Indo-China relations

For quite some time, the Chinese top leadership seems to have made it a point – as much as is possible – to visit India and Pakistan back-to-back. In 2006, President Hu Jintao’s Indian trip was immediately followed by a visit to Pakistan. In 2010, Prime Minister Wen Jiabao visited New Delhi and Islamabad – again on the trot. Last month the new Chinese Premier Li Keqiang paid back-to-back visits, his maiden foreign trips after assuming office, to the two South Asian neighbours.

Apart from economising on fuel consumption, the scheduling of the visits reveals Beijing’s attempts to send out the message that it seeks to strike a balance in its relations with Islamabad and New Delhi. Premier Li outlined the three-fold purpose of his visit to India as increasing mutual trust, intensifying cooperation and facing the future, which sums up the dynamics of Sino-Indo relations.

The trust factor: India and China have a history of mutual mistrust, going back to their 1962 war in which the former was comprehensively beaten. The two countries are locked in a territorial dispute over the Indian state of Arunachal Pradesh, on which Beijing stakes claim. Border tensions escalated last April, ending in the two sides reaching an agreement and pulling back their troops.

When New Delhi went nuclear in 1998, it described ‘threats’ from Beijing as the prime reason for that decision. New Delhi also continues to host the Tibetan government in exile, though it officially recognises Tibet to be part of China. India looks at China’s nuclear cooperation with Pakistan with suspicion. On its part, China is not happy with India-US nuclear cooperation, which it interprets as running counter to its interests in the region.

In the joint statement issued at the conclusion of Li’s visit, the two sides pledged that they will allow their territories to be used for activities against the other – thus addressing Chinese concerns at New Delhi’s support to the Dalai Lama – to maintain peace in the border areas and find out a ‘mutually acceptable settlement’ of the boundary question. The vague language shows that neither China nor India will allow the territorial dispute to bear upon their overall bilateral relations.

The joint statement, however, did not make any reference to India’s attempts to become a permanent member of the United Nations Security Council (UNSC). Given New Delhi’s ambition to enter the five-member club, it’s likely that the matter came up for discussion between the top leadership but not much to India’s satisfaction. This shows that though not categorically opposed to it, China continues to have some reservations against India’s UNSC campaign. It may be mentioned that all the other four permanent UNSC members are supportive of New Delhi being in the elite club.

Politics aside, increased economic cooperation is the main driver of Indo-China relations. China and India being the world’s two largest markets, no business looking for international exposure can afford to disregard the immense advantages that either market offers. Not surprisingly, Prime Minister Li was accompanied by a business delegation and out of the eight agreements signed during the visit, five pertained to shoring up economic cooperation.

The two countries already have an agreement for reciprocal protection of investment. India can supply raw material to the enormous Chinese industry, while China can provide technical know-how to India. Many Indian IT firms have a presence in China.

Over the past few years, bilateral trade has shot up, with China now India’s largest trading partner. Their bilateral trade exceeds $72 billion, compared to $17 billion in 2005, though the balance of trade remains heavily in favour of China reaching $27 billion in 2011. The two countries are looking towards trade of $100 billion by 2015 and may also enter into a free trade agreement (FTA) to boost their already thriving commercial relations.

These economic ties, however, are not without irritants. Both India and China accuse each other of hindering market access to their exports and also blame each other of using unfair trade practices. India has accused the Chinese government of subsidising its domestic firms, which make them ‘artificially’ competitive.

These firms then allegedly dump their products into the Indian market much to the detriment of the domestic industry. China denies Indian accusations and both countries have been embroiled in several antidumping disputes in the WTO. China accuses India of stringent non-tariff barriers, particularly the issue of delayed visas to Chinese workers and businesspersons.

India has also yet to give China market economy status. Upon its accession to the WTO in 2001, China, like other members, had signed a protocol which provided that China, whose economy is largely controlled by the state, would be treated as a non-market economy for determination of antidumping duty on Chinese imports. Other WTO members can revoke this non-market economy status and give China market economy status if they so desire. So far nearly 80 countries, including Pakistan, have given China market economy status.

China and India are the two largest developing countries. They are also two of the globe’s fastest growing economies. China is already a world power, while India is an aspirant for that status. Both China and India are among the four Bric countries, the other two being Russia and Brazil, that are widely predicted to dominate the global economic scene by 2050.

Great powers, incumbent as well as those in the making, want to cast the world in their own image and shape the future according to their own interests. This invariably brings them into conflict. What is important is not to try and avoid the conflict, which at any rate is inevitable, but to keep it from assuming dangerous proportions. This is especially true of nuclear powers like China and India.

Mindful of this, New Delhi and Beijing are conducting their bilateral relations with an eye on the future, each knowing well that a military stand-off will hinder its economic ambitions. The two countries subscribe to a similar nuclear doctrine – ‘no first use of nuclear weapons and achieving deterrence through development of a secure second strike capability’. Both nations have a promising future, which neither would want to spoil by positioning itself aggressively vis-à-vis the other.

The up-gradation of Indo-China relations may raise some concerns in Pakistan, where China is held in the highest esteem. Beijing has been dubbed Islamabad’s ‘all-weather friend’ for having helped in testing times, and on most occasions unconditionally.

Be that as it may, Pak-China relations have come a long way due in part to the growing pragmatism, particularly commercial considerations, that has come to characterise China’s foreign policy and in part to the alleged involvement of some non-state actors from Pakistan in the insurgency in China’s energy-rich predominantly Muslim Xinjiang province. At any rate, Pakistanis need to bear in mind that Sino-India engagement has much greater potential than Pak-China relations.

The writer is a freelance contributor. Email: hussainhzaidi@gmail.com