CAN GOOD ECONOMICS CHANGE BAD POLITICAL RELATIONS BETWEEN INDIA AND CHINA?

Transcription

1 CAN GOOD ECONOMICS CHANGE BAD POLITICAL RELATIONS BETWEEN INDIA AND CHINA? These are the most brilliant civilizations yet produced by humanity, those of China and India, lie side by side on the continent of Eurasia. The peoples that have produced these civilizations are both rightly proud of their histories and achievements, and determined that their nations will play a major role in the modern world. These two ancient nations emerged from long periods of foreign domination and established new states at about the same time--independent India in 1947, which became the Republic of India (ROI) in 1950, and the People's Republic of China (PRC) in The power and ambition of these states dwarfed the capabilities of the other states lying along their common flanks. For the next five decades the two powerful states struggled to reach a mutually acceptable accommodation. This was a difficult process, producing one limited but intense war, a half-dozen militarized confrontations, dozens of instances of sharp political-diplomatic struggle, chronic conflict over national policy, and layer upon layer of mutual suspicion. The thinking of both sides seems to have been subtly but profoundly influenced by the possibility that the other side might use military force or might be tempted to use military force. While war has not been a frequent occurrence, that possibility, and the even graver possibility of national defeat in war, has very frequently underpaid the ROI s and PRC s perceptions of each other. 1

2 The post Cold-War period have specially seen a swift turn around as far as the economies of these two nations is concerned. The continuous increase in their defence acquisitions have also complimented well to their financial growth resulting in change in their international role. Many of the theorists therefore, defined China and India as alternate centers of powers. Which refers to challenge these countries are posing to existing power equation in the world. But there are constrains and problems. For example, India still has unresolved territorial and other disputes with its neighbors including China, along with the challenges it is facing on the domestic front. China on the other hand can t remain economically capitalist and communist politically. This paradox needs to be looked in too. This paper is an attempt to understand that can improvement in Sino-Indian economic relations reduce their political rivalry? EARLY YEARS OF SINO-INDIAN RELATIONS Cultural and economic relations between China and India date back to ancient times. The silk-road not only served as a major trade root between India and China, but is also credited for facilitating the spread of Buddhism from India to East Asia. In the early 1950s, China and India had close exchanges and contacts. The two countries established diplomatic relations on April 1, In fact, when The PRC was formally proclaimed on October , India was the second non-communist country to recognise it. 1 The year 1954 was a turning point in India China relations, as Chinese Prime Minister Chou En- Lai and Jawaharlal Nehru exchanged visits and much famous slogans of Hindi-Chini 1 Jetly, Nancy, India China Relations, : A Study of Parliament's Role in the Making of Foreign Policy, (Radiant Publishers, New Delhi, 1979), p.2. 2

3 Bhai-Bhai (Indians and Chinese are brothers) were on a high note. During the same visit the controversial Sino-Indian Treaty on Tibet was signed. The whole exercise was carried out under the rubric of "Panchsheel" (the Five Principles of Peaceful Coexistence). This honeymoon however, didn't last long. In the Bandung conference, 1955, in Indonesia which was called by Nehru to discuss Afro-Asian unity, Sino-Indian differences on range of issues came out in open. Since then the two big nations are living in an era of conflicts and commonalities. AREA S OF POLITICAL AND DIPLOMATIC CONFLICT BETWEEN INDIA AND CHINA Sino-Indian relations are marred by two major conflicting area s. 1 There are issues relating to India's sovereignty, territorial integrity and security that have been reflected at various levels, including highest levels... On the boundary question, we recognise that a resolution requires time and patience. But progress can, and should, be made. [2] India s concerns regarding China's defence cooperation with Pakistan remain. Unlike India-China relations, which have shown improvement despite the difficulties of the past, Pakistan remains unreconciled to good relations with India. Our view in regard to external military assistance to Pakistan has been consistent over the last fifty years. Given Pakistan's approach to India, assistance in the defence field to Pakistan affects India's security directly and adversely... On our part, we do not seek a confrontation with China. To explain further, China and India shared a long border, sectioned into three stretches by Nepal, Sikkim (then an independent kingdom), and Bhutan, which follows 3

