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China and India: Asia’s Budding Partnership or Growing Rivalry?

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China and India, sometimes referred to “Chindia” are geographically proximate nations, contain over one-third of the world’s population and are among the fastest growing economies in the world. A report by IMF dated January 21, 2015, predicts India overtaking China as the Fastest Growing Major Economy by 2016. The economic strengths of two states are widely considered complementary; China is stronger in hardware and physical markets while India is stronger in software and financial spheres. They have been named as countries with the highest potential for growth in the next 50 years in a BRICS (Brazil, Russia, India, China and South Africa) report.
China and India also share certain historical interactions; the spread of Buddhism from India to China and British-European trade via the Silk route are famous examples. India is eyeing regional leadership while China is all set to peacefully change the unipolar world order into a multiolar one. In this perspective, both China and India can be seen as complementing each other’s role while at the same time challenging the position of the other. However, China does not feel threatened by India but India feels insecure by China’s rise.
New Security Concepts (NSC)
The NSC is a security policy enunciated by China. The concept is that nations are able to increase their security through diplomatic and economic interaction, and that the Cold War mentality of competing and forming antagonistic blocs is outdated. The NSC seems to have merged with the foreign policy doctrine known as “China’s Peaceful Rise.” It includes China’s better relations with ASEAN, the formation of the Shanghai Cooperation Organization (SCO), the Treaty of Good-Neighborliness and Friendly Cooperation between China and the Russian Federation, and joint efforts along with the US to control nuclear proliferation in North Korea.
On the other hand, India follows the “Smart Power Theory.” It is a combination of hard power and soft power strategies and underscores the necessity of a strong military, but also invests heavily in alliances, partnerships, and institutions of all levels. India’s “Act East Policy,” improving relations with small South Asian states, border conflicts with China and Line of Control as well as working boundary violations against Pakistan represent its belief on Smart Power Theory.
Part-I; Budding Partnership between China and India
The budding partnership between China and India is in following spheres.
1. Political Cooperation
India and China had close relationship from 1949 onwards. Their cultural contact was termed as Hindi-Chini Bhai Bhai. From 1962 to 1969, relations were freezed because of border dispute. The era of rapprochement started in 1988, based on long-term constructive and cooperative partnership on the basis of “Panchsheel or Five Principals of Peaceful Co-Existence” based on Jawaharlal Nehru’s vision of “Resurgent Asia.” Narendra Modi had visited China for four times as the Chief Minister of Gujarat.
Chinese President Xi Jinping’s 2014 visit to India was the first visit of a Chinese President to India in last eight years. Narendra Modi is also planning to visit China in May 2015. During his visit, Xi Jinping, in a special address on September 18, 2014 stated, “China supports India’s aspiration to play a more active role in the UN, as well as the UN Security Council.” Indian and Chinese voting records in the UNGA show that on issues related to Iran, Sudan, Myanmar, Middle East security and nuclear proliferation, both are often more closely aligned with each other than with the US.
2. Economic Concurrency
India is attracting foreign direct investment (FDI) and at the same time seeking to consolidate its leadership role in South Asia. Following “Act East Policy,” Narendra Modi is shifting focus to India’s immediate neighbourhood and other major Asian countries like Japan, China and Australia, as well as the BRICS group.
Narendra Modi is admirer of the “Chinese Model of Economic Development” and his government has initiated a programme to convert India into a ‘Global Manufacturing Hub.’ Xi Jinping considers China and India as “the two engines of the Asian economy” (Sep17, 2014). According to a report in the Times of India, March 2, 2014, India’s trade (exports and imports) with China were $7 billion in 2004, $38 billion in 2008 and $65 billion in 2013. Both states term their trade relationship as “South to South Trade” and both have set a target of $100 billion by 2015. Both are founding members of BRICS. UAE was India’s biggest trading partner in the 2012-13 fiscal year; however China emerged as its biggest trading partner in 2008, 2011 and 2014.
India is a member of Bangladesh–China–India–Myanmar (BCIM) Forum for Regional Cooperation, aimed at greater integration of trade and investment between the four countries. The forum plans to construct a “multi-modal corridor” which will be the first expressway between India and China and will pass to Myanmar through Bangladesh. The projects Maritime Silk Road (MSR) and Silk Road Economic Belt (SREB) are the revival of age-old ties among China, India and the states along the route. Both the states are members of the Regional Comprehensive Economic Partnership (RCEP). A Free Trade Agreement (FTA) was signed between ASEAN and six states including India with which ASEAN had concluded FTAs. It will gradually eliminate tariffs by 2015.
Trade between India and ASEAN states is US$ 79.86 billion. India is also a member of Asian Infrastructure Investment Bank (AIIB), an international financial institution proposed by China. China and India believe that together they can make a difference as Mr. Wei Wei, Chinese Ambassador to India, stated on July 19, 2014, “If you want to go fast, go alone; if you want to go far, go together.”
