Power Realignments in Asia: China, India and the United States


Edited by: Alyssa Ayres & C. Raja Mohan

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    List of Tables

    • 2.1 China's import tariff rates, 2004–10 33
    • 2.2 ASEAN 6 import tariff rates 33
    • 8.1 China oil demand and imports (MMBD) 161
    • 8.2 Chinese petroleum companies 165
    • 9.1 China's oil demand (MBD) 196
    • 9.2 Expected growth of renewables in China under the new law 199

    List of Figures

    • 2.1 Exports of foreign affiliates as a share of China's total exports, 1985–2006 22
    • 2.2 Processing exports, 1981–2006 22
    • 2.3 Exports of electronics and information industry products, 1995–2006 23
    • 2.4 China's applied tariff rate, 1982–2005 24
    • 2.5 China's import tariff revenue as a share of GDP, 1978–2005 31

    Foreword by Ambassador K. Raghunath

    This publication brings together the papers presented at the meeting of Indian and US scholars and experts from public life held in New Delhi on 15–17 December 2006 for sharing assessments on ‘Power Realignments in Asia: China, India, and the USA’. The discussions focused on the significance for India, the US and India–US relations, of China's growing economic and strategic profile and presence in the Asia–Pacific region, as well as on India and US engagement with this development in the framework of our respective national interests.

    This exercise involves forming a real-time sense and evaluation of the changing Asian strategic scene including, in particular, China's all round growth, keeping in mind that along with China's rise, there is also a larger picture of Asia–Pacific resurgence and the emergence of new centres of influence in this region. Their interdependence on each other and on China is an important pan of the evolving Asia–Pacific security and development architecture. In this framework, India, because of its traditional connectivity—commercial, cultural, and demographic—with its extended Asia–Pacific neighbourhood, has developed as a factor for stability and security in the region.

    This meeting was intended to be the first round in a larger dialogue between the Observer Research Foundation (ORF) and the Center for the Advanced Study of India (CASI). To date, this is the most comprehensive and imaginative India–US venture of its kind. It has grown out of the agreement between ORF and CASI, reached over two years ago on establishing a substantive dialogue on developments of common interest, pertaining in particular to the Asia–Pacific region. Relations between our two countries have, over the decades, acquired the necessary comfort level and mutual understanding to enable a meaningful dialogue on these lines.

    The US team comprises eminent academic scholars and other experts who have contributed significantly to an objective comprehension of modern China, to educating the public, and shaping US policy. The Indian side for its part is made up of persons of cutting edge engagement with the issues on the dialogue agenda, who have reached the highest professional levels in government, academia, and business and are now leading major think tanks and other national institutions.

    This exercise should be seen primarily not as yet another ‘Track II’ event, but more appropriately as a free and wide ranging exchange, a meeting of minds between Indian and US experts, reflecting scholarship, as well as policy experience, with an emphasis on rigorous analysis and practical suggestions. The views expressed are independent of the government and yet, at the same time, reflective of national positions. This quality of the dialogue as well as of the actual participation helps reinforce the utility of this exercise as a contribution to public understanding and policy clarity.

    Ambassador K. Raghunath

    Foreword by Francine R. Frankel

    The essays in this volume resulted from a three-day dialogue in December 2006 between distinguished American and Indian scholars and policy experts. The meeting provided the first opportunity for an exchange of views by some of the most influential thinkers in both countries on the implications for India and the United States of China's rise across a broad spectrum of security issues: strategic, military, economic, and environmental.

    Many of the dialogue participants had moved easily between public service and academic life in each country, but few had been challenged to make their understanding relevant to counterparts across countries. Equally important was the dialogic discussion's unusual forum. All participants, whatever their experiences, presented their views independently, without having to keep in mind any official or government position. The hallmark of this kind of free intellectual interaction is the production of fresh perspectives, which can then enrich and be integrated into the way each of us thinks about the new power relationships in Asia.

