India-Pakistan Tensions: Can China Be Trusted to Stay 'Neutral'?

Pakistan’s war plans depend on the assumption that it would obtain enough funds from China, writes Saibal Dasgupta.

Will China support its 'all-weather' friend Pakistan amid escalating tensions between India and Pakistan? Or will it be a good neighbour and defer to India's sovereign retaliation against a globally condemned act of terror?

(Photo: Arnica Kala/The Quint) 

(This piece has been updated. It was first published on 30 April).

Will China support its 'all-weather' friend Pakistan amid escalating tensions between India and Pakistan? Or will it be a good neighbour and defer to India's sovereign retaliation against a globally condemned act of terror?

Following a tense night of the Indian Armed Forces successfully thwarting Pakistan's attempted drone/missile strikes on 8 May, a look at the current geopolitical equations of India and its neighbours, including China, is necessary—for their involvement will be a key factor impacting any future escalations and the potential fallout.

China's Real Estate in PoK

For years, China has been ignoring India’s requests to not establish new projects in Pakistan Occupied Kashmir (PoK) as it's part of the Indian territory. China has nevertheless included the region in the $60 billion China-Pakistan Economic Corridor (CPEC) and built several projects in the area for geopolitical reasons. 

Bordering China is Gilgit-Baltistan, a part of PoK, which is the gateway for the 2,400-km-long CPEC crisscrossing Pakistan in its entirety. Upgrading and extending the Karakoram Highway (KKH) coming from China was a geographical necessity. But China could have avoided the construction of other projects in deference to India’s request.

It went ahead anyway and invested in other projects to give political legitimacy to Pakistan’s claim over the region and to make it difficult for India to recapture it at a later date. 

China had despatched fresh supplies of military hardware to Pakistan, including J-10C fighter jets, after the 22 April Pahalgam killings and India’s announcement that it would hit back. But Pakistan has not been assured of continued and unhindered supplies of missiles and ammunition, as it has been in no position to pay for them for years.

Pakistan is desperately seeking additional funds from different foreign sources, because it is facing huge shortages of a variety of goods, including medicines, which is not available on loan from China. Beijing is unlikely to support its ally over additional funds, as it is already sore about Islamabad’s failure to repay past loans. It was forced to re-roll $6 billion worth of past loans.

The biggest China-funded project in PoK is the $1.54 billion worth Azad Puttan Hydropower plant on the Jhelum River. The other important projects include the Diamer-Bhasha dam in Gilgit-Baltistan area and upgrading of the KKH.

Given its high stakes in PoK and other parts of Pakistan, can China be trusted to stay neutral in the light of the ongoing tensions between India and Pakistan?

This is a critical issue. Fighting Pakistan is not much of a challenge for India as its military capability is indeed superior. The situation would, however, become complex if China despatched emergency supplies of missiles and other sophisticated equipment to the Pakistani forces at this time.

Islamabad has requested China for 40 J-35A fighter jets which it plans to use against Rafale jet fighters that India acquired recently.

Though Pakistan has a fleet of F-16 fighters, it has signed a contract with the US to use it only for anti-terrorism activities—and not against India. This does not mean Pakistan would stick to the contract when it comes to the crunch.

Nearly 81 percent of Pakistan’s arms imports come from China, which has provided it with frigates, drones, and missiles. Pakistan is demanding additional supplies of medium to long-range missiles from Beijing. It also needs additional supplies of small arms.

Between Peace and Deterrance

Some experts have predicted that the two countries might restrict the conflict to exchange of fire on two sides of what was the Line of Control (LOC)—instead of launching an all-out war involving all the army, air force, and navy. There have been multiple violations of ceasefire by Pakistan along the LOC in the Poonch and Kupwara districts of Jammu and Kashmir, the Indian Army said on Monday, 28 April. The army has responded with small firearms. There was no casualty on the Indian side.

Pakistan’s war plans are based on the assumption that it would obtain sufficient funds from China to meet the heavy expenses.

For decades, Islamabad has successfully blackmailed China by utilising its need to keep India under pressure through cross-border terrorism.

Pakistan, which has a meagre foreign exchange reserve of $10 billion (India has $640 billion), is in no position to pay for the additional arms it is seeking. Besides, Pakistan has failed to repay its loans under CPEC, forcing Beijing to re-roll the installments amounting to $6 billion last month.

China recently joined Saudi Arabia and the UAE to extend a $5 billion loan to Pakistan which is close to bankruptcy. Pakistan has demanded an additional $1.4 billion from Beijing. It will make more demands from China and its Arab partners if the conflict picks up momentum.

After India announced that it was putting the Indus Waters Treaty in abeyance, several Pakistani experts suggested that China should give India a taste of its medicine by blocking the water flow in the Brahmaputra which originates in Tibet.

The question is whether China is capable of blocking the water flow, and, would it listen to Pakistan’s request. China has announced plans to build a large hydropower dam on Yarlung Zangbo, as the Brahmaputra is called in China. But it will take 4-5 years for the project to be completed.

Even after it is completed, China may find it difficult to apply brakes on the mighty river without flooding some of its own areas.

What's in it for Beijing?

Both India and China know that there is no way Pakistan can face India in a war if it is not supplied with additional arms and funds from Beijing. The question is whether China would allow itself to be dragged into a situation that has uncertain possibilities.

It is diplomatically wiser for China to obtain an informal assurance from India that Chinese-financed projects would not be damaged in a war, and keep out of supporting Pakistan. India is a $113 billion export market for China, making it a financially more important country than Pakistan.

China’s $440 billion worth of exports to the US is expected to decrease by 20-25 percent, even if US President Donald Trump reduces the tariff rates a little.

This is a bad time for China, which is facing a severe slowdown in the domestic economy, to venture into supporting Pakistan.

Some Pakistani leaders have irresponsibly talked about using the nuclear option. This is not something China would support because a nuclear war is unpredictable and affects several countries simultaneously.

Such a move by Pakistan would completely topple its own programme of economic development, seriously affecting Beijing’s plans to capture Taiwan.

India has already suggested it is ready to open the doors for Chinese investments much wider, giving Beijing additional incentives to avoid supporting Pakistan. What decision Chinese President Xi Jinping takes would demonstrate his level of wisdom.

(Saibal Dasgupta has been a foreign correspondent for 18 years and has authored Running with the Dragon: How India Should Do Business with China. This is an opinion piece, and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)