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Improvement in China-India Relations: Impact on Pakistan

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China is part of South Asian geopolitical dynamic. The bilateral political and economic context dominates India and China’s cooperation. Both countries have been named as countries with the high potential for growth in the next 50 years in a BRICS (Brazil, Russia, India, China and South Africa) report.

India believes that its relations with China are a touchstone of Nehru’s concept of Asianism. However, the concept of Asianism collapsed with the India-China war in 1962. Now, India is wary of Sino-Pakistan alliance while China believes in peace in the periphery. However, China does not feel threatened by India but India feels insecure by China’s rise.

Part-I; Improvement in China-India Relations

The China and India are improving in following spheres.

  1. Political Cooperation

The relationship between both countries is based on “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 XiJinping’s 2014 visit to India was the first visit of a Chinese President to India in last eight years. Narendra Modi visited China in May 2015. During his visit both countries signed 24 agreements worth over $10 billion.

  1. Economic Collaboration

India is seeking to consolidate its leadership role in South Asia. China’s economy is three times as large as India’s. However, India is largest trading partner of China. 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 and BRICS Development Bank. India’s trade with China in 2000-01 was $2 billion, in 2013-14 it was $65.86 billion, and in 2015 it reached up to $100 billion.

In 2014, 12 agreements were signed to expand cooperation in trade, space exploration, and civil nuclear energy sectors. In its 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 products including pharmaceuticals and agricultural products. Railway Modernization in India is the emerging priority for Chinese investment.

In May 2015, 24 agreements were signed including a consultative mechanism on cooperation in trade negotiations, Skill development, Cooperation in the fields of mining and minerals, MoU between NITI Aayog and Development Research Centre). Both countries agreed on implementation of the MoU on the border trade through the Nathula Pass between the Tibet and Sikkim

India and China are members of Asian Infrastructure Investment Bank (AIIB) and Bangladesh–China–India–Myanmar (BCIM) Forum for Regional Cooperation. 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. This corridor 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.  According to a report by International Economic Think Tanks; “India and China soon plan to form a trade coalition in Asia and that is projected to boost 65% of the world trade by near 2020”.

  1. Strategic Reconciliation

During Modi’s 2015 visit to China, the strategic agreements signed were; Cooperation between Foreign Ministry and Central Committee of Communist Party of China (CCCPC); Agreement on the establishment of sister states Sichuan and Karnataka, sister cities between Chennai and Chongqing, between Hyderabad and Gingdao, between Aurangabad and Dunhuang.

The joint military exercises were held between military forces of both states in 2007, 2008 and 2013. There is also a series of joint Strategic Economic Dialogues (SED) between both the states; 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. Both the countries condemn terrorism in any form.

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.

  1. Social Association

During Modi’s visit to China MoUs were signed between ICCR and Fudan University for establishment of centre for Gandhian studies, on education exchange programme, establishing India-China think tanks forum, on cooperation in earthquake science and engineering, cooperation in ocean sciences, on climate change and cryosphere, on cooperation in geo sciences, for the establishment of Yoga college in Kumning, for safety regulations on importing Indian rapeseed meal, for broadcasting agreement between CCTV and Doordarshan, an agreement for cooperation in the field of tourism, on Cultural Exchange Programmes (CEP), for Mandarin as a foreign language from  2011, and on climate change. 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.”

Is there any improvement in relations at all?

Tensions persist between China and India despite growing cooperation. The areas of diversion are as follows:

  1. Political Competition

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 while India considers itself as a regional powerhouse in South Asia and is strengthening economic and security ties with Bangladesh, Sri Lanka and Bhutan.

Both countries also 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 2015. China believes India has grand plans in Tibet. Both believe that their strong relationship depends 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.”

China as a veto power is also silent on the issue of India’s UN Security Council membership.

  1. Security Concerns

The continued occurrences of Chinese soldiers crossing into disputed areas of the China-India border are creating security concerns for both states. India believes that China is attempting to gain a strategic foothold in the Indian Ocean calling it a Chinese String of Pearls strategy. China is a self-reliant country in its security capability and also interdependent economically while India has both security and economic independence. The security concerns between both countries do not allow full scale cooperation in science and technology. Indian closeness to the US and Japan and China’s closeness to Pakistan shape their security relations.

  1. Economic Rivalry

India has a large trade imbalance with China. Chinese competitiveness in export-oriented industries creates problems for India’s comparatively weak economic institutions. India has also 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. Both states had agreed to invest $100 billion in two-way trade by 2015 but China invested $20 billion in 2014 and $32 billion in 2015 only. The two countries are competing for access to energy supplies. Both have competed for control over large natural resources of African countries.

  1. Strategic Vying

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. Pro-China Rajapaksa in Sri Lanka lost in 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 relation 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.


Impact on Pakistan

China and Pakistan enjoy a cordial relationship. Pakistan has been a key ally for China throughout the Cold War. The ongoing Sino-India rapprochement has no significant impact on the Sino-Pakistan relations and it will not weaken the Sino-Pakistan entente because of the following reasons:

  1. China’s economic focus and its utmost priority is economic growth. China sees Pakistan in terms of its economic interests. China currently is the world’s second-largest consumer of oil. Apart from the significance of Pakistan’s strategic location, the Gwadar port situated in Balochistan has reinvented Pakistan’s regional significance as an energy corridor for China. China’s enthusiasm about the Gwadar port and its immense technical assistance to Pakistan is one such example of this economic co-operation between the two countries. China attaches a strategic value to the Gwadar port, which for China is no lesser than that of the Karakoram highway because the port will provide China with the closest access point to the Persian Gulf.
  2. China is sensitive about the growing role of the US in the region and the US leaning towards India in the Asian continent. To counter this, China perceives Pakistan a best ally. Pakistan has always advocated full diplomatic support in favour of China over Tibet and Taiwan. Pakistan had also supported China to get permanent membership of the United Nations Security Council (UNSC).
  • China’s interests are in a stronger Pakistan. A stronger Pakistan is crucial for China’s own geo-strategic needs. China also does not want the US to fail in Afghanistan. A failure of such magnitude could eventually drive radical elements into Chinese territory. There could not be peace in region without peace in Afghanistan and Pakistan. Therefore, it is China’s own domestic interest that makes its role in enhancing Af-Pak relations.

Some of the positive and negative implications for Pakistan are as follows.

  1. Positive Implications
  • Cooperation between China and India could help Pakistan in resolving its disputes with India since cooperation and dependence in the region will enhance mutual trust.
  • In view of growing India-US relations as a consequence of US President Barack Obama’s India visit in January, 2015, as indicated by the visit of Chief of Army Staff Raheel Sharif to China in January Pakistan China also progressing at faster pace.
  • 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.
  1. Negative Implications
  • Indian textile and agricultural exports to China might negatively impact Pakistan’s exports to China.
  • If China decides to supports Indi in UNSC and India secures a seat, it becoming a permanent member would make India more arrogant and it will become impossible for Pakistan to resolve the Kashmir and other disputes with India in a just manner.


India and China cannot move beyond the scope of partnership to friendly relations. India continues to view China as a major threat to its national security while China seems to be expanding its economic relations with India to trade-off the impact of changing geo-political developments. China remains the main beneficiary of the growing Sino-Indian trade while India is facing trade deficit with China. China’s partnership with India will not affect China’s relationship with Pakistan because of the gravity of China’s interests linked to Pakistan.

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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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