India-China Relations: A Year-end Review
Sujitt Dutta

India-China relations have been going through a rough phase for some time now. In fact, over the past year they have become even more complex than they normally have been over the past five decades as a result of new Chinese diplomatic and military assertiveness. A clear sign of the fraying nature of the ties came from the Chinese Ambassador in New Delhi in an interview just before the Chinese Premier Wen Jiabao’s December 15-17 visit to India, when he characterized them as being in a “fragile” state that needed care. Little visible progress however has been made in resolving some of the issues that have made the relationship tenuous. Wen’s visit was useful for putting the issues back on the table and reiterating positions. He has indicated that China would discuss the problems so as to find solutions. Whether there have been positive movement will be visible in Chinese postures only in the coming months. Thus, when the Chinese Premier referring to the relationship said: “We are partners not competitors”, he was perhaps focusing more on a goal rather than describing the current reality, since the list of issues pending resolution has been growing.

The Issues
Several issues have plagued India-China relations through the past year. The most important of them concerns the emergence of Jammu and Kashmir as a new issue area between the two. The Chinese decision to provide stapled visas for Indians from the State of Jammu and Kashmir that indicated it considers it 'disputed’ – in line with Pakistan’s position – has become a major diplomatic problem. This problem was compounded in August 2010 when China denied visa to Lt. Gen Jas Pal, Commander, Northern Command, since he is based in Jammu and Kashmir. The lack of diplomatic sensitivity and protocol on the Chinese side was stark since the Lt. Gen was invited by the PLA. India has suspended all high-level military exchanges with China in retaliation and till the issue is sorted out to its satisfaction. It also cancelled the visits of Chinese high-level military visits to India.

A second issue – again linked to J&K – was the active involvement of China, largely through the PLA, in carrying out various projects in Pakistan occupied Kashmir. Legal sovereignty over Pakistan occupied Kashmir belongs to India – yet this has been systematically been set aside by China since it signed the 1963 'border agreement’ with Pakistan settling the POK-Xinjiang territorial division. India has always considered it 'illegitimate’. But this has been since then been further compromised by Chinese military activities, including road and infrastructure building, military transportation, etc., in POK. Earlier in the year the Chinese had opposed an Asian Development Bank project in Arunachal on the ground that the territory is 'disputed’ and that India must not undertake even official State visits of the Prime Minister and the President or allow the Dalai lama to visit the area. By its own logic China should not be undertaking any such projects in 'disputed’ POK. But logic has not been Beijing’s strong point, power politics is.

China’s attempt to make the visits of the Prime Minister to Arunachal and the Dalai Lama to Tawang highly sensitive public issues has had a very negative impact on public opinion in India which sees China’s claims as well as attendant diplomatic demands as provocative and hostile in nature. Arunachal has always been part of India and many Prime Ministers have visited the province. So why make the Manmohan visit such an issue? Similarly, the Dalai Lama has been in exile in India since 1959 and as a religious head travels to all parts of India, including the Buddhist monasteries such the one in Tawang. This too is not new. India expects China to directly talk with the Dalai Lama so that the over 100,000 Tibetans in exile may return to Tibet. They are a responsibility of China and they are in exile because they do not feel that the political and religious conditions are conducive for them to return home. The Tibetan issue is not an Indian creation and must not be made to look as such. It has already muddied India-China relations and caused many misperceptions. China needs to address it sincerely through talks with the Tibetans in exile and their leader the Dalai Lama – overcoming the dominant view that this problem can be overcome simply by waiting out. It is quite possible that complexities could increase as human rights and other cultural autonomy issues gain more salience in international diplomacy and Chinese domestic affairs.

China tried to push through supply of additional nuclear power reactors to Pakistan – a known proliferator of nuclear weapon technology --bypassing the Nuclear Suppliers Group regulations and restrictions despite being a member. While, the projects have not come through as yet and did not materialise even during the recent Pakistan visit of Wen Jiabao-- but the very fact that it has been attempted has not left a negative impression in India and elsewhere. China’s Pakistan fixation has been further reflected in its failure to condemn the perpetrators of the dastardly Mumbai terrorist attacks, its opposition in the UN to sanction the Lashkar-e-Taiba and the Jaish-e-Mohammad, and its calculated silence on mentioning Pakistan, even indirectly, as a state that needs to be responsible and control international terrorist attacks from its territory, and punish the guilty. The Chinese stance has had been widely viewed negatively in the Indian media and political circles, to the detriment of India-China diplomacy and confidence building.

