India’s Bilaterals Relation with China

Sino-Indian Relations refer to the bilateral relations between People’s Republic of China and the Republic of India. Over the last decade our relationship has been cordial, yet there border disputes and an economic competition which has often strained our relations.

India’s Bilaterals Relation with China

The two countries jointly expounded the Panchsheel (Five Principles of Peaceful Co-existence) in 1954. The India-China conflict in 1962 led to a serious setback in bilateral relations.In 1993, Agreement on the Maintenance of Peace and Tranquillity was signed along the Line of Actual Control (LAC) on the India-China Border Areas during the then Prime Minister Narasimha Rao’s visit to China. Since, then there has been several instances where Chinese extremism can be seen in terms of cross-border firing incidences, boundary violations, etc. Thus, as per recent context the Sino-Indian Relations is amidst a mix of competition and cooperation.

One Belt, One Road, One Big Mistake

Belt & Road Initiatives

• The BRI consists primarily of the Silk Road Economic Belt, linking China to Central and South Asia and onward to Europe, and the New Maritime Silk Road, linking China to the nations of South East Asia, the Gulf Countries, North Africa, and on to Europe.
• Thus, it includes 1/3 of world trade and GDP, 62% of the world population and 75% of known energy reserves.

How will it be implemented?

• At its core, OBOR would need the eastern (developed) parts of China to trade with the US and developed countries, while the central and western provinces, which have witnessed minimal growth, will feed Asia’s developing countries.
• However, a major roadblock for OBOR at present is the lack of infrastructure in South and Southeast Asia to foster trade.
• China hopes to work with interested countries and improve connectivity of their infrastructure construction plans and technical standard systems.
• OBOR also requires the construction of international trunk passageway and an infrastructure network connecting all sub-regions in Asia, and between Asia, Europe and Africa.

Why it is a Big Mistake?

• The new Maldivian president calls the BRI “a big cheat” and a “debt trap” that must be abandoned or renegotiated.
• Mahathir Mohamad, the new prime minister of Malaysia, who has described BRI projects as a form of “new colonialism” that must be rejected.
• Beijing’s quest to create a stable pro-China tilt in Sri Lanka has only spawned political instability, with President Maithripala Sirisena sliding up to and away from Sri Lankan politicians connected to China as the situation demands.
• In Bangladesh, authorities recently blacklisted China Harbour Engineering Company, one of the region’s most active BRI construction firms, on accusations of corruption.
• Burma was so alarmed by regional trends that it put a hold on its own BRI-funded port project in Kyaukpyu until the Chinese agreed to cut its scale by 80 per cent.
• Nepal and Pakistan have also demanded that China cancel or completely retool ongoing projects in their countries.
• In Western Pakistan, opposition to the initiative has turned violent. Several Baluchi separatists attacked the Chinese consulate in Karachi, treating Chinese infrastructure investment in their region as a threat to their dreams of independence.
• Chinese analysts who hoped that the BRI investment would help stabilize China’s borderlands and ease the threat it faces from ethnic separatists inside China now must come to terms with an initiative that is embroiling China in conflict with separatists outside of it.
• Far from being a strategic masterstroke, the BRI is a sign of strategic dysfunction/ strategic blunder. By buying into the flawed idea that barrels of money are all that is needed to solve complex geopolitical problems, China has committed a colossal error. Xi’s dictatorship makes it almost impossible for the country to admit this mistake or abandon his pet project.

South China Sea Dispute

• The Philippines, is a claimant in the South China Sea maritime territorial dispute along with China, Vietnam, Malaysia and Brunei, and the unrecognized claimant Taiwan.
• The Philippines moved the United Nations Convention on the Law of the Sea (UNCLOS) in January 2013 seeking arbitration on its 15-point submission (contentions against China).

The Verdict

• The Court has given a decisive ruling in favour of Philippines in 2016; and rejected the historical and legal validity of the ‘nine-dash line’, which, in a way, quashes China’s sovereign claims.
• On the question of China’s historic rights in the sea and validity of its ‘nine-dash line’, the Court has unequivocally maintained that “as between the Philippines and China, there was no legal basis for China to claim historic rights to resources, in excess of the rights provided for by the Convention [UNCLOS], within the sea areas falling within the ‘nine-dash line’.”

Impact

• In the short-term, in reaction to what is being widely perceived as “reputational damage” for it, China may adopt knee-jerk and aggressive posturing in the South China Sea.
• Domestic political compulsions may also force the Chinese government to show a defiant face to the other claimants in the maritime territorial disputes in the South China Sea, and particularly to the US –– a security guarantor in the region for claimants such as the Philippines.

India’s Response

• The wordings of the statement have been carefully crafted. It says that “India has noted the award” of the tribunal and then goes on to state India’s soft repeated position of supporting freedom of navigation and over-flight in the region.
• As a State Party to the UNCLOS, India urges all parties to show utmost respect for the UNCLOS, which establishes the international legal order of the seas and oceans.
• In fact, India’s total and graceful acceptance of a similar arbitration proceedings between it and Bangladesh, which according to some observers did not go fully in its favour, was in fact a manifestation and demonstration of that position.

What is the Significance for India?

