1 Introduction of two leaders. 1.1 China. 1.2 India. Official name People Republic of China ( 中華人民共和國 )

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1 TABLE OF CHAPTERS 1 Introduction of two leaders China India The history of the relationship : the Five Principles of Peaceful Coexistence : The border conflict Overview The McMahon line: Reason of a dispute Events leading to the war The war Consequences : The Indo-Russian rapprochement : Normalization of the bilateral relations Economic relations The trade ties China and India : Two members of the BRICS The India s exports to China The China s exports to India Investments and joint ventures Political point of view Military relationships The multi-lateral issues Relations China-Pakistan Relations India-Japan Conclusion Index References... 14

2 1 Introduction of two leaders 1.1 China Official name People Republic of China ( 中華人民共和國 ) Leader Polity Capital Official language Area Hu Jintao (President), Wen Jiabao (First Minister) Communist state, One party Beijing Chinese (mandarin) Km2 Population 1,344,413,526 (2011) Pop. Density Currency hab. / Km2 yuan / Renminbi (CNY) GNB $ 6102 Billion $ HDI 0,772, Global rank : 92 (2007) 1.2 India Official name Leader Polity Republic of India Pranab Mukherjee Federal parliamentary republic 1

Capital Official language Area New Delhi Hindi, English, and 21 other languages 3 287 590 Km2 Population 1 210 193 422 (est. July 2011) Pop. Density Currency 135.84 hab.

3 Capital Official language Area New Delhi Hindi, English, and 21 other languages Km2 Population (est. July 2011) Pop. Density Currency hab. / Km2 Indian rupee GNB $ 1237 Billion (2009) HDI 0,519, global rank : 119 (2010) 2 The history of the relationship : the Five Principles of Peaceful Coexistence After the foundation of both modern China (1949) and India (1947), the two countries were led by two news leaders: Respectively Mao Zedong and Jawaharlal Nehru. On the 1 st April 1950, India became the 16th state to establish diplomatic relations with the People's Republic of China. In April 1954, India and China signed an eight-year agreement on Tibet that set forth the basis of their relationship in the form of the Five Principles of Peaceful Coexistence (or Panch Shila). Moreover, Nehru sought to initiate a more direct dialogue between the peoples of China and India by promoting culture and literature. Around that time, the famous Indian artist (painter) Beohar Rammanohar Sinha went to China in 1957 to establish a direct cross-cultural and inter-civilization bridge. 2

4 Some famous Indian scholar such as Rahul Sankrityayan and diplomat Natwar Singh also followed the artist and visited the PRC. Beohar Rammanohar Sinha spent time with great chine artists as well as some moments with political leaders like Mao Zedong and Zhou Enlai. Consequently, up until 1959, despite border minor clashes and differences between Chinese and Indian maps, Chinese leaders had assured India that there wasn t territorial issue on the border : The border conflict Overview India and China share a 3400 km long border, also known as the "world's tallest" border with at an average altitude of 5500 meters. The border conflict was launched by China, led at that time by Mao Zedong on the 20 th October of The objective of Mao Zedong was to modify the territorial limitation inherited from the McMahon line. This action surprised the Indian government, led by Jawaharlal Nehru, especially because India had tried in the 1950s to get closer to the People's Republic of China. The weak Indian troop s forces weren t prepared to respond to this aggression and quickly retired from the fight, with 80% of soldiers defending the outposts being killed or made prisoners. The Chinese army occupied territories of Aksai Chin in Kashmir and future Indian state of Arunachal Pradesh, Assam, very mountainous areas claimed by China. The cease-fire was declared on the 20 th November 1962, although the Chinese army had the resources to continue his progression. The APL withdrew its troops from the occupied territories, except from the Aksai Chin, which then was unilaterally annexed and which is still claimed nowadays by India. On the other side, Arunachal Pradesh is claimed by China. This conflict caused the loss of about 3,000 Indians and 900 Chinese, mostly militaries The McMahon line: Reason of a dispute In 1826, India (which was still occupied by Britain), gained a border with China after the win of the First Anglo- Burmese War of In 1913, in order to clearly define the separation between both countries, representatives of China, Tibet and Great Britain attended a conference in Simla. Even if the three countries showed common points of views on the boundary agreement, Beijing later objected the proposed boundary between the regions of Outer Tibet and Inner Tibet and didn t ratify it. 3