Finally, China has acknowledged after being in denial for many years, that it is constructing a hydro-power plant on the Tsangpo or the Brahmaputra and is also planning other projects –that could affect the quantum of water flow into lower riparian India and Bangladesh during the lean period. No river water agreement exists between India and China, and water flows in both Sutlej and Brahmaputra are involved. Under the present arrangement China provides water flow data during the Monsoon and not year-round. Its dam building activities on the Mekong has been a diplomatic issue with the Indo-Chinese states. The failure to be upfront with India on the hydro-project issue has therefore raised public concern, especially in the Northeast.

In effect, the existing disputes and differences over territory, strategic ties with Pakistan and regional diplomacy that seeks to counter-balance India and undermine existing security arrangements and the Tibetan issue became more complicated over the past year. As a result the positive elements in the relationship such as at the Copenhagen climate change conference or in the G-20 global financial discussions have been overshadowed by the series of negative diplomatic moves by China. Growing trade volume and economic relations – important for the relationship given the political differences -- have not managed to cope with the string of new issues that have clouded the relationship.

Wen Jiabao’s Visit
Premier Wen knows the bilateral issues well enough. He and Prime Minister Manmohan Singh have met over 20 times during their tenures as heads of governments at different diplomatic forums and have discussed way to improve ties and deal with the problem areas.

Wen came to India with a 400-strong Chinese business delegation, set his eyes on commerce and investments, avoided controversies and on the whole made a positive public impression. This was his second visit. During his 2005 visit he had signed the principles to settle the boundary issue –which seemed important then but has been nullified because of its generalities and differences over interpretation. He has a good reputation as a reformer and as a leader interested in stable relations with India. In the five years since his past visit ties however have become entangled, new problems have been added. In some ways this was a damage control mission, arranged hurriedly during the G-20 summit in Seoul where he met Manmohan Singh on the sidelines.

Prior to the summit it was felt by some that a positive assessment of the visit would depend on whether he addresses two Indian concerns. One, what stand he takes on India’s persistent demand to do away with China’s policy of issuing stapled visas to Indians from Jammu and Kashmir, and two, whether he declares an unequivocal support to Indian candidature for United Nations Security Council’s permanent membership. Dodging of these issues by China is increasingly being seen as an unfriendly act in India. On both these issues the Chinese Premier remained non-committal or stuck to generalities. On the issue of terrorism, he took a general position opposing it in all forms. However, China has prevented the United Nations from imposing sanctions on Lashkar-e-Tayyeba chief Hafiz Saeed and his charity and terror front, Jamaat-ud Dawa (JuD). Nor has China before or during Wen’s visit even hinted at the need for Pakistan to bring to book the perpetrators of the 26/11 Mumbai attacks. China continues to handle its strategic ally Pakistan with kid-gloves. These postures do not create confidence about Chinese stated positions and intentions.

So what was achieved? Little that is tangible on resolving the large areas of differences; but some hopes have been raised within the political establishment by Wen’s assurances and apparent attention to India’s concerns. According to an Indian official comment -- "We have made it very clear that issues involving the Indian state of Jammu and Kashmir are a core concern for us, as Tibet and Taiwan are core concerns for them." However, he added, that efforts to improve ties would continue. "We will move towards trying to find agreement on those issues while not letting them impact on areas where we can move ahead."

In the two rounds of talks between Prime Minister Manmohan Singh and Premier Wen the “stapled visa” issue could not be undone. They therefore agreed on a mechanism to address the matter. They also decided to discuss the break in high-level defence exchanges — suspended by India as a result of Chinese denial of visa to the Commander, Northern Command --by creating a basis for them to “continue without constraints.” The immediate “constraint” is the stapled visa, which challenges India’s sovereignty and territorial integrity. In the absence of a resolution of this issue, India refused to include in the joint statement references to Chinese sovereignty in Tibet and ‘one-China' that have been part of the previous three joint statements. The reference in the joint statement to deepening bilateral relations on the basis of “sensitivity for each other's concerns” was the compromise formulation. India’s insistence on reciprocity and seeming assertiveness are a refreshing change from its previous docile posture that China had begun to take for granted.

