BY ZHONGHE ZHU
October 26, 2015
As one of the first states to recognize the PRC, India established diplomatic relations with the PRC on April 1, 1950. Both seeing themselves as once victims to western imperialism and now leaders of the developing world, the world’s two most populous nations had good relations at the beginning. In April 1954, India and the PRC signed the Panchsheel Treaty or the Five Principles of Peace Coexistence. In this eight-year agreement, Tibet was identified as the “Tibet Region of China”, indicating India’s consent that Tibet constitutes an integral part of China. The treaty and Nehru’s visit to Beijing later that year marks the apogee of India’s “Hindi Chini Bhai Bhai” (India and China are brothers) policy.
The China-India relationship remained tense in the late 1950s. As anticommunist rebellions activities supported by CIA and nationalist Chinese intelligence agencies became more rampant in Tibet and later spread to Lhasa in 1959, the Chinese Communist Party decided to take a more religion-repressive policy and enhance its control over the territory. After the 1959 Tibetan uprising, the Dalai Lama sought sanctuary in India. Since Tibet has strong cultural connections with India - Buddhism in Tibet originated from India and Tibetan way of life is also greatly influenced by India - Tibetan refugees received overwhelming sympathy from ordinary Indians and the Dalai Lama was welcomed as an honored guest by the Indian government. The Central Tibetan Administration was established in Dharamsala and remains in India today, becoming another destabilizing issue in the China-India relations. In the late 1950s, various military incidents took place at the border due to territory disputes. The disputes have not yet been resolved and will be discussed in greater details below.
The tense situation finally escalated into a border conflict in 1962. Both countries blame the other side for starting the conflict. China calls the border conflict “Sino-Indian Border Self-Defense Counter Strikes”, while India refers to it as the 1962 Sino-Indian War. The war lasted less than a month and ended when China declared a ceasefire and withdrew after pushing the Indian forces to within 30 miles of the Assam plains in the northeast and also occupied strategic points in Ladakh.
In 1971, India signed a twenty-year Treaty of Friendship and Cooperation with the USSR. In the last two decades of the Cold War, India sided with the USSR, while China and Pakistan with the US. Lack of progress was made on the border issue and the China-India relations remained strained in the 1970s and 1980s.
Some positive movements of the relations were seen in the late 1980s and early 1990s. India’s Prime Minister Rajiv Gandhi and his successor Narasimha Rao were more pragmatic on the economy and in international relations. Economic liberalization initiated by Narasimha Rao’s administration in 1991 lifted most restrictions against foreign technology and investment. Gandhi visited Beijing in 1988, becoming the first Indian Prime Minister to visit China since 1954. Both countries issued a joint communique and established Joint Economic Group on Economic Relations and Trade, Science and Technology (JEG), a ministerial-level dialogue mechanism which lasts till today. Ten sessions have been conducted so far.
During Prime Minister Narasimha Rao’s visit to Beijing five years later, India and China signed the border agreement. Later, Beijing announced that it not only favored a negotiated solution on Kashmir, but also opposed any form of independence for the region.
In 1998, India conducted the nuclear tests. In his letter to US president Clinton, Indian Prime Minister Vajpayee justified the test by arguing that it faced threats from the nuclear state China, and China has materially helped Pakistan to become a covert nuclear weapons state. This response received strong criticism from China. In the Kargil War a year later, China voiced support for Pakistan, but also counseled Pakistan to withdraw its forces.
China-India relations warmed up in the new millennium, especially after Indian Prime Minister Atal Bihari Vajpayee’s visit to China in June 2003. China officially recognized Indian sovereignty over Sikkim, a state in the northeast which was annexed and became part of India in 1975. Growing trade between the two countries started to play an important role in the bilateral relations, which will be discussed in details in the later section.