    The genesis of the dialogue meeting goes back to an agreement reached between the Observer Research Foundation (ORF) and the Center for the Advanced Study of India (CASI) in 2004. This agreement developed out of conversations during which we identified the need for periodic bilateral exchanges on jointly defined issues important to India and the United States.

    The December 2006 dialogue was conceived as the first of a three-year US–India project examining several aspects of the rise of China projected into the future. The goals of this initial meeting were twofold: We wanted to identify overlapping and diverging perceptions of the implications of the rise of China for US and Indian foreign policies and develop an overview to help structure discussions in subsequent meetings. My successor as CASI Director chose not to follow up the 2006 dialogue with two successive meetings, so this volume stands on its own.

    As the United States and India both create and adapt to a rapidly changing world, part of the dialogue process involves understanding what we mean when we use certain terms—and whether we mean the same thing when we use them. Often tensions arise because we think we are saying the same thing but in fact different meanings are assumed for the same words. In thinking about the changing power alignments in Asia, there are two or three words that continue to require clarification. One is ‘hedging’. This word seems convenient because it does not necessarily assume a confrontational outcome, but neither does it make clear against what outcome is a country hedging. As a result, it can cause misunderstanding. ‘Strategic partnership’ is another term for which further explication is needed. What does it mean, and in what contexts? India has a strategic partnership with the United States, and it has a strategic partnership with China. How do they differ, if they do? The third term that comes up frequently is the India–China–US ‘security triangle’. Does it imply any specific policy equations?

    Finally, I want to acknowledge very gratefully the contribution made to this dialogue by the Nand and Jeet Khemka Foundation, which allowed us to bring our US colleagues to New Delhi for this meeting. The host institution in each country underwrites local expenses, for which I want to thank the ORF and especially Ambassador M.K. Rasgotra, advisor on international affairs to the ORF, who graciously hosted a final dinner for our group which we very much appreciated.

    The pages which follow represent a great investment for all of us in the future of US–India relations.

    Francine R. Frankel, Founding Director CASI


    Edited volumes typically require a great deal of time from a large number of committed participants, sustained over several different stages. This one is no exception. We are thankful to all the authors represented in this volume for their contributions and their involvement in the entire project.

    The essays collected here originated with a conference coconvened by the Observer Research Foundation (ORF) and the University of Pennsylvania's Center for the Advanced Study of India (CASI), the result of discussions between ORF Chairman R.K. Mishra and Center Founding Director Francine R. Frankel. We owe this collection to their foresight and planning. Former Foreign Secretary K. Raghunath, along with Dr Frankel, chaired the conference proceedings; Dr Marshall M. Bouton of the Chicago Council on Global Affairs inaugurated the proceedings with a talk based on his institution's recently-released public opinion survey, which set the stage for vigorous discussion about rising powers and the perception thereof. Former Foreign Secretary and President–ORF International Centre M.K. Rasgotra proved a guiding hand and more-than-occasionally provocative interlocutor as well. He also hosted the entire gathering for a wonderful dinner at his home.

    Also at ORF, Honorary Secretary Baljit Kapoor not only ensured that everything ran smoothly, but was also the linchpin for the transition to publication with Sage. Senior Fellow Ashok Singh worked closely on the conference from idea through execution, and helped shepherd the papers into a coherent manuscript over the course of many months. ORF's Editor Anshu John served as the centralizing force in the later manuscript stages, as every author updated their chapters and made final changes. A special thanks goes to Satish Puri and his team, without whose hard work the entire conference undertaking would never have been realized.

    At Penn, the Center experienced a leadership transition in 2006, and we are deeply grateful for the enthusiasm with which Director Devesh Kapur embraced this project; we are also appreciative of his patience and support during the long time to publication that ensued. Michael Baker worked tirelessly to help the Center raise the funds necessary to support the project. Tanya M. Carey always offered her kind assistance with the many threads that needed stitching together. Finally, the Nand and Jeet Khemka Foundation underwrote Penn's component of the project, a most generous gesture. This volume thus represents a lasting product of that investment.