The setting of a new trade target of $ 100 billion for 2015, agreements to open branches of four major Chinese banks in India to promote investments, and begin a strategic economic dialogue to enhance macro-economic policy coordination and address challenges in economic cooperation-- are the areas that the two have moved forward. But even these are not without pitfalls. The trade target is modest if the current rate of over 40 per cent annual growth is taken into consideration. India-China bilateral trade stood at $51 billion in fiscal 2009, up from $15 billion in 2005. Trade is badly skewed with a trade surplus of $ 24 billion in China’s favour this year, up from under $ 1 billion in 2002. Also, India is largely selling raw materials such as iron ore while rising exports of Chinese power and other equipment add value to the manufacturing sector struggling with falling demand in the recession-hit developed economies and create badly needed jobs in China. India has been pressing China to open up its economy for more exports but progress has been slow. Bilateral trade is likely to touch $60-billion this year, but Indian exporters would need to secure access to Chinese information technology, pharmaceuticals and agriculture and allied products markets in order to gain from it. That won’t be easy. Larger trade without significant growth in Indian value added exports of goods and services to China may not be politically sustainable for much longer.

On the issue of dams on rivers, China, according to Indian officials, hinted at a changed stance. Both sides agreed to further discuss India's suggestion for increased cooperation on trans-border river issues over and above the expert level mechanism for the Brahmaputra and the Sutlej. With large projects on the anvil on its sides and China’s claims on Arunachal it remains to be seen whether it will actually share full data on water flow and cooperate so that India and Bangladesh are not affected. The two countries also made some progress by opening consultations on maritime security and agreed that freedom of navigation should be in line with international laws. Despite the suspension of defence exchanges at the higher level, they decided to work together in tackling piracy in the Gulf of Aden, where both sides have deployed their navies. These areas of agreement are important for sustaining engagement in the context of differences over vital sovereignty, national security and trade issues.
Changed Context

A little over two decades ago with the Cold War coming to a close and the Soviet Union and China on the anvil of fundamental changes, India and China had agreed on a framework of engagement and development of their ties. Prime Minister Rajiv Gandhi’s talks with Deng Xiaoping and Communist Party General Secretary Zhao Ziyang in December 1988 laid a six-fold plan – resumption of high level political exchanges and summits, confidence building between the two militaries, maintaining the status quo on the territorial issue, expanding trade and economic ties, and normalising tourism, cultural and intellectual exchanges, and parallel discussions on ways to resolve disputes. Despite different and often competing strategic visions this framework has been useful and has significantly changed the content and tenor of the relationship over the past two decades.
The strategic context however has undergone dramatic changes over the past two decades. The Soviet Union has disintegrated, the United States, Japan and Europe are in deep recession, China’s power has dramatically grown and looms large in international perceptions, and India is rising. As a result nationalism has been growing within the prosperous Chinese elites and professional classes, propelling China to be increasingly assertive in its external relations. It does not see any reason to reach settlements on sovereignty claims and strategic differences that would seem as making ‘concessions’. The desire to drive an ever harder bargain and the introduction of new complexities such as the 'stapled visa’ issue in the relationship with India has made dispute resolution – an important goal of the 1988 framework—difficult. Relations have as a result frayed. India would do well to take a comprehensive view of the relationship, including the sovereignty issues, not be manoeuvred to make new diplomatic concessions in order to overcome some of the new hurdles that China has introduced, such as stapled visas. If China does not untie the knot it has created in Jammu and Kashmir and Arunachal India would have no other option but to re-examine its Tibet and Taiwan policies.

Overall, India’s relationship with China is poised at the cross-roads. It can go in several directions depending on how the two deal with each other’s concerns and their ability to reach a reasonable settlement on some of the pending issues. Both need a stable, sensitive, and a productive and working relationship as their status and power in the world changes. The rest of Asia too wants to see peace and stability maintained in this major relationship of the 21st century. But the relations could also deteriorate if the sincerity of engagement falters. Wen’s visit would have played a positive role if it contributes to lessening the complexities that have emerged, resolve some of the pending issues and helps forge a stronger understanding of the interests that tie the two countries.

Published Date : 11 January, 2011

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