ELECTRONIC JOURNAL OF SOCIAL AND STRATEGIC STUDIES - Volume 5 Issue 2, August-September 2024

Pages: 330-362

Date of Publication: 30-Sep-2024

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Comparative Study of Sino-Indian Economic influence with Countries Sharing Land-boundaries in South Asia

Author: Prayant Praved

Category: International Relations

Abstract:

Kautilya in his “Raj-mandala Theory” in Arthashastra addressed that there is a possibility of immediate neighbouring country to be hostile but neighbour’s neighbouring countries can be potential allies. He also stated that a country should make alliance with a country who is stronger than one’s neighbouring enemy, and in the absence of such, the country should deliberately attempt to gain favour by supplying money or army or by ceding a part of its territory and by keeping itself aloof. This paper analyses the influence China and India have created due to trade and investment with neighbouring South Asian countries in the last five years. This paper also tries to ponder about knowing neighbours from Indian perspective. The objective of this paper to investigate:

1. Trade-balance between South Asian countries, India and China, which directly or indirectly influence the policy in South Asia.
2. Areas of investment in South Asia by India, to retain its influence in the region.
3. Hurdles in creating confidence to boost trade.

Keywords: India, China, South Asia, trade, economic relations, sphere of influence

DOI: 10.47362/EJSSS.2024.5213

DOI URL: https://doi.org/10.47362/EJSSS.2024.5213

Full Text:

Introduction

The neighbours common to China and India are uniquely placed on the map, sharing border with the 3^rd and 4^th largest country of the world by area. South Asia remains a fastest growing region in the world with an average of nine percent in the year 2022 (South Asian Development Update, 2023). Therefore, the contention to influence and be a driver of Asia is between China’s 17.73 trillion & India’s 3.41 trillion GDP (The World Bank Data, 2023).

Kautilya in his “Raj-mandala Theory” in Arthashastra addressed that there is a possibility of immediate neighbouring country to be hostile but neighbour’s neighbouring countries can be potential allies. He also stated that a country should make alliance with a country who is stronger than one’s neighbouring enemy, and in the absence of such, the country should deliberately attempt to gain favour by supplying money or army or by ceding a part of its territory and by keeping itself aloof (Kautilya, 2022). This paper analyses the influence China and India have created due to trade and investment with neighbouring South Asian countries in the last five years. This paper also tries to ponder about knowing neighbours from Indian perspective. The objective of this paper to investigate:

1. Trade-balance between South Asian countries, India and China, which directly or indirectly influence the policy in South Asia.
2. Areas of investment in South Asia by India, to retain its influence in the region.
3. Hurdles in creating confidence to boost trade.

Methodology

Quantitative-cum-qualitative methodology is adopted to enquire these questions and come to the findings in the end. It utilizes primary, secondary and tertiary source to investigate the issue.

Limitation of Research

To investigate the sphere of influence India and China has created in the respective South Asian nation, this paper restrict itself to the following:

1. It only focusses on bilateral trade & investment to look into the research aspect.
2. This paper takes into account only those South Asian countries, which share land-border with both India and China.
3. It also limit itself to the last five year to see the recent trend.

Afghanistan

Historically, Afghanistan was the important connection for the ancient Silk-Route, which connects East Asia to Europe. Figure 1. shows the geographical importance of Afghanistan.

Figure 1. Importance of geographical location of Afghanistan

Source: Encyclopaedia Britannica

Even though it has relatively dry climate, the main occupation of the afghan-population is agriculture, animal-breeding etc. Agriculture contributes to nearly thirty-percent of its GDP and employs more than sixty-percent of its labour force. Much of its small scale agricultural related activities add to the industrial product. However, the availability of rainy irrigation between October-March & water shortage in summer months, force the farmer on relying more on winter-crop. Wheat is the major crop cultivated along with rice, barley, maize, potato, sugarcane etc. Horticulture product like apple, pomegranate, apricot, almond, mulberries, grapes, orchid-fruits are also grown. Kunduz at an altitude of 400-2000m is the major agricultural region of the country. The exporting livestock product such as wool (pashmina), milk, meat, and fat give an earning edge to the afghan-farmer.

As, the country is located in the Tethys-Eurasian fold-line, it is also a hub of minerals like coal, iron, copper, gold, lithium, beryllium, uranium, oil and natural gas. (Scarlat, 2015). See the Table 1. below for minerals and mines in Afghanistan. Figure 2. gives the geographical distribution of these natural resources.

Table 1. Minerals and Mining-sites in Afghanistan

Minerals	Abundant region in Afghanistan	Mining-sites	Utility of the resource.
1.Copper	Logar Province	Mes Aynak mines	Electrical & Electronics.
2.Oil & Natural Gas	Sari-Pui & Faryab Province	Amu Darya basin	Energy.
3.Uranium	Kabul Province	Khwaja-Rawash Mountain	Nuclear Energy for fuel & defence.
4.Lithium	Ghazni Province	Dashti Nawur mines	Energy Storage in Battery.
5.Beryllium	Helmand Province	Khanashin mines	Lighter and stronger metal for aeronautical, ship, missile industry.
6.Gold	Ghazni Province	Zarkashan mines	Jewellery

Source: Author

Figure 2. Geographical location of minerals in Afghanistan

Source: United State Geological Survey; Afghanistan Geological Survey

India-Afghanistan Trade & Investment Relation: Post-2018

In September 2018, Afghanistan President Ashraf Ghani visited India to participate in India-Afghanistan International Trade and Investment Show held in Mumbai under the aegis of USAID (United State Agency for International Development) and GOI (Government of India). Some prominent Indian companies doing business in Afghanistan like APTECH, AIPL, Air India GSA, GAMMON INDIA, and KPTL etc. participated in the investment show. During the show, President Ghani and Indian Prime Minister Narendra Modi expressed satisfaction at the increase in bilateral trade that has crossed the US $ 1 billion. To further boost trade and connectivity, both the leaders expressed determination for development of Chabahar-port and Dedicated Air-Freight Corridor. The hurdle block in Attari-Wagah trade route is pinching the Afghan-trader, as India is the biggest market of afghan-products. The investment by India in Zaranj-Delaram road was to boost economic ties and to open a new route of seaport for Afghanistan.

