DR.

RAM MANOHAR LOHIYA NATIONAL LAW

UNIVERSITY LUCKNOW

POLITICAL SCIENCE-III

INDO-CHINA BILATERAL RELATIONS

Submitted to - Submitted by -
Dr. Monika Srivastava Digvijay Singh
Associate Professor (Pol. Science) Section: A
Enrollment No: 160101064
BA. LLB. (Hons) Sem-III
 ACKNOWLEDGEMENT

I owe a great many thanks to a great many people who helped and supported me during the
completion of this project.

My deepest thanks to Lecturer, Dr. Monika Srivastava the guide of the project for guiding and
correcting various documents of mine with attention and care. She has taken pain to go through
the project and make necessary correction as and when needed.

I would like to thank Dr. Ram Manohar Lohiya National Law University for giving me this
opportunity to work on this project. .

Lastly, I thank my friends for their support, for their help in collecting the material and for
critically going through the project and correcting the mistakes, without whom the project would
have been a distant reality.

I also extend my heartfelt thanks to my family for supporting and guiding me.
Introduction :

The term international relations has been interpreted and defined in narrow and broad sense. In
the narrow and ordinary sense, ―International relations are official relations conducted by
authorised leaders of the states only.‖ In the broader sense, in the words of Hartmann
―International are all intercourse amongst states and all movements of people, goods, ideas
across national frontiers.
International Relation (IR) is also termed as ‗foreign relation‘ which is basically an interaction
between individuals belonging to various nations. It is study of foreign affairs and global issues
among states within the international system, including the roles of states, intergovernmental
organisations (IGOs), non-governmental organisations (NGOs), international non-governmental
organisations (INGOs), and multinational corporations (MNCs).
Apart from political science, IR comprises of various fields such as economics, history,
international law, philosophy, geography, social work, sociology, anthropology, psychology, and
cultural studies/culturology. It involves a diverse range of issues including but not limited to
globalisation, state sovereignty, ecological sustainability, nuclear proliferation, nationalism,
economic development, global finance, terrorism, organised crime, human security, foreign
interventionism and human rights.
The relationship between states can be of two types- cooperative and oppositional (Involving
conflict). The cooperative relations are mainly of non-political character such as economic,
cultural etc. and do not involve any use of power. The oppositional relations, on the other hand,
imply conflict or struggle among groups and demand use of power. Therefore, International
Relations is a study of both cooperative and oppositional relations among the states.

China–India relations, also called Sino-Indian relations or Indo-China relations, refers to the
bilateral relationship between the People's Republic of China (PRC) and the Republic of India.
Both India and China are large economies. Their domestic markets provide vast scope for
diversified industrialization and trade. Both economies are classified by international agencies as
emerging markets with potential for rapid economic growth. Both economies possess the
capacity to become the ‗power houses‘ of global economy. There are many similarities between
the two economies such as vast pool of employable labour and abundance of natural resource
endowments. Also both countries suffer from paucity of capital and a large part of population is
still dependent on farm activities. Poverty and relatively poor standard of living continue to
affect a large number of people in both the countries. Eradication of poverty and improvement in
living standard, therefore, are seen as the basic objectives of development and acceleration in the
rate of economic growth as the means to achieve them. In June 2012, China stated its position
that "Sino-Indian ties" could be the most "important bilateral partnership of the century".

HISTORY

Historically, International Relations dealt with the establishment of treaties and agreement
between various nations. The emergence of International Relations took place after the 15th
century when governments of various nations interacted with each other and exchanged their
cultural values. The purpose of IR was to avoid conflicts and to ensure peace. Initially,
international relations as a distinct field of study was almost entirely British-centred.

