India and China: Conflict or Cooperation in the 21st Century
Aakif Merchant, International Affairs Staff Writer
As we enter the 21st century, there is a lot of talk around the world with regards to the rise of India and China and the scope of conflict and cooperation between the two. An assessment of this debate was recently given to us by none other than the President of China, Hu Jintao, and the Prime Minister of India, Dr. Manmohan Singh, in the Joint Declaration issued following their November 2006 summit in New Delhi “Both sides hold the view that their relationship is of global and strategic importance….that they are not rivals nor competitors but are partners for mutual benefit. They agree that there is enough space for them to grow together, achieve a high scale of development, and play their respective roles in the region and beyond, while remaining sensitive to each others' concerns and aspirations.”
India-China relations have undergone dramatic changes over the past five decades, ranging from benign warmth in the 1950’s, to a deep hostility and mistrust in the 1960’s and 1970’s, to a rapprochement in the 1980’s facilitated by Rajiv Gandhi’s visit to Beijing in 1988, and a readjustment since the demise of the Soviet Union. As we head into a new century, India and China continue a long and tangled relationship. With a contested border, sharp eyes on the balance of power in Asia, economic competition, nuclear weapons and daunting internal problems, their interaction will deeply affect not only their own stability but also the stability and prosperity of their entire region. Relations between the two countries have been on the upturn ever since Rajiv Gandhi’s visit in 1988, but have gained considerable momentum with former Indian Prime Minister Vajpayee’s visit to China in 2003 and the visits to India of Chinese Premier Wen Jiabao in 2005 and Chinese President Hu Jintao in 2006. This diplomatic flurry has culminated in 2006 being declared as “a year of friendship”.
Close friends have little need for formal professions of warmth. India and China are not there yet. Issues such as Tibet, their border dispute, Pakistan, US containment policy and energy security, amongst others, add a dimension of complexity to this relationship. With rapid globalization and increased growth rates and prosperity in both countries, leaders on both sided have realized the importance of economic cooperation between China and India. Economic cooperation is a major driver influencing the bilateral relationship between the two countries. A byproduct of the economic engagement between the two countries has resulted in cooperation on the political, military and cultural front. However, without enhanced political ties between Beijing and New Delhi, economic cooperation cannot take off.
Political Rapprochement
After Rajiv Gandhi’s “path breaking” visit to Beijing in December 1988, a new phase in relations that had been marred by the border war in 1962 was ushered in. He stated that, “India and China being the initiators of the five principles of peaceful co-existence can bring about sound development in Sino-Indian bilateral relations on basis of these principles.” A series of high level visits took place in both directions on a regular basis with the Chinese President Jiang Zemin visiting India in November 1996. One of the most important agreements signed during that visit was to downsize both countries' respective forces along the line of actual control. This agreement was ratified by the Chinese Parliament in May 1997, thus paving the way for a reduction in tension along the borders. This was regarded as a major breakthrough in bilateral relations.
The sunshine period in Sino-Indian relations disappeared behind a dark cloud following India’s nuclear tests, carried out in 1998. China’s initial reaction was mild. Its acerbic rebuff resulted from the fact that the Indian defense minister at the time, George Fernandes, justified the tests by pinpointing China as a “potential threat” to India’s national security. When Pakistan responded to India’s tests with tests of their own, the Chinese dubbed it as “reactive” to India’s “hegemonic designs”. India interpreted this as a pro-Pakistan stance, which created misunderstandings and distrust between New Delhi and Beijing. It took former Indian Prime Minister Vajpayee’s visit to Beijing in June 2003, the first by an Indian Prime Minister in almost a decade, to revitalize the relationship.
Political cooperation was further elevated with Chinese Premier Wen Jiabao’s visit to New Delhi and Bangalore in April 2005. Wen had 3 points he wished to confirm on the visit. The first point was to confirm the bilateral relationship from a long term perspective and strategic height, second, to issue a guiding principle to settle the border and third, to outline economic and trade cooperation for the next five years. To highlight the importance of his visit to India, Wen is believed to have told Indian Prime Minister Singh, “when we shake hands, the whole world will be watching.”
President Hu’s visit to India in November 2006 acts a capstone in the nineteen year long rapprochement between the two countries. It is the first visit by a Chinese President to India in a decade; it is also the first visit of a Chinese President to India in the 21st century. It also marked the first high level visit by either side after they agreed to form a strategic cooperative partnership in 2005, and the visit took place in the official year of friendship between the two countries. The two leaders signed a Joint Declaration and several Memorandums of Understanding regarding a wide array of sectors. The leaders agreed to hold regular summit-level meetings, to intensify high level exchanges, to strengthen institutional linkages and inter-ministerial dialogue mechanisms and to open additional consulates in Guangzhou and Kolkata. Prime Minister Singh is now expected to pay a visit to Beijing later this year.