The opening of Chabahar-port and Air-Freight route boosted the bilateral trade to a new level of US $ 1.5 billion in 2019-20. The sea-route via Chabahar-port was also used to send assistance of wheat & pulse by India to Afghanistan. Under High Impact Community Development Project (HICDP), India invested in small & medium scale project like school, health, roads, government building, sports facilities, water management, irrigation & agriculture. A total of 37-projects were completed by GOI under HICDP scheme till FY2019-20. A Memorandum of Understanding (MoU) commitment of million-dollar investment by GOI under various phases of HICDP was signed. The pandemic created by Covid-19 posed a challenge in trade across the world. In early 2021, India sent 5lakhs doses of indigenous Covishield vaccine, 20MT of life-saving medicine & 75000MT of wheat as grant assistance to tackle the food-security and humanitarian situation in Afghanistan. In order to provide safe drinking water to Kabul-resident, an agreement between both the countries was reached to build Shatoot-Dam.

Change in political-scenario in Afghanistan with the coming of Taliban-regime after the withdrawal of US-Forces, made India to start Operation Devi Shakti for the evacuation of its citizen from there. For the humanitarian assistance of Afghan people, GOI supplied the shipment consisting of 40,000MT of wheat, 5lakh doses of Covid-vaccine etc. Emergency-Relief-Assistance of 28 tons was dispatched by GOI in the wake of earthquake in Afghanistan & handed over to Afghan Red Crescent Society, Indira Gandhi Children’s Hospital, UN World Food Program and United Nation Office for the Coordination of Humanitarian Affairs. The trade & investment between both the countries was hit after the coming of Taliban-regime in August 2021. Table 2. below gives the trading value between both the countries in the last five years.

Table 2. Trade between India-Afghanistan: 2018-23 (in USD$ Mn)

	2018-19	2019-20	2020-21	2021-22	2022-23
India’s Export to Afghanistan.	726	891	855	662	482
Afghanistan’s Export to India.	359	410	-	-	-
Total	1085	1301

Source: Author’s tabulation based on WITS data.

China-Afghanistan Trade & Investment Relation: Post-2018

Afghanistan is an important centre in the China’s ambitious project under Belt & Road Initiative (BRI) connecting Eastern-China to Europe. After 2017, China redesigned its BRI and rethought of extending CPEC to Afghanistan in order to achieve four major purpose:

1. Safeguarding a corridor from China to Europe,

2. Confining the extremism to protect its internal threat in Xinjian,

3. Gaining access to various natural resources,

4. Securing its investment in Afghan-land.

In the next phase of interested investment in Afghanistan, China may consider service industries (Hashimy, 2023). In January, 2023 CAPEIC investment announcement of $540million over a period of three years for developing oil-reserve and oil exploration from Amu-Darya basin. Chinese firm Gochin is interested in exploration of critical energy transition and rare earth minerals especially Lithium in Afghanistan. These investments are also in the interest of cash-strapped Taliban-regime (Brar, 2023). One of the largest copper deposit at Mes-Aynak Copper mine is of China’s need for its electronics-sector. Under Customs FTA-2017, which gave zero-tariff to Afghan goods has increased landing of Afghan pine-nut to China (Cheema, 2023). Table 3. below gives the trading value between both the countries in the last five years.

Table 3. Trade between China-Afghanistan: 2018-23 (in USD$ Mn)

	2018-19	2019-20	2020-21	2021-22	2022-23
China’s Export to Afghanistan.	668	599	500	474	-
Afghanistan’s Export to China.	28	31	-	-	-
Total	696	630

Source: Author’s tabulation based on WITS data.

Pakistan

The country is located in the temperate-zone with Hindukush-range in north, Arabian-Sea in the South, it experiences majorly hot-dry climate. Figure 3. Shows the geographical importance of Pakistan.

Figure 3. Geostrategic Location of Pakistan

Source: MapsofIndia

The season varies from cool-dry winter, hot-dry spring, rainy-summer from South West Monsoon, to low-rainfall from North-East Retreat (Anglia, 2023). Agriculture contributes to 21% of Pakistan’s GDP. 80% of the cultivated area are irrigated, because of the majorly 5 perennial rivers. Major crops cultivated in this region are wheat, cotton, sugarcane, rice, maize, mango etc. Copper-deposit in Baluchistan region, Gypsum and Coal-deposit in the adjoining area of western Punjab & northern Baluchistan are major minerals contributing to quarrying-sector of economy (Malkani, 2016).

India-Pakistan Trade & Investment Relation: Post-2018

The inimical relation between both the countries carried on after the independence in 1947, with the major issue of Kashmir. The trade between these two countries followed a wavy-pattern with four war fought in the last 75-years. Abrogation of Article-370 from Constitution of India and henceforth the special status of Jammu and Kashmir by Indian-Parliament had taken the trading to a new low. Traditionally, Pakistan exported goods like raw-cotton, dates, sugar, moong, rock-salt, gypsum, limestone, rice, maize, carpet & mattress, embroidery item etc., whereas India exported goods like spices, rajmah, soyabean, walnut-furniture, automobile spare parts, simple machine tools, plastic granules, wooden-handicraft, medicine and herbal products etc.

The large market of Pakistan and the easy access it can provide to Iran, Afghanistan, West & Central Asia, provide huge opportunities for Indian-investor. However, the laws in Pakistan prevent Indian & Israeli citizens/entities to establish, own, operate and dispose of interest in most type of businesses (including arms and ammunitions; high explosives; radioactive substances; securities, currencies & mint; and consumable alcohol) on its land (Folley, 2023). In 2013, IWM Interwood Mobel Private Limited became the first joint venture of company from India-Pakistan, and operated in furniture making industry. Indian Pharmaceutical Company Biocon gave license to Ferozsons Laboratories of Pakistan for marketing of BioMAbEGFR. To cater the Pakistani-market, companies like Dabur choose to operate via Dubai. Table 4. below gives the data on the trading value between both the countries in the last five years.

Table 4. Trade between India-Pakistan: 2018-23 (in USD$ Mn)

	2018-19	2019-20	2020-21	2021-22	2022-23
Pakistan’s Export to India.	383	66.3	0.167	0.240	-
India’s Export to Pakistan.	2345	1186	282.3	502.8	-
Total	2728	1252.3	282.467	503.040

Source: Author’s tabulation based on WITS data.

