Strategic Backdrop

Chinese Premier Li Kequiang’s visit to India took place at a crucial time when the geopolitics at the international level are in a state of flux with the US pursuing its pivot to Asia-Pacific strategy besides its ongoing draw down from Afghanistan. China, as a possible response to the US maneuvers, is moving to forge new strategic equations and strengthen its old ones. China’s involvement in territorial disputes with some of its neighbours like Japan, Vietnam and Philippines also not only restricts its freedom of strategic maneuver but also paints a negative image of China’s peaceful rise theory and motivates affected countries to move closer to the US and the West to balance China. Therefore, President Xi Jinping’s first visit abroad to Russia was in this context aimed at stressing the importance of its relations with a close ally. Similarly, Prime Minister Li’s visit to India was with an understanding that India was a key power that could tilt the emerging international strategic balance either way. While Indian Prime Minister Manmohan Singh’s visit to Beijing was due in the coming months, yet Li’s visit to India prior to that exhibited the level of urgency and keenness with which the new leadership wishes to engage India and possibly reduce the trust deficit and address mutual differences on a number of issues of concern to both. Chinese leadership is also concerned with Indian moves to forge a closer relationship with Japan and therefore the timing of Li’s visit before Singh’s scheduled trip to Tokyo was also significant in the strategic context.

That Li chose to make India his first visit abroad after assuming office has given a positive thrust to Sino-Indian relations and also underscored the importance of this relationship in shaping the emerging world order. The Joint statement issued at the end of the visit notes that "both countries view each other as partners for mutual benefit and not as rivals or competitors."

Issues of Concern: No Easy Solutions

Evidently, the most important issue is the settlement of border dispute where both sides have failed to find a solution despite 15 rounds of talks by Special Representatives’ (SRs). This is further compounded by the fact that the Chinese side has not communicated to India their perception on as to where does the Line of Actual Control (LAC) lie. Despite the so called ‘candid and frank’ exchange of views there is a general impression that the Indian Prime Minister was not assertive enough in communicating New Delhi’s views on recent incursion by PLA. Singh’s statement terming it as an ‘incident’ in the Western Sector has not been well-received in the strategic community.

As expected, the Chinese proposal for formulating a new mechanism in the shape of a Border Cooperation Agreement/Border Defence Management Agreement has not been agreed to by India, as according to New Delhi, the ‘existing mechanisms have proved their worth’ in the recent border stand-off. Not only India had put forward its own proposals to deal with border flare-ups India also sought more time to examine Beijing’s proposal. Further, suggestions for demilitarization of border areas are fraught with risk so far as India is concerned because of lack of development of strategic infrastructure on the Indian side. However, what has been stressed by India is that an early boundary settlement is a necessary pre-condition for stabilizing the relationship between the two nations. Though these issues have been left for the next round of SR talks, yet the dissonance in Sino-Indian relations is likely to persist unless this fundamental divergence is addressed in a substantive manner.

Another issue flagged by Indian leadership was the construction of dams on Yarlung Tsangpo/Brahmaputra River without taking into account the interest of lower riparian countries. India proposed a joint mechanism for the same but this did not find any positive response from the Chinese side. China was only ready to share some hydrological data of river flows which might cause floods on the Indian side. In fact, India’s demand was that the mandate of existing Expert Level Mechanism should be expanded to include information sharing on upstream development projects on these rivers. Li also spoke reassuringly of China's respect for the rights of the lower riparian states. This has been interpreted by Indian officials as a “movement forward” but it is not clear up to what degree. Generally, China has been known for disregarding the rights of downstream countries over the rivers flowing down from Chinese territory which is contrary to international conventions on river water flows.

The third important issue from Indian perspective was a large number of Chinese (possibly PAP or some other militia personnel) working on projects in Pakistan Occupied Kashmir (POK) which is recognized by even China as a disputed area. Though this point was not brought up by India during the deliberations with Li, it remains an area of concern for New Delhi. Conclusion of an agreement with Pakistan on constructing an economic corridor through POK with construction projects in admittedly disputed territory indicates double standards being followed by China. It needs to be remembered that China had prevented the Asian Development Bank from advancing funds for projects in Arunachal Pradesh.

Trade Imbalance and connected issues: Some Promises

Imbalance in trade was another area which was sought to be addressed by both sides though; largely the Chinese delegation consisted mostly of export representatives rather than importers. A number of proposals were made, and these included greater Indian access to the Chinese market, investment in each country by the other, and exploring ways to allow Indian manufactures to export their products to China. Beijing also offered to invest in and build infrastructure in this country. India’s infrastructure requirements are huge but there are also some concerns about Chinese ways of working and investing in such projects which may be disadvantageous to Indian firms.

