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#3266, 25 October 2010
China-India: Return to Robust Relations?
Swaran Singh
Professor, Jawaharlal Nehru University, New Delhi

The week lasting 18-23 October 2010 witnessed three major events that promise to inject a positive enthusiasm in China-India relations.

First, the release of Regional Economic Outlook 2010 by the International Monetary Fund (IMF) in Jakarta underlined how, with their growth rates of 10.5 and 9.7 per cent respectively, China and India are clearly recognized today as the torchbearers of global economic recovery. The fact that China and India are located in the thriving Asia-Pacific makes the Chindia phenomenon the most robust driver of what is being described as an impending transformation in global economy followed by the transformation in global political relations.

Some sparks of this gradual but certain power shift were visible in the second event of last week – the G20 finance ministers’ and central bank chiefs’ meeting in Gyeongju, South Korea.  In spite of media hype over ‘currency wars’ on which they only agreed to ‘refrain from competitive devaluations’ these financial leaders managed a breakthrough agreement on IMF reforms, efforts for which had been on for several years, if not decades. From initial reports, Europe has agreed to give up two of its six seats in the 24-member board of governors of IMF and also agreed to surrender five per cent of its voting rights. In the communiqué issued at the end of this meeting, it was agreed to shift a total quota of six per cent shares to emerging economies and this will be over and above the amount that was previously agreed at the Pittsburg G20 summit of June 2009. These quotas in IMF shares and seats in the board of governors will be transferred to emerging economies like China and India.

At the end of the Gyeongju meeting, the IMF Managing Director, Dominique Stauss-Kahn, said “This clearly [was] an IMF day in Asia… now the board represents the reality of the global economy.” To recall, both China and India have been raising the issue of need for reforms in the UN and Bretton Woods institutions citing this as an issue of their credibility and efficacy in the face of the changed ground realities of the 21st century.

The third event was nearer home. This was the 50th anniversary celebrations of New Delhi’s premier strategic institute, the National Defence College.  The participation of Prof. Shen Dingli, Executive Dean of the Institute of International Studies, Fudan University, Shanghai was highlighted in Indian media as a signal of India lifting the bar on visits by senior Chinese defence officials and strategists that New Delhi had imposed since July when China had declined to give visa to a senior Indian general.

China’s becoming the number two world economy in September had already brought a certain focus on China. Meanwhile, India – now the fourth-largest economy in purchasing parity terms – is also growing at a rapid pace and has begun to receive rapidly expanding FDI. This sudden deluge has become a matter of concern in India. Indeed, World Bank World projections for 2011 last week believe that India’s growth rates will outpace the Chinese growth rate as early as 2011 while Morgan Stanley puts the date at 2013.

The coming weeks will witness a slew of interactions between their leaders that perhaps augur well for China-India relations. Indian Prime Minister, Manmohan Singh will be meeting his counterpart Wen Jiabao on the margins of the Fifth East Asia Summit in Hanoi late this month, their first meeting since the controversy about the denial of visa to Gen. BS Jaswal had resulted in suspension of their defence exchanges. India has also since been concerned about reports on China’s increasing investments and military presence in infrastructure and humanitarian relief projects in Pakistan-Occupied Kashmir.

However, while leaving for his three-country tour – Japan, Indonesia, Vietnam – this week, Singh tried to strike a positive chord as he acknowledged India’s conditional support to China’s decision to supply nuclear reactors to Pakistan. Singh will be meeting President Hu during the G20 summit from 11-12 November in South Korea. In between, both Barack Obama and Nicolas Sarkozy will be visiting New Delhi. Two important Chinese visitors are also expected to arrive in New Delhi sometime during the middle of November. These are Zhou Yongkang – China’s security czar and the ninth-ranking member of the CPC’s Politburo Standing Committee (PSC) and President Hu’s envoy on sensitive issues like North Korea and Tibet – and Li Keqiang – the seventh-ranking member of the PSC and expected successor to Premier Wen Jiabao in 2012.

Also, Indian Foreign Minister, SM Krishna will meet his counterpart Yang Jeichi on the sidelines of the coming BRIC (Brazil, Russia, India, China) and trilateral Russia-India-China Foreign Ministers’ meetings in Wuhan mid-November. Besides, the much-awaited meeting between their two Special Representatives on the boundary question is also expected anytime. And finally, their bilateral trade that had fallen from US$52 billion to US$45 billion last year is all set to now cross US$60 billion for this year.

All these events together are likely to provide a positive spin to the complex and volatile Sino-Indian relationship which has become increasingly critical beyond just their bilateral policy prism.

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