In 2014, both states signed 12 agreements. According to Investment Plans 2014, China pledges to upgrade India’s ageing railway system, to build Industrial parks in Gujarat and Maharashtra and to give more market access to Indian pharmaceuticals and agricultural products. There is also an influx of cheaper Chinese commodities into the Indian market such as Saris and Bhagwans. According to a report by Indian Trade Ministry the import of Chinese fireworks on the occasion of 2014 Holy threatened the Rs. 3000 crore domestic fireworks.
3. Strategic Rapprochement
China and India are trying to rise peacefully together and both call it “a strategic and cooperative partnership for peace and prosperity” (Joint statement signed on April 9, 2010). The joint military exercises were held between military forces of both states in 2007, 2008 and 2013. There is a series of joint Strategic Economic Dialogues (SED) between them; the 1st SED was held in 2011, 2nd in 2012 and 3rd in 2014. Both states have regular ministerial-level exchanges. China plans to participate in expected Indian nuclear projects worth $150 billion. Both have signed a “Protocol on Modalities for the Implementation of CBMs in the Military Field along the LAC” in China-India border areas. Xi Jinping stated on Sep 18, 2014 that “We plan to partner with each other to take our strategic and cooperative partnership of peace and prosperity to a higher plane.”
The Joint Working Groups between two states look into not only trade-related issues but also investments. Chief Executive Officers of both states make recommendations to expand trade and investment cooperation. As a part of greater communication, both premiers have telephone hotline and have an annual exchange of visits between foreign ministers. Both China and India participate in the East Asia Summit (EAS). It is a member of Asia‐Europe Meeting (ASEM) and ASEAN Regional Forum (ARF).
4. Social Collaboration
They have established the India-China outstanding college students and Cultural Exchange Programmes (CEP), and a Chinese Academy of Social Sciences (CASS) in India. Both cooperate with each other in science and technology, health care, tourism, agriculture, dairy development, sports and other fields on the basis of mutual benefit and reciprocity. Both states have finalized an agreement on mutual recognition of degrees and diplomas. China provides Chinese language training material to Indian students. The Central Board of Secondary Education (CBSE) in India introduced Mandarin as a foreign language from April 2011.
In 2010, a Buddhist complex was built in China with an Indian investment of $4 million. Monks spread Buddhism from India to China. ‘PK’ is the first Indian film released in China in 2015 in Chinese language. During recent visit of Xi Jinping, Ministry of Information and Broadcasting of India and China’s State Administration of Press, Publication, Radio, Film and TV, (SAPPRFT) signed an agreement for cultural exchanges. There is a Memorandum of Understanding (MoU) between Reserve Bank of India and the China Banking Regulatory Commission to increase banking and financial cooperation. The Industrial and Commercial Bank of China (ICBC) opened its first branch in India in 2011.
5. Engagement in Environmental Security
On engagement in environmental security, both states in a joint communiqué stated “bilateral cooperation in the area of mitigating and adapting to climate change” and agreed to strengthen such cooperation. In 2010, an MoU on Green Technology was signed between both states. China is number one emitter of carbon dioxide in the world while India is on 3rd Position. A Climate accord summit will be held in Paris in 2015. During Climate Talks in Paris-2014, the Indian Environment Minister has already backed China’s assertions that “historical emissions of developed countries as laid down in the Conventions should be the basis for differentiation.”
Part-II (Growing Rivalry between China and India)
The growing rivalry between China and India is in following spheres.
1. Political Competition
a) Vying for Regional Influence
Despite significant improvements in bilateral relations, a geopolitical rivalry for influence and dominance in Asia is intensifying between China and India. China is Pakistan’s largest defence supplier. It is the most important supplier of military aid to Myanmar. In recent years, Myanmar has moved to develop strategic and commercial relations with India also. India considers itself as a regional powerhouse in South Asia and is strengthening economic and security ties with Bangladesh, Sri Lanka, Bhutan and Nepal.
b) Border Disputes
Both claim each other’s territory. India claims Aksai Chin region of Kashmir. China refuses to recognize Ladakh and Arunachal Pradesh as part of India. There have been continued provocations along the LAC, recent one in 2014. China believes India has grand plans in Tibet. Both believe that their strong relationship depend on the settlement of border disputes. Narendra Modi stated on 18 September 2014, “True potential of our relations” would be realized when there was “peace in our relations and on the borders.” Xi Jinping on September 18, 2014 also stated that “China-India border issue is a problem which has troubled both sides for long. As the area is yet to be demarcated, there may be some incidents.”
c) Chinese String of Pearls
India considers that China is attempting to gain a strategic foothold in the Indian Ocean. A String of Pearls strategy is a network of Chinese military and commercial facilities and relationships along its sea lines of communication, which extend from the Chinese mainland to Port Sudan.
d) India’s UN Security Council Membership
The Indian defence analysts consider Xi Jinping’s statement regarding “China’s support of India’s aspiration to play a more active role in the UN, as well as the UN Security Council” as a typical diplomatic public relations punch line that lacks clarity and purposefulness.