The fact is that Henry McMahon (the secretary of the British Indian government), who had drawn up the proposal, decided to trick the Chinese government by negotiating directly with Tibet officials in

5 The fact is that Henry McMahon (the secretary of the British Indian government), who had drawn up the proposal, decided to trick the Chinese government by negotiating directly with Tibet officials in order to settle the border bilaterally. Thus, there was a different point of view between Indian government and Chinese government : - India s government held the view that the Himalayas were the ancient boundaries of the Indian subcontinent (and thus should be the modern boundaries of India) - China s government held the view that this area in the Himalayas has been geographically and culturally part of Tibet since ancient times. Later, China set up boundary markers south of the McMahon Line China took the position that Tibet shouldn t have been allowed to sign such treaty, rejecting Tibet s claim of independent rule. For its part, Tibet didn t object any part of the McMahon line excepting the demarcation of the town of Tawang, which the Line placed under British-Indian jurisdiction. However, up until World War II, Tibetan officials were allowed to rule Tawang with complete authority. Due to the growing threat of Japanese and Chinese expansion at that time, British-India chose to secure the demarcation by implementing several garrisons next to the borders Events leading to the war The 40 s was an important decade for South Asia with the Partition of India in 1947 (leading to the creation of two states: India and Pakistan), and the creation of People s Republic of China in The main policy of India toward China was to maintain cordial relations. In 1950, the PRC Liberation Army invaded Tibet. Moreover, the Chinese powered up their influence by building a road in India found out these moves after the road was completed, protested and decided to look for a diplomatic solution to ensure a stable Sino-Indian border. To resolve any doubts about the Indian position, the Prime Minister declared in parliament that India regarded the McMahon Line as its official border. In result, the PRC declared that there were no frontier issues to be taken up with India. In 1954, Prime Minister Nehru wrote a memo calling for India s borders to be clearly demarcated. In November 1956, the Chine Premier Zhou Enlai repeated that the PRC had no claims on Indian territory, even if official Chinese documents were counting square kilometers of territory claimed by India as Chinese. In 1954, China and India signed the Five Principles of Peaceful Coexistence agreement, by which the two nations agreed to solve the Border issue. India presented a frontier map which was accepted by China. Unfortunately, this improvement in relations suffered when Nehru accommodated the 14 th Dalai Lama, who fled Lhasa after having failed to up rise against Chinese rules. As a reaction, Chairman Mao asked the Xinhua News Agency to make reports on Indian moves and operations in Tibet. 4

Serious border incidents then began at this period, with the death of nine Indian frontier policemen in 1959.

6 Serious border incidents then began at this period, with the death of nine Indian frontier policemen in As a consequence of non-recognition of the McMahon Line, Chinese maps showed both Aksai Chin and the North East Frontier Area (NEFA) to be part of China s territory. In 1960, Zhou Enlai unofficially suggested that India drop its claims to Aksai Chin in return for a Chinese withdrawal of claims over NEFA. Adhering to his stated position, Nehru believed that China did not have a legitimate claim over these territories, and thus wasn t ready to concede them. This point of view was perceived by the Chinese government as an opposition to the Chinese rule on Tibet. Nehru declined to conduct any negotiations on the frontier until Chinese troops would withdraw from Aksai Chin, a position supported by the international community. India's stance that China withdraw from Aksai Chin caused continual deterioration of the diplomatic situation to the point that internal forces were pressuring Nehru to take a military stance against China The war On the 20th October 1962, the war was launched by Mao Zedong, who intended to modify the existing border. The weak Indian garrisons along the 2500 km border which the altitude exceeds sometimes 5000 meters weren t prepared to reply to this aggression and retired quickly, 80% of the soldiers defending the outposts were killed or made prisoners. The Chinese army occupied the territories of Aksai Chin in Kashmir and the future Indian state of Arunachal Pradesh Assam. The cease-fire was declared on 20 th November The Chinese army withdrew from the occupied territories, except from the Aksai Chin, which was unilaterally annexed (and still claimed by India nowadays). This conflict caused the loss of about 3,000 Indians and 900 Chinese, mostly military Consequences 5