Historically, India and China have had relations for more than 2,000 years but modern
relationship began in 1950 when India was among the first countries to end formal ties with the
Republic of China (Taiwan) and recognize the PRC as the legitimate government of Mainland
China. China and India are two most populous countries and fastest growing major economies in
the world. The resultant growth in China and India's international diplomatic and economic
influence has also increased the significance of their bilateral relationship.
China and India are two of the world‘s oldest civilisations and have co-existed in peace for
millennia. Cultural and economic relations between China and India date back to ancient times.
The Silk Road not only served as a major trade route between India and China, but is also
credited for facilitating the spread of Buddhism from India to East Asia. During the 19th century,
China's growing opium trade with the British Raj triggered the Opium Wars. During World War
II, India and China played a crucial role in halting the progress of Imperial Japan.
Despite the fact that India was one of the first few countries, which recognized the
People‘s Republic of China, the bilateral relationship saw a number of downs than ups. The
history of initial years of India-China relations more particularly during 1949 – 1958 depicts
an era of friendliness. Both India and China were able to reach to a consensus and signed the
Panchsheel Agreement, which basically dealt with Trade and Intercourse between India and
Tibet region of China in Beijing. Panchsheel became the guiding principles of India-China
bilateral relationship. Zhou Enlai‘s trip to India in June 1954 was a symbolic messaging about
China‘s intent and philosophy. It was historic in the sense that a communist head of
government was making a peacetime visit to a non-communist state.

Sino-Indian War

The Sino-Indian War , also known as the Sino-Indian Border Conflict , was a war between
China and India that occurred in 1962. A disputed Himalayan border was the main pretext for
war, but other issues played a role. There had been a series of violent border incidents after the
1959 Tibetan uprising, when India had granted asylum to the Dalai Lama. India initiated a
Forward Policy in which it placed outposts along the border, including several north of the
McMahon Line, the eastern portion of a Line of Actual Control proclaimed by Chinese Premier
Zhou Enlai in 1959.
Unable to reach political accommodation on disputed territory along the 3,225-kilometer-long
Himalayan border, the Chinese launched simultaneous offensives in Ladakh and across the
McMahon Line on 20 October 1962. Chinese troops advanced over Indian forces in both
theatres, capturing Rezang la in Chushul in the western theatre, as well as Tawang in the eastern
theatre. The war ended when the Chinese declared a ceasefire on 20 November 1962, and
simultaneously announced its withdrawal from the disputed area.
The Sino-Indian War is notable for the harsh mountain conditions under which much of the
fighting took place, entailing large-scale combat at altitudes of over 4,000 metres (14,000 feet).
The Sino-Indian War was also noted for the non-deployment of the navy or air force by either
the Chinese or Indian side.
The border row brought significant changes in China‘s approach towards India.
China‘s nuclear test on 1964 added additional fear among Indian minds and key policy
makers. Both the nations had lost mutual trust and confidence and since then it has been a
great challenge to leave misunderstandings behind and forge a new relationship. Such process
of forging friendly ties requires a strong determination and greater initiative to promote their
friendship.
It is obvious that the India – China border conflict in 1962 brought about serious
damage to the friendship between the Chinese and Indian Peoples and that led to a long term
conflict has still not been vanished. Hence, it had really been one of the greatest challenges to
change the mindset and look for zenith in India – China relations, which had reached to nadir in
the aftermath of 1962 conflict.

The cause of the war was a dispute over the sovereignty of the widely separated Aksai Chin and
Arunachal Pradesh border regions. Aksai Chin, claimed by India to belong to Kashmir and by
China to be part of Xinjiang, contains an important road link that connects the Chinese regions of
Tibet and Xinjiang. China's construction of this road was one of the triggers of the conflict.

Socio-Cultural Relations :

History of Cultural Exchanges

Both India and China are not mere societies; they are civilizations. We do not know exactly
when and how they started exchanging their cultural elements, but what we do know is that they
grew in parallel and shared their cultural traits since the beginning of human history and this
tradition of sharing has been continuing ever since.
Both civilizations also shared scientific knowledge. In eighth century, Indian astronomer
Aryabhata's astronomical signs were translated into Chinese in the book "Kaiyuan Zhanjing"
compiled by Gautama Siddha, an astronomer in Chang'an of Indian descent. It is also believed
that he translated the Nabagraha calendar into Chinese. During the Ming Dynasty, navigator
General Zheng His arrival at Calicut in early 15th century is also a testimony of China‘s ancient
maritime linkage with India.

