India-China Bilateral Relations
When the People’s Republic of China was proclaimed by Mao Zedong on October 1, 1949, the then Indian Prime Minister Jawaharlal Nehru regarded China as a natural ally and friendly neighbour, with much in common. Both countries were newly independent nation states having fought off imperialism. India was one of the first countries to recognize the PRC as a legitimate government of Mainland China and was the first non-communist country to establish an embassy in PRC(Ministry of External Affairs, (2012). India-china bilateral relations). On April 1, 1950, India and China established diplomatic relations. The two countries jointly signed the Panchsheel(FivePrinciples of Peaceful Co-existence) Agreement in 1954 which came to an abrupt end in 1955 when the People’s Liberation Army (PLA) occupied Tibet. The “MacMahon Line” separating Tibet from India was drawn by the earlier British-Indian Government and the then independent Tibetan Government in 1914 (Simla Accord) without any consent of the Chinese side. This demarcation was never recognised by China, resulting in persistent border disputes and finally leading up to the India-China War of 1962. The PRC pushed the unprepared and inadequately led Indian forces to within forty-eight kilometres of the Assam plains in the northeast and occupied strategic points in Ladakh until the PRC declared a unilateral cease-fire on 21 November and withdrew twenty kilometres behind its contended line of control.
Who initiated the War? India claims that it started with the massive Chinese attack which began in the early hours of 20 October 1962 all along the Sino-Indian border. However, China insists that the incident was only a ‘counter-attack’ and an act of self-defence to stop India’s ‘forward policy’ from wrongly occupying Chinese territory.
Regardless of the causes of the war, it led to a serious setback in bilateral relations and ended the element of trust crucial for good relations between the two countries. After its defeat, India increased its military presence in the regions bordering with China heavily. As the border
dispute remains unresolved till today, with occasional violation of the Line of Control (LOC) by alleged Chinese soldiers, India regards China as a security threat. Moreover, the issue over “stapled visa” for people from Arunachal Pradesh and Kashmir created further mistrust about Chinese intentions.
Former Chinese Ambassador to India, Sun Yuxi’s statement made India’s doubts about Chinese intentions disappear, "In our position, the whole of the state of Arunachal Pradesh is Chinese territory. And Tawang is only one of the places in it. We are claiming all of that. That is our position."
Relations further deteriorated between the PRC and India as Sino-Pakistan ties improved. China assisted Pakistan in building roads and power plants in Pakistan’s Kashmir Region, and India sees China and Pakistan forming an anti-India alliance in the neighbourhood.
Recent development in Indo-China relations have been disputes over water resources, and China’s increasing presence in the Indian Ocean worries India. There is concern in India over China's plans to dam the YarlungTsangpo (Brahmaputra). The Zangmu Dam that China is building is just the first of 28 dams that Beijing plans to build on the YarlungTsangpo in Tibet, including a hydel power generation plant at Zangmu on the middle reaches of the Brahmaputra, less than 200 kilometres from the Indian border. China had initially denied that they were constructing a dam on the Brahmaputra river, even after the contract was awarded. It was only in April 2010 that Yang Jiechi, Chinese Foreign Minister, officially revealed that they were constructing the Zangmu Dam.
The issue of more serious concern to India is China’s plans of diverting the Brahmaputra. The real worry for India, however, is not whether China will divert the Brahmaputra but when, as China has already identified the point of diversion- the U-bend where the Brahmaputra forms the world’s longest and deepest canyon just before entering India. It is at this Great Bend that China plans to divert water, and also build hydroelectric power projects that could generate 40,000 megawatts of power. Diversion of the Brahmaputra, the lifeline of India’s Northeast, would wreak havoc in the region.
India has several interests at stake in the South China Sea. Indian trade contributes to the massive amount of shipping that traverses these waters (half the world’s merchant fleet sails through the South China Sea every year), and thus India has an interest in maintaining its ships’ free right of movement in what it views as international waters. There are also energy interests at stake, as India’s Oil and Natural Gas Corp (ONGC) has a joint oil exploration venture off the coast of Vietnam, an asset that India would be willing to dispatch ships to defend, if a much-publicized statement by Indian Navy Chief Admiral D.K Joshi is to be believed. And finally, the South China Sea is central to India’s ‘Look East’ policy, which envisions deepening political, military, and economic links with the ASEAN countries.
That India would risk confrontation by propelling its influence into China’s strategic backyard seems less brazen when one examines China’s Indian Ocean policy, which could have been called ‘Look West’ if it wasn’t already known as the ‘string of pearls.’ Beijing has long sought to establish a series of naval outposts in the Indian Ocean, with the presumed aim of keeping the Indian Navy from consolidating its influence over its own strategic backyard (to use the same logic that Beijing applies to the South China Sea). A few notable pearls are: a port in Gwadar, Pakistan which China took over operations for in 2012, the Hambantota port complex in Sri Lanka, and more recently, if the rumors are to be believed, a Chinese naval base in Seychelles.
Though we’re still several years from a Chinese blue water navy that could use these bases and turn an abstract threat into a concrete one for India, it’s understandable that India would seek to project its own naval power into China’s backyard, albeit in a similarly hypothetical fashion.
After the 1962 War, India and China officially resumed trade in 1978. Despite hostility and mistrust between the two countries, bilateral trade proved to be the strongest pillar of China-India rapprochement. Trade has not only assisted in political confidence-building, but also has a considerable impact on their mutual perceptions. Border trade has especially brought about a noticeable transformationand relative peace in their remote and problematic border regions.
Bilateral trade proved to be a litmus test for Indo-China relations. Following the Indo-China diplomatic stalemate after India’s nuclear tests of May 1998, bilateral trade was the first to bounce back to its normal pace- starting with an extremely slow pace with an annual turnover of only a few million dollars, and then staying on the margins for much of the 1980s, their trade has gradually come to occupy the centre stage of their interaction. Here, the role of business communities needs to be noted as it has becomeinfluential in determining the mood of their political interactions. India-China bilateral trade which was as low as US$ 2.92 billion in 2000 reached US$ 61.7 billion in 2010, making China India’s largest goods trading partner.
Issues raised during Chinese Premier Wen Jiabao’s visit to India in December 2010 focused largely on trade relations - Sino-Indian economic ties have been re-enforced when both countries agreed to form the Strategic Economic Dialogue (SED), a forum to discuss strategic macro-economic issues impacting both nations as a result of the changing international economic and financial landscape, to share their individual best practices and in handling challenging domestic economic issues and to identify specific fields for enhancing cooperation, learning and experience sharing.The first India-China SED took place in Beijing from September 26-27, 2011.
There has also been an effort to re-balance the trading relationship and correct India’s trade deficit with China. The trade deficit for India for Jan-Oct, 2011 stood at US$ 22.79 billion.