China-Pakistan Trade and Investment Relation: Post-2018

China opened-up and reformed its economy in 1978 with the adoption of Flying-Geese model, leading to growth with an average of nine-percent between 1980-2005. According to this model, Chinese attracted huge amount of Foreign Direct Investment (FDI) with switching from import-substitution strategy to export-promotion policy. It advocates for order based on leadership and collective action within a nation state. Moreover, China is blamed to follow a Currency-Devaluation Policy to promote its export and discourage import. See Figure 4. for the explanation on Currency-Devaluation Policy. China maintained a friendly relation with Pakistan in order to secure its law and order situation in Xinjiang province. China-Pakistan entered into Preferential Trade Agreement(PTA)-2004, Early Harvest Program(EHP)-2006, Free Trade Agreement(FTA)-2007, which increased their bilateral trade, but giving an advantageous edge to China over Pakistan (Kayani, 2013). The FTA between these two countries covered trade in goods as well as investment. Pakistan-China Investment Company (PCIC) was founded in 2007 for promotion of trade, investment and economic growth. Pakistan export goods like raw-cotton, raw-wool, jute, synthetic-textile etc. to China, whereas China export electrical and other machinery, iron and steel, optical and medical equipment, data-processing equipment, textile, apparels etc. to Pakistan. Scholars in Pakistan point-out the reason for low trade and investment to the following reason:

1. China-ASEAN FTA (ACFTA) charges zero tariff on 90-percent export and import. Even, China offers zero to 3.3 percent tariff to 33-developing countries, which include Nepal, Bhutan, and Maldives. Hence, this put Pakistan hard to compete with these countries in exports to China.
2. Instability in governance and so irregular policy on investment.
3. Terrorism and the deteriorating law and order in its domestic-land.
4. Poor infrastructure.
5. Bureaucratic corruption and lack of business-ethics.
6. Excessive paperwork and rigid conformity to redundant formal rules. (Red tapism)
7. Chinese apathy for invest in Pakistan because of the bilateral trade-balance more inclined in favour of China. See the Table 5. below to analyse the trade balance.
8. China is more interested to invest in labour-intensive industry in Africa, having low labour-cost. (Malik, 2013)

Gwadar was originally part of Oman-Sultanate before being bought by Pakistan in September 1958 and added to its Baluchistan province. In order to attract investment at Gwadar, Pakistani government setup SEZ. The Gwadar port is strategically located 75km east from Iran-Pak border, 330km away from busiest oil-shipment corridor Strait of Hormuz Gulf. It is also a nearest oil-delivery point of China with just 2500km away from Xinjiang province (West China). The transfer of this port to China Overseas Port Holding Company created huge hue-cry in the Baluchistan region of Pakistan. Article 154(1) of Pakistan-Constitution assure provincial-autonomy to its people and handling of Gwadar-port to a foreigner without the consent of people or provincial government, by the federal authority created unrest in the region. The federal authority of Pakistan optimistically went ahead with such a move, as it would enhance the existing bilateral trade and investment. It can also be a strategic-tool to promote bilateral trade and relation with like-minded countries.

Figure 4. Role of Devaluation of currency in promoting export.

Source: Author

Table 5. Trade between China-Pakistan: 2018-23 (in USD$ Mn)

	2018-19	2019-20	2020-21	2021-22	2022-23
Pakistan’s export to China.	1818	2037	1867	3034	-
China’s export to Pakistan.	16933	16167	15358	24241	-
Total	18751	18204	17225	27275	-

The country is divided into northern mountainous part, which covers seventy-percent of the area, and the remaining thirty-percent is terai-land, which is suitable for cultivation. The fast-running river cuts down the hills forming I-shaped gorges, valley and the downstream river possess huge amount of energy-potential to harness hydropower. The country has also the potential for renewable solar energy on its hilly slope. Agriculture sector contributes to 35.12-percent of Nepal’s GDP and employs 66-percent of its workforce. As the country is located on Indo-Eurasian convergent plate boundary, it is prone to disastrous earthquake, flood etc. which derails its growth trajectory. The climate-change adds to irregular rain-pattern, affecting its agriculture. Remittance form the important source of foreign earning and maintain its foreign exchange reserve for balance of payment. The amount of $8.2 billion as remittance forms nearly thirty percent of its GDP. The mountainous rough terrain provides an enabling platform for the quarrying industry like cement, slate, limestone, gravel, sand etc. The southernmost Shivalik-Himalayas and Terai-plain has potential for construction-material, radioactive-minerals, petroleum & natural gas in reservoir rocks, while the Lesser-Himalayas has deposit of iron, copper, lead, zinc, cobalt, nickel, tungsten, uranium, molybdenum, limestone etc. (Kaphle, 2020). Before the year 1951, Nepal exported iron and copper to Tibet, and cobalt to India. Presently, most mining companies in Nepal are interested to operate in calcium-based minerals like limestone, dolomite, calcite, marble, slate etc. (Adhikari, 2020). Table 6. shows some of the major potential and operating mineral sites in Nepal. The mineral-industry contributes to nearly three percent of its GDP. However, the major hurdle in the growth of quarrying sector are:

1. Lack of infrastructure due to rough-terrain.
2. Deficiency of trained technical work force.
3. Unavailability of suitable mining equipment & charcoal for smelting.
4. Environmental issues raised by local people.

Table 6. Major minerals and mining-sites in Nepal

Major Minerals	Mining Sites (Operational and Prospective)
	Thoshe Megchan (Ramechhap). Phulchoki (Lalitpur). Dhauwadi-Pokhari (Nawalparsi).
	Udaypur. Makwanpur. Lalitpur.
Copper & Tungsten	Bamangaon (Dadeldhura). Gyazi (Gorkha). Bhut-Khola (Tanahun).
Petroleum & Natural-Gas	Dailekh (Karnali). Muktinath (Mustang).
	Mardar-khola & Panpa-khola (Chitwan). Chiruwa-khola (Makwanpur). Buka-khola (Sindhuli).

Source: Author

India-Nepal Trade & Investment Relation: Post-2018

In the mid-20^th Century, Nepal signed Treaty of Peace & Friendship with India, to strengthen the economic relationship. India is Nepal’s largest export market, the biggest source of its imports, the top investor of foreign capital stock & the largest donor of foreign aid. India’s direct investment in joint-venture industry accounts almost thirty-percent of total FDI in Nepal. Figure 5. points out the agreement for flow of goods between both the countries. The trade is inclined in favour of India from last two decades. Major exported product from India to the Himalayan-country are petroleum oil and oils from bituminous minerals, animal or vegetable fats and oils, pre-edible fats, coffee, tea, mate, spices, textile-fibre, paper-yarn, beverages, spirits, vinegar, etc. , whereas the exported product from Nepal to India constitute sweetened flavoured water, cardamom, plastics-articles, black-tea and fermented-tea, jute-fibre, textile-fibre etc. (Taneja, 2019)

Figure 5. Treaties & Agreement for trade between India-Nepal.