    In a closing word of memoriam, it is with great sadness that we note the passing of ORF Chairman R.K. Mishra in January 2009. Were it not for his vision of India, clarity of thought, and ability to implement ideas into action, the partnership that resulted in this volume would not have been built. He was a remarkable public intellectual, and will be missed.

    C. Raja Mohan, Singapore, June 2009

    Alyssa Ayres, Washington, June 2009

  • About the Editors and Contributors


    Alyssa Ayres joined McLarty Associates, the Washington-based international strategic advisory firm, as director for India and South Asia in 2008 after serving in the US Department of State as special assistant to the Under Secretary for Political Affairs. Previously, Dr Ayres was at the Center for the Advanced Study of India at the University of Pennsylvania, and before that, at the Asia Society in New York.

    A cultural historian of modern South Asia, Dr Ayres has carried out research in India, Pakistan, and Indonesia. Her book on nationalism in Pakistan, Speaking Like a State, was recently published by Cambridge University Press. As project director of the Asia Society's Task Force on US Policy toward India, she was the primary author of its 2009 report, Delivering on the Promise: Advancing US Relations with India. Her essays have appeared in the Wall Street Journal, Journal of Asian Studies, Current History, and World Policy Journal, among others. In addition, she co-edited the two most recent India Briefing volumes published by the Asia Society.

    Dr Ayres speaks fluent Hindi and Urdu and in the mid-1990s worked for the International Committee of the Red Cross as an interpreter in Jammu and Kashmir. She received an AB magna cum laude from Harvard, and an MA and PhD from the University of Chicago.

    C. Raja Mohan is the Kissinger Chair in Foreign Policy and International Relations at the Library of Congress in Washington DC during 2009–10. He is a contributing editor with The Indian Express, New Delhi and a Visiting Professor at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Earlier, he was a professor of south asian studies at the Jawaharlal Nehru University in New Delhi. He also served as the Strategic Affairs Editor of The Indian Express in New Delhi, and the Diplomatic Editor and Washington Correspondent of The Hindu. Dr Raja Mohan has a masters degree in Nuclear Physics and a PhD in international relations. He was a member of India's National Security Advisory Board during 1998–2000 and 2004–06. He was a Jennings Randolph Peace Fellow at the United States Institute of Peace, Washington DC, during 1992–93. His recent books include Crossing the Rubicon: The Shaping of India's New Foreign Policy (2004) and Impossible Allies: Nuclear India, United States, and the Global Order (2006).


    Vivek Bharati is Executive Director, PepsiCo India Holding Pvt Ltd. He was an advisor to the Federation of Indian Chambers of Commerce and Industry (FICCI) and headed its national programmes and policy division. He has also served as Advisor to the Country Director, World Bank, India. He was a financial journalist from 1984 to 1996, senior editor at The Times of India, and editor at The Economic Times. As a regular columnist and editorial writer, he has contributed hundreds of pieces on the Indian and global economy, politics, and international relations. He is a keen commentator on India's political economy. He was a Jefferson Fellow at the East-West Center in Hawaii in 1992. He has delivered talks and lectures on India in the US, Hong Kong, the UK, and the Middle East, and has anchored numerous TV programmes. He began his career as a lecturer of economics at Delhi University.

    Elizabeth Economy is the C.V. Starr senior fellow and director for Asia studies at the Council on Foreign Relations. She has published widely on both Chinese domestic and foreign policy. Her most recent book, The River Runs Black: The Environmental Challenge to China's Future (2004), won the 2005 International Convention on Asia Scholars Award for the best social sciences book published on Asia, was named one of the University of Cambridge's Top 50 Sustainability Books in 2008 and one of the top 10 books of 2004 by The Globalist. She also co-edited China Joins the World: Progress and Prospects (with Michel Oksenberg, 1999) and The Internationalization of Environmental Protection (with Miranda Schreurs, 1997). She has published articles in foreign policy and scholarly journals including Foreign Affairs, Harvard Business Review, Harvard Asia Quarterly, Survival, and Current History; and op-eds in the New York Times, The Washington Post, and International Herald Tribune, among others. She is a frequent guest on nationally broadcast radio and television programmes, has testified before Congress on numerous occasions, and regularly consults for US government agencies and companies on Chinese environmental issues. She is currently working on a new book focusing on the implications of China's global quest for natural resources. Dr Economy received her PhD from the University of Michigan, her AM from Stanford University and her BA from Swarthmore College. In 2008, she received an honorary Doctor of Laws degree from Vermont Law School.

