China’s Economic Policies towards India and Pakistan (2001-2015)

Abstract

This thesis is mainly focused on three countries, including China, India and Pakistan. At the same time, the USA is discussed due to its presence and influence on the policymaking within India and Pakistan. Our topic of interest is China’s economic policies towards India and Pakistan from the year 2001 to the year 2015. The theory of realism and theory of complex interdependence are discussed regarding Chinese economic policies towards India and Pakistan since the beginning of the new millennium. We explored the evolution of bilateral relations between China and Pakistan and ties between China and India in a historical context. We analysed the Chinese economic growth from the Chinese people revolution from 1949 to 2015. Chinese economic policies towards Pakistan and the deteriorating economy of Pakistan are explored. Chinese-Indian economic cooperation in the 21st Century and its implications for Pakistan are investigated. Finally, we present and analysed the China-Pakistan Economic Corridor (CPEC) and its regional implications. Our perception is that China has devised and pursued a rigorous policy of economic and strategic cooperation with the regional countries, especially Pakistan and India. China is required to maintain the growth rate of its economy even in the case of challenges faced by the U.S. and its allies in the Pacific in the form of indirect containment. Pakistan, being economically deteriorated, responded in a positive way to meet the Chinese aspiration of securing a relatively secure and short trade route to sustain its economy. It resulted in an inflow of massive amounts in the form of development and support for infrastructure and energy. China has also managed to develop viable economic relations with India as it is a significant and emerging market for Chinese goods and investment. It has tried to enhance the volume of trade with India and to minimise the conflicting issues. India has also responded positively to improve foreign investment in its economy. Moreover, we have studied Chinese policies toward South Asia, particularity toward India and Pakistan. We have concluded that they are based on their national interests. Their trilateral relations can be understood using theories of realism and complex interdependence. China-Pakistan relationships are rather based on the paradigm of realism, while China-India relations are rather mixed and based on both realism and complex interdependence. However, there is a recent change after the policy of One Belt One Road initiative, which is a step toward the interdependence of the Chinese economy in Pakistan. Chinese relations with Pakistan are not reflecting a win-win situation as there are numerous consequences (arms race, local industrial deterioration, etc.) along with the economic development and enhancement of strategic capabilities. Furthermore, we have analysed the mutual gains and impacts of growing Chinese economic interests in the South Asian region, especially in Pakistan and India. Our study is consistent with the hypothesis that Chinese economic policies are having substantial effects on the South Asian economies and are giving rise to regional cooperation and integration. This work can be useful for policymakers, economists, historians, and students of Pakistan study, International relations and political science, and individuals who have an interest in understanding the complex nature of relationships among the states.