Source: Author

There is a huge trade potential between India-Nepal, but the institutional, socio-political and transportation challenges depict a low amount of actual trade. Both the countries can explore the trade possibilities in items of goods, they can get from each other instead of elsewhere in the world. The large number of sensitive list of item in Nepal is also a hurdle in India’s increasing trade potential (i.e. they do not receive preferential-duty promised under SAPTA). High duty of minimum 25-percent procured by Nepal under Bilateral Trade Treaties (BTT) is a topping on the hurdles in bilateral trade.

The non-tariff barrier like complex technical requirement for authorisation and regulation in case of pharmaceutical products, no fly-ash content in cement component is also a challenge. As, India is not a member of Pharmaceutical Inspection Convention, & Pharmaceutical Inspection Co-operation Scheme, the Nepalese Drug Development Administration (DDA) inspector visit the factory-site to give the green-signal for drugs to land in Nepal. The burden of each visit of DDA official to India is borne by the Indian-trader at the rate of $1500. In the case of cement, Bureau of Indian Standard (BIS) allows fly-ash component ranging from 15-35 percent, which mismatches with Nepal Bureau Standard toleration of 15-25 percent.

On the other hand, when list of goods Nepal is exporting to other countries is compared with India’s import from various countries except Nepal, it is seen that Nepal’s export is not in demand in India. Table 7. shows the bilateral trade-value between both the countries. Even though, Nepal enjoys duty-free access under BTT for goods like copper product, zinc oxide, acrylic yarn, vegetable-ghee etc. for export to India, however, it is unable to reach to the quota-quantity allowed in the treaty (i.e. unutilized quota limit under BTT by Nepal). Nepal is also facing challenges for export to India due to the criteria of Rules of Origin, which define the requirement of minimum thirty-percent of value-addition in goods to qualify for duty-free tariff. The non-tariff barrier for Nepalese goods export to India are:

1. Limited number of testing facility near border, resulting in sending the samples to Kolkata, which adds to trade-time & transaction-cost.
2. Dependency on government-laboratories for testing, even though private laboratories are accredited by NABL (National Accreditation Board for Testing & Calibration Laboratories) & notified by FSSAI (Food Safety & Standard Authority of India).
3. Unawareness related to agricultural items & medicinal plants, resulted in information-crunch on the part of trader for requirement & regulation related to pest-risk analysis.
4. Absence of adequate-infrastructure at the Land Customs-station on the border (i.e. insufficient cold-storage facility, weighment-bridge etc.).

Table 7. Trade amount between India-Nepal: 2018-23

India’s Export to Nepal.
Nepal’s Export to India.

Source: Author’s tabulation based on data from Department of Commerce, GOI.

The data on investment by India in Nepal given by Ministry of Commerce, GOI highlights that 65-percent of investment is in service-sector, 33-percent in manufacturing-sector and only a minimal percent in agriculture. The sub-sector in service-industry which are more focussed by India for investment in Nepal are Wholesale, Retail Trade, Restaurants, Hotels, Financial, Insurance, Real Estate and Business Services. State Bank of India is one of the large investor in financial-service, which grew from one-percent to 37-percent.

However, the challenges faced by investor in the Nepal are the political instability, problems in land acquisition, disruptive activities of labour union, no tax rebate on reinvested profit. The Bilateral Investment Promotion and Protection Agreement (BIPA), which was designed after liberalisation of Indian economy in 1991, focussed in reducing political risks for increasing foreign investment and enhancing bilateral FDI. However, BIPA was seen as a hindrance to FDI investment between India and Nepal.

The Foreign Investment Policy, 2015 by Government of Nepal (GON), clearly define the term ‘foreign-investment’ and ‘technology-transfer’. The policy assured equal treatment to foreign investors, no nationalization of the investment, and withdrawal of their principal investment and its earnings. Dispute-settlement provision was also highlighted in this policy.

Under the SEZ Authority Act-2016, GON provided tax-holidays and other concessions to establish, operate and manage special economic zone. SEZ-Authority provided one-stop service for investor, construct and maintain physical infrastructure in the SEZ.

China-Nepal Trade & Investment Relation: Post-2018

Nepal and China established their diplomatic relation in 1955. Both the country signed Agreement on Economic-aid in October 1956. China provide assistance to Nepal in the various form, which include:

1. Grant in Aid.
2. Interest Free Loans.
3. Concessional Loans.

Trade and Payment Agreement, 1981 conceptualised the trade initiation and promotion of goods transaction through Chinese-ports. Under the Economic & Technical Cooperation Program of 1980s, China committed grant assistance to Nepal in mutually acceptable development project. However, the direct-road-route for Chinese-goods to Nepal attract more transportation-cost compared to the route via India’s Kolkata port, because of the frequent landslides, earthquake in the mountainous road connecting Tibet & Nepal (Kharel, 2021). Chinese National Highway-318 connects Nepal to Lhasa & Shanghai. Enhancement of connectivity & infrastructure will not only promote trade between the two countries, but also increase the Nepal’s tourism potential. Nepal also signed the MoU under BRI of China in May 2017. Both the countries are also negotiating connectivity project through rail-road & transmission line project. China has also signed Transit Trade Treaty and other pacts in March 2016 for using northern port facility, oil & gas exploration in Nepal. After the Nepal’s Foreign Investment & Technology Transfer Act (FITTA) 1992, the FDI inflow has increased in the country. Table 8. shows some of the major Chinese project in Nepal. Table 9. indicate interest of Chinese in various FDI sector for the year 2021-22.

Table 8. Chinese Project in Nepal.

Sl. No.	Major Chinese Project in Nepal
1.	Pokhara International Regional Airport.
2.	Kathmandu Ring Road Improvement Project - Ratna Park.
3.	Upper Trishuli Hydropower Project - Power Station & Transmission Line.
4.	Upgradation & Restoration of Rasuwagadi-Kodari Route– Nepal’s Yak Corridor.
5.	Upgradation of Syaprubensi-Rasuwagadhi Road – Nepal’s Yak Corridor.
6.	Larcha (Tatopani) and Timure (Rasuwagadi) Frontier Inspection Station Project

Source: Author.

