China-India Relations: A S I e - V I S I o N S 3 4

Asie.
Visions 34
______________________________________________________________________
China-India Relations
Strategic Engagement and Challenges
______________________________________________________________________
Zhang Li
September 2010
Center for Asian Studies

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Zhang Li / China-India Relations
Executive Summary
Sino-Indian relations have become increasingly significant and

produced widespread implications. The evolving bilateral relationship
is reasonably seen as a result of their shifting strategies and the ever-
changing global politico-economic situation. On the political front,
high-level interaction plays an important role in improving Sino-Indian
ties. The political willingness to improve relations helps kick-start the
significant process of building confidence and trust in different areas
and at various levels. As two fast-growing economies and developing
giants, both China and India have pledged to contribute to bilateral
and multilateral cooperation. Vibrant economic and trade links have
been an essential part of the bilateral partnership over the last
decade. Economic momentum will continue, although the supporting
effects of economic interaction on a credible partnership have to be
confirmed. Enhanced political engagement and pragmatic strategic
calculus have also pressed both sides to explore defense, security
and non-traditional security cooperation. The burgeoning military
interaction is of pragmatic significance to nurturing mutual trust on the
strategic level and achieving reciprocal accommodation.
While promising a stable bilateral relationship and peaceful
rise together on the global stage, expanding engagements between
China and India still face some formidable strategic challenges.
Among the strategic discords are a protracted boundary dispute,
diverging projections of geopolitical interest, security ties with other
powers and regional actors – especially with Pakistan and the United
States, and China‟s response to India‟s aspiration to be a UNSC
member and enter the global nuclear club.
To move the Sino-Indian partnership forward and make it more
credible, some major endeavors have to be made by both sides:
 To seek an early settlement of the border
problem and prevent the enduring stalemate from
completely undermining the confidence to seek a
mutually acceptable recipe;
 To reconcile regional strategies in South Asia,

Central Asia, ASEAN, and the Indian Ocean;
 To promote confidence-building measures and

remove misperceptions and misreading of each other‟s
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strategic intentions, and to envisage each other‟s core

interests and strategic sensitivities;
 To reinforce the bolstering effect of vibrant

trade and economic links in sustaining a stable bilateral
relationship; and
 To breathe more substance into the existing

framework of the declared Sino-Indian strategic
partnership.
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Contents
INTRODUCTION ................................................................................... 5
SINO-INDIAN RELATIONS: AN OVERVIEW OF RECENT HISTORY ............. 6
COMPLEX DYNAMICS OF SINO-INDIAN REENGAGEMENT ........................ 9

Post-Cold War pragmatism ........................................................ 9
Political links and high-profile interaction .............................. 11
Trade and economic interaction –
moving toward partnership ...................................................... 13
The Sino-Indian security and defense nexus ......................... 16
Non-traditional security: opportunities and constraints........ 17
China responding to India’s global aspirations...................... 22
THE CHALLENGES TO BE MET ........................................................... 25

The border issue ....................................................................... 25
The Pakistan factor and the Indo-Pak equation...................... 26
The US factor in Sino-Indian engagement .............................. 27
Security in the Indian Ocean .................................................... 28
Afghanistan, Central Asia and ASEAN .................................... 29
Trade frictions and economic impediments ........................... 31
CONCLUSION: THOUGHTS ON POLICY ................................................ 33
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Introduction
As rising global powers, China and India have both committed

themselves to promoting peace, stability and development in the
present international context. Believed to have profound implications
across the globe, their bilateral relationship has become a focus of
worldwide attention and public interest. In 2010, the 60th anniversary
of the Sino-Indian diplomatic relationship highlights several coherent
questions to be seriously addressed by both Asian giants: How can a
credible partnership between China and India be nurtured and
sustained in order to serve mutual benefits and bolster their global
aspirations? Has their complicated relationship come full circle, or is it
experiencing a new starting point on a different path? And perhaps
more importantly, in meeting their regional and global aspirations will
they prefer to move toward cooperation, competition, confrontation or
some combination of these, and to what degree? There are various
dimensions and parameters to be assessed for this meaningful
purpose, both in retrospect and in prospect. After a brief overview of
recent history, this article examines the basis for China-India coope-
ration and analyses the frictions that exist between the two countries.
This assessment will be most helpful in understanding the rationales,
dynamics, constraints, challenges, and future trajectory of China-India
strategic engagement.
Zhang Li is a professor of international relations in the Institute of South Asian

Studies (Center for Asian Studies) at Sichuan University in Chengdu, China. He is an
expert on China-South Asia connections and China’s neighborhood diplomacy.
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Sino-Indian Relations:
An Overview of Recent History
In the post-war Asian context, the relationship between China and

India was destined to produce significant, global consequences from
the very beginning. As two newly emerging Asian nations, the
People‟s Republic of China (PRC), founded in 1949, and India, which
obtained its independence in 1947, began their encounters on an
equal footing. On 30 December 1949, India became the first non-
socialist nation to diplomatically recognize the PRC. Beijing openly
appreciated New Delhi‟s mediatory role in the Korean War and its
categorical support for China‟s position on Taiwan, which included
India‟s bidding for a PRC seat at the UN.1 A major agreement was
reached by both governments in 1954, by which India officially
accepted China‟s sovereignty over Tibet and the innovative trading
and commercial links between China‟s Tibet and India through the
shared Himalayan frontiers were clearly defined. It was in the
preamble of this important agreement that both sides first cham-
pioned the “five principles of co-existence” (or Panchsheel, as it is
called in Hindi).2 In the Bandung Asian-African Conference in 1955,
Chinese Premier Zhou Enlai and his Indian counterpart Jawaharlal
Nehru came into the spotlight by mutually promoting the idea of Asia-
African solidarity for achieving their socioeconomic development and
world peace.3 Zhou Enlai visited India in 1954 and Nehru came to
Beijing in October of the same year to have face-to-face interactions
with Chinese leaders, including Mao Zedong. Through different
channels, Beijing and New Delhi unmistakably conveyed their shared
views of various global events. The cordial interaction between
Beijing and New Delhi was vividly epitomized in the catchword “Chini-
Hindi bhai bhai” (China and India are brothers).
However, the brief “honeymoon” of Sino-Indian ties was
interrupted by their diverging perceptions of the border issue that in
Beijing‟s view was left unresolved. Beijing argued that there was no
1
For a detailed account of China‟s interaction with India on the Korean War and
Beijing‟s representation in UN, see Zhao Weiwen, A Record of China-India Relations:
From 1949 to 1999, Beijing: Global Affairs Press, 2000, pp. 35-46.
2
“Milestones in India-China Relations,” China Daily, April 1, 2010.
3
“Bandung Conference Marks New Century,” China Daily, April 22, 2005; for Indian
comment on the performances of Zhou Enlai and Jawaharlal Nehru at the
Conference, see Inder Malhotra, “Coalition of Free,” The Indian Express, June 26,
2010.
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demarcated boundary between China and India along the Himalayan