Modern Phase of Cultural Exchanges

Our exchanges continued during the days of our struggle for self governance. In early 20th
century, Nobel laureate Rabindranath Tagore visited China twice, in 1924 and in 1929. Since
1911, Chinese scholars and intellectuals have been visiting and revisiting Tagore‘s life, works
and philosophy. During this year, which marks his 150th birth anniversary, there are efforts by
Chinese publishing houses to bring out collected volumes of these writings on Tagore in the last
one hundred years. Institutions are preparing to stage Tagore‘s plays in Chinese language for
easy comprehension of Chinese audience. As part of Gurudev‘s 150th Birth Anniversary
celebrations, Mission collaborated with Chinese institutions like Peking University, Chinese
Association for Friendship with Foreign Countries (CPAFFC), Yunnan University and many
others to hold seminars, exhibitions and movie screenings in his honour. A fully Chinese
production of Gurudev‘s famous play- Chitrangna, is slated to be opened in Lanzhou University
in March 2012.
Both India and China have vibrant cultures and vibrant people. Buddhism, Xuan Zhang, Tagore,
Dr, Kotnis, Nalanda, Yoga and Cinema are only symbols of our long tradition of exchanges.
They are testimonies of our shared heritage. The momentum has been set and the pace can only
increase in the 21st century.

Legal Relations :
China joined the WTO in December 2001. Its commitments to the WTO are massive. It has
made commitments to open and liberalize its economic regime. It would offer predictable
environment for trade and foreign investment. China has agreed to provide non-discriminatory
treatment to all WTO members, elimination of duel pricing between domestic and export
products, price controls, elimination of export subsidies on farm products, reduction in tariff
duties and removal of non-tariff barriers to name but a few. The largest gainers are the advanced
countries and newly industrializing countries of East Asia. Developing countries are the minor
gainers. China herself is major gainer because of improved market access worldwide.
China‘s joining of the WTO has coincided with rapid rise of Indo- China bilateral trade. The
two-way trade grew over 25 per cent per annum. Indian exports to China increased by 26 per
cent and imports from China increased by 24 per cent during 2000─2004 periods. However, on
the one hand, the share of India in China‘s global imports is around 1 per cent. On the other
hand, import from China in Indian global imports is over 5 per cent. For 237 India, China is an
important export destination but it cannot be said for China. Primary and resourced based
products dominate the Indian export basket but now there are some signs of diversification.
Chinese exports to India are more diversified and include resource based manufactures and low
and medium technology based products. Major change in product composition of China‘s
exports to India occurred in 2003 with the entry of large number of electric and electronic
products. However, the product concentration remained stable during 1996─2003. This is
evident from Hirschman Index. The Chinese exports to India are more diversified than India‘s
exports to China. More of medium and high technology products dominate Chinese exports to
India. Therefore, it appears that Chinese exports are more sustainable than India‘s exports to
China.

