Sino-India Relations: Unleashing the Potential

          China occupies a prominent place in India’s ‘Look East Policy’. The two civilisational behemoths’ bilateral relations have undergone a slow, but steady consolidation for the better in recent times, notwithstanding a background of mistrust and misunderstanding carried over through decades. China and India having the longest uninterrupted existence as nations have had cultural, religious and trade links for centuries. They also share a past of colonial and imperialist subjugation from which freedom had to be won with a major struggle. As a result thereof, they came into being as sovereign states almost simultaneously. Their combined size and population make them the largest geographical and human resource mass on the planet. However, the two civilisational entities have had a chequered history of bilateral interactions.

          From the heydays of ‘Hindi Chini Bhai-Bhai’ in 1954, Indo-China relations got frozen in a state of antagonistic coexistence. Although both nations continued to maintain a semblance of diplomatic relations, these were negligible and nominal. The border conflict had actually dealt a heavy blow to the bilateral relations between the two countries. The diplomatic impasse continued for a long period. The normalisation of relations began with resumption of ambassadorial ties in 1976 and the bold ice-breaking visit of the then Foreign Minister Atal Bihari Vajpayee in 1979.

          This was followed by former Prime Minister Rajiv Gandhi’s historic visit to China in 1988. The visit was an unquestioned success, for it not only thawed the bilateral relations but also set the tone for future interface. It was this path-breaking visit that enabled the advancement of relations in a broad spectrum of areas including science, technology, education, culture and trade, not to speak of efforts to seek a mutually satisfying solution to the border dispute between the two. The border dispute did not become the arbiter of relations in other fields, which for the first time since 1962 were allowed to grow on a relatively independent trajectory.

          Since 2005, the two countries have been trying to build and consolidate a strategic and cooperative partnership, though India has been careful to avoid the follies of an idealist approach in its dealings with China. The Panchsheel Agreement of 1954, which both countries propounded together at the very outset of their interaction as independent nations and championed as a model for inter-state relations in a world afflicted by cold war, became a laughing stock world-wide after the Chinese incursion of India thereby buffeting the cardinal Panchsheel tenet of ‘non-aggression’.

          Treating each other as new partners rather than adversaries and acknowledging the need for comprehensive approaches to national security, both China and India have accordingly adjusted their respective policies toward each other since the end of Cold War. Irrespective of their expectations from this relationship, both countries converged on the understanding that a stable and cooperative relationship between them would best serve their respective national interests in the post-Cold War era. Therefore, since 1991, the China-India relationship has experienced an impressive transformation.

          India and China signed a Trade Agreement in 1984 which provided for ‘Most Favoured Nation’ treatment and later in 1994, the two countries signed an agreement to avoid double taxation. The bilateral trade crossed US$13.6 billion in 2004 from a measly US$ 1 billion in 2000, reaching $72 billion in 2015. This is quite an impressive figure given the fact the same was a measly one billion dollars in the year 2000. And according to an estimate, the total value of bilateral trade would almost double over the next five year period to be around 140 billion dollars. This only shows the immense potential of trading opportunities between the two countries.

             The principal items of Indian exports to China are ores, slag and ash, iron and steel, plastics, organic chemicals, and cotton. The other potential items of trade between India and China are marine products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment, and dairy products. Great potential also exists in areas like biotechnology, IT and ITES, health, education, tourism, and financial sector. 

          The main items that comprise Chinese exports to India are electrical machinery and equipment, cement, organic chemicals, nuclear reactors, boilers, machinery, silk, mineral fuels, and oils. Value added items like electrical machinery dominates Chinese exports to India. This exhibits that Chinese exports to India are fairly diversified and includes resource-based products, manufactured items and low and medium technology products. If India is to capture Chinese markets, then it would have to discover new merchandise with investments and trade in services and knowledge-based sectors.

          In fact, if the two countries can get their acts together, then many more such opportunities beckon them. The relative technological strengths, availability of natural resources, complementarity of interests, availability of technical know-how and expertise in different sectors and above all, availability of huge markets with considerable purchasing power ability are some of the reasons which make them natural partners. The geographical contiguity, cultural affinity and historical ties should only further facilitate and spur this relationship between the second and third largest global economies in terms of purchasing power parity.

          Notwithstanding all the progress to bridge the trust deficit between the two countries, the great Himalayan Divide between them was in evidence recently when China refused support to India for entry into the Nuclear Suppliers Group. Today, the Sino-India relationship is characterised by the coexistence of an antithetical geopolitical rivalry and calibrated cooperation. China’s suspicions about our ties with the US, our proximity to Japan and our naval cooperation in the East and South China Seas with these countries have pushed it to Pakistan in its bid to counterbalance India. China continues to dabble in myriad dalliances in our neighbourhood with the same motive.

