April 2005 marks the 55th anniversary of the establishment of diplomatic relations between China and India. It is a major milestone for the two ancient civilizations, neighbors, and rising powers. Over the past five and half decades, the bilateral relationship has witnessed the warm "Hindi-Chini bhai-bhai" brotherhood and the famous Panch Sheel or the Five Principles of Peaceful Coexistence in the 1950s but has also been overshadowed by the 1962 border war and the acrimonious spat in the wake of India's May 1998 nuclear tests.
Sino-Indian relations today are enjoying a period of stability and growing economic ties. Chinese Premier Wen Jiabao's forthcoming visit to India between April 9-12 will build on the positive momentum generated by the June 2003 visit by the then Indian Prime Minister Atal Bihari Vajpayee. However, there remain unresolved disputes and emerging conflicts between the two countries -- ranging from boundary issues to energy security -- that require strategic vision, diplomatic skill and mutual accommodation.Rebuilding the Bilateral Relationship after the Pokhran II Nuclear Tests
Beijing reacted strongly to New Delhi's accusation that the Chinese threat was the key rationale behind its May 1998 nuclear tests. China retaliated by canceling the scheduled Joint Working Group meeting on boundary issues and played an active role in pushing through United Nations Security Council Resolution 1172 calling for nuclear rollback in India and Pakistan. Beijing's relentless diplomatic campaigns to isolate New Delhi eventually induced the latter to seek rapprochement. Sino-Indian relations gradually thawed and Indian policymakers publicly retracted from the China threat rhetoric.
In May 1999, Kashmiri militants, with the support of the Pakistani military, crossed the Line of Control into the Kargil area in the India-controlled state of Jammu and Kashmir. The Indian army launched military operations seeking to repel the intrusion. As the conflict escalated, threatening a major military confrontation between the two nuclear states, both New Delhi and Islamabad were seeking international support. Pakistani Prime Minister Nawaz Sharif and Foreign Minister Sartaj Aziz went to Beijing soon after the crisis broke out and sought to secure Chinese support; however, their requests were turned down. Instead, the Chinese leaders advised the Pakistani visitors to seek a peaceful settlement with India. Indian Foreign Minister Jaswant Singh subsequently visited China in June 1999 as the Kargil crisis reached the boiling point.
International pressure on Pakistan, including unequivocal warnings by the Clinton administration to Sharif, eventually brought the crisis to an end in July. China's apparent neutrality in the dispute gained much appreciation from India. The two sides have since then on many occasions publicly announced that they do not view each other as a security threat. Improvement in the bilateral relationship continued with Indian President K.R. Narayanan's visit to China in May 2000 to mark the 50th anniversary of the establishment of Sino-Indian diplomatic relations. Chinese parliamentary head Li Peng and Premier Zhu Rongji visited India in January 2001 and 2002, respectively, further consolidating the bilateral relationship.
Of all the key events over the past few years, perhaps the most important would be Indian Defense Minister George Fernandes' week-long visit to China in April 2003 and Prime Minister Atal Bihari Vajpayee's June 2003 visit. The former was more symbolic while the latter ushered in important milestones. Fernandes' China trip was significant in three respects. First, the visit was the first by an Indian defense minister to China in over a decade. Second, the visit, coming from someone who five years earlier had been widely quoted by the media as describing China as India's "security threat number one" just prior to the Indian nuclear tests, signified just how much the two countries had mended their fences. Third, at a time when China was embroiled in the crisis over S.A.R.S. and when many international events originally scheduled to be taking place in China had been canceled, Fernandes' visit was much appreciated by his Chinese hosts.
While no major breakthrough was achieved during Vajpayee's visit -- and indeed no such expectation had ever been entertained -- there was nevertheless significant progress in four areas that deserve closer scrutiny. The first is the growing consensus and converging interests between Beijing and New Delhi over a wide range of bilateral, regional and global issues. The two countries issued a joint declaration on principles for relations and comprehensive cooperation and vowed not to view each other as a security threat. They reaffirmed their determination to resolve their disputes through peaceful means. This is a far cry from the suspicions and hostility between the two Asian powers in the wake of India's May 1998 nuclear tests.
