Indian Defence Review

PM meeting with President of China Hu Jintao in New Delhi

The visit of the Chinese President Hu Jintao to India (20-23 November, 2006) has opened new vistas of concretisation of relations between New Delhi and Beijing, with emphasis on augmentation in bilateral trade and economic cooperation and keeping the controversial border issue on the backburner. Both countries’ willingness to open new points of land routes for trade and China’s offer of establishing ‘Free Trade Area’ (FTA) between the two countries can be construed as a bid for creating a borderless area between the two countries and increase mutual cooperation in other strategic areas that have long-term bearing on bilateral, regional as well as global peace and security.

Political Aspects 

In recent years, India and China have upgraded their diplomatic relations to the current level of ‘strategic comprehensive partnership for peace and prosperity; and there has been establishment of contacts between the two countries at the highest level. Prior to president Hu Jintao’s recent visit to India, his predecessor Jiang Zemin had visited India in 1996. Since the revival of full political and diplomatic relations between New Delhi and Beijing in the aftermath of India’s Prime Minister Rajiv Gandhi’s visit to Beijing in 1988, there have been a number of high level exchanges between the two countries, whose leaders also met often at the multilateral meetings around the world. The two countries recently came together to set up a trilateral relationship with Russia, and the heads of state of the three nations met for the first time under this framework in early 2006.

The process of improvement in Sino-Indian political relations received a substantial boost after the visit of the then Indian Prime Minister, Atal Bihari Vajpayee to Beijing in 2003. That occasion was utilised to raise the status of the long pending border talks to the political level by appointing Special Representatives. The subsequent visit of the Chinese Premier Wen Jiabao to India in 2005 provided a further fillip to the bilateral relationship. And in June 2006, the visit of Indian Defence Minister Pranab Mukherjee to China led to several crucial confidence building measures (CBMs) between the armed forces of the two countries. The Joint Declaration issued in New Delhi, on the eve of Chinese President Hu Jintao’s India visit, on 21 November 2006, envisaged the commitment of both India and China to pursue ‘ten-pronged strategy’ with a view to fully realise the substantial potential for their cooperation in a wide range of areas, to upgrade India-China relations to a qualitatively new level, and to further substantiate and reinforce their Strategic and Cooperative Partnership. The salient aspects of this ‘ten-point strategy’, deal with comprehensive development of bilateral relations and strengthening institutional linkages, increased defence cooperation etc.1

The Joint Declaration expressed satisfaction of the two countries on the all-round progress made over recent years in India-China relations and their regional and multilateral cooperation. While noting that the relationship between New Delhi and Beijing was of global and strategic significance, the Joint Declaration reiterated: “Each side welcomes and takes a positive view of the development of the other, and considers the development of either side as a positive contribution to peace, stability and prosperity of Asia and the world. Both sides hold the view that there exists bright prospects for their common development, that they are not rivals or competitors but are partners for mutual benefit.”2  In other words, political relations between India and China have gained new momentum in the aftermath of Hu Jintao’s visit to India.

Economic Interaction

The pace of economic trade and relations between the two countries has attained new dimensions in recent years and during 2006 the Sino-Indian trade has registered an increase of more than 40 percent and is about to touch the $20 billion mark, compared to below $1 billion in 1994. Both sides have fixed a target of $ 40 billion in bilateral trade by 2010. China is engaged in building roads along its borders with India in order to enhance border trade and for opening of many more custom posts. It is noteworthy that bilateral trade between the two countries is presently conducted through the shipping channel. Beijing wants to be recognised as a free market economy by India. It is noteworthy that most Western countries are ill-prepared to accept China as a free market economy because China subsidies its products.

Apart from getting recognition as a free market economy, China is also interested in signing a free trade area (FTA) agreement with India. However, India is treading a cautious path on this issue. India has agreed to begin the process of talks on Free Trade Area between the two countries, largely because of China’s growing influence over the ASEAN countries. The first round of talks on FTA between the two countries took place between the joint task force constituted by the two countries in September 2005 and the next meeting is scheduled sometime in December 2006. Undoubtedly, India has filed the greatest number of patent violation cases against Chinese companies at the World Trade Organisation (WTO) 3, but this is unlikely to deter the pace of phenomenal growth of economic and commerce relations between the two sides besides it is mutually beneficial.

Nuclear Cooperation

Having concluded a civil nuclear energy agreement with the United States, India is seeking the assistance of China to support New Delhi’s case at the Nuclear Suppliers’ Group (NSG). China is an influential member of the 45-nation Nuclear Suppliers Group and all decisions in NSG are taken on consensus basis. Beijing’s backing for the nuclear deal is crucial for India. India has an ongoing cooperation with China, which supplied fuel for Tarapur in the early 1990s under IAEA safeguards. India has an ongoing cooperation programme with China. The New Delhi Joint Declaration states the agreement between the two countries to promote cooperation in the field of nuclear energy, consistent with their respective international commitments. Widening of nuclear cooperation between New Delhi and Beijing is mutually advantageous, particularly for India, which needs energy security to keep up the momentum of its economic growth.