China’s preference for military power in pursuit of its geopolitical aims has not helped matters. China’s choice of the military option in a series of cases confirmed its image as a militarist state willing to use its power to settle issues by force. Formosa (Taiwan), Korea, the conflicts on the Sino-Soviet borders, the 1962 war with India, China’s open espousal of Pakistani cause during 1965 Indo-Pak war , China’s actions in the South China Sea and its role in Vietnam-Cambodia-Laos are contributive factors compounding its militarist image.           China’s assistance over decades to sub-national and ethnic groups with ideology, funds and weapons retarded the progress of newly-independent states in her neighbourhood. It’s acquiring of nuclear capability has evoked admiration, but has not reduced concerns about its future employment, given China’s record in managing international relations. The image is not made any less adverse by the continuing modernisation of China’s military capabilities.           India was tireless in its support to China’s cause in the international arena from the very beginning including latter’s entry into the United Nations. India’s attempts to grapple with the enormous task of nation building, of social and distributive justice, of security against external military and terrorist threats, of economic development through democratic processes were monumental. These were not helped by China’s support through the 1960s and 1970s to insurgent groups. They were made positively worse by China’s military assistance to Pakistan.            China’s arms transfers to Pakistan remain unabated. Indeed, according to a latest report of Stockholm International Peace Research Institute (SIPRI), China has become the largest arms supplier to Pakistan, accounting for more than 40 percent of Pakistani inventory. These developments suggest that China intends to continue its balancing approach in South Asia, irrespective of improvement in ties with New Delhi. There is also the nuclear and missile cooperation between Beijing and Islamabad that India could hardly ignore.            China has grown to such an extent that today it is trying to actively influence the global and regional environments to its advantage. This is against the backdrop of China becoming the second largest economy in the world. China today has amassed more than $4.5 trillion in foreign exchange reserves, accumulated through surplus trade with several countries including the US, Europe, Japan, South Korea, Southeast Asia and India. China’s defence budget has also grown to be the second largest in the world after the United States with 2015 allocations going up to $142 billion.           On the contrary, the Non-Alignment, the choice of the UN as a forum to settle the Kashmir issue even when it was winning the war, the restraint in the nuclear weapons field and its multiple initiatives on international peace are indicative of the underlying Indian belief in negotiation and cooperation as the essential tenets of state policy. The Chinese approach stands out in contrast. One might even say that China has been the true “Realist" state and India the “Idealist” in the use of power to further their national interests.             Both the countries nurture some grievances against each other, India’s being more pronounced than that of China as it is India whose vast chunks of landmass are still in Chinese possession. Today, China is in illegal possession of 38,000 sq kms of Indian territory in Jammu and Kashmir excluding the 5180 sq kms of Indian territory in Pakistan-occupied-Kashmir illegally ceded to China by Pakistan. Not only this, a revisionist power that China is, she illegally claims yet another 90,000 sq kms of Indian territory in the eastern sector and 2000 sq kms in the middle sector.             A status-quoist India, in keeping with her pacific postures, has rightly believed in amicable settlement of bilateral disputes through sustained engagement and dialogues, without compromising her core interests.   Despite a hot and cold relationship, the 3,440 kms-long Indo-China borders have been relatively peaceful since the bilateral agreement between the two in 1993 to maintain peace and tranquillity along the line of actual control, while simultaneously attempting to hammer out the boundary disputes.              India and China have since then engaged at various levels to minimise their differences on issues of disputes including the border issue and have made some smart progress in appreciation of each others standpoints. There has also been a proposal of trade-off between the eastern and western sectors for resolution of the border dispute, but the same is still to be concretised in the shape of a formal proposal and follow-up negotiations. The regular border talks of Special Representatives of India and China are held where decisions are taken regarding modalities and moves to come to a settlement.           India is keenly watching a number of revisions in Chinese policy vis-à-vis South Asia. For instance, China’s revision in Arunachal Pradesh policy is shifting from arguing initially that the McMahon Line is illegal to agreeing to recognize southern portion of McMahon Line as a part of the “swap principle” in 1957 and 1980 to the 2005-06 line of asserting that the “entire state of Arunachal Pradesh is disputed” to describing Arunachal Pradesh as “southern Tibet”.           China has also revised its Kashmir policy from the division of the sub-continent in 1947 as “unnatural” in the 1950s to advocating self-determination of Kashmiris in the 1960s and 1970s, to resolving Kashmir dispute only through bilateral and peaceful means during the 1980s and 1990s to the current efforts in actively financing strategic projects in Pakistan-occupied Kashmir. This indicated to India that China is no longer concerned about other’s sovereignty and territorial integrity thereby making India espouse counter-measures in South China Sea and East China Sea where China is locked in sovereignty disputes.             