Hu Jintao's visit has to be examined in the context of the strategic developments of the last ten years. The slow incremental pattern of cooperation between the countries was set with P.M Rajiv Gandhi's visit in 1988. It marked a huge leap forward with the setting up of a Joint Working group to formulate a fair and mutually acceptable solution to the boundary question. It also led to the establishment of the Joint Economic Group. The strengthened relationship was exemplified in Chinese President Jiang Zemin's visit in 1996 - the first visit by a Chinese Head of State. This visit witnessed the signing of important agreements, the most important being the one on CBMs in the Military Field along the LAC. It is this agreement that governs interactions along the LAC to date. India' nuclear tests in 1998 resulted in a break in cordial ties. High-Level exchanges were resumed with the visit of President Narayanan in May followed by Premier Li Peng's visit in January 2001. Premier Zhu Rongji's visit in January 2002 culminated with the signing of a MOU's as well as agreements on other issues including tourism and science and technology.

Vajpayee's 2003 visit was arguably as important as Rajiv Gandhi's visit in 1988. It was during this visit that a Joint Declaration on Principles for Relations and Comprehensive Cooperation and ten agreements were signed. The mechanism of Special Representatives was also established. India and China concluded a border trade protocol to add a border trade point between Sikkim and the Tibet Autonomous Region, signifying a resolution of boundary issues related to these areas.

Wen Jiabo's visit in April 2005 established a Strategic and Cooperative Partnership between the two nations. The agreement on political parameters and guiding principles for the India-China boundary question signed during Wen's visit lays down the parameters and principles for future discussions to explore the political settlement of the boundary question.

Defence ties have been strengthened with the participation of Indian observes in Chinese military exercises and Chinese observers in Indian exercises. The first joint naval search and rescue exercise was conducted in Shanghai in 2003 followed by another exercise hosted by the Indian navy last year. Peoples' Liberation Army CGS, Liang Guanglie's visit followed by Defence secretary Pranab Mukerjee's visit earlier this year has enable a continuous strengthening of defence ties. It is speculated that joint exercise with involving Russia, China and India may be held in the not too distant future.

Hu Jintao's visit can be seen as the culmination of the celebrations that marked the "Year of India-China Friendship'. Many important developments have taken place during this year. The opening of Nathu La has signified the possibility of greater bilateral trade as also mutual advantage with increased infrastructural development of N.E India and connectivity of the land locked Chinese provinces to the sea via Kolkota. Leaps have also been made in the sector of energy cooperation with the visit of Former Petroleum Minister Mani Shankar Aiyar to Beijing in 2006. Multilateral engagement has increased in the form of Trilateral Cooperation between India, China and Russia aimed at a joint front against terrorism and promoting democratization of International Affairs. India and China are cooperationg across issue areas - bet it the WTO negotiations or SAARC, the SCO and the East Asia Summit. Expanding bilateral trade, expected to reach the 420 billion mark by the end of the year, has also prompted Chinese proposals for a FTA.

Despite these developments, certain challenges remain. As China increases investment, and connectivity in South Asian countries such as Bangladesh, Burma and Nepal, Indian threat perceptions are magnified. The fear of "encirclement" is compounded by the stalled discussions on the boundary question. The Special Representatives despite having met eight times have been unable to maintain forward movement on boundary issue. Beijing's insistence on putting the boundary issue on the back burner and emphasizing trade has been met with unease from New Delhi.

Economic engagement may well become hostage to political antagonism. Challenges exist in the economic realm where India has denied Chinese investment in key projects for security reasons and Indian manufactures remain apprehensive of Chinese ability to overtake indigenous markets. These factors along with Chinese military and infrastructural aid to Pakistan have the potential to impede the progress of bilateral ties between India and China.

Mira Sinha Bhattacharjea

The last presidential visit by the Chinese Premier Jiang Zemin was a decade ago, and this past decade has been profound in changes on the regional and international level. These changes form the context in which we have to analyze Hu Jintao's upcoming visit.

