China and India Visits

Official travel is now certifiably back post-Covid-19, with Secretary of State Antony Blinken recently visiting China and Indian prime minister Narendra Modi paying a state visit to Washington. Both were significant, and both were related to China.

The Blinken trip was essentially damage control and had a low bar for success. The fact that it finally happened was reason enough to cheer, and that was about all that occurred. It does not appear that any significant issues were resolved. There were vague commitments to continue discussions at working levels and an invitation to Chinese foreign minister Qin Gang to come to Washington. The Chinese continued to decline one of our more urgent requests—the resumption of military-to-military dialogues. For the United States, it has been important to have a direct channel of communications between the two militaries to make sure the inevitable confrontations and near-collisions between ships or planes in the region do not escalate into something bigger. The Chinese are piqued that their defense minister is subject to U.S. sanctions and likely view an organized dialogue as little more than an opportunity for more American lectures.

So, it appears the visit did not materially change anything, but it did accomplish two things. First, it restored some measure of civility to the relationship. Nobody shouted at their counterparts, at least not in public, and the two sides clearly laid a basis for future exchanges. Second, and related to that, the visit opens the door to high-level contacts from U.S. economic officials. The gossip all along has been that China would have welcomed visits from Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo, but the United States wanted the State Department to come first. Now that that has happened, the others may follow. Even if they do, however, you should not expect much to happen. It is hard to find anyone in the Biden administration who believes we can persuade China to change its economic policy, and I suspect the Chinese are equally realistic about their inability to get the United States to remove its tariffs or export controls.

The more interesting question is whether the recent significant dip in two-way trade is a blip or a trend. Aside from the Covid-19 years, trade had continued to increase, notwithstanding the obstacles both governments have placed in each other’s way, until this year. Despite the rhetoric—politicians calling for decoupling and businesses saying that’s impossible—perhaps Western companies are engaged in de-risking by reducing their Chinese presence and finding alternative, redundant sources of supply. It is too soon to say, but the data bears close watching. 

The Modi visit ended up being more substantive, to the surprise of many, including me. In addition to a number of defense-related deals and agreements on technology cooperation, the two sides unexpectedly announced the resolution of six pending World Trade Organization (WTO) disputes, including the two large ones on the U.S. tariffs on steel and aluminum and on India’s retaliation. These are significant because it has been so difficult over the years to get India to agree to anything in the trade area or to play a constructive role in the WTO. Although the six cases involved an equal number from each side, the United States arguably got the better of the deal, as India removed its retaliation on U.S. steel and aluminum tariffs, but it does not appear the United States removed the tariffs that caused the problem in the first place. Of course, terminating these cases does not mean the problems are solved. It just means both sides have stopped complaining about them, at least temporarily.

The bigger controversy surrounding the trip came from those concerned about the Biden administration’s lavish (state dinner!) support for Modi in spite of the erosion of democracy in India and the Modi government’s religious discrimination against both Muslims and Christians. For an administration that has made human rights a high priority, the critics smelled hypocrisy.

This is another reminder of the cost of letting the perfect be the enemy of the good—up to a point. Every president has had to come to grips with the fact that very few world leaders meet all of our standards (and to be fair, our leaders often don’t meet theirs), which means they have to prioritize. In this case, the president decided that our interest in a closer defense relationship with an important country on China’s border was more important than a public lecture on human rights. There is debate about that, but the real question is whether the juice is worth the squeeze. India is not an ally and has a record of vigorously pursuing its own interests, which more often than not are different from ours, particularly on trade.

Having fought frequent border skirmishes with China, the Indian government has good reasons for building a better defense relationship with the United States and acquiring our advanced technology instead of relying primarily on China’s good friend Russia. Rolling out the red carpet for Modi was probably not necessary to accomplish that, and it may come back to bite us later on, particularly on the technology front, if India continues to move away from democracy and maintains its relationship with Russia. In short, the administration has created a friends-with-benefits relationship, with the United States providing most of the benefits. We would be wise to simultaneously prepare for the day when the costs exceed the benefits, and our relationship with India returns to its historical basis.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.