India and China have been eyeball-to-eyeball in Ladakh for three years now. China has been building up its military strength in the region, erecting heated frontline barracks to shelter its soldiers during the harsh winters, constructing helipads and expanding its Tibet and Xinjiang airbases. India has attempted to match the military build-up, keeping its troops on the frontline and strengthening airstrips like Nyoma and Fukche.

But unexpected though it may seem, it’s away from the frontlines that India is on a stronger footing than China, which has created enemies in all corners of the globe with its Wolf Warrior diplomacy. Chinese attempts to exhibit a gentler world face have only highlighted that Beijing wants other countries to make compromises but isn’t prepared itself for the give-and-take involved.

The best example is probably Australia. In mid-July, China’s Wang Yi, who’s back in the saddle as its chief diplomat, declared China-Australia relations had “stabilised, improved and developed”. Australia’s Foreign Minister Penny Wong was less upbeat, saying she’d had “frank” talks with Wang, focusing on China’s ban on Australian barley, wine and lobsters. China said it would need another month to review the ban while Australia said it was unlikely to lift Chinese investment curbs until Beijing moved on its crippling trade restrictions. India and China’s talks in June were also described by India as “frank and open”.

Meanwhile, Australia is pushing ahead with its Aukus military alliance. It’s buying five nuclear submarines and will construct one while the Chinese forge ahead with relations with the Solomon Islands which Australia sees as a threat to itself. Bear in mind, China was Australia’s largest trading partner only a few years ago.

China’s relations with other parts of the world aren’t on a much better footing. The Italian defence minister this week lashed out at Italy’s previous government for signing up to the “atrocious” Belt-and-Road Initiative and said it had only helped China export to the country. He lambasted the Chinese but admitted Italy would have to exit the BRI cautiously because, “China’s a competitor but also a partner.”

Germany is one European country that’s heavily dependent on China: companies like Volkswagen have long had huge sales in the Middle Kingdom. But even Germany is now tightening its stance and has blocked Chinese bids to buy two semiconductor companies.

China’s powerful telecom companies like Huawei and ZTE have taken a sharp beating in many parts of the world because of fears they pose a security threat. Washington has blacklisted Huawei and Telecom Italia has barred it from bidding for a 5G contract. The EU’s been encouraging countries to block Huawei but with mixed results. Many telecom companies worry if the Chinese companies are banned they’ll have to choose between Ericsson and Nokia and that would almost certainly result in higher prices. Indian companies have similar concerns and would prefer to see the Chinese in the ring in the future.

Massive two-way trade

Inevitably, the US is leading the way in all these anti-Chinese moves and it’s also in a bind. US firms are heavily invested in China but they’re cutting back and looking at investing instead in other Asian countries including India. In fact, the US began to tighten on Chinese investments several years ago when the US Committee on Foreign Investment started scrutinising every Chinese deal.

But the bigger issue is that the US and China have massive two-way trade and can’t afford to slow down on that. Even India has discovered it’s tough to stop buying many products and components from China although we’ve attempted to slash trading ties post-Galwan.

So where is China hoping to expand what President Xi Jinping calls “its circle of friends”? The welcome mat is still out in most parts of Africa and in South America where China has struck several free-trade deals. The US has tried to counter Beijing but hasn’t been able to match it effectively. The Chinese buy huge amounts of South American minerals and other raw materials.

In Africa, a different narrative has emerged. The Chinese are building everything from renewable-energy projects to ports and railway lines. But here the focus has switched to an emphasis on smaller projects to avert repayment crunches that earned the Chinese a lot of bad publicity.

Where does India fit in all this? It’s clear our efforts to cut the Chinese out of our business lives have been unsuccessful. But we aren’t the only nation to look at the Chinese with considerable hostility — in fact we have allies around the world. But everyone’s finding out in this interlinked world that breaking up is hard to do.

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