Chinese foreign policy is marked by a certain discontinuity. Deng Xiaoping's advice was to walk softly and keep a low profile. This phase ended in 1996. Jiang Zemin's 16th Party Congress Statement brought out this new attitude towards China's Foreign Policy for the 21st century and what is particularly noteworthy is the Chinese ability to plan years ahead and it is thus that, despite changes in government, the programs continue consistently. Essentially, this is because the idea, history and identity of China - as a state - has been constant, with the idea of China linked not only to some cultural or spiritual factor but also to the existence of the physical state. Regardless of the ideology Mao propounded, his two basic agendas were to complete the identity of and protect the territorial state while also building the economic strength of the state. No government of China will give up either of these objectives.

The discontinuity has been in terms of changed Chinese perception of its role in the world. China primarily viewed the 19th century as the century of humiliation on account of the invading colonial powers. Now, China has reached a state of social and economic development as well as military capability whereby that century of humiliation is over. In effect, Chinese diplomacy will no longer be linked to that humiliation and instead, be geared towards taking on the role of a 'responsible big power' in the international system. Thus in the 21st century, China will play the role of a responsible power in the region and the world. China is now beginning to think beyond the state, beyond the region, beyond today, and beyond tomorrow to something much larger, especially as there is now a search to replace the international bipolar order of the Cold War.

Internationally between 1986 and 2006 there have been two history making events: the collapse of the Soviet Union and the consequent end of bipolarity and globalization. Both India and China have reacted to the above changes by searching for a new equation to cope with the "challenges and opportunities" that lie ahead.

Most importantly, certain sensitive bilateral relations need to be overcome and here we go back to the first steps taken in 1988 with Rajiv Gandhi's visit that brought about very slow incremental progress until the Vajpayee visit in 2003. What was significant about the 2003 visit was that it opened the doors for a political settlement of the boundary question. It is important to note that this is a boundary question; and any talks of a border problem are completely irrelevant at this stage. The First need is to identify the outer limits of the territory and then transform these into firm borders, where every inch can then mapped either by satellite or physical surveys. This process will take up to 10 years easily. It is consequently the Line of Actual Control that needs to be settled first, after which the two countries can decide how the disputed areas can be settled. This settlement will lie in some sort of political parameters and principles. Hu Jintao's visit can be a step further in terms of exchanging maps of the disputed Eastern and the Western sector where India has strategic enclaves. The two maps could then be superimposed to see what areas can be easily agreed on and what areas need further discussion. A similar method has been used with Nepal, Burma and Mongolia; if there is to be any forward movement it will not lie in a political framework but in the concrete act of exchanging maps. The territorial issue is at the heart of the dispute between India and China.

The second stumbling block in bilateral relations is India's "threat perception" which is related to a sort of asymmetry between the capabilities of the two countries since China became a nuclear power. The Indian Nuclear Tests of 1998 have to be seen in this context of at least bridging one qualitative dimension of the power asymmetry signified by the shift from conventional to nuclear capabilities.

To deal with this asymmetry while looking after its interests, India needs to learn to play a similar game to that which China is playing whereby it is able to put certain political issues aside and yet move forward with relations in other sectors, i.e. they may not treat India as a Nuclear Power. This is significant because the nuclear dynamics altered our strategic relationship which was reflected in the opening of India's First Strategic Dialogue with China in 2004. Now that all the structures including Strategic Dialogue, High Level Meetings, EPG etc are all in order and the rhetoric is far reaching, however the relations have reached a sort of stagnation.

It is important to realize that Sino-Indian relations today cannot be restricted to a purely bilateral level. It has regional and international dimensions as manifested in China's quest to build greater roads, railways and increase connectivity which has brought it all around our borders or the global spill over of collaboration for energy security in Sudan, Latin America, Venezuela etc. If India incorporates these gestures into its threat perception of China, it will reach a dead end. Rather, India needs to bring to the table some out of box thinking as the time has come for cooperation. Increasing the number of CBMs, academic and cultural visits will not add to the existing dialogue between India and China. Relations are simply treading along the same beaten path. If China opens up even more, settling border issues will become much harder; as the emergence of plural opinion groups will make agreement on sensitive issues like the border very difficult.

