep Pal & Saheb Singh Chadha

How South Asian states are managing Chinese influence

We found that contrary to popular discourse, partner countries such as Nepal wield considerable agency, learning from their experiences and that of others in the region

A day after the devastating earthquake in Nepal in April 2015, China dispatched a 68-member search-and-rescue team to aid its southern neighbor. Within months, it had pledged over $650 million to help Nepal. The event also acted as a springboard for several long-term Humanitarian Assistance and Disaster Relief initiatives, such as an MoU on risk reduction and emergency response signed during President Xi Jinping’s visit to the country in 2019.

Nepal is not alone. Over the past one decade, moves like these have indicated a deepening engagement between China and countries in South Asia such as Bangladesh, Maldives, and Sri Lanka. In fact, China’s economic and political footprint has expanded so quickly that many countries, even those with relatively strong state and civil society institutions, have struggled to grapple with the implications. This reflects in China involving itself in domestic political developments in these countries, actively pursuing people-to-people relations, and even influencing how it is portrayed in the media in these countries.Our project, “China’s Impact on Strategic Regions,” is aimed at understanding the effect of such engagement and is based on a sharing of experiences across national boundaries by dozens of influencers with deep local knowledge. The study found that Chinese engagement leaves a deep impact on the institutions, civil societies, and elites of partner countries. The effect is higher in aspects of state and society that are already under duress.

A critical understanding of the drivers of this engagement, the various forms it has taken, and its impact on South Asian countries has been largely missing from the discourse, which is punctuated by broad-based assumptions such as allegations of debt-trap diplomacy. In reality, however, in a multidimensional region like South Asia, each of these relationships—in Bangladesh, Maldives, Nepal, and Sri Lanka—are unique. In Nepal, while centuries-old ties of trade, culture, and family were the initial drivers, in recent years China has had other avenues to expand its influence. At present, development assistance and Nepal’s keenness to explore an alternate route for trade and transit have taken the center-stage in the relationship with China.

Also read: US engagement in Nepal to grow, with or without MCC 

However, this has also meant that for every instance of successful partnership, as in the case of the Pokhara International Airport, there is an instance of shrinking space for Tibetan issues in Nepal’s newspapers; or for every instance of a fiber-optic cable link with China ending Nepal’s dependence on internet through India, there is an instance of Nepal’s state-owned airline finding aircraft purchased from China unprofitable and unviable.

Significantly, we found that contrary to popular discourse, partner countries such as Nepal wield considerable agency, learning from their experiences and that of others in the region. This is reflected in the rigor to evaluate all available options before accepting Chinese proposals, and, if need be, reject them, as in the case of the Budhi Gandaki Hydropower Project, which was found irregular and non-transparent by a parliamentary committee in 2017.

For all their uniqueness, as developing states, the common and overwhelming motivation for the countries under study is the quest to partner with countries that can help develop their economy, improve their infrastructure, and help their citizens meet their ambitions of a higher standard of living. These countries will engage the United States, China, or anyone else that can best assist them in realizing these goals.

In this scenario, the challenge for the US and its partners is to develop a policy that consistently and productively engages South Asian countries on their developmental needs. It follows that such engagement should be based on its own merits, delinked from how the countries choose to engage with China.

Pokhara Airport

The decision at the Quad summit in March 2021 to focus on vaccines, emerging technologies, and climate is a productive step in this direction, as is the Build Back Better World initiative, announced at the June 2021 meeting of G7 leaders. Together with the Blue Dot Network, it has the potential to offer the kind of engagement these states seek.

As countries in South Asia graduate to lower middle-income status, they are likely to require assistance in dealing with a new reality where they are ineligible for much of concessional financing. The United States could use its influence in Western multilateral organizations to ease the transition and help these states develop the capacity to access alternative avenues for assistance. 

Beyond state institutions, there is scope for partnership with other organizations. Media outlets and civil society organizations in all four countries have been focusing on questions of good governance—from their regimes’ human rights records to opacity in Chinese contracting practices. Building their capacity, over time, will lead more stakeholders in these countries to see the dangers of opaque deals and ignoring environmental and other concerns.

This new report has been translated in Nepali, Bangla, and Sinhala with the hope that it helps generate reasoned discussion in these places beyond just the elites—considering Chinese engagement is increasingly a whole-society phenomenon. 

Pal is a visiting fellow in the Asia Program at Carnegie Endowment for International Peace. He tweets @DeepPal_. Chadha is a research assistant and project coordinator in the Asia Program at Carnegie Endowment for International Peace. He tweets @SahebSChadha

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