The Chinese Premier did promise to help the IT, pharma and other Indian companies to promote their businesses in China. Apparently, this may not help much as the trade deficit with China is very large and India would have to think of innovative ways to reduce the imbalance. India was also not keen to enter into a bilateral Regional Trade Agreement as also a Regional Comprehensive Economic Partnership (RCEP) which would have further skewed the trade balance in favour of China.

It was also the first time that a mention of promoting the Kunming Initiative or BCIM (Bangladesh-China-India-Myanmar) Forum for Regional Cooperation for improving connectivity and trade relations through multimodal corridors from Yunnan- Myanmar and India’s North East was made at the highest level.
Earlier, India viewed it as only a provincial initiative by Yunnan; it had also not gained much traction due to reservations by India on grounds of security and connected issues. Hopefully, some substance would be added to it in the coming years. So far only conferences of the forum have been held and some publicity to the BCIM concept has been given through Kolkata to Kunming car rally. Surprisingly, there were no members from Yunnan in China’s business delegation. However, overall on the question of addressing trade imbalance and allied issues Li exhibited receptivity and reasonableness.

Apparently, the Joint Statement also reflected that China and India were ready to discuss bilateral cooperation in civil nuclear field for the first time. India is looking forward to China removing its opposition to India becoming a member of the NSG (Nuclear Suppliers Group). India is also keen that China should not provide its technology etc. to Pakistan for Chashma III and IV nuclear plants. The Joint Statement maintains that “the two sides will carry out bilateral cooperation in civil nuclear energy in line with their respective international commitments.” However, it is envisaged that China would continue to cooperate with Pakistan under grandfathering clause which, perhaps, could be termed by China as part of its ‘international commitments’.

A total of eight agreements were signed between India and China in areas of military-to-military cooperation to include exercises between respective Armies, Air Forces and Navies; cooperation in non-traditional areas of security, relaxing of visas for enhancing people to people relations etc. These were largely areas of congruence except that in military exercises, the scope and scale is very limited.

Regional and Global issues

For sometime, both India and China were interacting with each other at Track II and even Track I levels on the question of evolving scenario in Afghanistan post 2014 where both countries are concerned about security and stability. India and China have invested huge capital in Afghanistan and are also apprehensive about the adverse fallout of instability in Afghanistan on the region. Both have endorsed an “Afghan-led, Afghan-owned” reconciliation process. India believes that a positive Chinese involvement in Afghanistan may have the effect of moderating Pakistan’s stance on the issue. Though, so far China has largely viewed the Afghanistan issue through Pakistani prism.

There has also been general convergence on most of the global issues where both India and China have largely cooperated on climate and trade issues i.e. in Doha Development Round of WTO and Durban climate change summit and WTO issues. Further, for long both sides have been supporting the central role of the UN in the international affairs which the US has been disregarding for many years.

A mention of Asia Pacific security was also made where both sides observed that principles of international law should be followed to maintain peace and stability; this was somewhat of an indirect and mild criticism of America’s Asian pivot strategy. Another clause in the joint statement states that both sides “take a positive view of each other’s participation in regional and sub-regional cooperation processes, and support each other in enhancing friendly relations with their common neighbors for mutual benefit, and win-win results.” From Chinese perspective, it would mean that India should not be concerned about China’s engagement with its South Asian neghbours while India would interpret it as China should, therefore, take similar view of India’s engagement with Vietnam, other ASEAN nations as also Japan and other East Asian countries.

Assessment

It has been said that that talks took were candid and frank indicating that both sides articulated their views freely. India, in a way, did underline its unhappiness with lack of progress on the border issue and connected issues by not restating the Chinese demand of including the usual averment of Tibet being part of China and ‘One China’ policy etc. However, India did try to play down the issue as basic policy of India on Tibet has not undergone any fundamental change. It appears to be a bargaining tactic for China’s one-sided policies on POK. Indian officials feel that there is no point in making such remarks/commitments without getting anything in return as Kashmir is of core concern to India.

Further, China also wanted to make mention of South China and East China Sea as areas of core concern but was not accepted to be included in the official statement because of the larger ramifications on the sovereignty and freedom of navigation issues.

Overall, the visit can be described as moderately successful from Indian perspective as both sides have strived to resolve the core divergences but no easy solution is likely in the short-term. The new Chinese leadership has tried to reach out to India without offering any strategic concessions while giving minor concessions and making some promises. Positive development could possibly be that the Chinese Premier visited India first thereby indicating the new leadership’s priority. Li’s visit to Pakistan immediately thereafter denotes that China is still playing balance of power games in South Asia. Convergence on most of the global issues will not help much unless the bilateral divergences are settled amicably.