ridges and that a new border had to be re-defined through nego-
tiation. But New Delhi was to stick to a de-facto boundary based on
the McMahon Line, arbitrarily drawn by the British Indian adminis-
tration and imposed on the then-local Tibetan authorities in 1914,
which Chinese governments have since then never recognized. The
disputed territory of approximately 90,000 square kilometers was and
remains under India‟s actual control (the Northeast Frontier Agency in
1955, and Arunachal Pradesh since 1987). Added to this, the surfa-
cing of the western end of the long boundary dividing the two Asian
powers further complicated the matter. India asserted claim to Aksai
Chin, a barren but strategically important area under China‟s
jurisdiction. In fact, New Delhi was first made aware of the problem of
Aksai Chin through news reports in 1958 that described China‟s
completion of a strategic highway linking Xinjiang and Tibet through
this area.4
Initial negotiations on the border issue proved unfruitful and
both sides felt it impossible to find common ground. At the same time,
New Delhi continued Nehru‟s endorsed “forward policy” by setting up
outposts and sending patrol squads across the border. Almost equally
important, what happened inside Tibet played a visible role in
aggravating Beijing‟s strained relations with New Delhi. As many in
China believe it, India attempted to inherit British colonialist
geopolitical projections, regarding Tibet as its natural sphere of
influence or a buffer zone between the Subcontinent and China.5 Also
as observed, New Delhi had been uneasily concerned about Beijing‟s
marching into Tibet in 1950. Shortly after an abortive uprising in Tibet,
Nehru‟s government granted the “fugitive” Dalai Lama asylum in India
in 1959, which is thought to be a catalyst for Beijing‟s troubled ties
with New Delhi. This is also argued to be one of the main reasons for
Beijing‟s determination to “teach India a lesson”.6 There were a series
of skirmishes and crossfire along the actual border even before a
major conflict started. In October 1962, a border war was fought and
the Indian army underwent a debacle. After securing a victory in the
battlefield, Beijing unilaterally declared a ceasefire and withdrew from
the areas it took. New Delhi felt extremely discouraged and
humiliated by both the military defeat in 1962 and the diplomatic
hardship that followed.7 During the 1970s, both Beijing and New Delhi
were involved in the broader geopolitical game of the Cold War,
collaborating respectively with Washington and Moscow. Beijing also
4
Wang Hongwei, The Himalayan Sentiment: A Study of Sino-Indian Relations,
Beijing: China Tibetology Press, 1998, pp. 119-121.
5
Yang Gongsu, “Sino-Indian Relations: Retrospect and Rethink,”
http://politics.csscipaper.com/china/chinadiplomacy/24126_5.html; and Yuan Kao,
“India‟s China Policy and Sino-Indian Relations,” Global Academics, Jan. 14, 2008,
http://www.chinaelections.org/newsinfo.asp?newsid=121500.
6
Brahma Chellaney, “Checkmate India,” The Pioneer, Nov. 15, 2009.
7
For Indian perspective of the war, see J. N. Dixit, India’s Foreign Policy: 1947-2003,
New Delhi: Picus Books, 2003, pp. 352-358.
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backed Pakistan, India‟s arch enemy in South Asia, during the wars
that pitted its two South Asian neighbors against each other in 1965
and in 1971.
The grievances in both India and China mounted as a result of
the border war and, until the 1980s, Sino-Indian relations were at a
low ebb. Following a prolonged suspension of interaction, 1979 and
1981 saw an exchange of visits by the two countries‟ foreign
ministers. The low-profile dialogue on the border issue began to
resume and the diplomatic missions in Beijing and New Delhi took to
their business once again. Shortly after another border crisis caused
by India granting statehood to the disputed territory (what India calls
the Arunachal Pradesh), the then-Indian Prime Minister Rajiv Gandhi
visited Beijing in December 1988 and both sides agreed to shelve the
thorny border issue before finally finding a mutually acceptable
solution. They would then normalize their relationship by multiplying
bilateral engagements in a larger context, beyond the border issue.8
8
C. V. Ranganathan, “India-China Relations: Problems and Prospects,” World
Affairs, Vol. II, No. 2, April-June 1998.
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Complex Dynamics
of Sino-Indian Reengagement
Post-Cold War pragmatism
The end of the Cold War and China‟s shift of approaches to the
prevailing international relations created an opportunity for improving
Beijing‟s ties with New Delhi. As a result of the pragmatic mindset,
China‟s South Asia policy underwent a visible shift beginning in the
1990s. As a meaningful feature, the adjustment was reflected in a
growing emphasis on the paralleled nurturing of its bilateral relations
with India and Pakistan, and a more detached response to events in
South Asia. Beijing sought to repair its problematic relations with New
Delhi on a pragmatic basis and, in the meantime, kept its time-tested
partnership with Islamabad credibly workable. The paradigm shift also
urged Beijing to modify its traditional attitude toward the Kashmir
issue by advocating a negotiated settlement of the dispute through
diplomatic efforts between the two South Asian neighbors, instead of
any other proposed formulas.9 As a logical manifestation, Beijing
ceased to see the chronic New Delhi-Islamabad rivalry as best
serving its interests and sought to reduce tensions in South Asia.
During the 1999 Kargil conflict and the 2002 armed standoff between
India and Pakistan, Beijing refrained from the traditional side-taking
posturing and played a constructive role in defusing the tensions,
helping to avoid an all-out war between the two fledgling nuclear-
capable states.10
China‟s serious interest in improving its relationship with India
is backed by a number of identified rationales. First of all, China has
begun to accept the looming reality of India‟s emergence as a rising
power at both regional and global levels. As visibly seen, India has,
with its impressive economic performance and huge potential,
become among the fastest growing economies and secures wides-
pread recognition. As a result of dynamic economic growth, India‟s
national power and strategic assets are significantly strengthened and
create profound implications. In addition to this is India‟s enhanced
9
“China: Kashmir issue should be solved through dialogue,” China Daily, Nov. 24,
2009.
10
For Beijing‟s response to the events, see “China's Supportive Stance on Kargil,”
Kashmir News Network, http://ikashmir.net/kargil1999/china.html; “China Urges
India-Pakistan Talks on Border Tensions,” People’s Daily, July 31, 2002.
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global profile and proactive diplomacy, which have enlarged its

politico-economic interaction with major powers and international
institutions. According to an evolving Chinese view, India is expected
to play an influential role in the emerging global structure in terms of
its international weight, economic potential, military build-up and
strategic aspiration.11 India‟s emergence as a power necessitates
Beijing‟s reassessment of the significance of their engagement.
Next, Beijing and New Delhi take similar approaches to many
key issues regarding the existing global politico-economic structure.
They advocate for democratizing the existing international relations
and replacing unilateral and hegemonic practices with a norm-based,
multipolar global order in which they assert themselves as deserving
actors. Both of them highlight the authority of the UN by endorsing the
reinforcement of functions of the preeminent global body and calling
for upgrading the developing nations‟ profile and substantiating their
participation in resolving core issues of global concern. Moreover,
Beijing and New Delhi are highly critical of the practice of intervening
in the internal affairs of a sovereign state under the pretext of
protecting human rights. Both of them challenge the legality of “self-
determination” in the present international relations and fear their own
sovereign and territorial integrity to be seriously undermined by
ethno-religious separatism. As reasonably argued, these shared
perceptions and understandings are important for coordinating their
global strategies.12
Moreover, both Beijing and New Delhi underline the
importance of prioritizing economic growth, achieving socioeconomic
modernization, and enhancing national capabilities with regard to
their rising statuses in the present global system. The shared mantra
of the “developing economy” has pressed them to search for a stable
and conducive environment while preferring a proactive approach to
envisaging the emerging global challenges.13 As a primary example,
both countries play a significant role in representing the developing
world in global financial institutions, such as the WTO, and seek a
greater share in the global redistribution of wealth and resources.
China and India have attempted to reconcile their respective agendas
in securing perceived, shared interests including the Doha round
horse-trading, food security, and global climate change.
11
Zhao Gangcheng, “Significance of Sino-Indian Relations in China‟s Diplomatic
Policy,” http://www.ailong.com/pages/article/15/22.htm.
12
For a comparative analysis of Chinese and Indian international strategies, see
Zhang Li, “India‟s Strategic Perception and Policy Options toward China and Sino-
Indian Relations” in Zhang Yunling & Lan Jianxue (eds.) China-Russia-India
Cooperation towards the Future, Beijing: World Knowledge Press, 2007, pp. 74-94;
and Lan Jianxue, “Sino-Indian Relations and a Comparative View of Chinese and
Indian Diplomatic Strategies,” Foreign Affairs Review, No. 3, 2008.
13
Hu Shisheng, “China-India Partnership: The Emerging Scenario and Prospects,”
China Strategic Observer, No. 1, 2010.
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Political links and high-profile interaction
On the political front, high-level interaction plays an important role in