Economic Cooperation and Trade
Boosting India’s economy is on the top of Prime Minister Narendra Modi’s agenda when he came into office in May 2014. Modi launched the “Make in India” campaign to attract foreign investors. For Chinese businesses, the slowing Chinese economy, the loss of advantage in low labor cost in the global market, and the large demand in India make India an attractive market and testing ground for new products. In July 2015, Huawei Technologies, a Chinese telecoms giant and the world’s third largest mobile phone maker, won security clearance to manufacture telecoms equipment in India, and may start to supply locally made products for India’s mobile phones market. In spite of these positive aspects, tough security reviews, visa restrictions and bureaucracies still remain to be barriers to Chinese investment. China and India signed MoU on setting up two industrial parks exclusively for the Chinese in Gujarat and Maharashtra during Chinese President Xi Jinping’s visit to India in September 2014. However, no actual investment is yet reflected on the ground due to issues such as the slow land acquisition process.
The demand for massive infrastructural constructions makes India more attractive to experienced developers in China. National railway administration of China and India agreed to further develop cooperation and signed an action plan in May 2015, as one of the 24 agreements signed during Prime Minister Modi’s visit to China. Cooperative activities may include training programs and assessment. A consortium led by China’s national train operator was recently awarded the contract to conduct a feasibility study for a 645-mile high-speed rail link between Delhi and Mumbai. China faces huge competition from Japan in building India’s infrastructure. Japan has agreed to participate in the Indian Railway’s $140 billion investment plan over the next five years and offers to fund Mumbai-Ahmedabad high speed rail corridor at a low interest rate of 0.25%. It has recently submitted a final feasibility report on the more than $15 billion project.
Trade imbalance also deserves great attention in China-India relations. China has become India’s largest trade partner, while India is China’s seventh largest export destination. The bilateral trade totals $ 70.59 billion in 2014, with $ 37.8 billion in favor of China (figures from China’s General Administration of Customs). In the face of this large trade deficit, India blamed China for not providing India’s companies enough access to Chinese market, especially in IT, pharmaceuticals and agricultural sector. While Chinese leadership has promised to give more market access to Indian products, including pharmaceuticals and farm products, the large trade gap may be unlikely to narrow in the short term, considering India’s poor manufacturing capability to meet the domestic demand and its unfavorable business environment to attract foreign investors. According to the recent data for fiscal year 2015 from India’s Ministry of Commerce and Industry, India’s trade deficit with China spiked by 34 percent from previous fiscal year.
The contested areas cover two large and various small pieces of territory. The first contested territory lies in the western end. Aksai Chin, largely uninhabited, is currently controlled and administrated by China. Yet it is claimed by India as part of the state of Jammu and Kashmir and region of Ladakh. The other large disputed territory lies in the eastern end or South of McMahon Line. The area is currently referred to as Arunachal Pradesh by India and Southern Tibet by China. China rejected the agreement of McMahon Line, which was part of the 1914 Simla Convention and questioned its legitimacy by arguing that it was an agreement between British India and Tibet without the participation of Chinese government. China claimed that the contested area in the west belongs to the Tibet Autonomous Region.
Since Vajpayee’s administration emphasized India’s commitment to a “One China” policy and China officially recognized Indian sovereignty over Sikkim, in the past two decades, China and India were able to keep the border disputes aside and avoid major conflicts. However in recent years, the need to resolve the border issue has become more salient, as skirmishes on the border become more frequent and more infrastructure, such as road and highway, are built or planned along the side of Line of Actual Control. Leaderships from both countries have expressed their will to resolve the border disputes as soon as possible in their recent meetings. The two countries agreed to start annual visits between their militaries, expand exchanges between the border commanders and start using a military hotline, according to the Joint Statement during Modi’s visit to China in May 2015.
In spite of the political will to resolve the disputes, it is hard to expect that any side would be willing to make a significant concession. Several proposals to address the border dispute have been brought up on the negotiation table in the history. Chinese leader Deng Xiaoping broached the “package settlement” in his meeting with the Indian foreign minister in February 1979: Beijing would drop its claim to the Eastern Sector (Arunachal Pradesh/ Southern Tibet), subject to "minor readjustments" in the line of control in the exchange of Delhi accepting Chinese control over Aksai Chin. In the subsequent backchannel talks, China has proposed an LAC plus solution, whereby status quo in the Eastern Sector would be maintained, while China would make some territorial concessions in the Western Sector. A more recent proposal, which was brought up in 1985, demands that both sides make concessions in their current area of control, China in the Western Sector, while India in the Eastern Sector.
