Indian Prime Minister Dr Manmohan Singh’s visit to China between 13 & 15 January 2008 has added new warmth to the ties between the two countries. The maiden visit of Dr Singh as PM saw a new chemistry in the relationship as the two countries pledged to increase bilateral trade to US$60 billion by 2010. Dr Singh and his Chinese counterpart Premier Wen Jiabao signed 11 agreements covering strategic roadmap of new bilateral developments.

Though the visit did not deliver any drastic outcome in terms of resolving the decades old border issue, the reiteration of the April 2005 statement on political parameters and guiding principles, which included “not disturbing, settled populations in resolving the boundary dispute” became a loud affirmation of India’s stand on the issue.

“The two sides remain firmly committed to resolving outstanding differences, including the boundary question, through peaceful negotiations, while ensuring such differences are not allowed to affect the positive development of bilateral relations,” they said in a joint statement.

“The two sides reiterated their determination to seek a fair, reasonable and mutually acceptable solution to the boundary question and build a boundary of peace and friendship,” they said, adding the task of arriving at the framework of settlement would be completed at an “early date.”

Dr Singh later termed the statement as “an important milestone in the evolution of our relations.”

In his speech at the Chinese Academy of Social Sciences (CASS), Dr Singh told the intelligentsia that India and China needed to cooperate in creating a world of positive externalities and mutual prosperity, rather than the one based on balance of power calculations and animosity. “This involves India and China working together closely to ensure a global order in which our simultaneous development will have a positive influence not only on our own economies but also on the rest of the world,” Dr Singh said.

Agreements

India managed to extract two important diplomatic concessions from China. First was getting China to jointly pledge cooperation in the field of civil nuclear energy. The second was support to India’s aspiration to play a greater role in the United Nations, including the berth at the all-powerful UN Security Council.

India and China signed 11 agreements in diverse areas, including economic planning, housing, health and culture and land management. The two countries also agreed to deepen a defence engagement that was until a few years ago unthinkable between the Asian neighbours and decided not to allow the border row to affect the development of their ties.

However, an agreement on the possibility of launching a Regional Trading Arrangement (RTA) is seen as a mixed bag. There is fear that the proposed RTA would be heavily weighed in China’s favour and could end up further increasing the trade deficit of US$10 billion for India. India’s reiteration of its one China policy is deemed as a diplomatic concession to Beijing vis-à-vis Taiwan.

Great Synergy

In his address to the CASS, Dr Manmohan Singh pointed out, “The development agenda has taken centre-stage in both our societies. Our systems are different, but people in both countries are united in their aspiration for a better future. When countries of the size of China and India, together accounting for 2.5 billion people begin to unshackle their creative energies, it impacts on the whole world. The world knows it and is watching with interest.”

What the world sees common between India and China is the billion-plus populations of the two countries. But amidst the jumbo populations there lie some synergies that could take on the whole world in near future.

The Indian PM urged the two countries to be in the frontline to forge a more democratic international order. After the fruitful meeting of the leaders, the two sides, for the first time, not only openly recognised the boundary issue but also felt it should not come in the way of the developing friendly relations between the two powerful neighbours.

Trade Deficit and RTA

The decision to scale up India-China bilateral trade from US$38.6 billion to US$60 billion by 2010 was a significant affirmation in economic relations of the two fastest growing economies. China is the second largest trade partner of India and poised to become the largest, though India is way down at number 10 on China’s list. There is concern in India about the big trade deficit between the two countries.

Ahead of the visit of Dr Singh to China, India’s Industry and Commerce Minister Kamal Nath met his counterpart Commerce Minister Chan Deming in Beijing and said the trade deficit between the two countries was not very healthy, especially when India and China could set the economic agenda of the world within a decade. The combined force of the two emerging Asian markets, Nath said, would “eradicate the western trade dominance”.

In the last two years, India’s bilateral trade with China has doubled. The target of US$20 billion by 2008 has already been in year 2006. The growth rate has made the two sides optimistic of achieving the target of US$40 billion this year. Dr Singh wondered whether the two governments had been underestimating the capabilities of the respective industries and their strong urge to do business with each other.

Outcome Hailed

In the joint statement called ‘A Shared Vision for the 21st Century’, both leaders enumerated measures to build a relationship of friendship and trust, taking into account the aspirations of each other. The statement declared that the two countries were firmly committed to solving outstanding differences through peaceful negotiations. The statement also affirmed that India-China relations would not target any third party and not brook any interference by other countries in their mutual understanding.

Experts and analysts in India hailed the “shared vision” statement of the two countries. A clear mention of UNSC in the joint statement this time is being seen as a significant improvement over China’s position on the issue in 2006. Says K Subrahmanyam, who heads the PM’s Task Force on global strategic development, “The same goes for the Chinese backing for India’s claim for a seat in the UNSC. It’s roughly a reiteration, but is an advance over the 2006 position in so far as the joint statement mentions the UN Security Council explicitly.”

The broad message of the visit was that the rise of India and China and their bulging relations could contribute a lot to the changing world order. That the two rising Asian powers are cooperating rather than viewing each other as rivals is in itself a very important message to the world community. There may be cynical views that see China through the prism of suspicion, but the PM’s visit could successfully put all aspects of future development in Indo-China relations in the right perspective. That is no small achievement.