4 the Himalayas between Burma and what was then West Pakistan. A number of disputed regions lie along this border. At its western end is the Aksai Chin region, an area the size of Switzerland, that sits between the Chinese autonomous region of Xinjiang and Tibet (which China declared as an autonomous region in 1965). The eastern border, between Burma and Bhutan, comprises the present Indian state of Arunachal Pradesh (formerly the North East Frontier Agency). Both of these regions were overrun by China in the 1962 conflict. China is an important third party to the dispute over Kashmir. Especially after the agreement of 1963 through which Pakistan illegally ceded one-third of the territory of Jammu and Kashmir to China. Legal document signed between the two countries in 1963 says, The Government of the People s Republic of China and the Government of Pakistan; having agreed, with a view to ensuring the prevailing peace and tranquility on the border, to formally delimit and demarcate the boundary between China s sinking and the contiguous areas the defence of which is under the actual control of Pakistan, in a spirit of fairness, reasonableness, mutual understanding and mutual accommodation, and on the basis of the ten principles as enunciated in the Bandung Conference. Being convinced that this would not only give full expression to the desire of the people of China and Pakistan for the development of good neighbourly and friendly relations, but also help safeguard Asian and world peace. 2 Apart from these boundry disputes Beijing has perceived and not liked India s efforts of becoming the leader of the third world. India on its part has dismissed Chinese apprehensions and has always maintained that it has no quest for Asian or to be a Third World leader. 2 "Sino-Pakistan Frontier Agreement, 1963", 4

5 CHINA AND SOUTH ASIA South Asia is often referred by many security analysts as becoming a nuclear flash point. Their reasoning behind such a comment is the presence of three nuclear powers in the region, that is India Pakistan and China. Though, China does not fall exactly in South Asian Sub-Continent, its proximity and involvement however, in the region makes it a very important player. Swaran Singhh identifies following, as some of the fundamental issues in the South Asian security environment. According to him, conventional wisdom tells us that boundary disputes have been the most dominant cause of inter-state suspicions and threat perceptions in Asia. Of the seven South Asian states, China shares common borders with four which makes it integral to the region. All these borders had been disputed to begin with and have sparse yet overlapping populations. China s unresolved boundary with India makes these states critical buffers, thus increasing their strategic significance for both New Delhi and Beijing. Similarly, China s border settlement of March 1963 with Pakistan remains provisional to the final settlement of Jammu and Kashmir between India and Pakistan. Some confusion also remains on the China-Bhutan border demarcation. Even a country like Bangladesh, which was not in the scene until 1971 and does not directly share boundaries with China, remains important for its physical proximity to China. At one stage, Beijing even toyed with the idea of using Bangladesh to find an outlet into the Indian Ocean. The same is also true of China s other neighbour, Myanmar which, despite not strictly being part of the conventional British definition of South Asia, provides China tremendous leverage in determining the tenor of South Asian security. 3 3 Singh Swaran, The China Connection, 5

6 INDIAN ECONOMY India's economy which was declining sharply in 1990 when India had to mortgage gold with the Bank of England, picked up after liberalisation process began in India's economy is improving rapidly, and a senior official of the World Bank said in October 2006 that Indian economy would be the largest in next 25 years. That may or may not happen, but surely the world is taking clear note of India as an emerging economic power. India in 2006 was one of the three largest Asian economics -- the other two being China and Japan. Also by 2006, various Indian companies had acquired 307 companies, the world over, worth above 20 billion U.S. dollars. Chinese economy The expanding range of China's economic interactions has provoked the most recent attention towards China as an emerging superpower. China's economic successes are impressive enough and deserve attention. They reflect China's late entry into the international economy. China was effectively shut out of interactions with the international economy until The revision of its development policies and the role of the international economy in them were begun by Deng Xiaoping in Over the two decades after 1978, China's economic growth rates approached 10 percent annually. SINO-INDIAN ECONOMIES TOGETHER For our understanding I have tried to compile some data which clearly indicate Chinese and Indian trade internationally and Sino-Indian trade with each other. This data shttp:// 6

7 is a good enough example that why India China must improve their political relations and use their economic potential for strengthening their bilateral relations. Table 1 China Trade Growth BILLION USD EXPORT IMPORT TOTAL TRADE Figure 1 China Trade Growth Source: UN Comtrade Table 2 India Trade Growth 7

8 BILLION USD EXPORT IMPORT TOTAL TRADE Source: UN Comtrade Figure 2 India Trade Growth Table 3 India-China Trade Growth BILLION USD EXPORT IMPORT TOTAL TRADE

