Geopolitics

Sino-India Relations
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Issue Vol 22.1 Jan - Mar 2007 | Date : 04 Sep , 2011

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.

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.

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.

Keeping in view the willingness on the part of both sides to disallow controversial issues jeopardize the process of improvement of relations between the two countries and the availability of mechanism for discussing such issues…

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.

Major Irritants

Undoubtedly, the bilateral pattern of Sino-Indian relations is sailing smoothly forward and new strides are being achieved. However, China’s claim over some territory of India and Beijing’s unstinted support to Pakistan, along with massive economic and military assistance are two major irritants that entail the likelihood of impairing the ongoing process of improvement.

During President Hu Jintao’s recent visit to Pakistan, the latter was expected to sign a US-India type nuclear deal with China after having failed to procure such a deal from Washington. However, China’s new regulations on nuclear exports thwarted Pakistan’s bid for securing such a deal.

Claim on Arunachal Pradesh

The Chinese Ambassador Sun Yuxi’s reiteration on China’s claim to Arunachal Pradesh on the eve of President Hu Jintao’s visit to India, in an interview to CNN-IBN,  raised a political storm. China officially lays claim to entire Arunachal Pradesh. However, it is the small district called Tawang, bordering Tibet and Bhutan, which it is most interested in. The place is famous for its monastery, built in 1681 by the Tibetan Lama Lodre Gyatso in accordance to the wishes of the 5th Dalai Lama, Nagwang Lobsang Gyatso. China cites the monastery as evidence that the district once belonged to Tibet and wants New Delhi to return it in order to help settle the row. Recently, a Tibet wire service quoting a senior Chinese diplomat said: “We don’t recognise the entire Arunachal state as being a part of India. But Tawang is particularly special. It has longstanding historic links with Tibet and it is important for us to be able to settle the border problem.”5

In the backdrop of India’s repeated assertions that Arunachal Pradesh is its integral part, China wants to link it with ongoing border talks for a mutually acceptable solution. On 3 December 2006, Chinese Foreign Ministry spokeswoman Jiang Yu told PTI’’s Beijing- based correspondent AK. Joseph: “China’s stand is clear and consistent on the Sino-Indian border issue. China is for seeking a fair, reasonable and mutually acceptable solution to the issue, through friendly consultations.”6 This statement is seen in New Delhi as a fire-fighting exercise to undo the damage done by the controversial statement of the Ambassador on the eve of Hu’s visit to India. Keeping in view the willingness on the part of both sides to disallow controversial issues jeopardize the process of improvement of relations between the two countries and the availability of mechanism for discussing such issues, it is not likely that Arunachal Pradesh or any such issue would affect the pattern of growing relations between the two countries.

Pakistan Factor

Pakistan’s ‘all-weather’ friendship with China and latter’s crucial help in building up Pakistan’s missile and nuclear capabilities are significant factors impinging on India’s security. During President Hu Jintao’s recent visit to Pakistan, the latter was expected to sign a US-India type nuclear deal with China after having failed to procure such a deal from Washington. However, China’s new regulations on nuclear exports thwarted Pakistan’s bid for securing such a deal.7 Apart from this, there are other crucial areas of Sino-Pakistan cooperation that have direct implications for India’s security. Apart from the fact that Beijing is helping Pakistani defence forces by supplying sophisticated conventional weapons, China has rendered massive economic and technical assistance for the construction of Pakistani port of Gwadar. Gwadar port has a far-larger significance in China’s scheme of things than what Beijing’s claim of ‘purely commercial’ interests.8 Pakistan-China relations and their implications arising out for India is a sensitive issue which needs to be handled very cautiously without hurting the sensitivities of either China or Pakistan.

China has permitted more than 150 Indian companies to invest in more than 2,000 areas, whereas only 50 Chinese companies have been allowed by New Delhi.

Recommendations

Notwithstanding the fact that India and China are endowed with different political and social systems, both countries have become the focal point of international attention as rising economic powers. China has quite meticulously evolved a grand vision and strategy for transforming itself into a major ‘Global Economic Power’ by 2020. The burgeoning Indian economy is also making rapid strides to emerge as a global economic power in the next two decades. As the strategic partners  India and China should eschew competitiveness and become cooperative with each other in establishing joint projects in third countries. There also lies huge potential for Sino-Indian cooperation in IT and IT-enabled industries as well as on major negotiations as developing agricultural countries at the World Trade Organisation and other multilateral global organisations.

In the wake of Chinese President Hu Jintao’s recent visit, the two countries should harness huge growing complementariness in production and consumption structures and in mutual trade bilaterally. There is also a big scope for joint business ventures for exploiting world consumer markets. There is a need for setting up strategic alliances at commerce and business level with facilitative role for the governments of both the countries.

Besides visa relaxation for Chinese entrepreneurs and tourists, Beijing also expects more assurances from Indian leaders about a more congenial environment for Chinese companies to invest in India. However, Indian apprehensions about Chinese companies on account of espionage and security reasons are major constraints in this regard. Some mutually acceptable mechanism could be evolved to overcome this hitch.