improving Sino-Indian relations. During Prime Minister Narasinha
Rao‟s visit to Beijing in 1993, China and India signed an agreement
on achieving peace and tranquility along the Line of Actual Control on
the border, agreeing to maintain the status quo until a mutually
acceptable settlement of the dispute can be achieved and, at least in
principle, excluding the choice of resorting to military force. During
President Jiang Zemin‟s 1996 visit, both sides struck another major
deal on building military confidence along their lengthy border.14
Although Beijing‟s relations with New Delhi witnessed a setback in the
wake of India‟s nuclear tests, President Narayanan‟s trip to China in
2000 accentuated the resilience of high-profile interaction in helping
the bilateral ties to get back on course after a short diplomatic crisis.
Prime Minister Vajpayee‟s visit to Beijing in June 2003 proved
to be an expected success and both sides issued a declaration
defining principles for bilateral relations and comprehensive coope-
ration. Instead of repeating the previous vague expressions, India
confirmed its recognition of the Tibetan Autonomous Region (TAR) as
an integral part of the PRC.15 Shortly after the visit, Beijing de facto
recognized the status of Sikkim as an Indian state by deleting it from
the list of independent nations on the website of China‟s Foreign
Ministry.16 As Premier Wen Jiabao visited India in March 2005, the
two governments declared a strategic partnership towards peace and
prosperity. The nature of partnership, as qualifiers indicate, is to avoid
confrontation, cultivate friendship, and intensify economic interaction.
Added to this, both sides drew up the Agreement of Political
Parameters and Guiding Principles on settling the border issue.17
Since January 2005, Beijing and New Delhi have launched
several rounds of strategic dialogue that are aimed at enhancing
higher level coordination and cover multiple topics of common con-
cern, ranging from the border issue, confidence building measures
(CBMs), and India‟s aspiration to attain permanent membership of UN
Security Council to questions of non-proliferation, antiterrorism, and
regional security.18 President Hu Jintao in his November 2006 trip
14
For English versions of these documents and a brief introduction, see Swaran
Singh, “Three Agreements and Five Principles between India and China,” in Tan
Chung (ed.), Across the Himalayan Gap: An Indian Quest for Understanding China,
New Delhi: Gyan Publishing House, 1998, pp. 505-518.
15
“Experts Applaud China-India Declaration on Bilateral Ties,” People’s Daily, June
27, 2003.
16
Sultan Shahim, “Delhi loses its way on China trade route,” Asia Times, July 23,
2004.
17
Anil K Joseph, “Sino-India relations in good shape: Chinese premier,” Rediff.
News, June 26, 2006, http://www.rediff.com/news/2006/jun/26china.htm.
18
Zhang Li, “Sino-Indian Strategic Dialogue: An Exploration of Institutionalized
Interaction and Constraints,” South Asian Studies Quarterly (China), No. 3, 2009.
11
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made a package initiative of the “Ten-pronged Strategy” to elevate

the bilateral relationship. During Prime Minister Manmohan Singh‟s
visit to Beijing in January 2008, both countries issued a well-elabo-
rated agenda of shared vision for the 21st century. Essentially at the
urging of Beijing, it was finally agreed in April 2010 to set up a hotline
for communication between the two Premiers.19 Added to high-profile
visits, the two nations‟ leaders have kept meaningful contacts on the
sidelines of regional and multilateral gatherings.
Apart from meaningful sideline contacts, regional and multi-
sided arrangements also offer opportunities for Beijing and New Delhi
to diversify their engagement. They have realized a growing need of
engaging each other in a positive way in enlarging their own regional
clout and integrating themselves into a broader politico-economic
arrangement. Both China and India are influential participants of the
ASEAN free trade initiatives and the regional security forum since the
late 1990s. India was accepted in 2005 as an observer member of the
Shanghai Cooperation Organization (SCO), which is dominated by
Beijing and Moscow20; and China gained a corresponding status in
the South Asian Association of Regional Cooperation (SAARC) later
in the same year.21 After years of indecisiveness and lethargy, Beijing
and New Delhi began to show more interest in a tripartite regime of
dialogue involving Moscow that was originally driven by Russia. As a
new signal, the emerging grouping of BRICs comes to be a useful
politico-economic platform for Beijing and New Delhi to intensify their
constructive interaction.
Interestingly, Beijing and New Delhi have pledged not to see
the other as a strategic threat despite the perceived suspicions and
uncertainty.22 And political leaderships of two countries reassured
each other and themselves that there is enough space, both
regionally and globally, to accommodate both China‟s and India‟s
development.23 These rosy expressions have proved to be politically
necessary in the face of the growing fear of almost inevitable
confrontation between the two rising powers as a result of their
clashing interests and paralleled aspirations. While alluring to some
displeasing experience and the unfurling contests in various domains,
however, the controversial comments can convey a political will to
struggle for a healthy and stable bilateral relationship between the
emerging Asian giants.
19
Saurabh Shukla, “India, China agree to create hotline between PMs,” India Today,
April, 2010.
20
“India supports basic SCO principles: official,” People’s Daily, June 13, 2006.
21
Zhang Lijun, “Closer Ties: China‟s Expanding Economic Links with South Asia,”
Beijing Review, Vol. 49, No. 2, Jan. 12, 2006.
22
“India doesn't see China as a threat: Tharoor,” The Indian Express, Nov. 23, 2009;
and “Upbeat mood in Sino-Indian ties,” The Hindu, April 1, 2002.
23
“Message from Chinese Premier Wen Jiabao to Indian Prime Minister Manmohan
Singh on 60th Anniversary of Diplomatic Relations,” April 1, 2010,
http://www.chinaembassy.org.in/eng/zgbd/t676923.htm; and Lindsay Beck and Guo
Shipeng, “Room enough for China and India: Singh says,” Boston Globe, Jan. 14, 2008.
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Trade and economic interaction –

moving toward partnership
As two rising global powers and among the world‟s fastest growing
economies, both China and India carry increasing weight in and have
a growing influence on global economic development. Even during
the ongoing global financial crisis, they are keen to make their rapidly
growing economies a miracle and are highly expected to contribute to
the recovery of the global economy. It is widely recognized that the
Dragon and the Elephant are ascending together in a big way.
Sino-Indian ties are characteristic of their enhanced economic
significance and Beijing regards the economic bond as the backbone
of improving its bilateral relationship with India. India became China‟s
largest trading partner in South Asia in 1993 and the increase in two-
way trade has accelerated at a spectacular rate ever since. According
to China‟s official statistics, China-India bilateral trade reached
$51.8 billion in 2008, compared to only $2.9 billion in 2000, with an
average annual growth of 43%.24 Bilateral trade hit a symbolic figure
of $10 billion in 2004, then achieved $18.7 billion and $38 billion
respectively in 2005 and in 2007. In 2008, Chinese exports to India hit
$31.5 billion (a 31% annual increase over 2007) and imports from
India reached $20.28 billion (a rise of 38.7%). Encouraged by the
dramatic trajectory, the two governments have renewed their
ambitious target of up to $60 billion in 2010.25 Overtaking the United
States, China became India‟s top trading partner in 2007, while India
is among China‟s major trading partners (currently ranking 10th in
terms of the absolute volume of two-way trade). Recent research in
China indicates that China-India trade will remain vibrant in the
foreseeable future and keep the trend of steady growth, although
2009 witnessed a modest drop of the bilateral trade by 16.2%
($43.4 billion), primarily as a result of the global economic
slowdown.26
As compared with the dramatic increase of bilateral trade, two-
way investment between China and India has remained low. The
figures of 2008 indicate that India‟s total investment in China rose to
over $400 million, while China‟s total investment in India stood at
about $250 million.27 Comparatively, India takes lead and shows more
interest in investing in China. Over one hundred Indian companies,
24
Chen Deming, “Indian and Chinese are tied together,” People’s Daily, Jan. 20,
2010.
25
“Ambassador Zhang Yan relives China-India relations,” March 28, 2010,
http://www.china.org.cn/opinion/2010-03/28/content_19702391_2.htm.
26
Liu Xiaoxue, “60Th Anniversary of China-India Relations: To Develop Closer
Economic and Trade Cooperation,” March 23, 2010,
http://www.china.com.cn/international/txt/2010-03/23/content_19644956_2.htm.
27
Chen Deming, “Indian and Chinese are tied together,” People’s Daily, Jan. 20,
2010.
13
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including Indian industrial tycoons such as Infosys, Tata, NIIT,

