Issue

Context

Recently, Chinese President Xi Jinping visited India for the second Informal Summit with Prime Minister Narendra Modi.

Background

• India and China both the countries started off on cordial note post-independence with signing of Panchsheel. However the relations turned cold post 1962 war which created mistrust between the two countries since then.
• India-China relationship is dotted with competition, cooperation, and discord. In 2017 these played out in India’s critique of China’s Belt and Road Initiative (BRI), India’s entry into the Shanghai Cooperation Organisation (SCO), the dramatic crisis in Doklam, the acceleration of multilateral cooperation in the BRICS and attempts to foster economic engagement.
• Both the countries have similar attributes and problems including large population, huge rural-urban divide, rising economy and conflict with neighbours.

Analysis

Cooperation

• Economic Relations
  • Trade:
    • The India-China bilateral trade reached $84.44 billion in 2017.
    • India has emerged as the seventh largest export destination for Chinese products and the 24th largest exporter to China.
    • India’s top exports to China include diamonds, cotton yarn, iron ore, copper and organic chemicals.
    • India imports electrical machinery and equipment, fertilizer, antibiotics and organic compounds.
    • The trade deficit had crossed $52 billion in 2017. India has been pressing China to open IT and Pharmaceutical sectors for Indian firms to reduce the massive trade deficit.
  • Investment and Banking:
    • Seven Indian Banks have opened branches in China. Chinese bank and ICBC have opened branches in India.
    • Cumulative Chinese investment in India till March 2017 stood at US$ 4.91 billion. The cumulative Indian investment in China till March 2017 reached US$ 705 million.
  • E-business visa: More recently, in April 2017, e-business visa has been introduced to encourage more number of business people from China travelling to India. It will give push to the trade and business cooperation.
  • Dialogue Mechanisms: The India-China Economic and Commercial Relations are shaped through various dialogue mechanism:
    • Joint Economic Group led by the Commerce Ministers of both sides
    • Strategic Economic Dialogues led by the Vice Chairman of NITI Ayog and the Chairman of National Development and Reform Commission of China
    • NITI Ayog and the Development Research Center Dialogue and the Financial Dialogue led by Secretary Department of Economic Affairs of India and Vice Minister, Ministry of Finance of PRC.
  • Cultural relations
    • India-China cultural exchanges date back to many centuries and there is some evidence that conceptual and linguistic exchanges existed in 1500-1000 B.C. between the Shang-Zhou civilization and the ancient Vedic civilization.
    • During first, second and third centuries A.D. several Buddhist pilgrims and scholars travelled to China on the historic “silk route”.
    • As a mark of the historical civilizational contact between India and China, India constructed a Buddhist temple in Luoyang, Henan Province, inside the White Horse Temple complex which was said to have been built in honour of the Indian monks Kashyapa Matanga and Dharmaratna.
    • Yoga is becoming increasingly popular in China. China was one of the co-sponsors to the UN resolution designating June 21 as the International Day of Yoga.
    • Indian Bollywood movies were popular in China in the 1960s and 1970s and the popularity is being rekindled in recent times again. India and China have entered into an agreement on co-production of movies, the first of which based on the life of the monk Xuan Zang hit the theaters in 2016.
  • Education Relation
  • India and China signed Education Exchange Programme (EEP) in 2006, which is an umbrella agreement for educational cooperation between the two countries. Under this agreement, government scholarships are awarded to 25 students, by both sides, in recognized institutions of higher learning in each other’s country.
  • Chinese students are also annually awarded scholarships to study Hindi at the Kendriya Hindi Sansthan, Agra to learn Hindi
  • BRICS Network University and BRICS Think Tank Council are institutional networks for engaging with each other in education research and innovation.
  • Indian Diaspora In china
  • The Indian community in China is growing. Present estimates put the community strength to around 35,500. A major part of this comprises of students (over 18000), who are pursuing courses in various universities in China.
  • A number of Indians and PIOs are also working as professionals with various multinational and Indian companies.
  • Indian diaspora will help in further strengthening our ties with China.

Mutual Interests of India and China

• Both are members of BRICS, which is now establishing a formal lending arm, the New Development Bank.
• India is a founding member of the China-backed Asian Infrastructure Investment Bank.
• China welcomed India’s full membership of Shanghai Cooperation Organization, anEurasian political, economic, and security alliance.
• Both countries have advocated democratization of international institutions such as World Bank, IMF, etc.
• China and India have similar stand during WTO negotiations.
• China and India, being the main targets of criticism by the US and its friends, have so far successfully coordinated their strategies in the environmental summits

 Major irritants

• Trade imbalance is skewed in China’s favour viz. $52 billion when total trade volume was of the value of $84.44 billion in 2017
• Border Disputes – India and China share about 3,488-km long border which is yet to be fully delineated. The skirmishes between the security forces of the two countries in Dokhlam, Aksai Chin and Arunachal Pradesh are common in this disputed state of borders.
• India supports a Tibetan govt. in exile formed by Dalai Lama which is unacceptable to china. China recently opposed to the Dalai Lama’s visit to Arunachal Pradesh, particularly Tawang, which it considers as Southern Tibet. On recent Visit of President Xi Jinping, Tibetian leaders in India were arrested.
• China began the practice of issuing stapled visa to residents of Arunachal Pradesh and Pakistan occupied Jammu & Kashmir, though it stopped it for PoK but continues for AP.
• China has an undeclared policy of String of Pearls to encircle India, which involves building of ports and naval bases around India’s maritime reaches. While India has been trying to develop closer arrangements with the countries surrounding China viz. Japan, South Korea & Vietnam.
• China has been building dams in Tibet part of Brahmaputra. India has objected but there has been no formal treaty over sharing of the Brahmaputra water.
• China has been blocking India’s entry to NSG & has also blocked India’s attempt at the UN for sanctions against Jash-e-Mohammad chief Masood Azhar many times but finally Masood Azhar was put on UN blacklist.
• India considers building of the CPEC as China’s interference in India’s sovereignty and territorial integrity.

India’s Three-Pronged Strategy towards China

• The first prong is to engage in bilateral and multilateral forums such as BRICS, SCO and the Russia-India-China trilateral, in order to maintain overall stability, deepen economic ties, and foster diplomatic cooperation on regional and international issues.
• India has also sustained efforts to enhance its military and deterrent capabilities as the second prong of policy.
• There is an emerging third prongin India’s China policy in the form of new external balancing effort. The evolution of India-US relations in particular but also of India’s relationships with Japan and Australia as well as the quadrilateral cooperation among them indicates a growing convergence in their views regarding stability in the Indo-Pacific region particularly with respect to China’s intentions in laying territorial claims to more than 80 per cent of the South China Sea as well as to the sovereign territories of India and Japan.

Way Forward

• Necessary to build up economic and security capabilities and begin to close the power gap with China.
• India’s foreign policy formulations on China and Pakistan need no longer be considered as separate instead one hyphenated strategic entity.
• Time for India to join hands with Japan, US and EU to promote alternatives to Chinese economic exploitation.
• India should aggressively pursue ‘Cotton Route’, Project Mausam and Spice Route to strengthen economic ties between countries in the Indian Ocean rim.
• Bring into action planned strategic Asia Africa Growth Corridor with the help of Japan.
• Quad Grouping should be made more effective to play important role in the Indian ocean security.
• Wuhan and Mamalapuram like summits should continue to ease the tension between India and China.

Learning Aid