    Richard J. Ellings is president of the National Bureau of Asian Research (NBR), a non-profit, non-partisan institution whose international network of associates conducts advanced research on important policy issues concerning American relations with all of Asia, including Russia. Dr Ellings is co-founder of NBR, has served as the institution's executive director, and sits on its board of directors. Prior to serving with NBR, he was assistant director of the Henry M. Jackson School of International Studies at the University of Washington. He is also affiliate professor of international studies at the University of Washington where he received the Distinguished Teaching Award. He is the author of Embargoes and World Power: Lessons from American Foreign Policy, co-author of Private Property and National Security, and co-editor of Asian Aftershocks with Aaron Friedberg. With Nicholas Eberstadt, he co-edited Korea's Future and the Great Powers, and with Sheldon Simon, co-edited Southeast Asian Security in the New Millennium. He is the founding editor of the NBR Analysis series, and also established the Strategic Asia Program and AccessAsia, the national clearinghouse that tracks specialists and their research on Asia. Dr Ellings has served as consultant to the Office of the Secretary of Defense, Department of State, and other US offices and agencies.

    Nicholas R. Lardy is a senior fellow at the Peterson Institute for International Economics in Washington DC. He came to the institute in March 2003 from the Brookings Institution, where he was a senior fellow in the Foreign Policy Studies Program from 1995 until 2003, and served as interim director of the Program in 2001. Prior to his work at Brookings, he served at the University of Washington, where he was the director of the Henry M. Jackson School of International Studies from 1991 to 1995. From 1997 through the spring of 2000, he was also the Frederick Frank Adjunct Professor of International Trade and Finance at the Yale University School of Management. He is an expert on Asia, especially the Chinese economy. Before his directorship, Dr Lardy had been a professor of international studies at the University of Washington since 1985 and an associate professor from 1983 to 1985. He served as chair of the China Program from 1984 to 1989. He was an assistant and associate professor of economics at Yale University from 1975 to 1983. He has written numerous articles and books on the Chinese economy. His most recent book (co-authoed with Morris Goldstein) is The Future of China's Exchange Rate Policy (2009). Dr Lardy serves on the board of directors and executive committee of the National Committee of US–China Relations; is a member of the Council on Foreign Relations; and is a member of the editorial boards of The China Quarterly, Journal of Asian Business, China Review, and China Economic Review. He received his BA from the University of Wisconsin in 1968 and his PhD from the University of Michigan in 1975, both in economics.

    Kenneth Lieberthal is senior fellow and director of the John L. Thornton China Center at The Brookings Institution. He is emeritus professor at the University of Michigan, where he was, until June 2009, Arthur F. Thurnau Professor of Political Science, William Davidson Professor of Business Administration, distinguished fellow at the William Davidson Institute, and research associate of the Center for Chinese Studies. He has a BA from Dartmouth College, and two MAs and a PhD in political science from Columbia University. Dr Lieberthal served as special assistant to the president for national security affairs and senior director for Asia on the National Security Council from August 1998 through October 2000. His US government responsibilities encompassed American policy towards all issues involving northeast, east, and southeast Asia. Dr Lieberthal has written and edited 14 books and monographs, including a second revised edition of Governing China: From Revolution Through Reform (2004), and authored about 70 periodical articles and chapters in books, including: ‘How Domestic Forces Shape the PRC's Grand Strategy and Domestic Impact,’ in Ashley Tellis and Michael Wills, Strategic Asia 2007–08 (2007). Dr Lieberthal is on the editorial boards of Asia Policy, China: An International Journal, The China Quarterly, China Economic Review, Foreign Policy Bulletin, Journal of Contemporary China, and Journal of International Business Education.