Ranbaxy and Dr. Reddy‟s Lab, run their business in China, which
ranges from IT education/consultation, pharmaceuticals, banking
services and restaurants to entertainment programs.28 Currently,
China‟s investment in India is essentially in the electronics and
household appliance sectors. As a weak link in the commercial ties,
the scarcity of bilateral investment is also inflected in a trivial ratio to
their respective total outflows of foreign investment.
Despite its insignificant direct investment in India, however,
China‟s contractual investment in projects constitutes a more
meaningful part of bilateral economic relations. Chinese companies,
benefiting from their professional expertise and competitive cost,
have succeeded in bidding for lucrative construction contracts in
India, especially in the infrastructural and engineering sectors, and
have enjoyed a cumulative value of over $11.1 billion since 2006.29
Both Chinese and Indian leaders see closer trading and
economic links not only simply serving an immediate commercial
purpose, but also bolstering their bilateral relationship as a whole.
Governments in Beijing and New Delhi have shown a consistent will
to expand bilateral trade and economic interactions in a big way.
Beijing, especially, seems to believe closer economic ties to be a
panacea for bolstering their bilateral relationship, regardless of some
outstanding problems. Both Beijing and New Delhi have agreed that
the ongoing level of economic cooperation is still not commensurate
with their actual capacities and statuses, and that there are greater
complementarities and comparative advantages for both nations to
enhance trade and economic cooperation in terms of their fast
growing economies and huge potentials. In his 2003 visit, Vajpayee
was escorted by an impressive delegation consisting of top Indian
businessmen. He specified the areas for tapping potential and
strengthening cooperation such as IT, transport, and banking and
called for overcoming the information gap.30 Wen Jiabao, visiting
Bangalore in 2005, eloquently promoted the theme of Sino-Indian
economic interaction and the benefits of solidarity by predicting that
China and India could lead the world by combining their respective
advantages in hardware and software.31 As a major bilateral
document, A Shared Vision for the 21st Century of the PRC and India
pushes for an early implementation of a Regional Trading Arran-
gement (RTA) that promises a win-win prospect as well as regional
integration in Asia as a whole.32
28
“Explained: Sino-Indian ties in figures,” The Rediff Special, Jan. 10, 2008.
29
“Indian and Chinese Destinies Are Tied Together,” Jan. 20, 2010,
http://www.chinaembassy.org.in/eng/zyjh/t652596.htm.
30
Priya Ganapati, “IT majors welcome move to China,” Rediff News, June 27, 2003.
31
“Wen Seeks IT partnership with India,” China Economic Review, April 11, 2005.
32
“A Shared Vision for the 21st Century of the People's Republic of China and the
Republic of India,” Jan. 15, 2008, http://in.china-embassy.org/eng/zgbd/t399545.htm.
14
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At a sub-regional level, China and India have tried to move

ahead in diversifying their cooperation by taking a relatively liberal
agenda for their border areas in order to nurture economic
interaction. Since the late 1990s, China‟s frontier province of
Yunnan and India‟s northeastern states have made efforts to
deepen their trans-border commercial contacts in order to remove
the bottlenecks caused by poor connectivity and underdevelopment.
Chinese and Indian think tanks became, both bilaterally and within
the regional cooperative framework of BCIM (Bangladesh, China,
India and Myanmar), increasingly interested in a number of inspiring
projects for gaining mutual benefits, including extending the trans-
border overland connectivity involving Yunnan, Rangoon, Dhaka
and Assam.33 In the same vein, re-opening the Nathula Pass
bridging Sikkim and Tibet in July 2006 helped stimulate frontier
trade between both sides of the border, in addition to being
suggestive of greater border confidence.
As anticipated, the fast-growing bilateral trade and economic
interaction have enhanced the interdependency of the two Asian
powers, creating a positive mood for perceiving each other‟s
development strategy and making the nature of bilateral ties more
relevant to their respective core interests. Prioritizing economic
interaction and strengthening trade connections also help them to
reassess the significance of a non-confrontational relationship and to
tune up policy options in dealing with each other.
Nevertheless, analysts are still divided on the role of economic
ties in achieving political détente and moderating major conflicts of
interest, given the lack of reliable, mutual trust. Some analysts voice
greater self-confidence in predicting a more stable and less
confrontational Sino-Indian bilateral relationship as a result of their
booming and sustainable economic interaction.34 Despite the
relevance of increasing trade and economic links, on the other hand,
most strategic scholars on Sino-Indian relations still believe that the
key to making the declared partnership more credible remains
confidence-enhancement and trust-building and the settlement of
outstanding problems between them.35
33
Ren Jia & Chen Lijun, “BCIM Regional Economic Cooperation,” Contemporary
Asia-Pacific Studies, No. 1, 2004; and for an Indian perspective, see Patricia Uberoi,
“India–China Initiatives in Multilateral Fora: Two Case Studies,” China Report, Vol.
44, No. 3, July 2008, pp. 307-318.
34
Zhang Yan, “Economic and trade ties is important part of Sino-Indian strategic
partnership: An interview with former Chinese ambassador to India,” China United
Commerce News, May 28, 2010; Among Indian perspectives is Swaran Singh,
“China-India Bilateral Trade: Strong Fundamentals, Bright Future,” China
Perspective, No. 62, Nov.-Dec. 2005.
35
For a balanced analysis of politico-security vs. economic equation regarding the
bilateral relations, see Waheguru Pal Singh and Jing-dong Yuan‟s China and India:
Cooperation or Conflict? (Boulder: Rienner, 2003), pp. 175-177; and also Zhang
Guihong, “China-India Relations: Certainties and Uncertainties,” South Asian
Studies, No. 1, 2010.
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The Sino-Indian security and defense nexus
Enhanced political engagement and pragmatic strategic calculus have

pressed both sides to explore defense and security cooperation. Given
the protracted border dispute and the shadow of the 1962 war, Beijing
and New Delhi have long seen each other as strategic adversaries and
many in the Indian strategic community continue to regard China as a
major security threat.36 The border CBM agreements in 1993 and 1996
made it possible to expect mutual strategic transparency and
predictability by stressing the exclusion of any military resolution of the
boundary dispute. The CBMs include a reciprocal reduction of troop
deployment, regular meeting of both sides‟ local commanders to consult
and handle emergencies, and the prior announcement of military
exercises along the border. As a result of the declared strategic
partnership in 2005, military-to-military exchanges became part of the
overall bilateral agenda, which is believed to be of “vital importance in
enhancing mutual trust and understanding” between the two militaries.37
Indian Defense Minister Pranab Mukerjee visited Beijing in May 2006
and both sides signed a major memorandum of understanding that was
designed to spur defense exchanges and cooperation between their
military establishments.38 In recent years, Indian military leaders and
theatre commanders have made professional visits to Tibet.39
Perhaps more specifically, Beijing and New Delhi have
conducted annual defense and security consultations since
November 2007. Focusing on enhancing security, building mutual
trust and unleashing defense coordination, the dialogue mechanism
covers various areas of shared interest, including each other‟s
strategic sensitivities and concerns, regional conflicts, and non-
traditional security challenges, as well as the bilateral security nexus
and available schemes on cooperation that include joint training and
drills.40 The defense and security dialogue offers a needed platform to
expound the respective defense policy directions and regional secu-
rity considerations, apart from helping strengthen military interaction.
This initiative has also proven necessary in clarifying diverging
approaches and narrowing the gap of perception between the two
countries‟ military and defense establishments. Nevertheless, it
36
Gurmeet Kanwal, “Countering China‟s Strategic Encirclement of India,” Bharat
Rakshak Monitor, Vol. 3(3), Nov.-Dec. 2000; Subhash Kapila, “Indian Strategic
Community‟s Fixations with Pakistan,” March 22, 2009,
http://www.boloji.com/plainspeak/177.htm.
37
“Joint Statement of the People's Republic of China and the Republic of India,”
Xinhua News Agency, April 11, 2005,
http://www.china.org.cn/english/2005/Apr/125627.htm.
38
“Mukherjee: India sees no China threat,” China Daily, May 29, 2006.
39
Tang Lu, “Indian military delegation allowed to visit Tibet,” International Herald
Leader, Nov. 21, 2003; “Indian eastern theater chief meets Chinese general in Tibet,”
Tibet Daily, Sept. 4, 2009.
40
Hao Yalin & Ma Jie, “China and India step up defense cooperation,” Xinhua News
Release, Jan. 14, 2008.
16
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seems uncertain for Beijing and New Delhi to institutionalize their