Ninety-five percent of goods exported from Nepal to China include leather, carpets, bells and other metal ornaments, essential-oils, scarves and agricultural-products, whereas China’s major export to Nepal include telephone, apples and pears, other knitted or crocheted fabrics, synthetic filament yarn woven fabric, and light fixtures. Table 10. shows the trade amount between China and Nepal in the last five years. About 8000 goods originating from Nepal and exported to China enjoys zero-tariff treatment. Figure 6. indicate the trade balance between Nepal and China. However, the hurdle in export of goods, primarily agricultural products are the strict documentation and phyto-sanitary clearance of Quality Supervision, Inspection and Quarantine inspection (AQSIQ). Agricultural products like rice, sugar, wheat, maize requires Agricultural Products Import Tariff Quotas Certificate, which adhere to quota-limit. The major documentation required for export to China are:

1. Commercial invoice.
2. A detailed packaging list.
3. Bill of lading.
4. Certificate of origin.
5. Hygiene / Health certificate.
6. Certificate of bottling date (for drinks).
7. Certificate of free sale.
8. Sample of the original label.
9. Sample of Chinese label.
10. Inspection certificate.
11. Pre-import licensing.

Figure 6. Nepal-China Trade Balance

Source: Patan Pragya Journal, Tribhuvan University Central Library.

Table 9. FDI Stock in Major Sector of Nepal by China: 2021-22 (in NPR Mn)

Component	Paid-Up Capital	Reserves	Loan	FDI-Stock	Share in China’s FDI Stock(%)
Electricity, gas, steam, and air conditioning	8032.1	-2149.5	17495.1	23377.7	69.9
Manufacturing	12801.6	2111.9	74.9	14988.4	44.8
Information and communication	1004.6	346.4	254.5	1605.5	4.8
Accommodation and food services	947.2	-4.7	1.2	943.8	2.8
Others	1555.7	-9022.3	-	-7466.7	-22.3
Total	24341.2	-8718.2	17825.6	33448.6	100.0

Source: Survey Report on FDI in Nepal, Nepal Rashtra Bank (Shrestha, 2023).

Table 10. Trade amount between China-Nepal: 2018-23 (in USD$ Mn).

	2018-19	2019-20	2020-21	2021-22	2022-23
China’s Export to Nepal.	1077.36	1482.47	1167.41	1950.33	-
Nepal’s Export to China.	22.20	18.11	5.74	8.40	-
Total	1099.56	1500.58	1173.15	1958.73	-

Source: Author’s tabulation based on WITS data.

Bhutan

Bhutan is a sandwiched country between India and China. It is a country, which is facing the dilemma of modernisation along with preserving traditional and cultural uniqueness. Therefore, it focusses on Gross National Happiness (GNH) for its economic and spiritual development. It stresses primacy of economic-growth, cultural preservation, environmental conservation and good-governance, and ensure that development approaches are adapted to local condition & values. The central focus of development is to attain happiness & peace in place of materialistic profit. GNH stresses on meeting basic-material- needs of a person. It also believes that human needs and aspiration changes with time. Growth in GNH promoted good-governance based on efficiency, accountability and transparency after restructuring-initiative of 1999. Bhutan is rich in natural resource and renewable source of energy in which forest and water are major resource base. The communication infrastructure of the country is at very low stage of development, resulting in isolation of areas within the territory and presence of sparse population. Ninety-percent of population depend on agriculture with production of rice, maize, wheat and other minor cereal crops etc. The country has also minerals like Gypsum, Dolomite, Limestone etc. Hydropower and tourism are major source of income for the country. Hence, investment in agro-based industry and service-sector has huge potential in Bhutan. To enhance trade and investment, it passed several enabling legislations like Bankruptcy Act 1999, Movable and Immovable Property Act 1999, Companies Act 2000 etc. But during the Cold war era, the Royal-authority made clear that economic aid and assistance from a country should not have any political gain attached.

India-Bhutan Trade and Investment Relation: Post 2018

India-Bhutan Friendship Treaty of 1949 was revised in 2007, which stated that the two countries would not let their respective territories be used for activities inimical to the national security and interests of the other. India is the country, which registered the history in Bhutan’s economic development. It fully funded the Bhutan’s first and second five-year plan. Bhutan is the highest recipient of India’s overseas aid (Bhonsale, 2020). For the 12^th five-year plan (2018-23) of Bhutan, India provided development assistance and financial support to the tune of ?45 billion covering ?28 billion for Project tied assistance, ?8.5 billion for High Community Development Projects, and ?8.5 billion toward Program Grants.

Agreement on Trade, Transit & Commerce, 1972 (revised in 2016), guide trade between India and Bhutan. The 1972-agreement promotes free trade and commerce in their respective territories. India is Bhutan’s top trading partner with the trade balance in favour of India. Table 11. shows the trade-balance between India and Bhutan. The product imported by Bhutan from India includes petrol and diesel, passenger cars, rice, wood, charcoal, cell-phones, coke and semi-coke, soyabean-oil, excavators, electric-generators and motors, parts of turbines, transport vehicle, bitumen. Bhutan’s export product to India include ferro-silicon, ferro-silico-maganese, electricity, portland pozzolana cement, dolomite chips, cardamoms, betel-nuts, oranges. Figure 7. shows share of various product in Bhutan’s export to India.

Indian investment accounts for fifty-percent of FDI in Bhutan, majority of which are in banking, electricity generation, manufacturing, food-processing, hospitality, pharmaceuticals and education.

Table 11. Trade amount between India-Bhutan: 2018-23 (in USD$ Mn).

	2018-19	2019-20	2020-21	2021-22	2022-23
India’s export to Bhutan	657.33	738.60	701.02	885.81	1079.09
Bhutan’s export to India	370.96	405.73	433.00	545.04	535.61
Total	1028.29	1114.33	1134.02	1430.84	1614.70

Source: Author’s tabulation based on tradestat, Ministry of Commerce & Industry, GOI.