    Sudha Mahalingam is an energy economist with over 25 years of professional experience. She is currently member of India's Petroleum and Natural Gas Regulatory Board entrusted with the responsibility of regulating downstream hydrocarbon sector. She is also a member of India's National Security Advisory Board which advises the prime minister through the National Security Advisor on security-related issues. In this capacity, she provides policy inputs on India's energy security to the highest decision-making levels.

    Prior to her current assignment, Sudha Mahalingam held the prestigious Senior Fellowship at The Centre for Contemporary Studies, Nehru Memorial Museum and Library, New Delhi, India where she contributed to shaping the country's discourse on energy security. In 2007, she was awarded the first K. Subrahmanyam award for excellence in strategic studies by Institute for Defence Studies and Analyses (IDSA), India's leading think–tank on strategic studies, in recognition of her contribution to the debate on India's energy security.

    During her long career, she has worked for several leading think–tanks and research institutes as well as in mainstream business journalism. Her areas of interest encompass the geopolitical, economic, environmental, and regulatory dimensions of all forms of energy including oil, gas, electricity including nuclear, hydro, and coal as well as midstream and downstream activities like refining, petrochemicals, fertilizers, etc. She has published numerous articles in Indian and international journals and writes regularly in the opinion columns of newspapers. Sudha Mahalingam has represented India in several international conferences in her capacity as an energy expert. She is a star speaker in national conferences on energy-related issues.

    P.S. Ramakrishnan is emeritus professor and Indian National Science Academy Honorary Senior Scientist at the School of Environmental Sciences, Jawaharlal Nehru University. With a wide range of experience of working in universities and research institutions in India and abroad, and working in the interface area of natural and social sciences, he has used knowledge systems (traditional and formal) as powerful tools for ensuring rural community participation based on a value system that they understand. He has been successful in converting his research results into policy and developmental initiatives, working in the broad area of ecology linked with sustainable development. With over 450 research articles and 23 research-based volumes, he has taken research results to the society at large through policy documents, outreach volumes, and audiovisual documentaries.

    David Shambaugh has been professor of political science and international affairs in the Elliott School of International Affairs at the George Washington University since 1996. He directed the Sigur Center for Asian Studies from 1996 to 1998, and since then directed the China Policy Program in the Elliott School. He has also been a non-resident senior fellow in the Foreign Policy Studies Program, and affiliated fellow in the Center for Northeast Asian Policy Studies since 1997. He previously taught for eight years at the University of London's School of Oriental and African Studies, where he also served as editor of The China Quarterly (1991–95), and directed the Asia Program of the Woodrow Wilson International Center for Scholars (1986–87). He has been a visiting scholar numerous times in China as well as in Taiwan, Hong Kong, the former Soviet Union, Japan, and Germany. He has received several research and project grants from various private foundations, including Smith Richardson, Ford, Rockefeller, W. Alton Jones, the US National Academy of Sciences, the British Academy, the UK Economic and Social Research Council, and others. He has published widely, having authored or edited 25 books, over 200 articles and chapters in edited books, and many editorials. He is a frequent commentator on Chinese and Asian affairs in the international media, sits on the editorial boards of several scholarly journals, and has served as a consultant to several governments, research institutes, and private corporations.

    Jasjit Singh, awarded Padma Bhushan for life-time's contribution to national defence and security, is one of the leading strategic experts in India. He joined the Indian Air Force in 1954, graduating from the Air Force Academy with the Jodhpur Sword of Honour in 1956. He has been decorated by the President of India thrice for distinguished service of an exceptional order and gallantry in the face of enemy. He is a graduate of Defence Services Staff College, Wellington. He has held important command and staff appointments in the Air Force, including command of a MiG 21 squadron, director of flight safety, and director of operations at Air Headquarters, retiring from the Air Force in 1988 as an Air Commodore. He was director, Institute for Defence Studies and Analyses (IDSA), New Delhi, India's premier think–tank on strategic and security issues, for 14 years during 1987–2001. He currently heads an independent think–tank, Centre for Air Power Studies, New Delhi, and is the editor of Air Power. He is the author or contributing editor of nearly three dozen books and has published extensively on strategic and security issues. Air Commodore Singh has lectured regularly at defence and war colleges in India and abroad (US, USSR, China, France, Germany, NATO, and Italy) on strategic and security issues. He is a fellow of the World Academy of Art and Science and a fellow of the Aeronautical Society of India.