This stabilizing and maturing relationship is clearly marked by the two countries' converging interests in developing a fair, equitable international political and economic order, the role for the United Nations, and support of global disarmament, including efforts to prevent the weaponization of outer space. Beijing and New Delhi are seeking to promote greater equality and fair distribution of wealth between the rich and poor by working to improve the current international economic system. As developing countries, both China and India are interested in gradually integrating their economies into the global trading system in ways that provide the necessary protection and transition time for their industries to adjust; in addition, Beijing and New Delhi are also calling for greater economic assistance from the northern industrialized countries to the vast majority of developing countries in the South.
Likewise, both are critical of U.S. unilateralism and seek to promote a multipolar world where they can play a more important role in global affairs. India is looking forward to securing a seat in the proposed expansion of the U.N. Security Council, to which aspiration China has already indicated its support. India has long championed for nuclear disarmament, a goal shared by China. Beijing and New Delhi are also interested in promoting the peaceful use of outer space as both are developing their emerging civilian space programs. Weaponization of outer space could well put into jeopardy these programs, threaten existing peaceful use such as environmental monitoring and weather forecasting, and risks inducing an arms race in this new frontier.
Second, by each appointing a special representative to oversee the political framework of border negotiations, the two countries have clearly demonstrated their determination to speed up the process of resolving the territorial disputes. This reflects a consensus reached by Chinese and Indian leaders that to reach the full potential of bilateral relations requires the satisfactory closure of this issue. So far, four rounds of meetings have already been held and the change of government in India has not affected the process.
Third, China and India have made important -- although largely token -- gestures toward each other. New Delhi has shown greater appreciation of Beijing's sensitivity over the Tibetan issue by affirming for the first time that the Tibetan Autonomous Region is part of the territory of China. Beijing, on the other hand, has extended de facto recognition of Sikkim being a state of India, something that Beijing had refused to do ever since the small Himalayan kingdom acceded to India in 1975. While Chinese diplomats continue to characterize the issue as a historical legacy that takes time to resolve, the fact that official Chinese maps are showing Sikkim as part of India suggests that Beijing considers the issue closed. Indeed, New Delhi is confident that the de jure recognition will not be long in forthcoming.
Finally, Vajpayee's visit was marked by its economic orientation. A large entourage of Indian business executives accompanied the Indian prime minister; further, of Vajpayee's three important speeches delivered during his visit, two were addressed at business venues. Indeed, bilateral trade grew to $7.6 billion annually by 2003 and is projected to reach $10 billion in 2004 and surpass $15 billion by 2007, if not earlier. That target may be achieved earlier as the bilateral two-way trade already reached $13 billion in 2004, surpassing the original goals by over 30 percent. A Sino-Indian Joint Study Group on Trade and Economic Cooperation was formed in March 2004. In addition to growing bilateral economic ties, the two countries are also active in exploring potentials for regional economic cooperation, including the sub-regional "Kunming Initiative."
The momentum generated by the Vajpayee visit has continued. There have been more high-level exchanges between the two countries, with the Chinese defense minister visiting India last, the first in almost a decade, and the first joint Indian-Chinese naval exercises. India's chief of army staff also visited China in late 2004 and the commander of the Indian 4th Army Corp, the unit that was involved in the 1962 war and is now stationed in the areas along the Line of Actual Control, paid a visit to the Tibet Military District Command in Lhasa.Rivalry or Partnership: Challenges Ahead
The coming months and years will testify if the good will and momentum generated by Vajpayee's successful June 2003 visit can be maintained. While the two countries are on good terms for now and, indeed, their domestic priorities -- economic development and prosperity -- provide strong incentives for them to avoid conflict, obstacles remain and sustained efforts at the highest political level are required to steer the ship of bilateral relationships without hitting any major shoals. These include the intractable territorial disputes, even though the Line of Actual Control has been relatively peaceful over the last 40 years; mutual suspicions and the potentials for competition and rivalry; China's relationship with Pakistan in the regional context; the China-India-U.S. strategic triangle; India's eastward diplomacy; and the emerging energy security issue and potential trade disputes.
