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India & the World - SEMINAR REPORT

#108, 1 April 2004

India-China Relations: Current Developments

Report of the IPCS Seminar held on 26 March 2004
Jabin T Jacob, Research Officer, IPCS

Speaker:Dr. Sujit Dutta

Senior Fellow, IDSA

Dr. Dutta began by noting that the current period was one of the best phases of India-China relations, which started post-April 1999, after Indian Foreign Minister Jaswant Singh’s visit to Beijing. The period following India’s nuclear tests saw a regression but not a permanent one. Referring to the 1993 and 1996 agreements between the two countries as being loose-ended, Dr. Dutta pointed out that the LAC was not yet delineated. But, they pointed to the underlying political commitment on both sides. The JWG meetings that had been suspended by the Chinese after the May 1998 tests were resumed immediately after Jaswant Singh’s visit in 1999.

The continued progress in the bilateral relationship resulted from several factors. For one, there was an exchange of visits at the highest level between the China and India. There were changes in the policy of the Indian government on Tibet since the period of Rajiv Gandhi. The economic dimension was another important factor. From a few hundred million dollars in the early 1990s, bilateral trade had expanded now to $7.3 billion in 2003 and was expected to touch 10 billion in 2004. The predictions were that by 2010, the figure would be between $25-$30 billion. The recent talks on a Free Trade Agreement and other economic arrangements indicated the distance the two countries have travelled. The Indian corporate sector was confident of engaging with China after its initial fears of dumping by Chinese companies. Now a more balanced view obtained regarding the economic interaction with China, with the Indian chambers of commerce and industry, taking active interest in entering the Chinese market. In return, the Indian market was becoming increasingly attractive to China.

There was an increased engagement on border talks and a current emphasis on political settlement of the issue. Maintaining current CBMs at the military level formed an important part of the ties. The Primakov Doctrine espoused a strategic triangle between Russia and the two countries. India did not see China as playing an important or negative role at the time of the Kargil conflict with Pakistan. The two sides have thus been actively engaged in stabilising their relationship.

Chinese motivations for improving its relations with India were based on its requirement of a stable overall environment that allowed it to move away from Maoist fundamentalism. India too had raised its profile in the world in terms of its economy, engagement with the major powers, its Look East policy and the nuclear dimension. China had decided that, in a unipolar world dominated by the US, it had to develop its relations with other major powers and India was therefore being given more weight. China also needed to engage South Asia from the political and economic angles more than before.

China had critical domestic problems that required attention and peace on its border. These included unemployment, rising inequalities and the need to manage the impact of its entry into the WTO. In short, given the obtaining geopolitical conditions, the Chinese needed a substantial period of time to build up their comprehensive national power. Dr. Dutta stressed that the nature of the larger strategic environment in Asia needed looking into given current realities and possible scenarios of gradual US disengagement or complete rollback from Asia. India and China needed to build a strategic environment where they continued to cooperate with each other.

  • It was noted that while the Chinese would like a diminution of American power in Asia, it would not like its precipitate withdrawal for a number of reasons. These included the role of Japan, which was China’s principal concern in Asia. The Chinese were wary of the Japanese recessed nuclear capability.
  • In the economic sphere, there were problems regarding Chinese investments in India. Often, investments were turned away on vague objections of national security that should have been taken into account at a much earlier stage. The example of Hutcheson Whampoa and other Chinese companies that had won bids to upgrade port facilities in India but were denied the contracts was cited.
  • The Kunming initiative was one that required a more open-minded approach by India given its enormous potential to improve relations and infrastructure in the region. It was noted by the Chinese that South Asia was the only region with which they had no multilateral arrangements, either political or economic. The counter to this was that India had a number of political and security concerns both in its territory and the regional countries involved. The BCIM (Bangladesh, China, India, Myanmar) and BIMSTEC (Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Cooperation) arrangements could proceed in the meantime, though they could to fall by the wayside if the bilateral free trade agreements between the countries concerned, including India and China, were to take-off.
  • India needed to pay attention to the activities of Tibetan activists on Indian soil so that they did not impact on its relations with China.
  • There was a need to take a more balanced view of Chinese military support to Pakistan. While not completely eliminated, it was certainly much reduced. Also, Chinese supplies of conventional arms to other nations in India’s neighbourhood were commercial transactions and had no high-tech component.
  • There was a need to get rid of the “No. 1 threat” perception that still obtained in the military and intelligence establishments in India. Another view was that a change of policy in India had to come about at the political level rather than at the bureaucratic level. It was pointed out that many of the Indian positions on China were still in the process of revision and greater movement in the relationship was likely once this task was completed.
  • India and China also needed to have a greater engagement on Afghanistan and Central Asia to balance the US and Russian presence here.
  • The Japan factor in Sino-Indian relations had to be factored in. While the Japanese were unsure of their political engagement in South Asia, recent developments like the increasing Overseas Development Assistance support to India, more than China, indicate a shift in the Japanese position on engagement with India.
  • The opinion was expressed that the optimism regarding Sino-Indian relations was largely unfounded. The Chinese were more interested in keeping India isolated and moves towards improving the relationship through trade and commerce were cosmetic in nature. It was pointed out here that the path of politics and economy were not necessarily intertwined. For example, China’s high level of economic interaction with the US or Taiwan did not prevent it from taking hard-line positions on both. China’s essential policy was one of “partnership” with Pakistan while, with India, it was merely “friendship”. It was also suggested that increased political engagement on the border issue was necessitated because there was no meeting ground between the two sides.

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