    Vikram Sood is currently Vice President of the Centre for International Relations at Observer Research Foundation, New Delhi. He is also associated with the Centre for Policy Alternatives. He headed India's external intelligence service, the Research and Analysis Wing, from January 2001 to March 2003. He joined the service in 1972 having been transferred from India's civil services which he joined in 1966.

    Since retiring from the Research and Analysis Wing, he has been a regular commentator on international affairs, security, and foreign policy issues. From 2004 to 2008 he contributed a fortnightly column, ‘Perspectives’, to the Hindustan Times and has also been contributing to other journals, newspapers, and magazines including the Indian Defence Review, Force, The Asian Age, Mail Today, The Hindu, The Times of India, Business World and Tehelka. In addition, he is a consulting editor with Indian Defence Review.

    Ashley J. Tellis is Senior Associate at the Carnegie Endowment for International Peace, specializing in international security, defence, and Asian strategic issues. While on assignment to the US Department of State as Senior Adviser to the Undersecretary of State for Political Affairs, he was intimately involved in negotiating the civil nuclear agreement with India. Previously he was commissioned into the Foreign Service and served as Senior Adviser to the Ambassador at the US Embassy in New Delhi. He also served on the National Security Council staff as Special Assistant to the President and Senior Director for Strategic Planning and Southwest Asia. Prior to his government service, Dr Tellis was Senior Policy Analyst at the RAND Corporation and a professor of policy analysis at the RAND Graduate School. He is the author of India's Emerging Nuclear Posture (2001) and co-author of Interpreting China's Grand Strategy: Past, Present, and Future (2000). He is the Research Director of the Strategic Asia program at NBR and co-editor of its six most recent annual volumes, including this year's Strategic Asia 2009–10: Economic Meltdown and Geopolitical Stability. In addition to numerous Carnegie and RAND reports, his academic publications have appeared in many edited volumes and journals. He earned his PhD in political science from the University of Chicago. He also holds an MA in political science from the University of Chicago and both BA and MA degrees in economics from the University of Bombay. Dr Tellis is a member of several professional organizations related to defence and international studies including the Council on Foreign Relations, the International Institute of Strategic Studies, the United States Naval Institute and the Navy League of the United States.

    Forewords By

    Ambassador K. Raghunath graduated in physics and mathematics and joined the Indian Foreign Service in 1962. He served in several of India's diplomatic missions and become the foreign secretary in the Ministry of External Affairs. Between 2001 and 2004, he was Ambassador of India to Russia.

    Francine R. Frankel is professor of political science and founding director of the Center for the Advanced Study of India, where she served as director from 1992 to 2006. Her research interests include problems of economic transition, changing power alignments in Asia, and the nuclear non-proliferation regime. A recipient of research grants from the Ford Foundation, Social Science Research Council, Smithsonian Institutions, American Institute of Indian Studies, and the American Philosophical Society, Professor Frankel has held research appointments at the Woodrow Wilson Center for International Scholars, Nehru Memorial Museum and Library, New Delhi, Delhi School of Economics, the Institute for Advanced Study (Princeton), and the Center for International Studies, Princeton University. She as authored/edited eight books, including the second edition of India's Political Economy, 1947–2004 (2005); and was co-editor of The India–China Relationship: What the United States Needs to Know (2004). She is completing a book tentatively titled ‘Different Worlds: Challenges of Establishing an Indo–US Global Partnership’. Professor Frankel is a member of the Council on Foreign Relations and has served on several policy task forces sponsored by the Council and the Asia Society. She has appeared as an expert witness before the US House of Representatives Committee on International Relations. She holds a PhD degree from the University of Chicago.

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