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China Vs India- Some Thoughts on Their Future Relationship

Some recent pronouncements on the relationship between what are considered as two important countries of this region have raised questions and doubts whether these two can live in peace and as equals in political , economic , and military strength to ensure regional peace.

First of these was a report in on China, which pointed out an article in the Chinese website, of Zhong Guo Zhan Lue Wang ( China Strategy net). The article written in Chinese unabashedly recommends break up of India . Pointing out incorrectly that the “decadent” Hinduism holds the country together, it goes on to say China ,in its own interest and the progress of whole Asia, should join forces with different nationalities like Assamese, Tamils, and Kashmiris and support the latter in establishing independent nation-states of their own, out of India. In particular, the ULFA in Assam, a territory neighboring China, can be helped by China so that Assam realizes its national independence. and that China can bring into its fold countries like Pakistan, Nepal and Bhutan.

One does not know the importance of this site ( some analysts have dubbed it as obscure )and the standing of the article’s author but normally it is presumed that nothing sensitive can be written in Chinese media including the websites unless it has the concurrence if not support of the powers that be in China.

The second is a statement by the Retiring Indian Naval chief Suresh Mehta who in his ‘Bhashan’ to the National Maritime Foundation on national security challenges , ominously but correctly pointed out the enormous strategic weakness of India vis a vis China. According to him China will be India’s primary challenge, and that cooperation rather than competition or conflict with China was preferable since it would be “foolhardy” to compare India and China as equals in terms of economy, infrastructure and military spending. This uncomfortable reality is not something unknown to most of the strategic pundits in New Delhi and they are probably reconciled to it. With the policy “if you can’t beat them join them “ there is an effort to build fences – some call it strategic partnership- with China.

Be that as it may what is the truth about comparative strength of the two nations and what would be the future relationship ?

On every economic indicator to show the inherent strength of a nation it is well known that China is far ahead of India. While India’s GDP growth in the first quarter of this year has been 5.8% China posted a growth of 7.9 % . Before Global recession hit all countries China had consistently posted around 10% or more in the past years. Industrial production for China was 10.8% while India recorded 7.8% Another disturbing trend is the emerging trade deficit with China. In 2004, the balance of trade was $1.7 billion in India’s favor. By 2006, this surplus had turned to a $4.12 billion deficit, widening further last year to $11.2 billion, with Indian exports of $20.3 billion overshadowed by imports from China worth $31.5 billion.

Though the Indian exports to China has crossed more than 40 billion dollars these exports have been basically in the primary sector of raw materials , mainly iron ore feeding the strategic steel industry of China .In the first 11 months of last year, 71% of Indian exports to China comprised iron ore, up from 59% in 2007. The Chinese conversely export to India mainly high-value, finished products such as electrical machinery, a situation that has remained unchanged over the last several years despite much hand-wringing on the Indian side. Today it is difficult if not impossible to find domestic electrical items in the market which are Indian.

It is interesting to note that India is a leading initiator of anti-dumping cases against China. When the captains of Indian industry took up the issue of trade deficit in a business meeting last year the Chinese promised to send a business mission . Even after the visit by a delegation led by the Chinese vice minister of trade the deals which were signed did not cross a measly 100 million dollars, Chinese have also not removed non-tariff barriers erected against Indian products , particularly agricultural products which can have a good market in China . After accession to the WTO china signed a bilateral deal with India eight years ago and even now , only three items – mangoes, grapes and bitter gourd – have been approved for import from India.

The desperation in being unable to bridge the gap is evident by the somewhat desperate suggestions in a FICCI report that recommends medical tourism , luxury products and animation industry as possible selling items for china.

It would be interesting to see China’s import policies internationally to get some idea where India stands with respect to China in strategic thinking .China of late has made significant inroads not only in Africa but also Latin America the US back yard, challenging the long standing “Monroe Doctrine” of the U.S. The Toromocho copper mines of the Peruvian Andes is being developed at the cost of 2.2b$ by the Chinese metal company Chinalco.making China a leading economic partner for Peru. China is also aiming for closer economic partnership with other Latin American countries. In May this year an agreement was signed in Beijing between China and Brazil under which China bank and Sinopec a Chinese oil company will lend Brazil’s Petrobras 10b$ in return for up to 200000b/d crude oil for ten years from Brazil’s deep sea oil fields. Chinese companies have bought stakes in oil fields in Ecuador and Venezuela and are thinking of building a refinery in Costa Rica. Very recently China National Petroleum corporation and CNOOC another oil firm have bid at least 17 b$ for 84% stake in YPF, Argentina’s biggest oil company held by Spain’sRepsol.

It can be seen that China has concentrated its international investment in mining and oil In Venezuela it is posing a challenge to the US which has long been the main foreign buyer of Venezuelan oil.

As for military strength it is evident that in military holdings including missile and nuclear weapons capability , China has a dominant status compared to India. While Chinese missiles can reach any part of India , the latter is yet to have a missile capability which can threaten all parts of China.

China’s foreign policy is based on no interference whatsoever in another country’s affairs and this helps it to keep selling arms to murderous regimes like the jackboots in Myanmar. It is concentrating on improving its blue water naval capability including the Indian Ocean to protects its supply lines both by way of imports and exports. It is for nothing that a Chinese leader said in the past that there is nothing Indian about the Indian Ocean. It will continue to strengthen its influence among India’s neighbors for a check on Indian dominance in the South Asian region. India should learn to accept it and fashion its foreign policy accordingly.

(The writer, Mr S.Gopal, is former Special Secretary, Cabinet Secretariat, Government of India, New Delhi)

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