China has permitted more than 150 Indian companies to invest in more than 2,000 areas, whereas only 50 Chinese companies have been allowed by New Delhi. China can be wary of skepticism that is sometimes displayed by India about some moves by Beijing; under such situations, the best option is to sort out such issues through mutual consultations and institutionalised mechanisms. The ten-point strategy laid down in the Joint Declaration issued in New Delhi on 21 November this year should be pursued in letter and spirit by both sides in order to bring Sino-Indian relations on a new phase of cooperation and prosperity. Stable, prosperous and peaceful India and China are best guarantee for regional as well as global peace and security.

India needs to emulate the example of China’s robust success in economic realm. The comparative indicators of economic development between the two Asian giants is glaring. China elicited about $66 billion as FDI in 2005 while India could attract only $5 billion. China has almost a trillion dollars as its Foreign Reserves now, while Indian foreign reserves hover around $166 billion. India’s GDP is about $700 billion while China’s GDP is about $ 1.723 trillion. Chinese export is more than $700 billion, constituting 6.5 percent of the world’s exports every year while Indian exports is mere $75 billion, constituting less than 0.9 percent of the world exports.

India has much to learn from China in respect of economic development and New Delhi should strive to attain same levels in the next two to three decades. To realise its goal, India has to put its house in order by ensuring political stability and congenial environment to win investors’ confidence and elicit FDI. Apart from these, India should overcome its obsession with Pakistan and view its role at the global level by emerging as the fourth largest economy, after US, China and UK.

Notes

  1. The ‘Ten-point Strategy’, as mentioned in the India-China Joint Declaration of 21 November 2006, inter alia, include the following points: Ensuring Comprehensive Development of Bilateral Relations; Strengthening Institutional Linkages and Dialogue Mechanisms; Consolidating Commercial and Economic Exchanges; Expanding All-Round Mutually Beneficial Cooperation; Instilling Mutual Trust and Confidence through Defence Cooperation; Seeking Early Settlement of Outstanding Issues; Promoting Trans-border Connectivity and Cooperation; Boosting Cooperation in Science and Technology; Revitalising Cultural Ties and Nurturing People-to-People Exchanges; and Expanding Cooperation on Regional and International Stage. For full text of the Joint Declaration see, Government of India, Ministry of External Affairs (MEA), “Joint Declaration by the Republic of India and the People’s Republic of China”, Press Release (New Delhi), 21 November 2006.
  2. Ibid.
  3. Saibal Dasgupta, “China wants trade pact with India”, Times of India, 7 November 2006.
  4. The essential dispute is over China’s refusal to acknowledge the McMohan Line as the border between the two nations, and staking claim to large tracts of land as a contiguous part of Tibet. In the late 1950s, soon after occupying Tibet, China occupied a large tract (approximately 38,000 square km) of Aksai Chin, a remote part of Ladakh in Jammu and Kashmir bordering Pakistan, and built a highway (National Highway 219) through it to connect with its eastern province of Xinjiang. India considers this an illegal occupation. In the middle, or southern part of Tibet, China asserts that the border dividing Tibet and Sikkim and Uttar Pradesh are also disputed. And in the east, it lays claim to the entire state of Arunachal Pradesh. For details see, John W Garver, Protracted Contest: Sino-Indian Rivalry in the Twentieth Century (New Delhi: Oxford University Press, 2001).
  5. Cited in Ramananda Sengupta, “Why China claims Arunachal Pradesh?” 16 November 2006, available at http://www.rediff.com/articles/2006/nov/16China.htm
  6. Anil K Joseph, “China for ‘mutually acceptable’ solution to border issue”, PTI Release, New Delhi, 3 December 2006.
  7. Saibal Dasgupta, “New Chinese rules killed Pak nuke deal”, Times of India, 4 December 2006.
  8. Apart from transforming the economy of the landlocked and underdeveloped Chinese province of Xinjiang, port of Gwadar is said to be the western-most pearl in China’s ‘string of pearls’ strategy, which envisages building strategic relations with several countries along the sea lanes from the Middle East to the South China Sea to protect China’s energy interests and other security objectives. A presence in Gwadar provides China with a “listening post” where it can “monitor US naval activity in the Persian Gulf, Indian activity in the Arabian Sea and future US-Indian maritime cooperation in the Indian Ocean”. For China, Gwadar’s strategic value stems from its proximity to the Strait of Hormuz. About 60 percent of China’s energy supplies come from the Middle East, and China worries that the US, which has a very strong presence in the region, could choke off these supplies to China. Not surprisingly, the construction of Gwadar port and Sino-Pakistan cooperation in the project is causing concern not just in India, but also the United States and Iran. It also strengthens India’s feeling of encirclement by China. For more details see, Yukteshwar Kumar, “HU, Pakistan and the ‘string of pearls’”, 28 November 2006, available at http://www.rediff.com/articles/2006/nov/28China.htm
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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Anil K Singh

Anil K Singh is senior executive with the Star News and author of Military and Media (2006).

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