China and the World

Border tensions still simmer

Sino-Indian relations show no sign of improvement with Shopee’s exit


China and India’s foreign ministers

Sino-Indian relations remain damaged two years after deadly clashes along a disputed border in the Himalayas.

The latest evidence of this comes with the exit of Chinese-backed e-commerce platform Shopee from the Indian market, days after Chinese Foreign Minister Wang Yi made a hurried and many say unsuccessful trip to New Delhi to secure diplomatic support for Beijing’s position on Ukraine.

More than 300 Chinese apps have been banned in India since troops engaged in a bloody brawl on the mountainous border leading to the deaths of 21 Indian soldiers and at least four fatalities on the Chinese side.

The latest round of restrictions  on Chinese apps in mid-February saw the inclusion of Free Fire, a hugely popular online multiplayer game owned by Singapore’s Sea Limited, which is backed by Chinese internet major Tencent.

Also owned by Sea, Shopee only entered India last September. Sea cited “global market uncertainties” as its reason for closing its nascent India project. Separately Shopee had come under fire for undercutting bricks-and-mortar shops on pricing.

Having openly called for the ouster of Shopee, the Confederation of All Indian Traders (CAIT) hailed the platform’s exit from India. The powerful lobby group claimed the retailer had violated the country’s foreign investment and data protection rules. It had asked Indian Prime Minister Narendra Modi to look into Sea’s connections to China.   

Shopee had some 300 employees in India mostly based in the southern tech hub of Bangalore.

The closure calls into question other Chinese investments in the country such as ShareChat, another Tencent-backed company.

Prior to the military build-up on the disputed border two years ago, the tech sector had been a rare example of collaboration between Asia’s two giants. Many entrepreneurs saw similarities between the Indian market of today and that of China two decades ago.

But when live rounds began to be fired and deaths were reported, the decades-old stalemate on the frontier became a defining issue in the already delicate political relationship. Since then, troops have not been withdrawn in winter – as was the previous practice – and New Delhi has ignored Beijing’s pleas to focus on other areas of potential cooperation as a means of building trust.

Russia’s decision to invade Ukraine in February has only complicated matters further because China would like Delhi to tread a similar diplomatic line to Beijing over Moscow’s actions.

Modi’s government is reluctant to take as high a profile as the Chinese have in the dispute – China’s diplomats have blamed NATO for provoking Russia and hosted Russian Foreign Minister Sergei Lavrov at a summit in Anhui province last week – in part because any perceived approval of Russia’s actions by India might set a precedent for Chinese action along the Himalayan border.

“India has little interest in endorsing the idea that it is ok for large countries to violate the territorial integrity and sovereignty of smaller neighbours… China’s claims on some of the territory India holds are the same as Russia makes on Ukraine,” says Tanvi Madan of the Brookings Institution.

However, New Delhi also worries about an isolated Russia whose only ally is China. A scenario in which Russia is highly dependent on China is bad for India because Delhi procures a lot of military hardware  from Russia. If Russia were essentially beholden to China, then Moscow would have to back Beijing in any conflict with India.

At the same time Indian authorites have also expressed concern at what they see as growing Chinese influence in Pakistan, Sri Lanka and Nepal.

Foreign Minister Wang asked his Indian counterpart Subrahmanyam Jaishankar to put the differences on the boundary issue in “an appropriate position” so the two countries could also work together on other issues. 

Jaishankar responded by saying normal relations were not yet possible due to the “frictions and tensions that arise from China’s [troop] deployments since April 2020”. 

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