defense and security cooperation in its strict sense in the near future
given the trust deficit and strategic discords.
Several joint military and maritime training and drills are
reasonably seen as a sign of deepening military engagement, regardless
of their limited scale. These operations are reported to enhance their
coordinated ability to achieve multiple tasks of combating terrorists,
targeting piracy, and carrying out humanitarian missions in case of
natural calamities. Indian naval vessels paid a port call before launching
a joint training with Chinese navy in November 2003 and a small
Chinese fleet joined hands with the Indian navy in December 2007 for a
search and rescue drill coded “Sino-Indian friendship 2005” in the Indian
Ocean. The first joint army training was held in December 2007 in
Kunming, China, which received unusual media coverage.41 A follow-up,
coordinated training between the two armies was staged in India‟s
Belgaum one year later.42 As jointly proposed, Chinese and Indian air
forces are expected to launch their maiden joint exercise in 2010.43
Occasionally, each side also invites the other to watch military exercises
with other countries.
In the long run, the burgeoning Sino-Indian military interaction
is of pragmatic significance to nurturing mutual trust in the political
and security fields, in addition to its immediate effects on easing
common security concerns. It may urge each side to make reaso-
nable assessments of the other‟s strategic intentions and security
concerns. It could be helpful for augmenting transparency and predic-
tability and avoiding miscalculations on a reciprocal basis before any
crisis moves beyond control.
Non-traditional security:
opportunities and constraints
Unlike the uneasy chipping away of the strategic trust deficit or resolving
the vexed boundary disputes, non-traditional security provides more
room for Beijing and New Delhi to cooperate and substantiate their
declared strategic partnership. The areas of promising cooperation in
this regard involve, either actually or potentially, combating terrorism and
extremism, fighting maritime piracy and cross-border drug trafficking,
tapping overseas energy resources and achieving energy security within
a unified regional mechanism, transregional environmental protection
and water resource sharing, and stepping up nuclear confidence as well
as reinforcing the non-proliferation of WMD.
41
Dong Zhaohui, “Military official: Sino-Indian military training successful,” PLA Daily,
Dec. 26, 2007.
42
“China-India joint anti-terror drill,” Xinhua News Release, Dec. 8, 2008.
43
“India-China air forces to interact in November,” The Hindu, April 13, 2008; “Indian
Air Force plans joint exercise with China,” Global Security, Nov. 17, 2008.
17
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Energy security: cooperation vs. competition

Meeting the energy security challenge together is a potentially signi-
ficant dimension in expanding cooperation between China and India.
Over the years, both countries have witnessed robust economic
growth and, at the same time, become major energy consumers and
avid importers. Statistics indicate that China‟s oil imports account for
approximate 40% of its total oil consumption during 2000-2009
(47.3% in 2006 as compared by 29.1% in 2001)44 and hit a record
52% in 2009, reaching the globally recognized energy security alert
level.45 The data also suggest that this trend will continue. India‟s
energy scenario is even more challenging. Figures indicate that
imported oil accounted for 68% of India‟s total consumption in 2008
and, according to global energy experts, India will be the fourth
largest net oil importer following the US, China, and Japan by 2025.46
The growing reliance on overseas supplies suggests that, for
both Beijing and New Delhi, energy security and sustainable econo-
mic growth come to be increasingly dependent on an insecure global
energy market that, perhaps more threateningly, leaves them in an
unfavorable position regarding the prevailing global energy econo-
mics. This shared perception makes them think alike and develop
similar agendas to meet the challenge.
There are some effective ways for China and India to acquire
overseas energy, either individually or collectively, including joint
ventures with energy-rich countries or multinational consortiums,
equity-participation in exploration and production, investment in old
oil/gas-field refurbishment and bidding for concessions or projects.
The adoption of energy diplomacy has credibly bolstered these
activities. To acquire reliable and affordable overseas energy, Beijing
and New Delhi have begun seeking innovative relationships with
energy exporting countries in the Persian Gulf, Central Asia, Russia,
the Caspian littorals, Africa, Southeast Asia, and Latin America.
These endeavors have proved a modest success.
By nurturing better political partnerships and offering luring
economic aid, China has solidified beneficial cooperation with Central
Asian republics, Kazakhstan in particular, to transport the region‟s
energy resources to Chinese industrial centers.47 Beijing also
successfully wooed Russia into extending the Siberian oil pipeline to
44
“Analysis of China's energy import and export,” Xinhua News Agency, March 26,
2007.
45
Wang Qian, “Oil imports hit alarming level in China: Study,” China Daily, Jan. 14,
2010.
46
“India Energy Data, Statistics and Analysis,” Energy Information Administration,
March 2009, http://www.eia.doe.gov/cabs/India/pdf.pdf.
47
Annivaer Amuti & Sun Wenjuan, “Energy Cooperation between Central Asia and
China in the Geo-structure of International Energy,” Research on Development
(China), No. 5, 2009.
18
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its major refineries by using highly attractive financial incentives.48

Equally, India has attempted to secure gas supplies from Iran by
promoting the proposed overland gas pipeline via Pakistan to meet its
huge demand gap, although this project has yet to come to fruition for
a number of reasons including the security and geopolitical
concerns.49 In recent years, the energy factor has pressed New Delhi
to improve its problematic relations with Pakistan, Myanmar and
Bangladesh.50 Also, the expected energy cooperation between China
and India is believed to have affected their bilateral relations as a
whole in a positive way.
There are a few successful cases to mark the potential
opportunity for China and India to reconcile their endeavors for obtaining
overseas energy contracts. Early in 2000, China National Petroleum
Corporation (CNPC) and India‟s Oil and Natural Gas Corporation
(ONGC) signed their first memorandum on joint exploitation of oil
reserves in the developing countries. Both China and India obtained
considerable stakes in exploiting Sudan‟s oil deposits in 2004, thereby
forging an actual partnership based on shared benefits.51 Starting from
2002, Chinese and Indian energy enterprises also linked-up for oil
exploration in Kazakhstan, despite the fact that this endeavor ultimately
led to a contest that India would lose several years later.52 ONGC and
China International Trust and Investment Corporation (CITIC) planned to
join together to bid for a huge share of the Nations Energy Co. in
Kazakhstan. ONGC also expressed growing interest in participating in
the China-Kazakhstan oil pipeline project.53 As the first attempt to win
overseas oil contracts together, CNPC and ONGC Videsh Limited (OVL)
joined hands to acquire the Petro-Canada‟s stakes in Syria in December
2005. OVL and Sinopec, another Chinese energy giant, also secured
joint bidding for sharing 50% oil assets of US Ominex Resources in
Columbia in August 2006.54 Other interactive endeavors, possibly
towards tangible cooperation in this regard, are Beijing‟s explicit interest
in participating in the proposed Iran-Pakistan-India gas pipeline
arrangement (IPI)55 and calls from both Beijing and New Delhi to bolster
Pan-Asian energy cooperation to enhance their energy security.56
48
An Bei & Zhang Yi, “CPNC strikes a deal on Russian Oil,” Xinhua News, Nov. 11,
2008, http://news.qq.com/a/20081101/001287.html; “China, Russia sign 20-year deal
swapping oil for loans,” Shanghai Daily, Feb. 18, 2009.
49
“India, Iran to talk energy during Ahmadinejad visit,” China Daily, April 30, 2008
50
Siddharth Srivastava, “India looks east for gas,” Asia Times, Sept. 28, 2005
51
Ye Hailin, “China and South Asian relations in a new perspective,” Oct. 23, 2008,
http://www.iapscass.cn/english/Articles/showcontent.asp?id=1118.
52
C. Raja Mohan, “Sakhalin to Sudan: India‟s Energy Diplomacy,” The Hindu, June
24, 2002.
53
Ding Xingan, “Sino-Indian Energy Cooperation,” World Outlook (Shanghai), No. 8,
2007.
54 st
“China-India join hands to bid for oil assets in Columbia,” 21 Century Business
Herald (Guangzhou), Aug. 18, 2006.
55
Lee Geng, “China Keen to Participate in IPI Pipeline,” Energy Tribune, June 18, 2008.
56
Mani Shankar Aiyar, “Asia's Quest For Energy security,” Counter Current, Feb. 17,
2006.
19
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The SCO provides another helpful platform for Beijing and New
Delhi to expand their cooperation in energy. The concept of creating a
SCO energy club, initiated by then-Russian President Vladimir Putin in
December 2006, envisages the unfurling of energy cooperation among
its member nations at global, regional (both full and observer members
of the SCO), sub-regional (Central Asia), and national levels. As one of
the observer members, India is increasingly interested in cooperating
with Russia, China, and Central Asian republics in energy. The proposed
energy club is believed to enable SCO members to moderate, if not
remove, the existing competition among them, such as one between
China and India for energy resources and supplies.57
The other side of the same coin is an unfolding contest between
Beijing and New Delhi over energy acquisition. Fierce tussles between
them over bidding for oil/gas projects abroad have been often heard,
although it is too early to fathom the intensity and consequences of
future competition. The contest has begun to spread over most energy-
rich regions where both of them have attempted to take an upper hand.
As observed in vying for bids in Angola, Kazakhstan, Venezuela, and
Myanmar, among others, Chinese companies eventually outbid their
Indian opponents to obtain project contracts thanks to more attractive
terms for the host countries.58 But a worrisome fact is that to out-survive
each other for project contracts or equity oil, either China or India had to
pay much more than proposed bidding prices. This unexpected practice
urged them to try a tentative joint bidding. During former Indian energy
minister Mani Shankar Aiyal‟s visit to Beijing in 2006, both governments
reached a consensus on working together to maximize their capacity of
acquiring energy abroad and to overcome the effect of the “Asian
premium”. A significant cooperative accord was signed by their
respective energy giants, namely the CNPC and the ONGC.59 In the
future, Beijing and New Delhi have reasons to continue this revisionist
strategy as far as their own energy security and cost-interest
considerations are concerned. Sino-Indian collaboration on energy
security may also have profound ramifications for energy geopolitics and
economics in the long run, although the contest between them has
proven unavoidable.
Combating terrorism
Fighting terrorism and extremism has an increasing bearing on Sino-
Indian collaboration in the field of non-traditional security and can
possibly serve as a rallying point for enhancing trust between them,
57
Sergei Luzyanin, “SCO-2009: Development Problems,” Russia in Global Affairs,
No. 2, April-June, 2009.
58
“China beats India for Angola oil deal,” Xinhua News Release, Oct. 19, 2004
http://news.xinhuanet.com/english/2004-10/19/content_2110896.htm; Rakteem
Katakey & John Duce, “India Loses to China in Africa-to-Kazakhstan-to-Venezuela
Oil,” June 29, 2010, http://www.bloomberg.com/news/2010-06-30/india-losing-to-
china-in-africa-to-kazakhstan-to-venezuela-oil-purchases.html.
59
“Indian minister heads to Beijing for energy,” China Daily, Jan. 8, 2006.
20
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despite some differences yet to be resolved. For years, India has

