Opinion - News Analysis

A perspective on India & China-India ties

— Photo: AFP

convergence: Manmohan Singh and Hu Jintao… “there is enough space for India and China to grow together.”

India is a country with great diversity and also sharp contrasts. Here, the modern and the ancient, the wealthy and the poor, different political parties and religions, exist side by side. Each functions in its own way and contributes, in a positive or negative manner, to the country’s development.

India is a rising economic giant. It has registered an annual GDP growth rate of 8.5 per cent over the last five years. In fiscal 2007-2008, India’s GDP reached $1.16 trillion, making it the world’s 10th largest economy. Its foreign exchange reserves crossed $301 billion by February 2008, behind only China, Japan and Russia. According to a study by Goldman Sachs, it will be the world’s second largest economy by 2050.

India is at the cutting edge in several fields. The service sector is the main pillar of the economy: its production value in 2007 accounted for 55 per cent of overall GDP output. In outsourcing, it retains 70 per cent of the global market and 90 per cent of the U.S. market. In pharmaceuticals it has an international stature: it is reported that the sector is 10 years ahead of China. India is one of Asia’s attractive financial destinations. It is catching up in manufacturing.

The booming economy has given a fillip to world-class companies such as Reliance and Tata, and increased people’s wealth. It is reported that India has a 300-million strong middle class population. This represents huge purchasing power and an inviting market for foreign investors.

With its economy growing, India has acquired increasing confidence and is making its impact felt in regional and international affairs. It has an independent foreign policy and maintains good relations with major powers. It has consolidated its influence in South Asia. India is seeking a greater role on the world stage, especially in the U.N. A seat in the Security Council is its cherished goal.

As a developing country, India too faces daunting challenges. According to Economic Survey 2006-2007, some 240 million Indians remain below the poverty line. Infrastructure is inadequate to support fast and sustainable economic development. The growing population provides abundant human resources but poses challenges too. Intra-regional disparities, especially urban-rural ones, have to be addressed to achieve inclusive and equitable development. The economy is getting more and more sensitive and vulnerable to the fortunes of the world economy.

Yet, as a rising economy India holds great potential. It has become a force to reckon with politically, diplomatically, economically and militarily. But to benefit from India’s booming economy, you need courage, wisdom and patience, besides an understanding of the people, the culture and the way the system operates.

China and India represent two great civilisations. Historically, the neighbours have had frequent exchanges, and learned from and influenced each other. In modern times, their peoples have supported each other in their pursuit of national independence and liberation. In the 1950s, both cooperated in the international arena. They initiated Panch Sheel, the Five Principles of Peaceful Co-existence, which remain the basic guiding principles in international relations.

A border dispute in the early 1960s cast a shadow on the relationship. But as Premier Wen Jiabao said, when you look at the over 2,200-year period during which the two countries have had exchanges, 99.9 per cent of it has been marked by friendly cooperation.

The relationship started to pick up after Prime Minister Rajiv Gandhi visited China in 1988. In this century, bilateral relations have evolved at a fast pace. In 2003, Prime Minister Atal Bihari Vajpayee visited China. Premier Wen Jiabao and President Hu Jintao visited India in 2005 and 2006 respectively. During these visits, it was agreed to establish a long-term Strategic Partnership for Peace and Prosperity.

Today, China-India relations are on a fast track. Politically, both sides have maintained high-level visits. Prime Minister Manmohan Singh’s visit in January 2008 led to the signing of “A Shared Vision for the 21st Century of China and India.” External Affairs Minister Pranab Mukherjee visited China recently. Foreign Minister Yang Jiechi is expected to make a return visit this year.

Economically, both have enjoyed a fast pace of trade growth: it was 50 per cent last year. Two-way trade was worth $38.7 billion in 2007. In the first quarter of 2008, China became India’s top trading partner aside from the E.U. During Mr. Manmohan Singh’s visit the two sides increased the trade target from $40 billion to $60 billion by 2010. Mutual investments are expanding. A feasibility study on a China-India Regional Trading Arrangement has been done.