India also needs to learn from China's neighborhood policy. It needs to realize that South Asia is not a closed area upon which we have hegemony. The respect and friendship of South Asian countries has to be earned which China has done very well. On Pakistan, there are two options; first, India can continue to play the China-Pakistan nexus on China and second, India can deal with China to break the China- Pakistan nexus. The latter would be the more favorable option. On Dalai Lama, India needs to draw the line between sentiment and political necessity. This is a difficult task but it is necessary.

A very important global dimension which will shape this visit is the Chinese concern about our so called "natural alliance" with the US especially through the Indo-US Nuclear Deal.Since 1988 India-China relations have qualitatively come a long way, though it is at crossroads now. It is time for making decisions; territorial issues will continue to have a significant role to play. Is India ready and able to deal with an "emerged China"? This depends on how India perceives itself and its future; it should also keep in mind that China is integrating with Asia both economically and culturally. Does India know how to deal with the asymmetry between China and India - not only in terms of military strength but also in terms of China's greater comprehensive power?

Aditya Bhattacharjea

Sino-Indian economic ties are a crucial aspect of the evolving relationship. The growth in Sino-Indian trade has been immense and is supposed to cross the $20 billion mark later this year. However the Joint Study Group set up by the UPA government in 2004 to probe the dynamics of Sino-Indian economic ties has enunciated that, this trade comprises of high commodity concentration. India loses out because its exports are mainly low value added (iron ore etc), as against Chinese manufactured products. Suggestions mainly include improvement in trade diversifications and shipping and air transport links.

The JSG highlighted Dumping as a crucial issue which required the countries to work together. Indian anti-dumping initiations against imports from China are much higher than similar Chinese initiations. Essentially, if a country can establish both "dumping" and "material injury" to its domestic industry, it can impose an anti-dumping duty up to the dumping margin (difference between export price and normal value). However, these standard WTO/GATT rules are not applicable to anti-dumping on imports from China. Section 15 of Protocol of Accession to the WTO allows other members to ignore Chinese prices and costs in calculating the normal value. Other countries often use prices of a comparable market economy, for example, India, as a surrogate for Chinese costs. India's DGAD also does the same, using cost data provided by petitioners themselves and not made public. This makes it easy to prove dumping and establish a high dumping margin. Indian industries are concerned about Chinese industries getting cheap credit and land from government agencies. But there is no justification for using Indian costs as surrogate for Chinese costs of other inputs. China has requested the "Market Economy status" which has been denied by India.

The second area that the JSG has explored is the Free Trade Agreement, with the governments setting up a Joint Task Force to explore its feasibility. However bilateral FTA's can be a problem for India. On the one hand, FTA's result in welfare loss due to trade diversion and involve complicated Rules of Origin, on the other, they signify losses for India due to higher rates of tariff.

Moreover, influx of cheap Chinese manufactured goods can cause a social/political backlash and hurt the fledgling political rapprochement. A more acceptable alternative would be an FTA with ASEAN or other Asian countries. The current JSG's recommendations are as follows:

• Bilateral "trade facilitation" which will also promote people-to-people contact

• Making anti-dumping procedures less cumbersome taking into account the higher competitiveness of Chinese industries

• Jointly improving bilateral understanding of WTO issues and strengthening the G-20 to make it proactive and extend beyond agriculture

• Learning from each other on how to cushion the social consequences of economic reforms

DISCUSSION

The Border Issue

• Tawang has always been militarily important for the PLA. Tawang entered the debate only in 1990's with an article published by the China Institute of International Studies in which Tawang was claimed to be important for China's security. During the 1950's and 60's the emphasis was on the Western sector and there was no discussion of the Eastern sector. However, under the give and take understating implicit in the Peace and Tranquility Agreement (1993) there was great emphasis on Tawang. PLA coveted Tawang on the arguments that as a source of fisheries and minerals, it was important for the Tibetan economy. The argument was also extended on another issue: the sixth Dalai Lama was from Tawang and since the Dalai Lama belongs to Tibet, and Tibet belongs to China, Tawang should be handed over to China.