been a major victim of terrorism and elicited sympathy and support
worldwide. But the terrorist scourge in this region, as widely
recognized, is entangled with the protracted Indo-Pakistan rivalry and
the Kashmir imbroglio in particular. Until recent years the complexity
of the issue has limited Beijing‟s reaction towards the challenge that
India has had to confront.
China became more responsive to the transregional terrorism
and extremism with its growing sense of insecurity brought about by
the militant Eastern Turk separatists operating within its frontier
autonomous province of Xinjiang. There has been a mounting
perception in China that the threat posed by extremists, separatists
and terrorists (namely, the “three evil forces” as Beijing brands it) has
become a grave threat shared by China, India, and Russia.60 Beijing
conveyed its sympathy to New Delhi shortly after the terror attack on
the Indian Parliament in December 2001 and condemned the
perpetrators.61 Terrorism has been listed as one of major subjects of
shared concern in a series of bilateral consultations. Following a
signed bilateral memorandum of security cooperation, the PLA and
the Indian army undertook the first joint anti-terror war game in
Kunming in December 2007. One year later, another joint special
combat training was staged in Belgaum, India. The agreed bilateral
documents indicate that there has been a general consensus on
targeting the terrorist scourge “in all its forms and manifestations, and
in all regions of the world” and both sides pledge to work together for
this purpose in both regional and global frameworks.62
Nevertheless, both sides will have to remove some formidable
stumbling blocks before moving toward a credible partnership in
tackling the terrorist challenge. The expressed consensus is still far
from working out any operational agenda in this direction. The
lingering political distrust and the diverging perceptions of terrorism in
the South Asian context have limited, and will continue to limit, the
scope and depth of cooperation between them. As widely perceived
in China, to target Pakistan-based terrorist outfits might be used by
New Delhi to enlarge its strategic capability vis-à-vis Islamabad or
even launch a preemptive war against Pakistan.63 New Delhi, in
return, sees Beijing‟s measured reaction towards the Mumbai terror
attack in November 2008 as a sign of Beijing‟s insensitivity to the
terrorist challenge facing India and, more simply, of a pro-Islamabad
60
Pan Zhiping, “Geopolitics in Xinjiang and China‟s National Security,” Frontier
Historical and Geographical Studies (China), Vol. III, 2003.
61
“China, India Vow to Fight Terror,” China Daily, April 24, 2002.
62
“A Shared Vision for the 21st Century of the People's Republic of China and the
Republic of India” (Jan. 15, 2008), Beijing Review, No. 9, Feb. 28, 2008.
63
Fang Hui, “India seeks advanced arms to deal with Pakistan,” International Herald
Leader, Feb. 12, 2009; Wang Wuyang, “Don‟t use anti-terror as excuse for war
against Pakistan,” Dec. 21, 2008, http://bbs.tiexue.net/post_3251702_1.html.
21
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policy.64 Rarely unnoticed by Chinese, in return, India‟s media

became reticent on the attacks on Han-Chinese conducted by
radicalized ethnic Uyghurs in the Xinjiang capital of Urumqi in July
2009, in contrast to other international media. According to an Indian
analyst, the Indian public‟s unresponsiveness to the incident was
linked to Beijing, as they perceived it, being always silent on the
terrorist atrocities in Kashmir, although many Indians “are worried
over the brutality of the Uyghur jihadis to the Han Chinese civilians”
and “will feel the same way against the trouble-makers” in Xinjiang.65
Regardless of the existing disarrays, however, to address the
menace of terrorism is expected to be one of major arenas of
promising collaboration for both sides to explore mutual trust and
reconcile their regional strategies. At the October 2009 Bangalore
meeting attended by Indian, Chinese and Russian foreign ministers,
Beijing, joining New Delhi and Moscow, vowed to strengthen global
collaboration in fighting rampant terrorism and asserted that “there
can be no justification for any act of terrorism anywhere”, explicitly
condemning the terror strike on the Indian diplomatic mission in
Kabul, taking place immediately before the meeting.66
China responding to India’s global aspirations
Beijing‟s feedback on India‟s aspirations to be an emerging power is a

telltale indicator for assessing their complicated relations. It also
reflects various parameters in the bilateral ties. There are several
identifiable core goals for India to pursue in achieving this ambitious
strategy: to elevate its global prestige and profile through economic
development and by promoting pragmatic power diplomacy; to obtain
the permanent membership of the UN Security Council (UNSC); and
to be counted among the legitimate nuclear powers within a shifting
global nuclear regime. New Delhi sees these aspirations to be
interrelated and mutually supporting. Based on sophisticated conside-
rations and binding commitments, Beijing‟s response is differentiated,
selective, and open-ended as far as each of them is concerned.
In general, as mentioned earlier, China recognizes the reality
of India‟s ascension as an important power in the ever-changing glo-
bal socioeconomic structure. There are increasing positive comments
on and balanced analyses in the Chinese media of the role of India in
pushing for a multipolar world order. India‟s significance to the bur-
geoning politico-economic grouping of “BRICs” (Brazil, Russia, India,
64
D. S. Rajan, “China‟s Reaction to Mumbai Terror Strikes: Pro-Pakistan Bias,”
South Asia Analysis Group Paper, No. 2972, Dec. 8, 2008.
65
B. Raman, “Why Indians Are Silent On Uighur Brutalities?” South Asia Analysis
Group Paper, No. 3306, July 15, 2009.
66
“Joint Communiqué of FMs of China, India and Russia at Bangalore Meeting,” Oct.
28, 2009, http://www.chinaembassy.org.in/eng/ssygd/FMvisitsindia/t623590.htm.
22
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and China) has come to be a theme of serious interest.67 The idea of