7 The consequences of the war are numerous: In October 1962, the General Consulate of India in Lhasa was closed and wasn t reopened since. This war had a significant influence on the Sino-Soviet relation split, due to the fact that the Soviet government had openly sided for India. A few years later, in 1965, during the Indo-Pakistani War, China threatened to intervene militarily on the side of Pakistan. In April 2005, an agreement was reached between China and India to solve their border dispute. Nevertheless, boundary violations by Chinese forces are still reported, with 270 identified cases in 2008 leading to an increased military presence on Indian zone. In 2012, the border dispute is still not solved : The Indo-Russian rapprochement In August 1971, India signed with Russia the Treaty of Peace, Friendship, and Cooperation. As a reaction, China, in December 1971, threatened India to side with Pakistan during the war with India, but didn t carry out any intervention. By this time, the PRC had just replaced the Republic of China in the UN where its representatives denounced India as being a "tool of Soviet expansionism." India and the PRC renewed efforts to improve relations after Indian Prime Minister Indira Gandhi's Congress party lost the 1977 elections to Morarji Desai's Janata Party. The new Desai government sought to improve long-strained relations with India and the PRC. In 1978, the Indian Minister of External Affairs Atal Bihari Vajpayee made a landmark visit to Beijing, and both nations officially re-established diplomatic relations in In the end of this decade, the PRC modified its pro-pakistan position on Kashmir and lowered its position on India's absorption of Sikkim. Moreover, the PRC's leaders agreed to start negotiation with India about the border issue : Normalization of the bilateral relations In the beginning of the 80 s, after a long period of cold relationship contacts, India and China began the process of the normalization of their relations. The end of the cold war in the 90 s, with the end of Maoism contributed to make vanish the ideological struggle that was sustaining, in background, their rivalry. The implementation of a bilateral economic cooperation became the main stabilizing element of their relationship. The increase of sino-indian exchanges, which shifted from 200 million USD in 1990 to 2 billion in 1999 shows the success of this stabilization. This stabilization was endangered in May 1998 when India launched its first nuclear tests, thus the volume of commercial interactions dramatically decreased before resuming growing in September The coming of new leaders in both countries in 2003 (China) and 2004 (India) didn t change this dynamic combination. Since then, the economic ties grow exponentially, reaching 60 billion USD in The political point of view also showed great improvements, with the Strategic Partnership for Peace and Prosperity agreement, in With a growing regional power, India and China became also more and more reliant on regional countries. That s why they developed ties with other countries, which ones could be not friendly to each other (Japan toward India, China toward Pakistan). 6

8 The different organizations joined organizations, at a regional level (ASEAN, ARF, East Asia Summit), and at a global level (G20, ONU ), providing to them a neutral platform through which they can confront their interests. 3 Economic relations 3.1 The trade ties China and India : Two members of the BRICS The trade relations are the most important part of bilateral relations between India and China. This trade is facilitated by the fact that the two countries belong to the same economic organization, the BRICS. The India China trade relations are regulated by the India China JBC, which ensures a free exchange of products and services between the two nations. In 1994, China and India have signed a trade agreement avoiding double taxation. Moreover, the trade relations have been improved from 2006, with the initiation of the border trade between Tibet, and India through Nathu La Pass, which reopened after more than 40 years. According to the Indian Commerce Minister, Kamal Nath, China would soon become India s largest trade partner within the next 3 years, after the US and Singapore The India s exports to China The principal exportations of India toward China are about slag, ores, ash, steel and plastics. Until now, the part of iron ore in exportations is about 53% of the total exports. The other items which are taking more and more importance are marine products, salt, inorganic chemicals, plastic, rubber and medical equipment. Some great potentials also exist in areas such as biotechnology and IT. As a developing country, China seeks to shift from first-materials exports to high-value added products, such as : Auto engine components and automobiles Pharmaceuticals Agricultural products like grains, tobacco and oilseeds Engineering goods like diesel engines and compressors Marine foods Fresh and processed fruits and vegetables Medical and optical diagnostic equipment and laboratory equipment Consumer durables Textile yarns Impediments for Indian exports to China Therefore, there are some obstacles to the improvement of exports to the Chinese markets, such as : - Lack of information on customs procedures - Complex customs valuation procedure - Unfamiliarity with regard to provincial rules and regulations, and frequent change in policies 7