Figure 7. Various Bhutanese product and their share in export to India

Source: Author’s graphical representation based on Bhutan’s 12^th Five Year Plan

China-Bhutan Trade and Investment Relation: Post 2018

Bhutan is having the highest debt-to-GDP ratio (108.6-percent) among the small South-Asian countries. It is a low-income country, which is cautious of the middle-income trap as seen in other small South-Asian countries in recent times (i.e. few option for concessional finance, accelerating debt payment schedule etc. leading to slow economic growth.). On the other side, the People’s Republic of China provide huge financial assistance to debt taking countries as a loan & in return, gets access to these markets. Bhutan has no debt to China and is out from debt-trap game of PRC. It enjoys the advantage of landlocked country by not serving as the dumping area of cheap-product of the world. In the book, “The Bottom Billion”, the author Paul Collier says, “If you are coastal, you serve the world; if you are landlocked, you serve your neighbours”. In 1998, an agreement to maintain peace and tranquillity on the Bhutan-China border areas was signed. At the Rio Summit-2012, Chinese President Wen Jiabao met Bhutanese Prime-minister Y.Thinley and expressed to establish formal relation and open diplomatic ties with Bhutan, resolve the border dispute between both the countries, strengthen Sino-Bhutanese exchanges and relations. Scholars see the Doklam dispute of 2017 as;

1. An attempt by Chinese to be closer to chicken-neck Silliguri corridor of India. This could cut India’s access to tits northeastern states.
2. An attempt to push its claim to the region.
3. An effort to pressurize the Bhutanese to establish more formal diplomatic relation with China.

China is encouraging Bhutan to participate actively in BRI initiative and Asian Infrastructure Investment Bank (AIIB) for common development. China has built rail-network connecting Lhasa to Shigatse (site of Panchen Lama seat) in 2014. It is planning to extend this rail-line to the border with India and Bhutan. Chumbi-valley area shares border with Tibet (China), Sikkim (India) and Haa-district (Bhutan). Bhutan and China has very low amount of bilateral trade and investment as seen in Table 12. China’s export to Bhutan majorly comprises of Machines and Electrical goods, Consumer goods, Intermediate goods, fuels, textiles and clothing etc., whereas Bhutan’s export to China include consumer-goods, capital-goods, food-products, metals etc. in miniscule amount.

Table 12. Trade amount between China-Bhutan: 2018-23 (in USD$ Mn)

	2018-19	2019-20	2020-21	2021-22	2022-23
China’s export to Bhutan.	12.83	10.91	13.56	108.76	-
Bhutan’s export to China.	0.008	0.046	0.032	0.010	-
Total	12.838	10.956	13.592	108.77	-

Source: Author’s tabulation based on WITS data.

Health of Economy of the common neighbours of India and China.

This section discusses the total external debt (DOD, Current US$), total reserve (percent of total external debt), and nominal GDP of the common neighbour to India and China. Graph 1. shows the total external debt in the year 2022. DOD is typically a measure derived from a debt-management system that records contractual obligation on existing debt, which are essential for cash-flow management and for implementing payments. Table 13. shows total reserve as a percent of total external debt of these four countries. International Debt Statistics, 2023 of World Bank even points out India’s share of debt in Bhutan and Nepal stands out to be 66-percent and three-percent respectively, whereas China’s share stands out to be zero-percent and three-percent respectively. It is also seen that loans from Bretton wood institution has servicing time of forty years, whereas loans from China is serviced for twenty years on an average. This puts a challenge on the huge payment instalment, maturity-time of various loan falling in a particular year leading to Debt-Trap scenario.

Graph 1. Total External Debt of the above four countries.

Source: Author’s graphical representation based on International Debt Statistics (World Bank)

Table 13. Total external debt as a percentage of total reserve

Country	Total reserve (percent of total external debt)	Nominal GDP (in USD$ Bn)
Afghanistan	320.7 percent (2020)	14.59 (2021)
Pakistan	7.8 percent (2022)	377 (2022)
Nepal	102 percent (2022)	40.83 (2022)
Bhutan	31.8 percent (2021)	2.54 (2021)

Source: Author’s tabulation based on International Debt Statistics (World Bank).

India and China Strategic Role in South Asia.

South Asia remains the lowest economically integrated region in the world with only five-percent (approx.) of total trade in 2022 due to poor logistic connectivity and high trade cost. In contrast, South East Asia has twenty-five percent of total trade due to better economic integration and regional connectivity (World Bank, 2018). Therefore, it presents an ease scenario for entry of Chinese investment in infrastructure and connectivity project. China offer concession and even bailout package for bolstering its presence in the region. However, with the onset of Covid-19 in the early months of year 2020, economic relation between South Asian countries and China showed an unusual pattern:

1. China’s trade volume with South Asian countries decline for a while but rebound quickly below the actual trade.
2. Slowdown in Chinese investment in the region, which was compensated by increase in Chinese Covid-19 support.
3. Skirmish along India-China border in 2020, forced the ban or lower in dependency for Chinese product in Indian government procurement.

China’s trade in South Asia dipped during Covid-19 majorly because of:

1. Lockdown induced barrier in movement of goods.
2. Economic and Emotional blockage due to opaqueness in handling of virus outbreak.

India supplied Covid-19 support in the South Asian region majorly with respect to essential medicine, food and Covid-vaccine. But it was unable to show confidence in mega-regional trade blocs like RCEP and even its Atmanirbhar-Bharat campaign pitched for low economic integration.
From the above South Asian country-specific assessment, it can be said that trade-deficit is in favour of China. Hence, China has to give more market access to these countries to promote economic integration with this region. Figure 8. shows China and India’s role in these South Asian countries. The BRI project of China creates less jobs for local-people because lack of skilled labour in these region and also due to other factors. Figure 9. point-out competition between China and Quad-member in South Asia.

The challenges faced by India, which gave an edge to Chinese-investment in South Asia, are:

1. The delayed response and inadequate funding for project in South Asia by India, led to many of the connectivity project going to China.
2. Political-instability in various South Asian countries and India’s inability to tackle the scenario gives China an advantage in winning project in this region.
3. Border row with neighbouring South Asian country like Nepal, Pakistan, Bangladesh etc. with India is a sign of discontent in the integration of South Asia.

Figure 8. Role of China and India in Afghanistan, Pakistan, Nepal, Bhutan.

Source: Author

Figure 9. South Asia, as a theatre of competition between China (BRI-Strategy) and Quad (Indo-Pacific Strategy).

Source: Author

Analysis of India-China competition in South Asia.