In her bid to subtly counterbalance China, India has moved into “Act East Asia” policy in contrast to its erstwhile ‘Look East Asian’ policy. As more than 55 percent of Indian trade passes through the South China Sea, in addition to more than $5 billion investments for oil exploration in the region, the revival in policy has clear implications to the regional security situation in the years to come. Since 2010, India has articulated the view that freedom of navigation should be observed, meaning that countries in the region should desist from incorporating major international sea lanes into their territorial sea ambit.            There is no doubt in saying that the levels of engagement between India and China have certainly increased to a great extent. India, at the same time, requires adopting sophisticated approach to deal with the strategic challenges emanating from China. Despite the fact that China has become increasingly assertive not only at the regional level but also at the global level, India has not shown any displeasure or reservations so far. However, India has been trying strategic alliances with important international players to pre-empt any Chinese threat to its national interests.             In the current circumstances, it is obvious that trade has come to be viewed as an increasingly important driver of relations by both sides; especially in the light of lingering political mistrust on a wide range of issues spanning the long running border dispute to China’s all weather relationship with Pakistan. The regular reports of incursions by Chinese troops and more aggressive patrolling in disputed areas have further strained India-China relations.           However, the same has not deterred a realist India to systematically develop a management regime in its relations with China. This regime has functioned efficiently in transacting dialogue and managing tensions on the border through confidence-building mechanisms. With the agenda of a holistic national development and accelerated economic growth, India needs to carefully chart out its bilateral relations with China. This will enable her to grow comprehensive national strength and hone her strategic capabilities.                   While the existing dialogue mechanisms and economic linkages with China should continue, India should steadily build cascading relations with major likeminded powers with a view to further consolidate its strategic and defence capabilities a la Indo-US civilian nuclear cooperation and Logistics Exchange Memorandum of Agreement (LEMOA). The 1962 face-off, the continuing border dispute and China’s rapid growth in military power coupled with its aggressive foreign policy posture definitely create anxieties about their future relationship.           In a world characterised by information technology and complex interdependence, India and China should both realise the need to adapt to these tectonic changes, if they hope to develop as economically stable and politically lasting entities. The leadership in both states is aware of the need to ensure the social and economic well-being of their peoples. In that lies real security and stability, the two essential conditions for development. The need to assure neighbours of their interests through confidence building measures, placing past disputes in correct perspective and resolving bilateral disputes through dialogues are the need of the day.             While against a background where China stills illegally claims Indian territory, where she still refuses to recognise Arunachal Pradesh, where she keeps resorting to such pinpricks as denial of visas to officials and politicos from Arunachal Pradesh, where she allegedly continues aiding and abetting Indian insurgents and where she allegedly continues to build a nuclearised Pakistan as a counterweight to India, it would be interesting to see the trajectory of future relationship between the two countries.           While the string of irritants, that still remain between the two countries, does make one suspect of such bizarre suggestion as the development of a security triangle of India, China and Russia to act as a counter to the hegemony of the global super cop, the United States of America, there still remain a lot to explore and harness to take the Sino-Indian bilateral relations to a new height. These opportunities lie mainly in economic cooperation, as delineated above, which can be given new and productive dimensions through better coordination in the various multilateral fora including ASEAN, APEC and Shanghai Economic Grouping, not to speak of positive spin-offs of the dyadic engagements. The confidence building measures and track two diplomacy should also be continued simultaneously.           Whatever be the case, the fact remains that if India needs to secure her national interests from Malakka Strait to Persian Gulf, it definitely needs to have better relationship with her eastern neighbour which requires more engagement than estrangement. India appreciates this fact and accordingly pursues a policy of thicker economic relationship, while simultaneously pursuing a policy of sustained diplomacy to resolve the border imbroglio. But on the other hand, China also needs to reciprocate Indian overtures with equal enthusiasm, without further ruffling Indian sentiments relating to her core national interests including continuing to prop up Pakistan’s military strength and her nuclear muscles.           The post-Cold War reality today is of a world order based on equity amongst states and constructive engagement through trade and economic development. China and India realise the need for cooperation to move away from old animosities through mutual agreements. They must resolve to find solutions to their disputes including the long-festering border dispute through negotiations. There has never been a better time than now to take their bilateral cooperation to newer heights to unleash the pent-up potential. This will need accommodation from both sides and that should not be an insurmountable problem given the new found atmosphere of mutual trust and understanding.                     One just hopes that both countries would show more sagacity and appreciation of each others’ standpoints on various issues and continue to build bilateral relationship through sustained engagement and cooperation. The peaceful relationship between these two Asian giants reinforced by strong economic ties shall be a positive sign not only for the world peace and security, but shall also delineate the contours of regional prosperity.