• By focusing on Tawang and the Eastern sector, China could be trying to extract certain concessions from India during a negotiated settlement. Manmohan Singh has explicitly stated that populated areas will not be discussed in terms of exchange. Does that mean that unpopulated areas maybe traded? Undoubtedly, such areas close to the LAC will be discussed. Twenty kilometers South and South West of the Western Highway running through Aksai Chin is no longer that strategically important for the PLA. If India could guarantee security of this region, China might give up some section of Aksai Chin in lieu of some parts of Tawang.

• In the 1970s, when Deng Xiaoping put forward the package proposals, Tawang was not on the table. India in accepting the package could have kept Tawang. However, the political situation then was not feasible to accept the proposals. Tawang also has a history of affiliation to Tibetan authorities which is much clearer than any similar relationship with India. The Tibetan government raised numerous objections on Tawang being left out of Tibet as did the PRC. To resolve this complicated issue, it is necessary to think out of the box. The need is to engage with alternatives, for example, dual sovereignty or examination of areas around the border which the Chinese do not really need, would be willing to trade and which are necessary for India's defensive line. The objective should be to create borders which need no jurisdiction as they operate by themselves. Opening up of trade through Nathu La pass, resettling local population, and building greater connectivity would create vested economic interests which would then preserve the status-quo.

• China has heavily invested in connectivity in its border areas; however in India, civilization has not yet penetrated large parts of Arunachal Pradesh. The situation at the ground level in some border areas is deplorable with no roads and modern facilities. It is necessary that the development of these crucial border areas must be an integral part of India's national reconstruction. There have been some proposals for a Border Area Development Program in the Eastern sector which, on the one hand brings these areas close to the hinterland as also recreates a stake in maintaining security, however the resources allotted have been insignificant. There is a need to strengthen commitment and re-orient our resources to this end.

Political and Economic Issues

• One of the greatest problems of India's foreign policy today is how to deal with "Emerged China." India has to be sure about what it wants and be confident of its military capability. Economically India is willing to engage the Chinese. Chinese political positions in the recent past whether in the African Summit or its role in ASEAN have been guided by its economic objective of securing raw materials.

• Though trade between the two countries is booming, FDI has been largely restricted. According to the Indian estimates Chinese investment in India is $2.03 million as against India's $130 million in China. China's peaceful rise has been centered on keeping the political issues like the boundary dispute on the back burner and focus on the economic issues. Indian newspapers, while concentrating on the border issue have ignored this aspect.

• India's negotiations with Hu Jintao's China's will largely depend on how India would like to project itself. India has to present a confident image of an "emerging power" and create a parallelism of interests which carry over and above the issues of border, for example - promoting effective trade without borders. India and China have to accept both competition and cooperation what has been called "co-opetition" and avoid confrontation. A partnership needs to be worked out, for example in terms of Free Trade Agreement which would both safeguard India's economic and security concerns.

• Though in the post Cold War scenario, most relationships are asymmetrical there has been a tendency to hype the India-China asymmetry. China's process of economic "opening up" and modernization has been there for almost 30 years while the short life of India's liberalized economy creates a natural gap. However, politically India is better placed than China to develop compensatory relationship with US, Japan, Russia which is an advantage. India should not attempt to break the 50 year old relation between Pakistan and China. What can be achieved is the dilution of this connection through our strengthened engagement with China.

• Before Hu Jintao's visit, India needs to inculcate more self-confidence and make strong policy declarations on vital issues in the relationship, for example, the decision to build roads, provide infrastructure and populate the areas in Arunachal Pradesh and Northern borders to integrate them in India's body politic. The visit can be used as an opportunity to work together and address proliferation concerns in both North east Asia (concerns largely China) and South Asia.

• Anti-dumping duties gain significance because the Chinese government is unlikely to reduce their subsidies or their non-transparent activities. An easier way to meet this Chinese threat is by imposing duties which will make the Chinese goods more competitive. The Chinese consumer goods flooding the Indian market are being rejected by Indians due to their low quality

Concluding Remarks

Rukmani Gupta

It is essential to remember that India is also important for China's global politics and India need not negotiate from a defensive position. China could be apprehensive over improved Indo-American Ties. Hu Jintao's visit can be a good opportunity for India to rally is support for the nuclear deal as China has not explicitly condemned the deal but proceeded to emphasis in general the proliferation regime and its precarious future. Manmohan Singh's scheduled visit to Tokyo later this year, India and Japan's joint bid for the Security Council along with developments in East Asian could make China wary of Indian intentions. Initiatives taken in the BRICS+G, engagement with ASEAN and other multilateral forums make India an important player at the global level. What is required is a confident assertion of Indian aspirations.