Despite the generally benign atmosphere between the two countries, there remain lingering suspicion and distrust; the scar of the 1962 war has yet to be healed. India claims the Chinese-controlled Aksai Chin of approximately 35,000 square kilometers as part of the territory in Ladaakh, Kashmir. Beijing, on the other hand, disputes New Delhi's possession of over 90,000 square kilometers in what is now the Indian state Arunachal Pradesh. Without a satisfactory resolution of the territorial disputes, there can never be a "full and complete" normalization of bilateral relations. Since the early 1980s, eight rounds of border negotiations and 14 rounds of Joint Working Group meetings have taken place. During Vajpayee's visit to China in June 2003, the two governments designated their respective special representatives to provide the political impetus to the process. Four rounds of meetings have been held so far. However, a solution remains elusive due to fundamental differences over the mechanisms of settlement. Clearly, final resolution of the issue requires not only political decisions at the highest level in both capitals but also the political skills to sell it to their respective domestic constituencies.
A stable Sino-Indian relationship requires the effective management of the delicate China-India-Pakistan triangle. For over forty years, and specifically in the wake of the 1962 China-India war, Beijing and Islamabad have developed a close political-security relationship. Over the years, China has provided both moral and material support in assisting the latter's rivalry with India. This "all weather" relationship was a key component of China's South Asia policy as Beijing sought to tie down India and extend its influence to the subcontinent. Since the early 1980s, as China and India embarked on the path of normalization, Beijing has shifted to a policy of balance and made greater efforts to address New Delhi's legitimate concerns over Sino-Pakistani ties, in particular in the defense area.
While China's neutrality during the 1999 Kargil crisis demonstrates a more balanced Chinese South Asia policy, that gesture has yet to translate into good will and confidence on India's part that the Sino-Pakistani relationship is not targeted at India. Indeed, Sino-Pakistani ties, in particular in the security area, remain a serious concern to India as reports suggest continued Chinese missile assistance to Pakistan. New Delhi remains suspicious of the Sino-Pakistani relationship and their resilient security ties, ranging from the construction of a strategic outlet for Pakistan in the Gwadar Port and continuous supplies of military equipment, reinforces the specter of strategic encirclement of India. While China's continuing support of Pakistan is partly due to containing India, it is also aimed at maintaining a stable relationship with an important Islamic country -- and a nuclear weapons state -- and therefore retains its influence over the government in Islamabad out of concerns over the Islamic unrest in its own territory, especially in Xinjiang.
Despite progress in bilateral relations over the past few years, mutual suspicions remain. Partly this is due to the dynamics of the security dilemma and structural conflicts between the two Asian giants; it is also because of the lack of institutionalized and regular high-level official exchanges. India has watched China's phenomenal growth in the economic and military sectors with both envy and alarm. Beijing's defense budgets have grown at double digits over a decade and Chinese acquisitions of advanced weaponry from Russia has resulted in improved aerial and naval capabilities of the two-million strong People's Liberation Army.
In addition, China is also modernizing its strategic nuclear forces. If there is one single lesson that New Delhi's security analysts have drawn from the 1962 war, it would be this: power and strength are the only ticket to the club of great powers. For many of them, the very fact that China continues to lead India on many indicators of power poses a greater threat than its military defeat 40 years ago. China is also paying close attention to India's growing military power and its nuclear and missile development. New Delhi is purchasing advanced Russian fighter aircraft, submarines and an aircraft carrier. In addition, India is expanding its defense contacts with Israel and has acquired the Phalcon early warning system that was denied to China. Jerusalem's proposed sale of the Phalcon system to China was effectively blocked by Washington in 2000 out of concerns over its use by the Chinese military against U.S. interests in the region, especially around the Taiwan Strait.
Chinese security analysts are also debating the significance and implications of a warming U.S.-India relationship. Prior to September 11, there were growing concerns that the new and growing ties between Washington and New Delhi could have negative security implications for China, especially the apparent attempt by Washington to enlist New Delhi as a potential counterweight, if not part of a containment strategy, against China. Within this context, the growing security ties, including U.S. military sales to India, joint military exercises, and regular defense consultations between the two are of particular concern to China. Washington and New Delhi were drawing closer to each other than ever before. There were regular high-level visits to each capital, and the Bush administration briefed the B.J.P.-led government on major policy initiatives, treating India almost as an ally. New Delhi, in return, openly endorsed U.S. missile defense positions. Indeed, even many U.S. allies were concerned with the strategic implications of Washington's decisions.
