6/18/13

Article @ competitionmaster.com - India-China Relations - A Backgrounder

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A RCHIVES I N DI A -C H I N A RE L A T I O N S: A BA C KG RO U N D E R U N I O N BU D G E T 2 0 1 2 EC O NO MIC DE V E LO P M E NT A ND E N V I RO N M E N T ST A T E O F I N D I A 'S E C O N O M Y - 2 0 1 0 -1 1 I N D I A S U RBA N SC E N A RI O HUMA N DE V E LO P M E NT RE P O RT 2 0 1 0 : A SY N O P SI S C O RRU P T I O N A N D Q U A LIT Y O F G O V E RN A N C E E D U C A T I O N FO R A L L P U BL I C FI N A N C E A N D FI SC A L DE V E LO P M E NT S ST A T E O F I N D I A S EC O NO MY G L O BA L T O BA C C O EP IDEM IC HUMA N DE V E LO P M E NT RE P O RT , 2 0 0 9 C HA LLE NGE S M I G RA T I O N M I SC O N C E P T I O N S U RBA N I SA T I O N : A DA U NT ING C HA LLE NGE A G RI C U L T U RE A N D FO O D M A N A G E M E N T IN INDIA SE C U L A RI SM I N I N D I A D E FL A T I O N : I S T H E T H RE A T FO R RE A L ? I N FRA ST RU C T U RE : T H E KE Y T O RA P I D G RO WT H G O RU RA L : T H E N E W M A N T RA BA I L O U T P A C KA G E A ND INDIA N EC O NO MY RI C H - P O O R D I V I D E : C A N I T BE BRI D G E D ? T H E G E N E SI S O F C A P I T A L M A RKE T S C RA SH G RO WT H O F M O N E Y M A RKE T I N I N D I A FI N A N C I A L SE C T O R RE FO RM S I N I N D I A

INDIA-CHINA RELATIONS: A BACKGROUNDER

The cross cultural currents between India and C hina date back to many millennia. During the colonial period people of both countries rendered support and sympathy to each other in their common struggle. It was vision of Pt. Jawahrlal Nehru, Indias first Prime Minister, that India and C hina should necessarily come nearer to each other for the vast and tremendous potentials of economic cooperation in a New World after the War. India was the first country in non-communist block to recognize C hina and establish diplomatic relations. However, both did not handle their relations well in the 1950s due to various misconceptions and misunderstandings. The decades-old cordiality after Indias independence, which marked the Hindi-Chini Bhai-Bhai days and all the impressive talk of Panchsheel (five principles of peaceful co-existence), to which C hina was also a vocal party, were turned into hostility as a result of the sudden invasion of India by C hina in 1962 and forcible occupation of Indian territory. Since then, every now and then the C hinese, officially or unofficially, keep releasing maps in a bid to establish their legal right over Indian territory which it seized in 1962 and other areas on which it shows its claim. Several rounds of talks have been held, frequent gestures of friendship made, feelers thrown by both countries and false hopes aroused of a settlement of the vital border question. The results of the prolonged discussions do not mark concrete achievements towards the solution of the boundary question which naturally continues to be the topmost priority from the Indian viewpoint. Relations with C hina also soured because of its support to Pakistan in making nuclear weapons. India has often protested about this, but the co-operation has continued. C hinas hand in the making of the Pakistani nuclear bombs was all too evident but India did not make it into an international issue. Nor has it highlighted the plight of the Tibetan refugees in India. More and more keep crossing the border and settle in India to escape the prosecution in C hina. C hinese leader Deng Xiaoping, who led C hina after Maos death towards a market economy from 1978 to 1992, offered a package deal which envisaged freezing the status quo on the India-C hina border. India, however, made it known to the C hinese that it could not accept the package plan which amounted to accepting the C hinese occupation of about 23,000 square km of Indian territory. This included Aksai C hin area in J&K, as also approximately 3,000 square km of Indian territory under Pakistans illegal occupation which was ceded to C hina under the Sino-Pakistan Agreement of 1963. Prime Minister Rajiv Gandhis five-day visit to C hina in December 1988 created an atmosphere of goodwill for the first time after a long period, and set the stage for a settlement of the 26-year-old border dispute between the two countries. The two sides had in-depth discussions and agreed to develop their relations in several fields and work hard to create a favourable climate and conditions for a fair and reasonable settlement of the boundary question. Both sides agreed that concrete steps would be taken, such as establishing a joint working group on the boundary question and a joint group on economic relations, trade, science and technology. The Indian side assured that anti-C hina political activities by Tibetan elements would not be permitted in the country. India and C hina signed a landmark agreement on 7 September 1993, during Prime Minister Narasimha Raos Beijing visit. It generated much goodwill and set the stage for peaceful resolution of the vexed border issue. The accord was a pragmatic step forward to promote understanding and mutual confidence. The two sides agreed to reduce their military forces along the Line of C ontrol (LoC ). It was also agreed that neither side would undertake specified levels of military exercises in identified zones. A meeting of the Sino-Indian Joint Working Group (JWG) on the border question yielded a breakthrough at New Delhi on 20 August 20 1995, when both countries agreed to pull back troops at four points on the Arunachal Pradesh border. The agreement ended a 33-year-old eyeball-to-eyeball deployment where the two forces are separated by as less as 50 to 100 yards. India and C hina marked 50 years of diplomatic contact on 1 April 2000. For most of these five decades, ties between Asias two largest countries had been uneasy,