Mira Bhattacharjea

The India-China border question and the issue of Tawang is one of the most difficult to resolve and the main problem is history and is related to the differing interpretation of the McMahon line. When the McMahon line was drawn in 1947 it was still shaded. The monastery of Tawang paid tribute to Lhasa and Indian troops did not physically reach Tawang till 1951. Before the 1960's, the confusion arose because China spoke about the map drawn McMahon line of 1947 and India spoke about the map adjusted McMahon Line post 1950's. China also claimed that there was a Line existing on the ground which India altered in 1951, further complicating the issue.

An alternative solution can be reached only if India can give up the idea of a defensive line and security is not our main concern. China has solved other boundary disputes leading to border demarcation while strengthening economic and other relations so that the question of threat does not rise. China has three successful swaps with Burma, Russia and Islands in the South Chinese Sea. Moreover, India has been managing Tawang very well. Recently, the population profile has changed; development initiatives have started and seven new points have been opened. Therefore, the Chinese are being unrealistic in asking for Tawang. The issue is being raised for a larger settlement elsewhere and since Tawang is closely related to Tibet the issue of Dalai Lama needs to be resolved once and for all. Similarly India's asking for Aksai Chin is not feasible.

India also needs to balance out its asymmetrical relations with China by developing its own areas of competence. There is a need to build a credible and a strategic vision especially in the cultural and moral dimension and bring a subtlety of negotiation to the vital issues of the relationship.

Aditya Bhattacharjea

All countries including India give subsidies to their industries which have become very difficult to identify as the shift has taken place from direct to indirect subsidies post the WTO Agreement. For example, the unpaid industrial loans have been written off by the Indian Banking sector. Thus justifying anti-dumping on the basis of the subsidy argument is faulty.

Most of India's anti-dumping duties are not on consumer goods but on chemicals including vitamins and pharmaceuticals. If anti-dumping duties are imposed, contrary to the normal perception, the losers are the small scale industries, for example, power looms that have to pay higher costs of imported chemical goods as against powerful industries like Reliance.

Social consequences of globalization have been the displacement of farmers and workers, caused in equal parts by both imports as also economic policies of the Indian government like the creation of Special Economic Zones. India has to understand that it can gain from Chinese technology and management with certain safeguards and be ready to compete with it in the market. FDI needs to be promoted ; the need of the hour is cooperation and competition and not confrontation.

Indian manufactures barring in certain industries will not be able to compete with China. This is not because of the miracle of the free market as the West enunciates but due to the successful East Asian Pattern of development pioneered by Japan and followed by Korea, Taiwan etc. The 2 key elements of this development model that have been completely left out in the Indian context are A) destruction of landlordism in rural areas and freeing of the peasantry from socio-economic-political control B) Universalization of Primary Education - two lasting legacies of the Maoist period. At the outset of reforms China had a commune system with a reasonable equitable countryside and a pool of skilled, educated manpower for their industries. Indian manufactures are unable to compete with the Chinese industries because of shortage of skilled manpower as they depend on a very thin feeder channel of those Indians who have successfully completed school. Today we are being forced to import technicians and engineers and this lacuna is not being addressed by our developmental model.

Maj Gen Dipankar Banerjee

Major issues in India-China relations include the following: How do we deal with India's asymmetrical relations with China in all spheres - political, economic and military? On, the encirclement of India by China in South Asia, how much of it is actual and how much is India's threat perception? In the economic realm, is Sino-Indian trade likely to show constant growth? There is less likelihood of a FTA between India and China but a FTA with South Asia might be on the horizon.

Talks about the NSG and proliferation as also energy cooperation will not figure in the talks with Hu Jintao. Even though India is entering the world market with some success it still can not compete with China in terms of resources, financial outlays and rapidity of decision-making. However, the two countries can work together in cushioning the social consequences and unrest caused by globalization.