South Asia has suffered for decades from declining employment-ratios. The labour-force released by agriculture sector is not fully absorbed by the non-agriculture sector, which points to the fact of jobless-growth and development. It is also the fastest growing region in the world, with an average of six-percent. (World Bank Group, 2024). According to World Bank Vice President for South Asia, the region is making steady-progress but most countries in South Asia are not growing fast enough to reach high-income thresholds within a generation. The countries urgently need to manage fiscal risks and focus on measures to accelerate growth, including by boosting private sector investment and work toward energy-transition. (World Bank Group, 2024). Therefore, this region stands out as a competition ground for China and India to play the role of guardian in South Asia.

In 1980s, the China followed the strategy of hide-and-bide, which emphasised on strengthening domestic-capacities and avoiding external involvement. Whereas India was struggling with an unstable government, low-rate of growth, internal disturbance (created by terrorism, naxalism, Khalistan-issue etc.), interfering in neighbour’s issue (like Liberation of Bangladesh, Tamil-issue in Srilanka, Nepal-crisis etc.). This created an image of Big-brother attitude of India in the eyes of South Asian countries. Xi Jinping after becoming president of People’s Republic of China (PRC) in 2013, aimed at transforming China into a global super-power with his ambitious policy of One-Belt-One-Road (OBOR) or Belt-and-Road-Initiative (BRI) to bolster connectivity through Central, South, South-east Asia, as a way to Middle East, Africa, Europe. South Asia is crucial point in OBOR/BRI, as it is an intersection of the continental and maritime connectivity. Thus, it avoids the seasonal-clash trade route and provides alternate to the trade-choking point like Malacca Straits, Strait of Hormuz etc. China is playing the card of easy-cash and customised country-wise lucrative-investment along with tactful engagement ranging from education to culture in South Asian region for increasing its hold. Asian Infrastructure Investment Bank (AIIB) is seen as an attractive bank for South Asian countries, which is an alternate to condition-ridden Bretton-wood institution. China is more ambitious in South-Asia because it is strategically blocked on its east by U.S.A, Japan, Taiwan, Philippines (i.e. the two-island chain). BRI in South-Asia will ensure Indian-Ocean access needed for uninterrupted oil-supply from West-Asia and Africa to China. It will also provide nearest maritime access to China’s landlocked southwestern region. China’s presence in South Asia is seen to countries in this region as a strategic-balancer against India. The absence of USSR and near small presence of USA in South Asia made the room for entry of China as a balancing-actor in terms of economic-lifeline and defence. Taliban sympathy with the Uyghurs could increase support to insurgent movement as it gains political-power and influence in its own land. This problem is tackled by China with extension of CPEC to Afghanistan.

To counter this India must work towards portraying South-Asia as a unified-region. It should also come in co-ordination with extra-regional power like Japan, Australia, USA and European Union to create a balance in the region. India must engage with the countries in this region in helping them rationalising their expenditure more towards infrastructure-financing. The smaller countries should exert pressure on South-Asian giant (India and Pakistan) to remove their hostilities and work together for the growth of the region. Revival of regional-organisation like SAARC is the need of the hour in the interest of the region engulfed in economic-crisis. Moreover, India as an enlightened-nation must guide its neighbour in diversifying their external loan portfolio from various multilateral organisation in order to avoid the debt-trap policy of China. Promotion of Free and Open Indo-Pacific (FOIP), which encourages private-investment and wide range of sectoral engagement, is an answer to state-driven investment like BRI. India, covering 68-percent of area and 79-percent of economic-output in South-Asia, still has a clout of influence in the region. It needs to adopt proactive strategy and create a burden-sharing coherent policy for the growth of the region in order to decrease the influence of China in South Asia. India must also work for expansion of Bangladesh-Bhutan-India-Nepal (BBIN) to other South Asian countries like Sri Lanka, Maldives and make them realise that South-Asia is for South-Asian. India should also tactfully invest in South-Asia with the strategy of investment with responsibility.

Conclusion.

The analysis above shows the effect of economic relation (investment and bilateral-trade) on the international-policy of the four South Asian countries. The research reveals the reasons for preferred-partner of the South Asian countries, between India and China. Although, both India and China are deepening their economic-relation with South Asian countries to make a strong hold in this region, but there is some fundamental difference in their intention and method.

1. China is investing and deepening its economic relation with South Asian countries to increase its influence beyond East Asia and showcase itself as a superpower, an alternate to the western-power. Whereas, India is investing in South Asia with the purpose of maintaining and continuing its stronghold in South-Asian region.
2. As, China is having a better fiscal reserve, GDP, domestic manufacturing-base, technology etc. than India, it is capable of investing hugely in this region based on its interest. Whereas, India is still challenged in rationalising their overseas-investment owing to comparatively small fiscal-reserve, GDP etc.
3. The investment by China in South-Asia is not creating jobs for the locals. Instead, it is creating a huge debt-burden on the host country because of their low growth rate. On the other hand, Investment by India in South Asian countries is attached with skilling of the locals, creating jobs for them. The CPEC project in Pakistan is giving more benefit to China in terms of inclined-trade, return on investment etc. However, apart from enhancing connectivity, it is not working towards the skilling of local-population and help in revival of Pakistan’s economy. Likewise, the investment in Hambantota-port by China, has not increased the Sri Lanka’s export to the world, upgraded the skilled port work force and created a shipbuilding industry in the host country. It has deteriorated the economic condition of Sri Lanka which is presently facing the debt-crisis, high-inflation, unemployment etc. leading to mass-protest Aragalaya.
4. China’s investment in South Asia is majorly for securing an alternate trade-route, free of contention and disturbance, to increase its trade and get an uninterrupted supply of raw material and energy. Whereas, India’s investment in South-Asia is to maintain peace in the region for its growth and not to make it a zone-of-war like West-Asia.
5. Chinese investment are providing on-time delivery of project-result, but Indian-project are showing delay in delivery.

In order to address these issues, this paper compares the administrative structure of India and China to deal with investment and economic-relation with the South Asian countries. Table 14. shows the various department under respective foreign-ministry of India and China.