In order to increase Indian exports to China, there should be a continuous interaction through exchange of delegations, enhancing participation in each other's trade fairs and seminars and

9 In order to increase Indian exports to China, there should be a continuous interaction through exchange of delegations, enhancing participation in each other's trade fairs and seminars and facilitating trade through positive initiatives The China s exports to India In 2004, the Chinese exports to India reached million $. Since the normalization of diplomatic relations between China and India, the trade relations have slightly increased, reaching US$18.7 billion in 2005 from US$ 4.8 billion in China mainly exports high value added items such as: - Electrical machinery - Nuclear reactors - Boilers - Machinery The exports are also made of first materials such as fuels and oils. The value added items dominate the Chinese exports, for example, electrical machinery represents 36% of Chinese exports. The prospects for Chinese exports to India have been enhanced from 2006, with the opening of the prospective Indo China border trade. Trade has been initiated between Tibet, an autonomous region of China, and India through Nathu La Pass, reopened after 44 years. From then onwards, nearly 15 items are being exported from China to India. Nevertheless, bilateral trade reached $ 43.4 billion in 2009, while it reached 51.8 billion a year earlier, according to Chinese statistics. 8

10 3.2 Investments and joint ventures The economic partnership between the two countries is also linked to investments and joint ventures. China and India have created joint-venture companies due to common interests in oil fields in Sudan. Chinese investments are relatively news, Chinese market only opened in the 80 s (thanks to Deng Xiaoping leadership), which made that, during a long time, Indian investments were made toward Hong Kong. On the other hand, the first Chinese investments in India were concentrated in mining and manufacturing areas. Nevertheless, geopolitical equations (see the third chapter) make Chinese investments fluctuating. On the period , while promises of investments were about 225,07 millions of dollars, the real investments made were only 0.56 millions of dollars. Therefore, the situation has been evolving in the last decade. For example, the pharmaceutical company Ranaxaby and the National Indian Institute for IT (NIIT) now hold clearly a dominant position in the pharmaceutical and IT education system in China. Also, the Indian group TATA, one of the most important economic conglomerates in Asia, plans to enhance its investments in the IT area in China. Thus the investments would shift from 2 million $ to 5 million $. Tata has also started negotiations on joint-venture creation projects in the car market and steel market. The Chinese appliances producer Konka, based in Guangdong province, and the Indian company Tata Consultancy Ltd (TCL) have also created joint-venture companies in India. However, Konka has stopped its fabrication operations in India because of restrictive policies, and had deep MATTERS with its indian partners. 4 Political point of view 4.1 Military relationships Since the beginning of the XXIth century, China and India have started their military cooperation. For example, in 2004, the two countries have conducted joint naval maneuvers in the South China Sea. However, in 2007 were planned joint military exercises on mainland India. This project was canceled due to a deterioration of diplomatic relations between the two countries about the border limitation. 9