POLITICAL RELATIONS

Leaders of the two countries have maintained regular contacts and have met frequently during
international gatherings.
The People's Republic of China (PRC) was established on October 1, 1949, and India was the
first non-communist country to establish an Embassy in PRC. On April 1, 1950, India and China
established diplomatic relations. The two countries also jointly expounded the Panchsheel (Five
Principles of Peaceful Co-existence) in 1954. Chinese Premier Zhou Enlai visited India in June
1954 and Prime Minister Nehru visited China in October 1954.
India and China have stepped up functional cooperation in all areas. The two foreign ministries
have instituted dialogue mechanisms on issues relating to counter-terrorism, policy planning and
security, besides strategic dialogue and regular consultations. There are also close cooperation in
areas as diverse as water resources, judiciary, science & technology, audit, personnel, finance,
labour etc.
Exchanges at the government levels, Parliamentary and Party exchanges have also expanded.
India-China political relations are enhanced and strengthened by various mechanisms. There is a
close and regular interaction between strategic and foreign policy think-tanks. These exchanges
continued to be strengthened during 2011. CICIR has regular interactions with IDSA and ICS.
The third Track-II dialogue between China Reform Forum and Aspen India was held in March
2011. USI has exchanges with China Institute for International Strategic Studies and ICWA has
interactions with CPIFA. Dialogues are now being initiated between pairs of India-China
academic organizations.
Defence Relations :
Background
A warming trend in relations between India and China was facilitated after Prime Minister Rajiv
Gandhi visit China in Dec 1988, wherein it was decided to set up a Joint Working Group (JWG)
on the boundary issue. Between Dec 1988 and Jun 1993, progress was made in reducing tensions
on the border via Confidential Building Measures (CBMs), including mutual troop reductions,
regular meetings of local military commanders and advance notifications of military exercises.
Seven rounds of JWG talks were held during this period. During Shri Sharad Pawar's visit to
Beijing in July 1992, the first ever by an Indian Defence Minister, it was agreed to develop
academic, military, scientific and technological exchanges. A senior level Chinese military
delegation aimed at fostering CBMs between the defence forces of the two countries made a six
day goodwill visit to India in Dec 1993. The visit was reciprocated by Indian Army Chief Gen
BC Joshi's visit to China in July 1994. Since then regular exchanges have been taking place at
various levels. Bilateral defence interaction has been growing. Peace and tranquility along the
Line of Actual Control (LAC) in the border areas is being largely maintained by both sides in
accordance with the agreements of 1993 and 1996. Recent highlights in defence relations are the
visit by the then Defence Minister, Mr George Fernandes, to China in Apr 2003. The visit came
after a gap of more than one decade and also helped ease the post Pokhran tensions. This was
followed by a return visit by Chinese Defence Minister Gen Cao Gangchuan in Mar 2004. In
Dec 2004, Gen NC Vij, the then COAS visited China, the first by an Indian COAS in a decade,
and both the countries agreed to deepen defence cooperation. In May 2005, the Chinese CGS
visited India, a further sign of warming relations between the two countries. The Indian Defence
Minister visited India in May 2006 and signed the first ever MoU on Defence Exchanges
between the Armed Forces of India and China. In May 2007 Gen JJ Singh, Chairman COSC and
COAS visited
China. This was the first time that Chairman COSC visited China and was hosted by the CGS of
the PLA. In Nov 2008, the Chief of Air Staff of the IAF paid an official visit to China from 02 –
06 Nov 2008. Simultaneously, the Commander PLA Navy paid a visit to India from 02 to 05
Nov 2008. Chairman COSC and CNS, Admiral Sureesh Mehta, PVSM, AVSM, ADC visited
China and participated in the International Fleet Review to mark the 60th Anniversary
Celebrations of PLA Navy from 19 - 25 Apr 2009.
Review of Defence Exchanges
General: Bilateral defence interaction has been growing. Peace and tranquility along the Line of
Actual Control (LAC) in the border areas is being largely maintained by both sides. Presently our
approach has been based on interaction at a higher level with the heads of departments/institution
making visits to PLA Institutions. Lower level interaction is carried out through training
institutions like NDC and Army War College (AWC). With thenformalisation of MoU on
Exchanges in the Field of Defence Cooperation between India and China, the effort to deepen
and institutionalise defence cooperation between the armed forces of India and China is being
reinforced.
Bilateral Exchanges: Details of bilateral exchanges (Service Chiefs & Ministerial) conducted
between the two countries from 2000 to 2011 is attached as at Annexure. The bilateral exchanges
between India and China have been steadily increasing with greater exchanges of defence
delegations.
Ministerial Level Delegations: From India, the Indian Defence Ministers have visited China
thrice in Jul 1992, Apr 2003 and May 2006. The Chinese Defence Ministers have visited India
twice in Sep 1994 and Mar 2004.