2. Economic Tug of War
Both states are vying for investment. India has blocked Chinese investments in telecom, ports, and shipping due to security concerns and made it difficult for Chinese employees to obtain visas to work in India. India’s 2013-2014 trade deficit with China was 55% of total China-India trade. Both states had agreed to invest $100 billion in two-way trade by 2015 but China invested $20 billion only. China is much ahead start in international marketplace. Both Asian investors have competed for control over African large natural resources. India’s 2000 companies are based in Singapore intending to expand into East Asia. Tata Consultancy Services and Satyam Singapore have regional headquarters in Singapore.
3. Strategic Antagonism
India’s Act East Policy is in conflict with China’s expansion into South Asia. Narendra Modi visited Bhutan and Nepal in 2014, and signed long delayed power projects with these states. India is investing $8 billion in deep water port project in Bangladesh with the help of Adani Group, a company close to Narendra Modi. China Harbour Engineering Company, an early bidder, was previously the front-runner. Pro-China Rajapaksa in Sri Lanka lost Jan 8, 2015 elections which is considered an important diplomatic victory for India. China has concerns over the presence of Dalai Lama, the Tibetan Buddhist spiritual leader, in India. On Afghanistan, Chinese policy is of non-interference while India invests in security. On Kashmir, China believes that the only realistic way to resolve the Kashmir conflict is through peaceful negotiations between India and Pakistan.
India has improved its relations with ASEAN and East Asian states. It has ties with Japan and Vietnam; both are locked in territorial disputes with China. India has partnership with Australia, Fiji, and the Philippines. There is a “Quadrilateral Coalition” among India, Japan, the US, and Australia to neutralize China through the establishment of a ring around it. Exercise Malabar is worth mentioning in this context. India considers Myanmar as its link to Southeast Asia and for Myanmar India is a window to South Asia.
Same Globalization Road, Different Destinies
China and India are different nations which are moving on the same globalization road. China is rising peacefully while India has greater aspirations; its companies enjoy global expansion. China is a single party authoritarian state while India is a democracy of hundreds of political parties. Socially, India is a pluralist society while China is an ethnically homogeneous society. Chinese economy is three and a half times bigger than that of India while India is Asia’s number one arms buyer according to SIPRI’s Year Report 2014. Their national interests collide over contrasting development models, access to markets, natural resources, legitimacy in the global arena and in having strategic partners. China is developing relations with Russia in order to reduce the influence of Japan, Taiwan and US in the region. China has been dominating in manufacturing and India in service sector. Now service sector in China is rapidly growing, while India’s manufacturing sector has seen rapid growth in recent years. According to a World Bank reviewed revision in May 2014, the world had 872.3 million people below the poverty line, of which 179.6 million people lived in India. Extreme poverty in India is in contrast to China‘s economic development. China has greater geopolitical clout than India as well as a permanent seat in the UNSC. The US is encouraging India to counter China’s rise in Asia while China is considered supporting Pakistan to counter Indo-US alliance.
Implications for Pakistan
Some of the positive and negative implications for Pakistan are as follows.
a) Positive Implications
• Cooperation among regional countries is a way to resolve border conflicts and a way to peace and security for the entire Asian Continent through cooperation and interdependence. Peace and cooperation in the region will create an atmosphere of mutual trust.
• US President Barack Obama’s Indian visit in January, 2015 will act as a catalyst in strengthening Pak-China relations.
• Chinese “String of Pearls” strategy will have strategic and economic benefits for Pakistan because of development of Gawadar and Pak-China Economic Corridor and Maritime Silk Route.
b) Negative Implications
• Indian textile and agricultural exports to China will negatively affect Pakistan’s exports to China.
• If and when China supports Indian membership of UNSC and India secures a seat, it would further make the UN ineffective in resolving major issues of global concern such as Kashmir dispute.

The relationship between China and India is based on three Cs: Competition, Cooperation and Conflict. It can be argued that there is a lot of potential for co-operation between India and China which has brought both these countries closer to each other. On the other hand, the strategic differences between them are so great that there is a bleak possibility that their differences will be resolved completely in the near future. China and India will remain two challengers in spite of their mutually beneficial economic associations. The only interest between them is economic cooperation.

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IPRI is one of the oldest non-partisan think-tanks on all facets of National Security including international relations & law, strategic studies, governance & public policy and economic security in Pakistan. Established in 1999, IPRI is affiliated with the National Security Division (NSD), Government of Pakistan.


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