Posted by: John Elliott | December 17, 2010

China and India quarrel despite $16bn economic carrots

The contours of the likely future relationship between India and its larger, more successful and more globally ambitious and aggressive neighbour China have begun to emerge as Wen Jiabao, the Chinese premier, this morning finished a two-day visit to Delhi and flew on to his ally Pakistan.

Economic and cultural ties will grow and trade will boom between the world’s two fastest expanding economies, but China will continue indefinitely to rattle India’s nerves in a variety of ways, not least by becoming closer to Pakistan and claiming territory in India’s northeastern mountains.

That was demonstrated by Mr Wen’s visit, which did nothing to improve relations and instead showed, as China’s ambassador to India put it earlier this week, that the two countries’ relations are “very fragile and very easy to be damaged”. 

looking different ways in a 'very fragile' relationship - photo AP

Mr Wen brought a weirdly large posse of 400 businessmen, and presided with Indian prime minister Manmohan Singh (above) over a flourish of $16bn business deals and joint agreements. His main speech, at the Indian Council of World Affairs, was full of talk about joint aspirations, friendship, co-operation and almost doubling two-way trade (despite considerable tensions) to $100bn a year by 2015. There was even a personal tribute to Mahatma Gandhi that rivalled President Obama’s similar line last month.

But he put India in its place as an unequal friend when he took a rigid line on the mountainous 48-year old border dispute saying it needed “patience” for a “long period of time”, with “sincerity and mutual trust”- and offered no help on other irritants. He also maintained China’s recently toughened pro-Pakistan line on Kashmir, which brought a tough response by a newly emboldened India (more on that below).

It is however important to note that Beijing will not see this economic carrot and diplomatic stick approach primarily as a China-India strategy because India is merely a (rather large) pawn in its overall ambition to become a super power, alongside and maybe one day replacing the US. That ambition necessitates keeping India, which is on course to become the world’s second biggest economy, in check because China is determined that it should not become a rival in terms of world power.

That analysis stems from a number of recent conversations with experts in Delhi, and over a longer-term elsewhere. In the late 1980s and early 1990s I was in Hong Kong watching (first as a journalist and then working in the territory’s government) Beijing’s manoeuvres as it prepared to take over the territory in 1997, dangling the UK for more than a decade on the end of a rope over the post-1997 constitution, just as it is dangling India now on the border and other issues. That is a classic China negotiating (a misnomer if ever there was one) tactic.

China’s line on India

A key to the analysis came from something a Chinese official recently told an Indian contact. He said India needed to understand three things:
– First, political differences would not impede economic growth and trade relationship between the two countries.
– Second, India should not meddle with its neighbours – meaning presumably that China will meddle in places like Myanmar, Sri Lanka, Nepal and Bangladesh, but that India should neither object not try to counter its efforts.
– Third, India must accept China’s growing links with Pakistan which would continue –presumably because arming a nuclear Pakistan is a key way to keep India in check.

This means that, while China is content to see India’s prosperity grow and to participate itself in that growth, India should not try to become a regional power, much as the US might like it to do so. It also probably means that, though China is surprised and rather taken aback by India’s rapid economic and industrial advances over the past decade, and has also been rattled by growing close ties (and last year’s nuclear deal) between India and the US, it knows that it is way ahead in terms of overall development and regional power.

In 1995, I wrote one of the first India-China comparative reports (for the Rajiv Gandhi Institute of Contemporary Studies). That was a time when there was reason to question whether India or China would win the race to liberalise and build their economies. But that debate is now redundant, even though it continues to fill conference halls and newspaper columns. China has won in terms of development, efficiency, world-reach and significance, as any visitor can instantly see.

People used to warn that China might implode because of its authoritarian lack of democracy, but it has not done so despite social unrest and riots across the country as well as in the western and southern regions of Xinjiang and Tibet. India, on the other hand is slowed down by its widely corrupt democracy, and faces social unrest in the north-east, where China meddles, and with a growing Maoist Naxalite threat that covers a third of the country’s districts, making many areas ungovernable.

India’s progress is seriously impeded by the widespread inefficiency and corruption in both the central and state governments, as has been seen recently in the Commonwealth Games and the current Radia tapes scandal (which knocked Mr Wen’s visit off top headlines). Corruption of course is dealt with differently in the two countries: some of the Indian politicians and bureaucrats currently accused and under investigation would face the risk of being executed – shot – if they were in China. In India, they usually wriggle free.