Washington's current focus on combating global terrorism and the post-September 11 policy shift brought a renewed engagement of Pakistan and an emphasis on great power cooperation; this reduced Beijing's worries about an Indo-U.S. entente against China. But a China-India-U.S. strategic triangle has clearly emerged in that policymakers are increasingly aware of and attentive to policies taken in the other two capitals and how these may affect its own security interests. Within this complex structure, Washington and New Delhi share normative values (democracy) and strategic interests while Beijing's ties with both are more driven by contingent rather than structural interests.
Beijing is wary of New Delhi's eastward strategy of developing greater economic and military ties with Japan and the Association of Southeast Asian Nations (A.S.E.A.N.). India has in recent years launched a new post-Pokhran offensive diplomacy of engagement and entente with countries beyond New Delhi's traditional strategic domain: Japan, Vietnam and, to a broader extent, members of A.S.E.A.N., many of which have ongoing disputes with China. The Indian defense minister visited Japan in January 2000, the first such visit since India gained independence. Japanese Prime Minister Yoshiro Mori visited India in August 2000 and Vajpayee paid an official visit to Japan in February 2001. Japanese Prime Minister Junichiro Koizumi's upcoming visit to India this month will further consolidate such ties.
India has also broadened its relationship with A.S.E.A.N. countries and improved relations with Myanmar. Chinese analysts note that New Delhi's Southeast Asia diplomacy could add complexity to China-A.S.E.A.N. relations. For example, growing Indian and A.S.E.A.N. naval cooperation could impinge upon China's maritime interests, making a final resolution of the territorial disputes in the South China Sea even more difficult. The Indo-Vietnamese defense cooperation is viewed with suspicion given that China has unresolved territorial issues with both countries.
China-India trade has experienced significant gains in the last few years, totaling $13 billion in 2004. However, given the sizes of both economies, the level of economic interdependence remains low. Both countries have registered significant growth over the last decade. There is intense competition for, and protectionism against, each other in the areas of foreign direct investment (F.D.I.) and market access. China is now in a comfortable lead, with $60 billion F.D.I. -- twelve times India's total -- in 2004. While leaders in both countries have touted the complementarities of their industries -- India's software and China's hardware -- they have yet to make significant investments in each other's economy. How to promote and expand greater economic contacts and manage competition for markets and investment and technology imports would also test the leadership skills and entrepreneurship in both countries so that their projected growth could both benefit from and generate more win-win cooperation instead of falling into the trap of zero-sum games.
Finally, India and China are both energy consumers and importers. A net oil importer since 1993, China today is the number two oil consumer after the United States, depending on imports for two-thirds of its total consumption. While ranking sixth in the global petroleum demand, India's fast growing economy and its lack of domestic energy sources means that it is bound to move up the imports' ladder, projected to occupy the fourth place by 2010. On energy security issues, the two could compete as well as cooperate. Indian and Chinese oil companies are already involved in overseas oil field exploitation, extractions and acquisitions from the Middle East, to the Persian Gulf, to Latin America. An uncoordinated competition from the world's most energy-thirsty countries could drive up prices and rivalry in yet another field.
Beijing and New Delhi would both do well in working with each other to find energy security. Already the two countries are seeking to cooperate rather than to compete directly with each other since the latter strategy is bound to drive up oil prices. India hosted the first-ever meeting between major Asian oil importing countries, including China, and the Middle Eastern oil exporting countries such as Saudi Arabia. Chinese and Indian oil companies have acquired equity stakes in Iran's Yadavaran oil field. In addition, China and India are also discussing a potential natural gas pipeline. Conclusion
The Sino-Indian relationship is bound to be one of the most important bilateral relationships in the coming decades simply by the sheer weight of numbers: combined they represent 40 percent of the world's population and their continuing economic growth will project them to the second and third place within the next two decades. How they manage their relationship will have a tremendous impact on peace and stability in the regional and, increasingly, global context.