That this will be the sixth meeting between Hu Jintao and Manmohan Singh in less than two and a half years is indicative of how far the two countries have progressed on the political front compared to the mutual suspicion and mistrust of the 1960’s.
Economic Cooperation
As mentioned earlier, economic cooperation is the biggest driver for the bilateral relations between the two countries. Both sides know that they have much to gain from cooperating with one another in the economic sphere. Their economies are complementary in nature with India’s strength lying in the service sector, such as information technology, and China’s strength lying in the manufacturing sector. Chinese premier Wen Jiabao, noting India’s advantage in software and Chinese advantage in hardware, said cooperation was “just like two pagodas, one hardware and one software and combined we can take the leadership position in the world.”
Bilateral trade between the two countries is skyrocketing and was up 33.87% in 2006 from the previous year. The target to reach $20bn in bilateral trade by 2008 was achieved in October of 2006 with $25.05bn at the end of last year. During Hu Jintao’s visit to New Delhi last year, the two sides have now pledged to double bilateral trade to $40bn by 2010. China has now become India’s second largest trading partner, though China’s trade with the US is still ten times larger than its commerce with India. Hu Jintao and Manmohan Singh have agreed to diversify trade and encourage investment flows but no free trade deal was discussed, largely because of Indian concerns about its own industrial competitiveness. The two sides also formed a Joint Study Group (JSG) to explore the potential complementarities between the two countries in trade and economic cooperation. During Wen’s visit, the two sides appointed a joint task force to study in detail the feasibility of, and the benefits that may derive from, the China-India Regional trading agreement.
There has been much interest in the corporate world regarding the rise of China and India as economic giants. The Chairman of Microsoft, Bill Gates, once said, “A lot of people ask me what about India versus China? But I ask them what about India plus China? It’s being called Chindia.”
A sore spot in this flourishing economic cooperation relates to India’s accusations of Chinese dumping, or subsidizing exports to India so that Chinese products can be sold at a lower price, in order to give Chinese companies an unfair advantage in Indian markets. This accusation has created a significant rift between the two countries and is now in the process of being settled by high level trade delegations from both countries. It is imperative that the two countries continue to cooperate on a wide range of economic issues in the future if they want to increase the standard of living of their respective peoples.
Energy Security
China and India are developing rapidly and are thus desperately in need of oil and other energy resources to fuel their rapid economic growth. This area could be a potential source of conflict between the two since oil is a limited resource and both need a lot of it. India and China both realize it makes economic sense for them to cooperate in order to guarantee energy security. China also knows that India’s presence in the Indian Ocean and the Malacca straits, a main route for oil to reach China, is second only to that of the U.S., and the two countries could potentially work together to block China’s access.
The two countries agreed in January 2006 to cooperate in foreign energy exploration and development, even after India lost out to China on large energy projects in Angola, Myanmar, Ecuador and Kazakhstan. That month, the China National Petroleum Corporation and India’s state run Oil and Natural Gas Corporation jointly purchased assets in Syria’s Al-Furat oil fields for $573m. These two firms are also working together in Sudan’s Muglad Basin to pump oil and construct a 940 mile pipeline project to transport it to Port Sudan on the Red Sea.
India and China are both net energy importers and depend heavily on Middle East oil supplies. Both nations are also looking at alternative sources of energy and could work together to exchange R&D. China and India have much to gain if they can cooperate to ensure mutual energy security.
Looking Forward
It is not easy to chart out the future course of Sino-Indian relations. There are five key factors that will influence the course. They are, each state's nuclear weapon strategy and doctrine, their relations with the USA, their respective relations with Pakistan, their efforts at structural reforms and integration with the global economy and finally their respective domestic political structures.
Given these factors, three scenarios are likely. The first is continued and intensified competition and rivalry between the two as they become locked in an open competition for regional hegemony whilst continuing to grow in economic and military strength. A second scenario could arise which would see India and China joining hands to promote a multi-polar world and a more equitable and fair international political and economic order. The third and most likely scenario would see the two countries seeking solutions to their unresolved disputes while exploring areas of potential cooperation.
There is a saying in Chinese, “for a greater sight, climb to a greater height.” One hopes that both sides will take a long term perspective and work together in order to bring about peace and prosperity in their respective countries and to the world at large.