China has growing military might and an expanding defence manufacturing base (see  China clones, sells Russian fighter jets by Jeremy Page  in The Wall Street Journal reporting from Beijing, though a counter-view datelined Moscow appeared later in The Washington Post). In India, the army and some other forces use obsolete equipment, and are often not trained to use more modern gear when it arrives. The public sector defence establishment fails to re-equip the forces because of a mixture of corruption-related blockages and fears of letting India’s efficient private sector into the market. 

It is therefore scarcely surprising that, though India would like to be regarded on a par with China, it does not rate. But it has to find a way of coping with its large neighbour which, in recent months, has become more aggressive regionally over the South China Sea being a “core asset” and in a clash with Japan, as well as with India because of its pro-Pakistan policy.

Friend or Foe?

When he made the fragile relations remark, China’s ambassador warned that India’s government should “provide guidance to the public to avoid a war of words”. That is reminiscent of the economic policy hectoring that India repeatedly hears from the US, but was rather more significant coming in a different context on the eve of Mr Wen’s visit.

Nirupama Rao, the foreign secretary and a former ambassador to Beijing, immediately replied that “Chinese friends” should get used to dealing with the “vibrant…noisy, nature” of India’s democracy. Yesterday, India was not prepared to repeat its usual acceptance of Beijing’s One-China policy, which recognises Beijing’s right to rule Tibet and Taiwan. This was because of China’s hardening pro-Pakistan stance, which has included a rather childish innovation of only stapling China visas into Kashmiris’ passports, and other similar irritants.

The long-term question of course for India and for the rest of the world is whether China will be a “Friend or Foe”, to quote the title of an excellent 14-page special report in last weekend’s Economist. Does China’s new (rather clumsy) regional belligerence indicate that the “foe” angle is gaining supremacy in Beijing, as the country becomes more economically powerful and sees the US courting its neighbours? The Economist‘s foreign editor asks whether a story about a fifth century warring Chinese king, who seeks revenge for earlier defeats, is an alarming parable about China’s ambitions.

The answer to  that question will run for decades, and it will affect the whole world, with India on the front line. So it is surely good that India is beginning instinctively not to kow tow.

Earlier India-China posts on this blog: 

China out-guns US in friendliness at Delhi conference  March 21, 2010

China aims to block India’s place in the sun  August 13, 2009

New Delhi in lockdown over Olympic Torch run  April 17 2008

 Demand from China kills India’s vanishing tigers Feb 13, 2008




  1. Stapled Visa situation is NOT childish.
    You are reading it wrong.

    China is desperate to resolve its border issues with all 13 or so countries that border it.
    Only India border remains unresolved, all the rest have be laid to rest.

    And its India which is holding the progress back,
    China in all its border resolutions only got a max. of 50% of disputed land once, rest were wall 20% and below.

    India can only get the best deal under a communist regime, if representative system was to come in China, border will remain unresolved even further.

    China is pushing India to come to terms and India is refusing to do so (due to ofcourse its political structure)

  2. Indian leaders need to have a vision for their country. Within the context of national vision the various states have to have their individual visions. Indians have to have a idea where they want their country to be politically, economically and militarily. China is to huge a country for India to compete with. It needs to develop relations with like minded potential allies like Vietnam, Indonesia, Thailand, Japan and Korea. Cross fertilization of cultural values will improve Indian competitiveness in all areas. China is a economic vortex that will create its own set of countries gravitating around it for markets and raw materials.

  3. Iam not sure why most people in the world are obsessed with China being a threat!
    From what I have seen, the ordinary chinese do not see it that way, it is just the world media which is trying to create this superficial hype that China will somehow gobble down someone!

    Iam Indian, and I know that for centuries indians and chinese have had links. During the Buddhist era in India, many chinese scholars have visited india over and over again and took back Buddhist teachings to China. Nalanda in India was a Buddhist centre and attracted a lot of people from China in the past.

    The recent report stating that India is to introduce Mandarin as a foreign language in CBSE shows that India has put forward a step of cultural bonding with China.

    I dont think west is really well versed with the eastern ideas of peace, harmony etc…

    West really needs to learn a lot from India.

  4. India had dealt with many super powers in past. China may be another addition. What difference does it make ?

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