C U RRE N T A FFA I RS C U RRE N T G E N E RA L KN O WL E D G E EV ENTS SP O RT S C A RE E R I N FO P E RSO N A L I T Y D E V E L O P M E N T E SSA Y A RT I C L E FE A T U RE C O V E R FE A T U RE

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RE FO RM S I N I N D I A RO L E O F BA N KS A N D FI N A N C I A L I N ST I T U T I O N S I N EC O NO MY P E T RO L E U M P RI C I N G P O LIC Y IN INDIA : N E E D FO R C H A N G E RE FO RM S I N G O V E RN A N C E A N D P O V E RT Y A LLE V IA T IO N M A C RO E C O N O M I C M A NA GEM ENT A ND M O N E T A RY P O L I C Y I N INDIA I N FL A T I O N I N I N D I A : FU E L L E D BY D E M A N D ?

these five decades, ties between Asias two largest countries had been uneasy, especially since the short border war of 1962.

Article @ competitionmaster.com - India-China Relations - A Backgrounder

In August 2000, both the countries signed a five-year memorandum of understanding on critical areas of information technology, during the visit of the then Information and Technology Minister Pramod Mahajan to Beijing. In May 2001, the C hief of Indian Air Force, Air C hief Marshal A.Y. Tipnis, visited C hina to help enhance military to military ties. He became the first IAF C hief to visit C hina in the 51 years of diplomatic relations between the two countries. Later, two C hinese naval shipsHarbin and Tailingarrived in Mumbai to engage the Indian Navy in a three-day Pasex exercise or naval exercise while on passage. Beijing assured New Delhi of its active co-operation in the fight against international terrorism, including Pakistan-sponsored cross-border terrorism, when the two countries held a bilateral dialogue on terrorism for the first time in Beijing in November 2001. The two sides also discussed developments in the region following the September 11 attacks in the US, and expressed concern on the grave threat faced by India and C hina from terrorism. Though Beijing has earlier also condemned acts of terrorism in India, it was the first time that it recognized New Delhis concern on Pakistansponsored terrorism. C hinese Prime Minister Zhu Rongjis six-day visit to India, in the second week of January 2002, took place at a time when military tensions between India and Pakistan were on the boil. However, C hina made it clear that it wanted to expand economic, scientific and business ties between the two countries and maintained its position that the India-Pakistan dispute should be resolved through negotiations. India and C hina agreed to speed up resolution of their border dispute by clarifying the 3,268 km long Line of Actual C ontrol (LAC ). Prime Minister Zhu, however, preferred to concentrate on the business of strengthening bilateral economic ties. Five Memoranda of Understanding and contracts worth more than $100 million were signed during the visit. Prime Minister Atal Behari Vajpayees visit to C hina, in June 2003, helped in taking the relationship to a new level. Ten agreements and a Declaration on Principles for Relations and C omprehensive were signed during the visit. While the Declaration contained the sensitive formulation on Tibet, what held more interest from the Indian point of view was a Memorandum of Understanding signed on expanding border trade. In the first-ever joint declaration of Principles of Relations and C omprehensive C ooperation signed by Prime Minister Atal Behari Vajpayee and his C hinese counterpart Wen Jiabao, India recognised that the Tibetan Autonomous Region is part of the territory of the Peoples Republic of C hina. It reiterated that New Delhi will not allow Tibetans to engage in anti-C hina political activities in India. The declaration is the first-ever joint document signed by leaders of the two countries. In the MoU on expanding border trade, the Indian side agreed to designate C hanggu of Sikkim State as a venue for the border trade market. The C hinese side agreed to designate Renqinggang of the Tibetan Autonomous Region as the venue for the border trade. And the two countries agreed to use Nathu La as a pass for entry and exit of persons, means of transport and commodities engaged in border trade. What was most important in this MoU was related to the status of Sikkim whose merger with India in 1975 C hina had consistently refused to recognise. While a formal statement of recognition did not come, it extended what was clearly de facto recognition by agreeing to open a new trade route between the two countries through Sikkimsomething that C hina had been refusing to do earlier. Also, in an attempt to speed up resolution of the border dispute, India and C hina agreed to appoint a special representative to explore, from the political perspective of the overall bilateral relationship, a framework on the boundary settlement. This was an acknowledgement that the key issue in resolving the dispute is political and discussion at a purely official and technical level may have reached a plateau. In a major move to foster friendly ties with India, C hina, on 8 October 8 2003, removed Sikkim as a separate country from its Foreign Ministry website, honouring an understanding reached on the issue during Prime Minister Atal Behari Vajpayees historic visit to Beijing in June 2003. On 31 May 2004, C hina took another significant step to recognise Sikkim as part of India by not showing the North-eastern State as an independent country in the Annual Year Book (2004 edition). Seeking to upgrade bilateral relationship, India and C hina held their first-ever strategic dialogue on January 24, 2005, to discuss major global and regional issues, including international terrorism, non-proliferation and energy security. The aim of the strategic dialogue was to broaden the scope of the blooming bilateral relationship, allowing both sides to exchange notes on global and regional security issues. Prime Minister Wen Jiabao paid a State visit to India from 9-12 April 2005. The visit was substantive in its outcome. Heralding a new dimension in bilateral ties, India and C hina agreed to work for early settlement of the vexed boundary question, establish a strategic and cooperative partnership for peace and prosperity and further promote exchanges in the military field.

