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INDIA/CHINA: ‘Chindia’ May Help Quell Lingering Suspicions

Antoaneta Bezlova

BEIJING, Jan 16 2008 (IPS) - Indian Prime Minister Manmohan Singh arrived in China this week on the heels of a World Bank report release that thrust the two Asian giants in the role of engines for economic growth in 2008.

The three-day visit was dominated by talk about the rise of new powerhouse economies in the four BRIC (Brazil, Russia, China and India) countries and about the spectacular economic potential of ‘Chindia’ in particular.

Chinese observers enthused about the ascension of emerging economic powers as an antidote to the United States economic slowdown. Singh, a former World Bank economist, and Chinese leaders spoke of it repeatedly during their talks at the Great Hall of the People in Beijing.

“China and India are today the fastest growing developing economies,” Singh told Chinese president Hu Jintao. “At a time when there are cyclical uncertainties about the global economy, the strong growth of China and India is a positive public international endeavour for the benefit of Asia and for the benefit of the world community as a whole.”

Chinese Premier Wen Jiabao and Singh signed a seven page ‘Shared Vision for the 21st Century’, which pulled together a growing number of common concerns for the two Asian giants like climate change, instability in Pakistan, Islamic fundamentalism in the neighbourhood and terrorism.

Noting that India and China are “the two largest developing nations on earth representing more than one-third of humanity,” the document went on to promise that, despite a history of mutual suspicion, the two countries are now “convinced that it is time to look to the future in building a relationship”.

“The economies of China and India have emerged as an important new source of demand,” says Shen Jiru, researcher with the Institute for World Economic and Political Studies under the Chinese Academy for Social Sciences. “Even if the global economy slowed down, the two countries would be able to play the role of engines to keep it going. Increased cooperation between the two is vital.”

But the upbeat talk obscured the underlying tensions simmering between the two Asian countries and their potential to undermine efforts to build a forward looking partnership.

For two countries, which fought a brief but bitter border war, the continuing territorial dispute throws a shadow over fresh efforts to rebuild military ties and establish mutual trust.

China and India held their first joint military exercises in the Chinese south-western province of Yunnan in late December and the Singh visit produced an agreement for a new round of joint drills to be held in India this year.

But despite this recent thaw, the legacy of the 1962 border conflict continues to dog the relationship, spurring both countries into rapid military modernisation. China saw double-digit increases of its military budget over the last ten years, including a 17.8 percent increase to 45 billion US dollars in 2007. India for its part, intends to spend over 30 billion dollars on defence from 2007 to 2012.

China and India representatives have held 11 rounds of negotiations on the border issue since 2003 with no significant progress. China accuses India of occupying some 90,000 sq km of Chinese territory, mostly in the north-eastern Indian state of Arunachal Pradesh. India for its part, accuses China of illegally occupying 43,180 sq km of territory belonging to the Indian state of Jammu and Kashmir.

“We are still trying to work out the framework of border negotiations,” says Ma Jiali, an expert on India at the Chinese Academy of Social Sciences. “The prospect of final resolution is still in the distant future.’’

Meanwhile, both China and India have been expanding the scope of their engagement polices with each other’s neighbours. As it continues to play the role of a reliable ally for Pakistan and Burma, China is busily courting Bangladesh, Nepal and Sri Lanka. Following its “Look East” policy, India has been building ties with countries in China’s backyard like Vietnam and Singapore.

Perhaps, most worryingly for China, New Delhi has joined a quadrilateral initiative of democratic countries in Asia, called the “arc of freedom and prosperity” among Japan, Australia and the U.S., which Beijing perceives as an attempt to contain China’s rising military power in the region.

During his visit Singh sought to ease China’s fears in this regard in hope that Beijing would give its nod for India’s participation in the Nuclear Suppliers Group (NSG).

“Our policy seeks to… give us strategic autonomy on the world. Independence of our foreign policy enables us to pursue mutually beneficial cooperation with all major countries,” he told Chinese leaders.

A controversial nuclear deal, signed between India and the US in 2006, would enable the U.S. and other countries to supply New Delhi with nuclear technology and fuel without India having to give up its nuclear arms or sign the Nuclear Non-Proliferation Treaty (NPT). The deal however, needs a consensus in the 45-member NSG to be validated and Beijing has shied away from declaring either its assent or disapproval.

As observers here hail the countries’ new role for spurring global economic growth, they worry that mutual suspicions plaguing the bilateral political ties can spill over into the economic area. Chinese academics, for instance, blame lingering distrust between the two sides for the slow growth of their investments.

While bilateral trade has grown to reach 37 billion US dollars, double its size two years ago, investment has been slow to catch up. Since 1991 India has invested 178 million dollars in China while China’s investment hovers at the 10 million dollar mark, described by some economists as “pitiful”.

“India is stuck in its security conundrum,’ says Zheng Ruixiang, a senior researcher with the China Institute for International Studies. “They restrict investment not only from Chinese but also Hong Kong companies for security reasons.’’

India has also been increasingly unhappy about its widening trade deficit with China, which swelled from 1.7 billion dollars in 2004 to 10 billion dollars last year. Fears of Indian markets being swamped with cheap Chinese manufactured goods have hobbled negotiations for the establishment of a Sino-Indian free trade area (FTA), zealously pushed by Beijing.

“There will be no progress in the FTA negotiations unless the trade deficit issue is resolved,” predicts Zheng. “The abolition of many duties under the FTA rules would make Chinese goods even more competitive”.