Table 14. Complexity in Administration to deal with South-Asian Economic relation

	Afghanistan	Pakistan	Nepal	Bhutan
INDIA	DPA-I Division DPA-III Division BIMSTEC & SAARC Division PAI Division Economic Diplomacy Division	DPA-I Division BIMSTEC & SAARC Division PAI Division Economic Diplomacy Division	DPA-I Division DPA-III Division BIMSTEC & SAARC Division Northern [Nepal, Bhutan] Division Economic Diplomacy Division	DPA-I Division BIMSTEC SAARC Division Northern [Nepal, Bhutan] Division Economic Diplomacy Division
CHINA	The Department of International Economic Affairs The Department of Finance The Department of Asian Affairs	The Department of International Economic Affairs The Department of Finance The Department of Asian Affairs	The Department of International Economic Affairs The Department of Finance The Department of Asian Affairs	The Department of International Economic Affairs The Department of Finance The Department of Asian Affairs
DPA-I = Development Partnership Administration. It deals with Development Cooperation extended through concessional loans offered by India to other countries around the world, namely, Lines of Credit [LOCs] and Concessional Finance Scheme [CFS]. The Division deals with policy matters, loan offers, terms and conditions, project identification and evaluation and project progress monitoring. Joint-Secretary level officer is the head of this division. At present, it has a Director, two officer-on-special-duty and four under-secretary to co-ordinate the work. DPA-III = Development Partnership Administration. It deals with all matters relating to grant assistance to Afghanistan, Myanmar, Maldives, Nepal, and Srilanka (except housing project). Joint-Secretary level Officer is the head of this division. At present, it has an advisor, a director, two officer-on-special-duty, a deputy-secretary, two under-secretary and a legal consultant to co-ordinate the work. BIMSTEC & SAARC Division = All matters relating to BIMSTEC and South Asian Association of Regional Cooperation. Joint-Secretary level officer is the head of this division. At present, it has one deputy-secretary and two under-secretary to co-ordinate the work. PAI Division = Pakistan, Afghanistan & Iran Division. All matters relating to Pakistan, Afghanistan and Iran. Joint-Secretary level officer is the head of this division. At present, it has a director, two deputy-secretary and three under-secretary to co-ordinate the work. Economic Diplomacy Division = All Economic Diplomacy- related matters including Trade & Investment promotion, energy security, International Solar Alliance, Coalition of Disaster Resilient Infrastructure, Bilateral Investment Treaties/Arbitration, Investor-State Dispute Settlement, Social Security Agreements, Press Note 3 [FDI Policy] & GFR-144 [Public Procurement], Market Expansion Activities, Civil Aviation matters etc. Joint-Secretary level officer is the head of this division. At present, it has a director, three under-secretary and a legal consultant to co-ordinate the work. Northern [Nepal, Bhutan] Division = All matters relating to Bhutan and Nepal. Joint-Secretary level officer is the head of this division. At present, it has one director, two deputy-secretary and three under-secretary to co-ordinate the work.
The Department of International Economic Affairs = It studies policies concerning the global economy and implements the relevant directives from leaders. Director-General level officer is the head of this division. At present, it has three deputy-director-general to co-ordinate the work. The Department of Finance = It prepares budget and final account for the Ministry and manages the collection and hand-over of administrative charges. It develops financial regulations for China's overseas diplomatic missions, participates in the development of national diplomatic and foreign-related financial regulations, and audits and guides the financial operation of the Ministry and its directly affiliated agencies and overseas diplomatic missions. It also manages MFA's government procurement affairs. Director-General level officer is the head of this division. At present, it has two deputy-director-general to co-ordinate the work. The Department of Asian Affairs = It implements China's foreign policy and principles. It reports and works on China's bilateral relations with countries and regions concerned, manages diplomatic contacts with and makes representations to relevant countries and regions, oversees and coordinates policies on and cooperation and exchanges with relevant countries and regions and guides the operation of China's overseas diplomatic missions within its regional jurisdiction. It is responsible for translation and interpretation for important diplomatic functions, documents and instruments in relevant languages. Director-General level officer is the head of this division. At present, it has five deputy-director-general to co-ordinate the work.

Source: Author’s compilation based of respective Foreign-ministry website.

To fill the gap of trust-deficit for return on investment, India should create a sense of unified-growth among South-Asian region before investing in any project in its neighbouring country. It should also work towards efficient delivery of project on time, which can be achieved with more investment in research and development, increase in GDP, increase in technology-driven project by India. This paper tries to cover some of the aspects of inclination for preferential-international relation policy adopted by South Asian countries. However, research-work on inner-potential of South-Asian countries in terms of natural-wealth, geo-strategic location, human-resource influence on foreign-policy must be carried out for analysing the growth of this region and driving-force of the continent in this world.

Acknowledgement: The author would like to acknowledge the mentorship and guidance that he received for undertaking this research from Dr R Srinivasan, Director, Praghna Centre for Research, and in the production of this work.

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Appendix A

List of Tables:

1. Table 1. Minerals and Mining-sites in Afghanistan.
2. Table 2. Trade between India-Afghanistan: 2018-23 (in USD$ Mn).
3. Table 3. Trade between China-Afghanistan: 2018-23 (in USD$ Mn).
4. Table 4. Trade between India-Pakistan: 2018-23 (in USD$ Mn).
5. Table 5. Trade between China-Pakistan: 2018-23 (in USD$ Mn).
6. Table 6. Major minerals and mining-sites in Nepal.
7. Table 7. Trade amount between India-Nepal: 2018-23 (in USD$ Mn).
8. Table 8. Chinese Project in Nepal.
9. Table 9. FDI Stock in Major Sector of Nepal by China: 2021-22 (in NPR Mn).
10. Table 10. Trade amount between China-Nepal: 2018-23 (in USD$ Mn).
11. Table 11. Trade amount between India-Bhutan: 2018-23 (in USD$ Mn).
12. Table 12. Trade amount between China-Bhutan: 2018-23 (in USD$ Mn).
13. Table 13. Total external debt as a percentage of total reserve (Afghanistan, Pakistan,
    Nepal, Bhutan).
14. Table 14. Complexity in Administration to deal with South-Asian Economic relation.

Appendix B

List of Figures:

1. Figure 1. Importance of geographical location of Afghanistan
2. Figure 2. Geographical location of minerals in Afghanistan.
3. Figure 3. Geostrategic Location of Pakistan
4. Figure 4. Role of Devaluation of currency in promoting export.
5. Figure 5. Treaties & Agreement for trade between India-Nepal.
6. Figure 6. Nepal-China Trade Balance.
7. Figure 7. Various Bhutanese product and their share in export to India.
8. Figure 8. Role of China and India in Afghanistan, Pakistan, Nepal, Bhutan.
9. Figure 9. South Asia, as a theatre of competition between China (BRI-Strategy) and Quad (Indo-Pacific Strategy).

Appendix C

List of Graphs:

1. Graph 1. Total External Debt of the above four countries.