The key issue in current stalemate of negotiation is Tawang. Tawang is a town in the northwestern Arunachal Pradesh/Southern Tibet, 23 miles away from the border. Since 1985, China has made an explicit demand that the “restitution” of Tawang is indispensable to any boundary settlement. According to Beijing, Tawang and its surroundings were under the suzerainty of the Qing dynasty. In addition, Tawang is also the home of the Sixth Dalai Lama. Beijing’s argument is if Tibet is Chinese soil, which New Delhi has officially recognized, then Tawang ought to be as well. However, in academia, there are also debates about whether Tawang should be considered as part of Tibet. Moreover, Tawang is a critical corridor between Lhasa and Assam. For India, giving up this strategic valuable point may allow China to militarily throttle its hold on its northeastern region.
Yarlung Zangbu/ Brahmaputra river is a transboundary watercourse with headwaters in the Tibetan Plateau of the Himalayan and is shared by three riparian states: China, India and Bangladesh. China sits on the upstream, while India and Bangladesh on the relative downstream. About one-third of India’s water is dependent on waters originating from across its frontiers, largely Tibet.
Recently, China operationalized its 510-MW Zangmu Hydropower Station, built on Yarlung Zangbu/Brahmaputra. Two more dams (Jiexu and Jiacha) were reported to be built within 15 miles from Zangmu power station on the Brahmaputra. Indian media have often raised the issue that building dams on the Yarlung Zangbu/Brahmaputra would reduce the flow of water that comes into India, while the Chinese has assured the Indian government that the only purpose is to generate electricity for the Tibetan region, which would not affect water flow. China also denies that it has any intention to divert Brahmaputra, the biggest concern at the Indian side, as part of a potential water transfer plan to address the rising water demand.
In 2013, Ministry of Water Resources of both countries signed a Memorandum of Understanding, on which both sides agreed to further strengthen cooperation through the Expert-Level Mechanism on the provision of flood-season hydrological data and emergency management, and exchange views on other issues of mutual interest, and the Chinese side agreed to extend the data provision period of the river. The MoU was later reinforced with the Implementation Plan for Provision of Hydrological Information of the Yarlung Zangbu/ Brahmaputra River in Flood Season by China to India in June 2014. However, the agreement does not mention information about future plan of Chinese dams, and there is still no official water-sharing deal between the two countries.
The biggest challenge for China-India relations to move forward is the distrust between two countries, which is mainly driven by the unresolved border dispute. Unfortunately, even though both sides have shown political will to resolve the issue, neither of the two is willing to make significant concessions. The occasional skirmishes at the border – there is lack of evidence showing whether all the orders come directly from the top decision makers – becomes a destabilizing factor of the bilateral relations. Moreover, the distrust is further magnified by the nationalist and over-sensitive media from both sides.
On the Indian side, this distrust leads to a greater concern about the trade imbalance, Chinese infrastructure building (i.e. dams.) along the border or potential ones in India, hindering further economic engagement. On the Chinese side, the general public’s perception of India as a far less important power than how India perceives China may not be good for the balanced bilateral relations.
However, an escalation of the border disputes to a major conflict may be also less likely, as both countries have plenty of domestic problems that need to be focused on now. Both countries have taken minor steps to advance current relations: state-level and business cooperation also develops as nation-level engagement enhances. The two Asian giants understand that in order to address domestic economic issues and to strengthen their role in global or regional governance, they need each other.
Chellaney, Brahma. Water: Asia's New Battleground. Georgetown UP, 2011.
Garver, John W. Protracted Contest: Sino-Indian Rivalry in the Twentieth Century. University of Washington Press, 2011.
Gupta, Shishir. The Himalayan Face-off: Chinese Assertion and the Indian Riposte. Hachette India, 2014.
Maxwell, Neville. India's China War. Natraj Publishers, 2011
Zhonghe Zhu is a recent graduate from Elliott School of International Affairs at the George Washington University. His research interests are India’s political economy and China-India relations. He can be contacted at firstname.lastname@example.org.