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Article @ competitionmaster.com - India-China Relations - A Backgrounder

exchanges in the military field. After wide-ranging discussions, Prime Minister Manmohan Singh and visiting C hinese Premier Wen Jiabao signed a landmark Joint Statement that contained a vision of where India-C hina relations are headed and an action plan for cooperation in bilateral, regional and global domain. The two countries also agreed on the importance of comprehensive reforms in the UN system. C hina conveyed that it attached great importance to the status of India in international affairs and understood and supported Indias desire to play an active role in the UN and international affairs. A very important dimension of the evolving Sino-Indian relationship is based on the energy requirements of their industrial expansion and their readiness to proactively secure them by investing in the oilfields abroadin Africa, the Middle East and C entral Asia. This cooperation was sealed in Beijing on 22 January 2006, with an agreement which envisaged ONGC Videsh Ltd (OVL) and the C hina National Petroleum C orporation (C NPC ) placing joint bids for promising projects elsewhere. On 6 July 2006, India and C hina re-opened Nathu-la, an ancient trade route which was part of the Silk Road. Nathu-la is a pass located on Sikkim-Tibet border. It was closed for trade after the 1962 war. The initial agreement for the re-opening of the trade route was reached in 2003, and a final agreement was formalized on 18 June 2006. The re-opening of border trade helped ease the economic isolation of the region. Meanwhile, little spats continued. In May 2007, C hina denied the application for visa from an Indian Administrative Service officer in Arunachal Pradesh. According to C hina, since Arunachal Pradesh was a territory of C hina, he would not need a visa to visit his own country. Later, in December 2007, C hina reversed its policy by granting a visa to Marpe Sora, an Arunachal born professor in computer science. Building on a much-improved bilateral relationship, Prime Minister Manmohan Singh and his counter-part Wen Jiabao, on 14 January 2008, signed a joint declaration titled A Shared Vision for the 21st C entury, during the visit of Indian Prime Minister to C hina. In another advance over previous formulations, C hina supported Indias aspirations to play a greater role in the United Nations, including in the Security C ouncil. Taking forward their 2006 accord, the two countries also pledged to promote bilateral cooperation in civil nuclear energy, consistent with their respective international commitments. In an atmosphere tinged with the Hindi-C hini Bhai Bhai spirit, Indian troops arrived on 20 December 2007, in C hina, to a warm welcome by the C hinese hosts for the firstever Sino-Indian joint military exercise in a hilly terrain in South western Yunnan province. The Indian troops were drawn from the Jammu and Kashmir Light Infantry. The military cooperation gave the two countries a way to bring vision to their efforts to improve relations. On 7 April 2010, India and C hina signed an agreement to establish a hotline between Prime Ministers of the two countries. This was the first time in recent years that India established a dedicated hotline facility with any country. The two countries also decided to strengthen their cooperation in regional forums and on addressing issues like global financial crisis and climate change. Indias President Pratibha Patil visited Beijing from 27 May 2010. She was the first Indian Head of State to visit C hina in a decade. Her trip coincided with the 60th anniversary of the establishment of diplomatic relations between India and C hina. During her visit, Patil inaugurated C hinas first Indian-style Buddhist temple in Luoyang city in Henan province. However, controversial issues such as C hinese border incursions, stapled visas for Kashmiris, Indian visas for C hinese telecom companies and Sino-Pak ties did not figure in her discussions with the C hinese leadership. Prime Minister of C hina, Wen Jiabao visited India on 15 December 2010. The muchanticipated summit between Prime Minister Manmohan Singh and C hinese Premier Wen Jiabao was rich in symbolism but poor in substance. Belying New Delhis expectations, the C hinese leader remained non-committal on reversing Beijings policy of giving stapled visas to residents of Jammu and Kashmir or endorsing Indias candidature for a permanent UN Security C ouncil seat. A joint communiqu issued after the talks suggested few positive outcomes, including a commitment by the two countries to resolve outstanding differences, particularly on the vexed boundary dispute, at an early date through peaceful negotiations. It was quite clear from the communiqu that the C hinese side was keen to deepen the economic content of the relationship rather than dealing with contentious issues of core concern to India. The two countries set a new bilateral trade target of $100 billion by 2015 and take measures to promote greater exports to C hina with a view to reduce Indias increasing trade deficit. On 1 March 2012, taking a giant step towards normalisation of relations, India and C hina decided to begin a dialogue on maritime issues while resolving to maintain peace and tranquillity along the Line of Actual C ontrol (LAC ). The suggestion for the first-ever maritime dialogue between the two countries was made by C hinese Foreign