“Chindia”, advocated by the noted Indian economist and then-Minister
of State for Commerce and Industry Jairam Ramesh, has gained
growing popularity and received constructive responses among
Chinese academics.68 Beijing has also tried to find common ground
with New Delhi in seeking a greater interest share for themselves
within the prevailing global economic and development regimes.
Another, more recent example is seen in the Copenhagen Confe-
rence on global climate change in December 2009. Instead of simply
downplaying its merits, Chinese strategists have begun to develop a
balanced perception of India‟s pragmatism in dealing with major
powers and optimizing its own national interests, which are believed
to help calibrate China‟s policy in South Asia. Equally interesting is
the Indian-style democratic politics and socioeconomic transformation
that are evoking Chinese intellectual interest in terms of comparing
different development models and assessing advantages and
disadvantages.69
Beijing has held an ambiguous attitude towards India‟s desire
to enter the UNSC as a permanent member whereas, as a standard
expression, China backs India‟s expanding role in ongoing global
affairs and within the UN. Beijing has also hinted at prioritizing India‟s
chance of acquiring such a role at the UN, especially in case of the
expansion of the UNSC.70 But this response is far from meeting New
Delhi‟s expectations. It is argued that Beijing is reluctant to offer India
a definite and unequivocal endorsement. Beijing‟s unconcealed
reservations about the issue could be explained, at least partially, by
its lack of reassurance and confidence in the bilateral relations,
despite its understandable misgivings about the resultant diluting of
the UNSC‟s power. Most likely, in prospect, is that Beijing will
calibrate its policy option, either supporting or boycotting India‟s
aspiration to seek the seat, on the basis of its assessment of the
nature of its multidimensional engagements with India, as well as of
the changing regional geopolitical alignments.
China has been among the major critics of India‟s ambition to
be a legitimate member of the global nuclear club in the aftermath of
its nuclear tests in May 1998. Beijing‟s stubborn opposition is groun-
ded on some recognizable reasons, among which are its stated
adherence to the principles of global non-proliferation, prolonging the
status quo of Asian nuclear asymmetry, and the unconcealed
resentment against New Delhi justifying its nuclear option by selling
67
Tang Liang, “Prospects of the BRIC: India Ranks No. One,” CCTV online, Oct. 27,
2008.
68
“Sino-Indian relation,” China Daily, Jan. 17, 2008.
69
Wang Hongsheng, “How to Build a Harmonious Society: India‟s Experience,”
China and World Observer (Beijing), Issue 1, 2007.
70
“China supports a larger Indian role in UN,” The Indian Express, Oct. 25, 2007;
“Support for India‟s UNSC aspiration serves China‟s interest,” International Herald
Leader (Beijing), Oct. 24, 2004.
23
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the misleading idea of a “China threat”.71 Unlike Washington, Beijing

has declined to dialogue with India on the nuclear issue. Despite tem-
pering its discontent, Beijing has been concerned about Washington‟s
overture to India regarding the latter‟s nuclear status, culminating in
the signature of the Indo-US civilian nuclear deal, and has cautiously
gauged the strategic consequences and implications.72
Partially as part of its response to the US-India nuclear deal,
Beijing has continued cooperating with Islamabad on civilian nuclear
energy by providing additional reactors and related technologies. This
is believed to substantially support Pakistan by both helping to
mitigate its energy shortage problems and reducing discouragement
resulting from Washington‟s unequal treatment in nuclear coope-
ration. Nevertheless, there has been no broad-based China-Pakistan
civilian nuclear deal signed so far, despite wide speculation.
Meanwhile, for China‟s part, there have been some signs of
adapting its countermeasures to the emerging nuclear reality in the
subcontinent. Beijing seems likely to relax its previously tough
position and take a more flexible and accommodative approach to
this sensitive issue. Responding to New Delhi‟s request, Beijing
agreed to include this issue in the proceedings of the 2006 Sino-
Indian strategic dialogue. As indicated in several recent bilateral
documents, Beijing and New Delhi agree to explore the likelihood of
cooperation on civilian nuclear energy while sticking to the recognized
principles of global non-proliferation.73 However, it should be admitted
that a noticeable perception gap continues to exist as far as India‟s
nuclear status is concerned. This helps explain, to some extent, why
Beijing hesitated in granting India a waiver at the Vienna NSG
conference in September 2008.74
71
A summarized review of China‟s reaction toward India‟s nuclear tests in 1998 is
“China and the Nuclear Tests in South Asia” by the James Martin Center for
Nonproliferation Studies at the Monterey Institute of International Studies available in
http://www.nti.org/db/china/nsascris.htm#China's%20Reaction%20to%20India's%20
Nuclear.
72
“China voices concern over US-Indo deal”, Press TV, Sept. 2, 2008,
http://www.presstv.ir/detail.aspx?id=68199&sectionid=351020404; and for Indian
reading of China‟s response to the Indo-US civilian nuclear cooperation, see D. S.
Rajan “What China thinks about the N-deal progress,” July 24, 2008,
http://www.rediff.com/news/2008/jul/24guest1.htm.
73
“India, China pledge nuclear cooperation,” The Hindu, Jan. 14, 2008.
74
Chris Buckley, “China state paper lashes India-U.S. nuclear deal,” Reuters India
News, Sept. 1, 2008.
24
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The Challenges to Be Met
While promising a healthy bilateral relationship and peaceful rise

together on the global stage, enhancing engagements between China
and India also face a number of strategic challenges. Given the
chronic trust deficit and lingering suspicion of each other‟s intentions,
the effects of any constructive endeavors from both sides might be
regrettably discounted. More importantly, one has to wonder if various
discords between the Asian giants reflect a certain strategic necessity
in terms of the clashing of interests as they rise together. From
Beijing‟s perspective, there are outstanding problems that China and
India have to address before achieving a substantive and genuine
partnership. Regardless of the nature of the bilateral relationship, the
strategic discords between China and India do and will produce
uncertain geopolitical consequences at both bilateral and regional
levels.
The border issue
In spite of the written agreements, political guidelines, and multi-level

border negotiations, Beijing and New Delhi have found it difficult to
secure any substantial progress in settling their protracted border
dispute.75 Since an inspiring consensus reached in 2003, thirteen
rounds of high-profile dialogue have been conducted by two special
representatives on border issues, meeting on behalf of their top
political authorities. The latest round of talks in August 2009 failed to
declare a credible breakthrough as speculated by the media, and
China‟s foreign affairs spokesman dismissed as groundless the report
of some major concessions possibly being made by Beijing. The
interaction on the issue proceeds at a glacial pace and tests
reciprocal patience. There has been a huge gap of understanding in
terms of conflicting interest settings and political constraints for both
China and India, and this gap will not be easily bridged.
Many in China argue that India‟s emergence as a global
power will make it more difficult to settle the boundary dispute,
whereas some Indian strategists believe Beijing is not keen to resolve
75
“Sino-Indian border talks need prolonged patience: Chinese experts,” China News,
August 7, 2009,
http://news.southcn.com/international/gjkd/content/2009-08/07/content_5510260.htm.
25
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the issue with India until and unless China enjoys an overwhelming
strategic edge. To some extent, Beijing‟s inaction on pushing for an
early settlement is attributed to New Delhi‟s inflexibility and intran-
sigence in negotiations. A number of domestic political constraints
also call into question New Delhi‟s ability to practice the “give-and-
take” formula. Added to this, both Beijing and New Delhi may also
become more assertive and take a tougher stance in future
negotiations as a result of their military modernization and growing
nationalistic sentiments. New Delhi‟s announcement of an additional
deployment of troops and sophisticated SU-30KM combat aircraft
along the Himalayan Line of Actual Control (LAC) in 2009, coupled
with stern exchanges and heightened, hawkish rhetoric, continued to
remind the public of the enduring tensions along the border and of the
daunting obstacle in moving toward a credible partnership.76
The Pakistan factor and the Indo-Pak equation
For India, China‟s long-standing cordial partnership with Pakistan has

been and remains a major obstacle in the way of improving its ties
with Beijing. Many Indians believe that it is Beijing‟s endorsement and
support that has emboldened Islamabad to challenge its preeminence
in South Asia, and that the core of the Sino-Pak strategic partnership
is exclusively against India. Beijing repeatedly denies this allegation
and is vocal about its interest in nurturing paralleled relationships with
both Islamabad and New Delhi, despite the fact that the tangible
substance in its partnership with India is somewhat limited. According
to this shifting regional approach, a non-confrontational relationship
between the South Asian neighbors can considerably enlarge China‟s
diplomatic and security gains.77 This thinking justifies Beijing‟s
growing interest in endorsing the peace process in South Asia.
The process of New Delhi-Islamabad rapprochement has
been disrupted in the wake of the Mumbai terror attack in November
2008, for which India believes Pakistan-based terrorist outfits to be
responsible. The future of New Delhi-Islamabad ties and the stale-
mate in addressing the Kashmir problem are likely to be more
challenging in terms of clashing perceptions of the regional security
by India and Pakistan. China‟s role in extraditing reconciliation in
South Asia continues to be visibly restricted as a result of New Delhi‟s
skepticism about a China-Pakistan strategic nexus and India‟s oppo-
sition to the involvement of any third party in the removal of its
imbroglio with Islamabad.
76
Wang Qian, “India Enhances Military Deployment in Southern Tibet: Political
Intentions and Strategy toward China,” Global Online, July 26, 2009,
http://bbs.yahoo.cn/read.php?tid=199616.
77
Zhang Li, To Manage Conflict in South Asia: China‟s Stakes, Perceptions and
Inputs, ISDP (Sweden), October 2009, pp. 72.
26
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Moreover, China and India have been involved in a fierce

contest for their relations with smaller countries in the region, such
as Nepal, Bangladesh, Myanmar, and Sri Lanka. Some argue that
this inevitable competition is ruthlessly dictated by the geopolitical
reality and that an intense Sino-Indian rivalry will be fueled in South
Asia and the immediate region because of their incompatible
interests.78 It is a known fact that Beijing has sought closer
engagement with the regional actors who, in return, need links with
China to balance pressure from India. Actually, Beijing‟s agenda of
aligning with the smaller regional countries has also pressed New
Delhi to improve its problematic ties with them by taking a more
elastic policy. In the long run, most possibly, Sino-Indian strategic
encounters in South Asia may produce uncertain consequences for
regional security.
The US factor in Sino-Indian engagement
The United States has developed complex relationships with both