9 Source: UN Comtrade Figure 3 India-China Trade Growth India and China both are emerging economies and have been aggressively growing in international trade market. However, even a cursory look of trade statistics above reveals that there is huge difference in the size of both countries in international market. Total international trade of China in 2003 stood at USD billion which grown more than four times in last nine years and in 2011 reached at the level of USD billion. On the other hand, India s total international trade in 2003 was merely USD billion which witnessed more than five times growth in the same period and reached at the level of USD billion. 9

10 Picture emerges clearer when we look Indo-Chinese trade figures. In past nine years both countries have witnessed tremendous growth in bilateral trade. Whereas, in 2003 total bilateral trade of India-China was merely USD 6.16 billion it reached to USD billion in 2011, almost 11 times growth in a short spam of time. Interestingly, this growth was caused more by Indian imports. As we can observe that in this period Indian import from China increased more than 14 times and reached from the level of USD 3.60 billion to USD billion. However, Indian export to China increased only 6.5 times in the same period. Thus, India s trade deficit in bilateral trade grown from USD 1.03 billion in 2003, to USD billion in While there has been a common acceptance that trade must go on, China has focused in expanding her export basket through diversifying items as well as their quantity. INDIA AND CHINA CONFLICTS AND COMMONALITIES India and China thus, are the countries with conflicts and commonalities. BANGKOK in 2010, a rare opinion poll was conducted across China. It asked a simple question: What do you perceive as the greatest threat facing China? The range of answers was interesting but even more interesting was the way the survey was reported in India. Among Indian newspapers, the thrust of the stories said that 40 percent of the Chinese polled think India presents the greatest security threat after the United States. Yet Indian business journals emphasized that 60 percent of Chinese saw no threat from India. The Indian Business Standard explained that while India was seen in China as the 10

11 second-biggest threat, 6 in 10 Chinese citizens didn t mention India at all a reflection of the broader concerns of a wealthier populace 4. Stanley A. Weiss argues that the contradictions came as no surprise India is a kaleidoscope of competing realities. But as China and India begin preparations to mark 60 years of diplomatic ties, that same schizophrenia has come to characterize their bilateral relations. Where does the heart of the relationship between the dragon and the elephant lie? Is it in their increasingly public bickering over disputed land on the Himalayan border, where Indian officials have accused China of 270 line-of-control violations and 2,285 instances of aggressive border patrol last year? Or is it in a burgeoning economic relationship that has seen China become India s largest trading partner, with bilateral trade leaping from $15 billion to $40 billion in the past five years and is expected to grow to as much as $60 billion in 2010? 5 Weiss argues further, Does it rest in China s aggressive support of India s arch-rival, Pakistan; Beijing s strategy of building roads and ports in countries around the Indian Ocean as a string of pearls designed to choke India; and its efforts to block a $2.9 billion Asian Development Bank loan to India? Or is it anchored in the remarkably united front India and China presented in Copenhagen, where they stood together to ensure that developed countries did not extract unilateral concessions on climate change from developing ones? Right 4 STANLEY A. WEISS, Rivals and Partners, The New York Times January , Op-Ed Contributor : Rivals and Partners, Cited on January STANLEY A. WEISS, Rivals and Partners, The new york times January , Op-Ed Contributor : Rivals and Partners, Cited on January

12 now, the answer seems to be both. Indians generally agree that we must have excellent economic and diplomatic relations with China, but we must also keep our powder dry, 6 This thinking by Indians regarding China is based upon latter s continues efforts to intervene in South Asian Region. 7 PROSPECTS FOR INDIA AND CHINA The international importance of the China-India relationship reflects the fact that together they account for 37 percent of humanity. Although, they represent markedly different cultures and competing models of development Indian and Chinese foreign policies share some similar objectives, such as maintaining national unity and territorial integrity, establishing pre-eminence in their respective neighbourhoods, and playing an important role in world affairs. The international system of the post-world War II world, dominated as it was by the United States and the Soviet Union and molded by the Cold War, was a constant determinant of both Indian and Chinese foreign policies though operating on each in different ways at different times; within the hierarchical structure of this international system China after 1971 occupied a higher status -- as a nuclear weapons power and permanent member of the United Nations Security Council since than India. India and China had also encountered some specific problems, including those posed by ethnic separatist movements, weak and divided neighbours, obsessive regional rivals, or dealings with international lending institutions and foreign investors, which affected their foreign relations. 6 STANLEY A. WEISS, Rivals and Partners, The new york times January , Op-Ed Contributor : Rivals and Partners, Cited on January Arvind Subramanian, The growth future India and China, Cited on February

