Sino-Indian Relations: A Thaw in the Offing?

 The June visit of an eight-member Indian military delegation to China for defense talks marked a welcome resumption of contact between the two countries after a nearly year-long hiatus. Regular defense exchanges between the two Asian giants had been suspended since July 2010, when China refused a visa to Lieutenant-General BS Jaswal, then-head of the Indian Army’s Northern Command, because he was in charge of what the Chinese termed the ‘sensitive region’ of Kashmir, compounding already existing tensions. For years, China has been issuing ‘stapled visas’ to the people of the Indian provinces of Arunachal Pradesh and Jammu and Kashmir as opposed to regular visas for people from other parts of India.

 Toward a Chinese policy of engagement?

In another important development, representatives of China's Foreign Policy Advisory Group (FPAG) recently indicated the country will look to recalibrate ties with India and strive to balance its relations with India and Pakistan during the next Five-Year Plan period (2011-15). The FPAG was also in favor of an early settlement to the festering border dispute with India. While this may not indicate a complete reversal of China’s attitude towards India, it does suggest that China is exploring new options, including a policy of engagement.

There are many reasons for it to do so.

First, as the United States and NATO prepare to withdraw from Afghanistan, China wants to fill the inevitable power vacuum in the region. Without India’s benign acquiescence, this will not be possible and Beijing knows it.

Second, at a recent summit meeting in Astana, Kazakhstan, India kicked off its quest for full-membership in the Shanghai Cooperation Organization (SCO. The firm backing for India’s membership by countries like Russia and Kazakhstan shows how difficult it will be for China to diplomatically sideline India.

Third, India’s improving defense ties with the US has China worried that it might be pushing India closer to the US in general. India decided to purchase 10 C-17 Globemaster III heavy-lift transport aircraft from the US in recent months under the Foreign Military Sales route (government-to-government) in a deal worth approximately $4.1 billion. The India-US civilian nuclear deal in 2008 already had the Chinese worried, and US President Barack Obama pledged US support for India’s bid for a permanent seat on the United Nations Security Council (UNSC) during his country visit in November 2010.

However, many areas of friction remain between China and India. China’s decision to dam the river Brahmaputra (Tsangpo) has raised concerns inside India. China has never openly backed India’s bid for a permanent seat on the UNSC. Many Indian observers also point out that China has adopted a so-called “string of pearls” strategy to encircle India by building naval bases in Pakistan, Sri Lanka, Bangladesh and Myanmar.

Building on a firm foundation

It is worth noting, however, that disagreements in these areas have not precluded the two countries from cooperating in others. Economic relations between the two countries have neared a high point and continue to improve. While most of the world’s major economic powers have been weakened by the ‘Great Recession,’ China and India have bucked the trend. During Chinese Premier Wen Jiabao’s visit to India in December 2010, the two countries agreed to a $100 billion target in bilateral trade by 2015. China and India have already concluded several high profile joint ventures and many more are in the works – in areas such as power generation, consumer goods, steel, chemicals, minerals, mining, transport, IT and telecommunications.

For example, one of India’s biggest IT companies, Tata Consultancy Services (TCS), has a joint venture with China's Foreign Exchange Trade System (CFETS) to provide IT services to China's huge domestic market, as well as the US, Europe and the rest of Asia, while India’s leading automotive forgings maker Bharat Forge has a joint venture with one of China’s biggest auto makers, FAW Corporation.

The increasing cooperation between the two neighbors was perhaps most visible during the December 2009 Climate Change summit in Copenhagen.Sporting what has been dubbed the “Copenhagen spirit,” the two countries decided to set up a Beijing-New Delhi hotline last year.

India and China also share an interest in fighting Islamist terrorism in Central Asia, Afghanistan and Pakistan. Though China has close ties with Pakistan, it also worries about links between separatists in its restive Xinjiang province and Islamist militants based in Pakistan.

The two Asian giants have also been cooperating in the energy sector. In 2006, the Gas Authority of India Limited signed MoUs with the China Petrochemical Corporation and the China National Offshore Oil Corporation, laying the groundwork for cooperation between India and China in energy exploration both within the two countries and across the globe. Joint military exercises have also been conducted on a regular basis.

China and India have decided to cooperate in some areas while agreeing to disagree in others. One expects both countries to continue testing the chinks in each others’ armor.