Today, more than 150 Indian enterprises have sub-companies or representative offices in China. Over 60 Chinese companies are engaged in infrastructure projects in India.

Exchanges are expanding. Last year, people-to-people exchanges exceeded 520,000. The two armies have interacted. The first defence and security consultation and the first joint anti-terrorism training were held last year. In science and technology, contacts and exchanges continue.

There is a growing convergence on international and regional affairs. Mechanisms for a strategic dialogue, foreign policy consultation and a dialogue on anti-terrorism have been established. They consult and coordinate. Both cooperate closely in the U.N., the World Trade Organisation and G8+5, and in regional groupings.

On issues affecting China’s core interests, India has maintained consistent policies. It recognises the Taiwan province and the Tibet Autonomous Region as being part of China and does not allow on Indian soil any anti-China activity. India made great efforts to ensure that the Olympic Torch Relay in New Delhi was a success. It offered in a generous and timely manner, relief material worth $5 million to the victims of the earthquake in Sichuan in China. The government and the people of China appreciate these goodwill gestures.

Of course, there are some outstanding issues. But both are mature enough to handle the differences in the best possible manner. On the boundary question, the two sides have established the mechanism of Special Representative on the Boundary question and held 12 rounds of talks. Both are committed to resolving the issue through negotiations and in a fair, reasonable and mutually acceptable manner on the basis of the Agreement on Political Parameters and Guiding Principles for the Settlement of the China-India Boundary Question concluded in 2005. Pending a final solution, both will do their best to maintain peace and tranquillity along the border.

At the same time, political trust between two countries needs to be enhanced. Communications and contacts need to be expanded to bridge the gap of information. To sustain bilateral trade, joint efforts need to be made to expand the scope of products suitable for the two huge markets. The trade imbalance, currently in China’s favour, needs to be minimised.

China views its relationship with India as one of global and strategic importance. It takes a positive view on India’s rise, and considers the development of either side as a contribution to peace, stability and prosperity in Asia and the world, rather than as a threat. China attaches importance to India’s position as a major developing country, and understands and supports its aspirations for a greater international role. Any assumption that rivalry between China and India is inevitable as they grow is untrue: the “world’s factory” and the “world’s office” can indeed complement each other. The two countries know that if they join hands both will prosper; if they fight both will suffer. As Mr. Manmohan Singh said, “there is enough space for India and China to grow together.”

The simultaneous rise of China and India is among the important developments of our times. With a total population of 2.5 billion, a combined economic strength of $4 trillion, huge foreign exchange reserves, big purchasing power, and a young and creative human resource, China and India are bound to wield an important and positive influence on the transformation of the international order, which is moving in the direction of multi-polarity. As President Hu Jintao noted, “long-term friendship, cooperation with mutual benefit and common development between China and India will change Asia and the world in a profound way.”

In a sense, the China-India relationship has gone beyond the bilateral context and acquired a global dimension. It is China’s policy to further advance its Strategic and Cooperative Partnership with India. As the world watches with interest, and as other Asian countries place their hope on them, China and India have every reason to work together to make the Asian century a reality.

Of course, a constructive and mutually beneficial relationship needs careful nurturing and encouragement. The strategic vision and the firm commitments of the leaders of the two countries will ensure the continuous progress of relations.

On the subject of Hong Kong (SAR), it has had a time-honoured relationship with India. Business-to-business and people-to-people ties and exchanges have been nurtured over a century or more. But in general, its presence in India is not significant. It is now looking to expand contacts with India. Hong Kong can offer its technical expertise to India in the area of infrastructure development and its higher learning institutions are attractive. The Indian community here of around 50,000 people can serve as a bridge in developing cooperation.

The development of China-India relations opens opportunities for Hong Kong to cooperate with India. With its openness, entrepreneurship and dynamism, and its position as a major centre of shipping, finance, trade and commercial services, it can contribute to the development of China-India relations.

(This article is excerpted from the text of an address delivered by the Chinese Ambassador to India, Zhang Yan, at the Asia Society in Hong Kong on June 18.)

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