Economic Relations :
Both the countries posses advantages in labor India-China economic relations constitute an
important element of the strategic and cooperative partnership between the two countries.
Several institutional mechanisms have been established for enhancing and strengthening
economic cooperation between the two countries.
India and China compete in the global market place in many product lines. This competition got
intensified after China joined the WTO. This is because China received the MFN treatment from
the WTO member countries.-intensive product lines, particularly manufacturing products such as
textiles, apparel, chemicals, leather products and host of light manufacturing products to name
but a few.
Sizeable exports of both the countries are directed towards the developed countries markets,
namely the US and the EU. In addition, both the countries 181 have substantial trade with the
Asian economies such as ASEAN and Japan.
China‘s global exports was $438 billion or 6 per cent in world exports as compared to India‘s
$55 billion or 0.76 per cent share in world exports in 2003.
China‘s exports grew on an average 21 per cent between 2001 and 2003, during the same period
when India‘s exports grew by 9 per cent.18 India‘s share is too small as compared to China in
the total imports of the US, the EU, Japan and ASEAN.

Changing Trends of Bilateral Trade Engagement

Bilateral trade between India-China has grown rapidly in the past few years and picked up
significantly after Chinese accession to WTO. During the period 2001-2009, bilateral trade
turnover jumped by nearly twelve and a half times from US$ 3.6 billion to nearly US$ 45.1
billion as presented in the table. With a conservative estimate, the India-China trade turnover is
expected to cross US$ 60 billion in 2010 and further to 125 billion in 2012. China has now
emerged as the largest trade partner of India30 since 2008-09.
During the last nine years, exports of India to China have grown at annual rate of 29.8 per cent
and by 2009, they formed 7.7 per cent of the total exports. In 2001, China was lagging behind
several countries including Belgium and Singapore so far as its share in the total trade of India is
concerned. In the same year, China shared 3.5 per cent of India‘s total trade whereas the US
shared 14.4 per cent, the UK 5.1 per cent and Belgium 4.1 per cent of total India‘s trade. The
trade scenario changed significantly in 2009 with a sizable increase in India‘s bilateral imports.
China not only jumped up in its ranking among India‘s lead bilateral trade partners but also
splashed the Indian market with its exports, causing serious bilateral trade imbalances. It is now
sharing nearly 9 per cent of 48.

Indian Companies in China

With the growth in bilateral trade between India and China in the last few years, many Indian
companies have started setting up Chinese operations to service both their Indian and MNC
clientele in China. Indian enterprises operating in China either as representative offices, Wholly
Owned Foreign Enterprises or Joint Ventures with Chinese companies are into manufacturing
(pharmaceuticals, refractory, laminated tubes, auto-components, wind energy etc.), IT and IT
enabled services (including IT education, software solutions, and specific software products),
trading, banking and allied activities. While the Indian trading community is primarily confined
to major port cities such as Guangzhou and Shenzhen, they are also present in large numbers in
places where the Chinese have set up warehouses and wholesale markets such as Yiwu. Most of
the Indian companies have a presence in Shanghai, which is China‘s financial centre; while a few
Indian companies have set up offices in the capital city of Beijing. Some of the prominent Indian
companies in China include Dr. Reddy‘s Laboratories, Aurobindo Pharma, Matrix Pharma, NIIT,
Bharat Forge, Infosys, TCS, APTECH, Wipro, Mahindra Satyam, Dr. Reddy‘s, Essel Packaging,
Suzlon Energy, Reliance Industries, SUNDARAM Fasteners, Mahindra & Mahindra, TATA
Sons, Binani Cements, etc. In the field of banking, ten Indian banks have set up operations in
China. State Bank of India (Shanghai), Bank of India (Shenzhen), Canara Bank (Shanghai) and
Bank of Baroda (Guangzhou), have branch offices, while others (Punjab National Banks, UCO
Bank, Allahabad Bank, Indian Overseas Bank, Union Bank of India etc.) have representative
offices. Apart from PSU banks, private banks such as Axis, ICICI also have representative
offices in China.