• More than 55% of India’s trade passes through Straits of Malacca which opens into SCS and India has a stake in ensuring freedom of navigation and overflight.
• India is also worried about the expansion of the Chinese navy which now regularly sends ships right up to the Gulf of Aden in the name of maintaining security.
• One of its nuclear-powered submarine even docked in Sri Lanka a few years ago.
• Both US and India realise that unchecked Chinese belligerence in South China Sea will also impact the security situation in the Indian Ocean where India has the advantage of geography.

China-India Water Disputes

The dispute between India and China is mainly regarding the Brahmaputra River flowing through the two countries. Chinese efforts to divert the water resources of the Brahmaputra River away from India towards Taklamakan Desert worsens the situation that has remained tense since the 1962 Indo-China war. This will increase water scarcity as well as the likelihood of floods, impact agrarian livelihoods and strain the fragile equilibrium between the two Asian giants.

China Enjoys Unique Riparian Status

China has established a hydro-hegemony unparalleled on any continent by annexing Tibetan Plateau in 1951, the starting place of major international rivers. Another sprawling territory Beijing forcibly absorbed, Xinjiang, is the source of the transnational Irtysh and Ili Rivers.

• China also stands out for not having a single water-sharing arrangement or cooperation treaty with any co-riparian state.
• Its refusal to accede to the Mekong Agreement of 1995, for example, has stunted the development of a genuine basin community.
• The plain fact is that China rejects the very concept of water sharing. It also asserts a general principle that standing and flowing waters are subject to the full sovereignty of the state where they are located.
• It thus claims “indisputable sovereignty” over the waters on its side of the international boundary, including the right to divert as much shared water as it wishes for its legitimate needs.

Sino-Indian Border Dispute

India shares total boundary of around 3,488 km with China (i.e. 2nd largest after Bangladesh). The Sino-Indian border is generally divided into three sectors namely: Western Sector, Central Sector, and the Eastern Sector. Five states .i.e. J&K, H.P., Uttarakhand, Sikkim and Arunachal Pradesh share border with China.

1. Western Sector (Disputed)– 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 (Aksai Chin). After the 1962 war, it is administered by China which is also the second largest Indo-China border area covering over 38000 sq. km. However, it is an uninhabited land. While India claims the whole 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, world’s highest airstrip)
2. 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.
3. Eastern Sector (Disputed)– 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 (NEFA). During the 1962 war, the PLA occupied it but they announced a unilateral ceasefire and withdrew respecting the international boundary (McMahon Line). Currently, China claims almost the whole of Arunachal territory.

Conflicting Stands on the Border Dispute

• The border between India and Tibet, the McMahon line, had never formally been recognized by China, which now constructed a road through 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 Shimla 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.

Bilateral Trade

For the year 2017, bilateral trade increased by 20.3% year-on-year to reach US$ 84.41 billion, with India’s exports rebounding to US$ 16.34 billion registering positive growth of 38.9% year-on-year after 3 years’ continuous decline. India’s imports from China grew by 16.5% to US$ 68.03 billion.

Composition of Trade

• India Exports: Natural Pearls, Precious Stones & Metals Metal Ores, Slag & Ash Cotton including Yarn & Woven Fabric Copper & Articles Organic Chemicals Salt; Sulfur; Earth & Stone; Lime & Cement Plaster
• India Imports: Electrical Machinery & Equipment Computers, Servers, Printers, Air conditioners, Compressors, Machinery & parts Organic Chemicals Plastics & Articles Fertilizers, Iron & Steel

Trade Deficit

• In 2017, the widening trade deficit reached to US $51.72 billion. The growth of trade deficit with China could be attributed to two factors: narrow basket of commodities, mostly primary, that we export to China and market access impediments for most of our agricultural products and the sectors where we are competitive in, such as pharmaceuticals, IT/IteS, etc.
• In 2018, market access was achieved for export of Indian Non-Basmati rice, rapeseed meal, fishmeal and fish-oil.

Bilateral Investment

According to Ministry of Commerce of China, Chinese investments in India between January-December 2017 were to the tune of US$289.98 million and Cumulative Chinese investment in India till the end of December 2017 amount to US$4.747 billion. Cumulative Indian investment in China till September 2017 is US$ 851.91 million.

Cultural Exchanges

India-China cultural exchanges date back to many centuries and there is some evidence that conceptual and linguistic exchanges existed in 1500-1000 B.C. between the Shang-Zhou civilization and the ancient Vedic civilization. During first, second and third centuries A.D. several Buddhist pilgrims and scholars travelled to China on the historic “silk route”.

Kashyapa Matanga and Dharmaratna made the White Horse monastery at Luoyang their abode. Ancient Indian monk-scholars such as Kumarajiva, Bodhidharma and Dharmakshema contributed to the spread of Buddhism in China. Similarly, Chinese pilgrims also undertook journeys to India, the most famous among them being Fa Xian and Xuan Zang.

• As a mark of the historical civilizational contact between India and China, India constructed a Buddhist temple in Luoyang, Henan Province, inside the White Horse Temple complex which was said to have been built in honour of the Indian monks KashyapaMatanga and Dharmaratna.
• In 2017, India received around 250,000 Chinese tourists. To enhance people to people cooperation, the year 2015 was celebrated as “Visit India Year in China” and year 2016 was celebrated as ‘Visit China Year in India’.
• In recent years, Indian movies such as Dangal, Secret Superstar, Hindi Medium, Toilet, etc. registered great success at Chinese box office.