13 The future prospects hence, for both India and China in terms of their international role depend on following factors. [1] How both India and China integrate their economies with world economic system. [2] Both New Delhi and Beijing will have to resolve their political and territorial issues with their neighbours and with each other. [3] The third issue which both of them will have to address is the problem of social backwardness resulting in social unrest. Some of these above mentioned challenges have been addressed by both the nations which make their prospects bright and therefore, both India and China can be termed as emerging centres of power. For example: Arvind Subramanian argues, Can China and India sustain their current growth rates? A traditional answer to this question is conditional: yes, provided they continue to implement policy reforms. But historical experience allows a less guarded answer. There are few examples of countries that have grown as strongly and for such long periods as India and China have 6% and 10%, respectively, for nearly three decades and then suffered a sharp slowdown or collapse. If history is a reliable guide, then barring major upheavals, economic growth looks likely to continue in both countries until some threshold level of prosperity is attained. 8 Arvind Subramanian further writes, Growth in India has come with a more entrepreneurial private sector but accompanied by deteriorating state capacity. China has a vastly superior state capacity but an indigenous 8 Arvind Subramanian, The growth future India and China, Cited on February

14 private sector that is still finding its feet. Which combination augurs better for the future is yet to be seen. 9 Dr. Marvin J, Cetron, states about China, Economic growth has allowed China to overcome some of its social problems in recent years. An estimated 130 million Chinese live below the local poverty line. Yet this is only one in ten. Another 247 million people qualify as middle-class, about 19 percent of the population. Children are required to attend school for seven years, so that 86 percent of Chinese can read and write. These are impressive improvements over the situation after the Cultural Revolution of the late 1960s and early 70s 10. Writing about the prospects for India, Stephen P. Cohen writes, "India has begun to overcome its many deficiencies and has discovered new strength," He added, "Ten years ago India was struggling to find a role in the post-cold war world, its economy was in disarray, and its social and political systems were undergoing rapid and unsettling change. India seemed to be plunging into chaos." 11 WHY IS CONFLICT MANAGEMENT BETWEEN INDIA AND CHINA SO DIFFICULT It is very clear by now that India and China share many identical problems. Both these countries are also well aware of the bright prospects they have in international system. However, political conflicts between the two still guide their agenda. 9 Ibid, 10 Dr. Marvin J, Cetron, Prospects for China and India in the 21st Century Cited on February Khanna V N, Introduction to International Relations, Theory and Contemporary Issues 2007 P

15 Though, Out of the above mentioned conflicts these two nations have solved a few and have been able to make progress on some. But their relationship still remains at crossroads. For example, New Delhi and Beijing, have almost agreed upon the issue of Sikkim. India at least perceives so, though, China has not made any official announcement in this respect. But contrary to this example, in 2012, a month after India and China held the fifteenth round of border talks, a commentary in a Chinese newspaper has questioned India's claims on Kashmir and asserted that the only dispute was over the status of Arunachal Pradesh. 12 An article in the Communist Party-run Jiefang Daily, or Liberation Daily newspaper said the disputed western section of the border including the Aksai Chin region which is now under China's control was not part of the dispute, 13 underscoring how far apart both countries' positions remained even after 15 rounds of negotiations. Additionally, Beijing has always opposed any international deal India that enters into, which can help develop India s intrinsic strength. It opposed the India-US nuclear deal, it continues to oppose nuclear transfer to India, and has resented the Australian consensus to export uranium to India. It has exhibited similar concern over India-US high technology cooperation and India-US military exercises. It has indicated strong reservations over India s Look East policy, and declared concern over India-Japan strategic cooperation and defence agreement. 12 February , 13 Ibid, 15

16 CONCLUSION From an economic perspective, stable Borders can simply bring greater monetary gains due to ease of cross- Border trade or, the status quo party might expect benefits in the long run for making concessions to improve ties. At the political level however, there is a trust deficit which impedes cooperation when both parties have sought closer engagement with each other's adversary. Progress on the border issue has also come to almost a complete stop in recent years, despite the existence of multi-tiered mechanisms to facilitate resolution. To conclude, in spite of increasing economic interdependence on each other both, India and China could not use economic cooperation as conflict manager between them. Economics still remains a method of soft diplomacy for New Delhi and Beijing. Proving Realist theory correct that politics or international relations is a separate discipline which can t be mixed with economy or culture. In my opinion though, Sino- Indian relations are bound to improve and when so ever it happens their economic interdependence will play a vital role in making India and China cooperative neighbors rather then conflicting ones. 16