Chinese Companies in India

According to information available with the Embassy of India, close to 100 Chinese companies
have established offices/operations in India. Many large Chinese state-owned companies in the
field of machinery and infrastructure construction have won projects in India and have opened
project offices in India. These include Sinosteel, Shougang International, Baoshan Iron & Steel
Ltd, Sany Heavy Industry Ltd, Chongqing Lifan Industry Ltd, China Dongfang International,
Sino Hydro Corporation etc. Many Chinese electronic, IT and hardware manufacturing
companies also have operations in India. These include Huawei Technologies, ZTE, TCL, Haier
etc. A large number of Chinese companies are involved in EPC projects in the Power Sector.
These include Shanghai Electric, Harbin Electric, Dongfang Electric, Shenyang Electric etc.
Chinese automobile major Beijing Automotive Industry Corporation (BAIC) has recently
announced plans to invest US$ 250 million in an auto plant in Pune. TBEA a Xinjiang-based
transformer manufacturer has firmed up plans to invest in a manufacturing facility in Gujarat.
During the visit of Premier Wen to India, Huawei announced plans to invest in a telecom
equipment manufacturing facility in Chennai.

FUTURE

In terms of the future prospects, China can assist India in her globalization efforts, by cheaper
imports from India and using them to produce low cost products in India itself, through the joint-
venture strategy. By trading with China, India can be a little more competitive in global markets.
A strategy of engagement with China and facing up to competition can be India‘s policy for the
future.
India must emulate China by taking advantage of its cheap hardworking and skilled workers to
leverage better in world markets. To compete effectively India needs to expand its primary and
secondary education, and give more emphasis to vocational education and training.
At the geo-political level, Sino-Indian relations should rise above the present border disputes,
and past tilts. Relation should be non-hyphenated and stand alone, not guided by any third
country. India occupies a special place, as the land of Buddha in China. There is also admiration
in India for China‘s economic achievements. India has an edge over China in terms of
intellectual capital for the future knowledge of economy.

CONCLUSION :
There is no doubt in saying that the levels of engagement between India and China have
increased certainly to a greater extent. India, at the same time, requires to adopt sophisticated
approach to deal with the emerging Strategic challenges being emanating from China. Despite
the fact that China has become increasingly assertive not only at the regional level but also at the
global level, India has not shown any displeasure so far in strongest terms. The border dispute
with China will not be resolved in near future.
In the current circumstances, it is obvious that trade has come to be viewed as an increasingly
important driver of relations by both sides; especially in the light of lingering political mistrust
on a number of wide ranges of issues spanning from the long running border dispute to China‘s
all weather relationship with Pakistan. The regular reports of incursions by
Chinese troops and more aggressive patrolling in disputed areas have certainly created strain on
India-China relations.
It is high time that both India and China should start emphasizing on resolving the real border
issues so that the relationship gets a boost and which ultimately would forge a greater and
friendly cooperation. India also requires taking pro-active measures in countering China across
its borders. A new pragmatism with a combination of both realism and neo-realism would shape
their view of each other. The neo-realist perspective of international relations, where
maximization of interests becomes the key factor would guide India – China relations in the
future. The emergence of China as India‘s biggest trading partner in the year 2008 signals that
both the countries have been ushering into a new phase of relationship mostly guided by
economics and commerce factor.
The signing of an Agreement on ―Political Parameters and Guiding Principles for the
Settlement of the Border Dispute‖, by both India and China has shown that both the countries,
India and China are moving ahead in terms of reaching to a consensus on this major irritant. It
has been also agreed that both sides would maintain peace and tranquillity on the border. But, at
the same, it requires careful assessment especially on the intent and declarations. China has also
been following the tenets of the ‗Monroe Doctrine‘. The attempt has always been to deny access
to other powers in the region that it perceives as exclusively within its sphere of influence. Such
Chinese actions have been damaging the interests of other regions especially to the countries in
the East and South East Asia. Many of China‘s actions in this part of the world would require
very careful handling by India. It may be important for India in the current context to understand
China‘s intentions and fundamental goals. India will always promote constructive engagement
with China and avoid any direct confrontation. It would also be in China‘s interest if it forges
greater and robust partnership.
BIBLIOGRAPHY
www.dgft.gov.in
www.mca.gov.in
www.business .mapsofindia.com
www.brookings.edu.com
www.thehindu.com
www.sricity.in/freetrade.com
www.ecb.europa.com
www.indianembassy.org
www.ajadhind.wordpress.com
International Relation and Organisation by Dr. S. R. Myneni
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