Daily Editorial – Repairing India- China relations

Repairing India- China relations

Background
What are the suggestions made?
Could there be a hidden agenda behind the suggestions?
Do the suggestions made hold any water?
Why is India reluctant to join OBOR initiative?
What can India do as a counter measure to CPEC?
A final word of caution

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Repairing India- China relations

Background

The provocations from China amount to a sort of ‘hostility’ against our nationhood, from their staking claim over the state of Arunachal Pradesh, occupation of the Shaksgam Valley in Ladakh, pumping up Pakistan with military, nuclear and missile capabilities – a brazen recourse to destabilize India, negation of New Delhi’s stance on terrorism with its incomprehensible stand on the listing of known terrorist Masood Azhar under the U.N. Security Council’s 1267 Committee, China’s obduracy on India’s Nuclear Suppliers Group (NSG) bid, the deployment of Chinese military and engineering assets in Pakistan-occupied Kashmir and the development of the China-Pakistan Economic Corridor (CPEC) exemplify Beijing’s obsessive antipathy towards India.

In this context, the Chinese Ambassador to India, Luo Zhaohui, has recently put forward some suggestions for improvement of bilateral ties between China and India.

What are the suggestions made?

A friendship and cooperation treaty.
A free trade agreement (FTA) to boost bilateral relations.
Joining of hands on China’s One Belt, One Road (OBOR) initiative.
Resolve the boundary question based on negotiations held so far.

Let us examine the suggestions made, in detail:

Could there be a hidden agenda behind the suggestions?

It could be part of an effort within the Chinese establishment to review relations with neighbours like India, given the strategic uncertainties generated by the advent of Donald Trump’s.

Trump had made a phone call to Taiwanese President, Tsai Ing-webefore he took office;
He had also proclaimed intention to impose punitive tariffs on Chinese goods.
The new U.S. Secretary of State, Rex Tillerson of Trump’s administrations had thinly disguised threats against China’s building of artificial islands in the disputed areas in the South China Sea.

All this have generated concern in Beijing.

Do the suggestions made hold any water?

The state bilateral relations is soar and the extent of unresolved political and security issues are many, there is also huge deficit in the trade balance, a treaty of friendship and cooperation may only look good on paper but cannot be a transformative document.
The suggestion FTA is forward-looking. Trade between India and China has grown to an annual volume of $70 billion (2015-16). Chinese investments under Make in India in infrastructure development, solar energy and smart cities will be helpful. An FTA that is goods-centred will obviously not benefit India given the huge trade in goods imbalance that favours China. An FTA that is comprehensive, covering goods and services, cross-border investment, R&D, standards and dispute resolution would be worth exploring for India.

Why is India reluctant to join OBOR initiative?

India’s reaction to China’s OBOR has been non-committal, mainly because of the CPEC through Pakistan-occupied Kashmir. At the same time, India is a part of the frontline membership of the Asian Infrastructure Investment Bank (AIIB) that is funding OBOR.

The provisions of the 1963 China-Pakistan Boundary Agreement which conceded the disputed nature of the territory (in what Pakistan now calls Gilgit-Baltistan but what is a part of Jammu and Kashmir) covered under the agreement but today the Chinese have chosen to disregard the sovereignty issues surrounding the dispute between India and Pakistan over the State of J&K.

What can India do as a counter measure to CPEC?

India should explore the development of connectivity between Tibet and India, especially through the Sikkim sector into Bengal. The old route between Lhasa and Kolkata via Nathu La was the most easily traversed route; this is a road that provided for the transport of goods and services between Tibet and the outside world through India. This can be a true test of Chinese positivity; it would also be approval for India to open a Trade Office in Lhasa in place of the old Consulate General that operated there until 1962.
An opening of ties between India and the Xinjiang region of China is also worth examining. Providing for air connectivity between Urumqi, the capital of Xinjiang province and New Delhi as one of the OBOR linkages would help the promotion of people-to-people ties, trade and commercial contact and could also help open a new chapter in counter-terrorism cooperation between India and China. The two countries have a common interest in curbing religious radicalism and terrorism. Kashmir and Xinjiang, both contiguous neighbours, have similar challenges posed by terrorism and separatist movements.

A final word of caution

Maturity of approach and strategic patience is a way forward.There has been peace between the two countries, from the 1970s till date;it deserves preservation and not disturbance. Competitive coexistence, with a clear delineation of areas of difference and how to manage them, the promotion of business and people-centred connectivity, and mutual confidence-building with tension-reduction measures cannot do any harm as such. But border problem can take time to be solved.

China is anxious to find a new market for its huge reserves of surplus cash and as another avenue for investment, and India is an attractive and huge market. Undoubtedly it will benefit if China invests in India’s infrastructure (Roads, flyovers, railways, hydro-electric projects, multi-storey office and residential buildings, are sectors that can benefit from Chinese investment) but India will need to carefully decide the direction in which to steer Chinese business as otherwise, in a democratic set up such as India’s, China will soon acquire a powerful business lobby capable of adversely influencing national strategic decisions.

In order to ensure strategic flexibility and increased investment, we must balance by offering similar competitive opportunities to other countries like Japan, Taiwan and Singapore. India can particularly benefit in the hi-tech, advanced electronics and defence sectors by encouraging investments from Japan and Taiwan on very preferential terms.