11 4.2 The multi-lateral issues Relations China-Pakistan Since the partition of the English empires of India in 1947 that led to the birth of modern India and Pakistan, the two countries clashed several times about the Kashmir issue. Since then, even if the XXIth century has marked a new era for the relationship between the two countries, the diplomatic situation is still tense. On the other side, since the last decade, while improving its relations with India, China is starting new connections with Pakistan For example, in May 2011, China announced that it would deliver 50 fighter jets to Pakistan, and some assistance about the nuclear field. This announcement made India declared that it was deeply concerned about this. In fact, China is the main weapons supplier to Pakistan, considered by the PRC as an useful counterweight to India. On the other side, India sees Pakistan as the checkpoint for terrorism in south asia. India accuses Pakistan of supporting extremist groups. According to the latest revelations of Wikileaks, the attack in Mumbai in 2008 would almost have caused a war between the two countries. Due to Chinese support to Pakistan, the diplomatic situation between China and India remains tensed Relations India-Japan Since a long time, Japan and India have been friendly countries. They have been both influenced by Buddhism, and both established official relationships after the World War II, on the 28 th April Moreover, India was one of the first country to sign a peace treaty with the defeated Japan. Nevertheless, during the cold war, India chose to implement relationships with Russia whereas Japan preferred to become an ally of the USA. Therefore, the end of the cold war opened a new era for the relationships of both countries, which became the second and third economic leaders in Asia. For example, on the 29th January 2012, Japan and India have launched a common maritime operation, using in common both coast guards helicopters and vessels, in order to train their naval force to struggle with maritime piracy operating in the Indian Ocean. Another important event, just one month before, is the visit in January 2012 of Yoshihiko Noda, former Japanese prime minister, to Manmohan Singh, in the indian capital. The both leaders have signed a common declaration focusing on the economical, financial and security cooperations. Those links come from a certain fear from the military development of China on India and Japan, but also the technological transfers from China to Pakistan. After Indian atomic attempts in 1998, which led to the interruption of financial aids toward India, the relationship became colder, before getting better in the 2000 s. Japan have signed the Declaration about security between India and Japan. It s only the third country (with USA and Australia) that Japan implements such tie. The declaration should make the meetings between military ministers more often, to enhance common military exercises, and to manage better natural disasters. 10

12 The military cooperation is also followed of an important economic domain. The economic ties between Japan and India know a quick growth. Former minister Noda and Singh had agreed on the objective of 25 billions dollars of bilateral trade between the two countries for Japan is also investing in many infrastructure projects in India, for an objective amount of 4,4 billions dollars for

13 5 Conclusion The relationship between China and India has experienced significant developments in the past. The Border war of 1962 shocked the mind of the international community and continues to affect relations between the two Asian giants. However, in a multi-polar world, the alliances between these two neighboring countries guarantee a certain balance in their relationship. The creation of the BRICS will surely improve the economic and political relations of the two countries. 12

14 Index Aksai Chin... 3, 5 Arunachal Pradesh... 3, 5 ASEAN... 7 Border issue... 4 Chinese investments... 9 Dalai Lama... 4 exportations... 7 exports... 7, 8 first-materials... 7 Himalayas... 4 indian investments... 9 Indo-Pakistani War... 6 Investments... 9 IT 7, 9 Japan... 6, 10, 11, 14 Manmohan Mao Zedong... 2, 3, 5 McMahon... 3, 4, 5 military cooperation... 9, 11, 14 Nehru... 2, 3, 4, 5 Pakistan... 4, 6, 10, 14 PRC... 3, 4, 6, 10 Russia... 6, 10 Tibet... 2, 3, 4, 5, 7, 8 trade... 7, 8, 11 USA

15 References Challenges and opportunities India, China : Friends, enemies, rivals, investors India-China relations after 50 years of sino-india war Institute for Defense Studies and Analyses Bilateral ties : China, Pakistan sign military cooperation deal Japan s PM Shinzo Abe seels security ties with India, Australia: Report Japan and India : Asia s odd Couple Inde : Conflits et divergences Relations Inde-Chine : des dynamiques concurrentielles qui annoncent un avenir incertain The Sino-Indian war : 50 years later, will India and China clash again Exclusive : What provoked India s war with china China keen to boost mutual investments with India 14

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