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first-ever maritime dialogue between the two countries was made by C hinese Foreign Minister Yang Jiechi during talks with External Affairs Minister S.M. Krishna in New Delhi.

Article @ competitionmaster.com - India-China Relations - A Backgrounder

Despite all the efforts and rhetoric created from time to time, India continues to perceive C hina as a security threat because disputes about the demarcation of the border lines are still not solved. The off-and-on crossings of the Line of C ontrol to India territory (LOC ) by C hinese soldiers and the visa issues concerning citizens of the Indian States of Arunachal Pradesh and J&K also keeps the C hinese threat theory hot and boiling. C hina and India have also been seen to join forces when it comes to oppose demands from western, developed countries. In climate policy, C hina and India signed a five year agreement in October 2009 to jointly fight climate change and to negotiate international climate deals using common positions. Both are members of G-20 and consistently argue that developing countries should not be required to set and meet the same targets for reducing greenhouse gases as developed countries who carry a greater historical responsibility for the increase in atmospheric greenhouse gases. On the economic arena, C hina and India have not consented to a bilateral Free Trade Agreement (FTA) because of fears of the Indian industry that it would not be able to compete with cheap C hinese imports. Nonetheless, an indirect arrangement came into effect in 2010, when an India-ASEAN FTA and a C hina-ASEAN FTA was signed. C hina and India also joined hands in the World Trade Organization (WTO). At the Doha Development Agenda (DDA) trade talks in Geneva in 2008, C hina backed India's stand. Although this mutual support drew widespread criticism from not only developed countries but also from Brazil, the joint position of the two neighbouring countries has continued ever since. In multilateral forums both the countries share a geo-strategic interest, but that vanishes when it comes to what both assume to be their own respective backyards. The Shanghai C ooperation Organization (SC O) is a group of C entral Asian C ountries, Russia and C hina dominated by the latter two nation States, while the South Asian Association for Regional C ooperation (SAARC ) is a regional forum dominated by India. C hina and India continue to keep each other out of their respective denominations to contain greater regional influence by the other. The following statement by Dr Rup Narayan Das, Senior Fellow at the Institute for Defence Studies and Analyses (IDSA), aptly summarizes the relationship between the two Asian giants: India-C hina relations may not be ideal in the narrative of a bilateral relationship between the countries. But given the complexity of the engagement and interaction between the two countries and taking into account the divergent political systems, the unresolved territorial issues, compulsions of geo-politics, the quest for resources and markets, and aspirations of the two countries for global influence and power, the relations between the two countries are certainly a matter of reassurance and optimism. In spite of the occasional hiccups, the two countries have shown a certain degree of resilience and have learnt to live together.

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