The Border Dispute

Historical Background

The dispute is a hangover of historical events such as the annexation of Tibet by China in 1959. China’s control over Tibet not only changed the nature of the shared border between Bhutan and Tibet but also the nature of China’s relationship with some of its immediate neighbours. Mao claimed that Tibet was the palm of China’s hand of which the five fingers were identified as Bhutan, Ladakh, Sikkim, Nepal, and Arunachal Pradesh. In other words, Tibet became a strategic platform from which China tried to enlarge its territory and by doing so, aimed to increase its sphere of influence in the region.

China failed to annex the so-called five fingers. Bhutan and Nepal managed to maintain their sovereignty and territorial integrity, Ladakh and Arunachal Pradesh remained Indian states, whereas Sikkim was annexed by India in the 1970s. Formal border talks between Bhutan and China started in 1984 and a peace agreement was signed in the 1990s entitled the Maintenance of Peace and Tranquillity in the Bhutan-China Border Areas. This agreement was important for Bhutan as it officially recognised its sovereign status.

Western Sector – This comprises the Aksai Chin sector. This region which originally was a part of the state of Jammu and Kashmir is claimed by China as part of its autonomous Xinjiang region. After the 1962 war, it is administered by China. It is the second largest Indo-China border area covering over 38000 sq. km. However, it is an uninhabited land. While India claims the entire Aksai Chin territory as well as the Shaksgam valley (Indian territory gifted to China by Pakistan), China contests Indian control over Daulat Beg Oldi (a tehsil in Leh, south of Aksai China-it is believed to host the world’s highest airstrip)

Central Sector – Undisputed – Although China has recognised India’s sovereignty over Sikkim and had initiated the trade at Nathu La pass, the Doklam fiasco could mean trouble at all ends.

Eastern Sector – The Arunachal Pradesh border that China still claims to be its own territory is the largest disputed area, covering around 90000 sq. km. It was formally called North East Frontier Agency. During the 1962 war, the People’s Liberation Army occupied it but they announced a unilateral ceasefire and withdrew respecting the international boundary (McMahon Line). However, it has continued to assert its claim over the territory. Nowadays, almost the whole of Arunachal is claimed by China.

‘Market Economy’ Tag

India is not inclined to automatically grant the coveted ‘Market Economy Status (MES) to China under World Trade Organisation (WTO) norms.

WTO Protocol

  • Citing the provisions in the ‘Protocol on the accession of China to the WTO’ in 2001, Beijing has said WTO member countries must fulfil their promise to deem China a ‘market economy’ from December 2016.
  • There is a clause in the 2001 Protocol, according to which countries need to grant the MES only after China has established that it is a ‘market economy’ under the national law of the importing WTO Member.

MES Tag will Hurt India’s interests

  • However, granting MES to China will severely curb the ability of nations including India to impose anti-dumping duties on “unfairly priced” Chinese imports.
  • Of the 535 cases where anti-dumping duties were imposed by India during 1994 to 2014, a maximum of 134 has been on goods from China.

Is China Really a ‘Market Economy’?

  • To refuse China the ‘MES’, India has taken sides with the U.S. and European Union in stating that unlike in ‘market economies’ where prices of items are market determined (based on demand & supply conditions), there is still a significant government influence in the Chinese market.
  • In this regard, they have referred to the Chinese government subsidies for various sectors, currency manipulation and the related price fixing, absence of transparency in lending rates and bad loans of banks as well as in minimum wages & property rights besides the lack of proper business accounting standards.

Conflicting Stands on the Border Dispute

  • India’s border with China—its longest with any neighbor—was complicated both by China’s acquisition of Tibet and by the fact that the agreements governing the border line had been drawn up by officials of the British Empire.
  • The border between India and Tibet, the McMahon line, had never formally been recognized by China, which now coveted Aksai Chin, a portion of eastern Ladakh in the Indian state of Jammu and Kashmir, as a means to link Tibet and Xinjiang by road.
  • Additionally, China claimed the region controlled by India south of the eastern end of the McMahon Line, an area then administered as the North-East Frontier Agency (NEFA) and now as the state of Arunachal Pradesh, but known to the Chinese as South Tibet.
  • This area had historically been claimed by Lhasa, but was ceded by Tibet in the 1913-14 Simla Agreement that saw the drawing of the McMahon Line. In the initial period after China’s successful 1950 invasion, India, while somewhat uneasy about the inflow of Han Chinese migrants into Tibet, nonetheless believed that the border dispute could be resolved through a joint recognition of the McMahon Line.

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