An IDC Analysis


New Delhi, 03 February 2002

There is no doubt that China has marched ahead. Indians keep saying there will be problems in China because of inequitable growth between the hinterland and the coast and in water short areas. Well IDC believe that to be wishful thinking. Chinese leaders are well educated, learned, ruthless and the Chinese do not like to ‘Lose Face’. They have great pride in their heritage. Yet they do secretly admire India and its progress in the software and banking sectors and want to cooperate.

Our trade with China has gone up to US$ 3 b and if we include Taiwan and Hong Kong then it is almost $9 billion. So China is our second largest trading partner. However the foreign trade of China is some US$ 480-b and our factor in that is not much by any standard. It was good that Dr WPS Sidhu of the International Peace Academy, (ex-St Stephens, JNU and India Today correspondent who did his PhD at Cambridge) and Dr Yuan –– a Canadian at Monterey, were both in India to co-Author a study on India–China relation’s and threat perception for USA, and spoke at USI. 

China-India relations are very important and revolve more on how India treats China than how they treat us. Our mindset is against China. To George Fernandes, China is Enemy/Threat No1, though people like Lt Gen Nambiar of USI defend him and say he never said it. IDC feel relations with China in 2002 will be important even though today they are in the negative list and not invited to the IFR or the DEFEXPO 2002. This has to change. Let us list the factors Sidhu and Yuan alluded to with our comments, as many are contentious.  The subject is of interest to IDC in the order of precedence below.

1.  The territorial dispute is paramount and the Army must have a say.  The Peace and  Tranquility Treaty and 13 meetings have ensued and India will never get Aksai Chin back but we must progress to get some agreement on the boundary and forget the Mc Mohan Line issue in some areas.  That is history.  China is strong.

2.  A triangular relationship India–US–China is very crucial. USA will want to make India the bulwark as now China is growing fast to threaten USA. India can play its cards to get USA to do its bidding and see that trade with China rises and also cooperation on world issues. India can get into a commanding position in the bargain as a good friend of both countries.

3.  Triangular relationship India–Russia–China comes next. Russia and India are already buddies and we can bring in China, as Ambassador C V Ranganathan Chairman of NSAB has been advocating with the think tank he is associated with. It follows from the above two and between us we have more than one third of the world.

4.  An India–Pakistan–China triangle is critical. Missile transfers and missile targeting create problems with China now that it has detargeted USA.. India must be mature and let Pakistan be made to join an arms reduction with India. If Kashmir can be resolved along the LOC as a line of P and T. China feels every nation has a right to self-defence and we cannot fault China. It feels threatened by India. Pakistan is low on its list now but is still a friend in the area. Pakistan is a Central Asian beachhead.  Terrorism is a passing phase.

5.  The presence of the Dalai Lama raises suspicion and an exiled Tibetan Government in India is certainly not acceptable to China since India accepted Tibet as an autonomous region in the 50s and they say the CIA helped Dalai Lama to escape to India. The period after the present Dalai Lama will solve this issue to some extent and he is not keeping good health.  IDC hope India has had enough demonstrations on this. Read Dragon Fire.

6.  As explained, our trade is US$9 b and as friends more is possible. This must be progressed at all costs as China is willing to come forward and Indian businessmen know it is not dumping that is threatening us but our own poor control on production costs, because of which the Chinese are beating us. They also believe in reverse engineering and the story of FDI of US$ 30-b per year is staggering. India has to liberalise. Views on NPT/MCTR differ but both have declared ‘no first use’.

7.   We can cooperate and we must move in that direction.

8.   Domestic Policy and who dictates it is what matters in India and our leaders like George Fernandes and Advani must visit China to change their mindset.

History is well known but politically India and China keep each other out. It was the British who pitted China and India against each other in the Opium War. In World War II India and China supported Gen Stilwell against Japan. After Independence personality and ideological differences and the ‘boundary dispute’ soured relations with the 1962 war. In future India and China may well spark a war if they tread a confrontational path because USA and Russia are now involved for world stability.  At present the Peace and Tranquility agreement is in force sullied by the 1998 nuclear blasts, but this is receding as China gains a “Look West” and bigger role in the world for political reasons. India’s ‘Look East’ for economic reasons is very interesting and will bring balance in our mutual relations.  As India’s economy improves and Naval exercises are carried out the picture changes and confrontation should be avoided in words and deeds.

China has signed a de-targeting agreement with Russia and USA so there could be three scenarios.

a) Confrontation. No progress on border, nuclear instability, arms race and regional competition without any dialogue.  It can happen if both do not take each other seriously.

b) Cooperative. Border resolution, demilitarisation and a not-to-arm neighbours policy may lead to an alliance which will threaten USA politically and economically. This is unlikely as USA is the key and both countries are deeply involved with local issues –– Pakistan, Taiwan, and internal issues.

c) Mixed -- Confrontation and Cooperation.  This is the present state and will continue unless we move to (b).

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