Beijing and New Delhi. It is arguably believed that the strategic links
of China and India with Washington create a zero-sum effect on their
bilateral strategic interaction.79 First of all, the US input has affected
the trajectory of China‟s ties with India. The New Delhi-Washington
nexus has undergone a dramatic transformation in the last decade.
The formal signature of the civilian nuclear deal in 2008 was a
milestone in an enhanced Indo-US partnership, convincingly marking
the depth of the strategic engagement. That the Bush administration
promised to help India to be a global power in the 21st century is
explained as having a strategic allusion to China‟s rise.80 As widely
observed, moreover, Washington‟s rhetoric on the bond of the oldest
democracy and the largest democracy and its initiative to forge an
Asian alliance of democracies have made Beijing more vigilant about
any undermining changes of its strategic environment.
Few Chinese analysts doubt that upgrading Indo-US strategic
ties will produce geopolitical consequences disfavoring Beijing. For
them there seems a visible uneasiness that New Delhi could act as a
counterweight to Beijing and even bandwagon with the US in encir-
cling China, although the opposite view holds that Indian policy-
makers would prefer an independent diplomacy in terms of its policy
towards China. Beijing is concerned about any US-driven strategic
initiatives excluding China and involving India in Asia and the Pacific
region. As an often-cited example, the Chinese media gave its strong
78
B. Raman, “The danger of the India-China hysteria,” Rediff. News, Sept. 8, 2009,
http://news.rediff.com/column/2009/sep/08/the-danger-of-the-india-china-hysteria.htm
79
Shi Hongyuan, “China-India-US Tripartite Ties: A Zero-Sum Game?” Outlook
Weekly (Beijing), Nov. 2009.
80
Zhang Yuyan & Zhang Jingchun, “China-India Relations in Asian Economic
Integration,” Contemporary Asia-Pacific Studies (Beijing), Issue 2, 2006.
27
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reaction to the conceived formula of an “Asian NATO” in 2003 and

lashed out at a quadrilateral joint navy exercise (that involved the US,
India, Japan, Australia) in April 2007.81
Interestingly, on the other side of the coin of US involvement,
New Delhi has repeatedly conveyed its uneasiness about
Washington‟s evolving strategic ties with Beijing. Following President
Barack Obama‟s visit to China in November 2009, New Delhi became
emotionally discontent with the reference to, in a joint statement, US
endorsement of China‟s role in facilitating the South Asian peace
process and defusing Indo-Pak conflict.82 New Delhi has shown a
haunting fear of being marginalized by US diplomacy in Asia as a
result of Washington‟s thinking highly of Beijing‟s positive importance.
For both China and India, there is no doubt that the perceived zero-
sum effect of US diplomacy and security strategy on them has to be
moderated before these two rising powers can move toward a more
stable relationship.
Security in the Indian Ocean
The Indian Ocean is of growing relevance to China‟s security

interests and Beijing has become more outspoken about its maritime
rights and security concerns. Security in the Indian Ocean is a
significant factor in calculating China‟s interests because it involves
securing China‟s overseas energy and trade shipments, among
others. More than 70% of China‟s imported energy supplies are
transported through shipping lanes in the Indian Ocean and some
major strategic chokepoints including the Malacca Strait. But there is
an urgent sense of insecurity among the Chinese strategic elite
regarding the viability of undisrupted transport in case of an
emergency. Thus for China, as convincingly argued, a successful
maritime strategy will hinge upon Beijing‟s ability to overcome, both
physically and psychologically, the Indian Ocean challenge and the
so-called “Malacca dilemma” in different ways.83
India takes a key position in the Indian Ocean and traditionally
perceives it as a guarded sphere of influence, if not a strategic
preserve. It offers an important arena for Beijing and New Delhi to
neutralize each other‟s strategic clout and, perhaps, display their
strategic muscle. Beijing is preoccupied with the possibility that
security in the Indian Ocean could become a hostage to India‟s
maritime strategy. China is also concerned about New Delhi‟s interest
in accessing the South China Sea, where China has a suspended
81
Stephen Blank, “Inherent Dangers in an 'Asian NATO'”, Asia Times, Sept. 19,
2003; “A „Goodwill‟ Joint Naval Drill?” People’s Daily, April 21, 2007.
82
Shobori Ganguli, “To please China, US slights India,” The Pioneer, Nov. 19, 2009.
83
Liang Hui & Tang Lu, “China‟s Indian Ocean Strategy: A Debate among Chinese,
US and Indian Experts,” International Herald Leader (Beijing), March 10, 2009.
28
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dispute with some ASEAN nations. For India‟s part, there has been
an increasing fear of the alleged “string of pearls” strategy, referring
to China‟s devised attempt to encircle India by building strategically
important ports along the Indian Ocean such as Gwadar (Pakistan),
Chittagong (Bangladesh), Sittwe (Myanmar) and Hambantota (Sri
Lanka).84
As mentioned earlier, the Chinese and Indian navies have
conducted several joint drills and exercises on a small scale and both
sides express a willingness to expand maritime security coordination
and cooperation. China and India discussed counter-piracy cooperation
between their navies along the Gulf of Aden on the sidelines of the
eighth Asian Security Summit (Singapore) in May 2009, agreeing to step
up collaboration on maritime security in general and on anti-piracy in
specific.85 Despite the emerging opportunity to cooperate, however, any
substantial maritime cooperation will likely be restricted in view of the
lingering suspicion of each other‟s strategic intensions. In April 2010, the
Indian navy unexpectedly suggested offering escort service for Chinese
energy shipments through the Indian Ocean sea lanes. This is read (in
Beijing) as a sign of asserting India‟s dominance and boycotting China‟s
maritime presence in the region rather than as an offer of good-will.86
Dictated by clashing geopolitical concerns and strategic distrust, each
side most probably prefers a hedging strategy against the other in the
foreseeable future, although an accommodative and cooperative
maritime agenda between them is believed to be a tempting choice.
Afghanistan, Central Asia and ASEAN
In a broader template, Afghanistan, Central Asia and ASEAN nations

could possibly become the hotspots of triggering Beijing‟s contest
with New Delhi, if not necessarily a strategic standoff. On one hand,
both China and India are stakeholders of a stable Afghanistan, and
are among the major donors of reconstruction and good governance.
The incumbent government in Kabul keeps amicable working
relations with Beijing and New Delhi and seeks their greater
involvement in Afghan stability and development. Also, both China
and India have voiced doubts over the validity of the US Af-Pak
strategy while endorsing a step-up of anti-terror initiatives in this
region. On the other hand, however, Beijing and New Delhi have
diverging considerations of interests and mutually neutralizing
influences. China‟s close ties with Pakistan further complicate this
correlation.
84
Ishaan Tharoor, “India‟s China Panic: Seeing a „Red Peril‟ on Land and Sea,”
Time, Sept. 20, 2009 http://www.time.com/time/world/article/0,8599,1924884,00.html.
85
P. S. Suryanarayana, “India, China discuss anti-piracy cooperation,” The Hindu,
May 31, 2009.
86
Ma Xiaolin, “Indian Navy escort offer hints at China‟s exit: Beijing,” China Daily,
Feb. 23, 2010.
29
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China‟s dealing with India in Central Asia involves some major

dimensions, of which are the curbing of ethno-religious extremism,
energy acquisition, and trans-border overland connectivity.87 China
has a relatively geographic advantage in accessing the landlocked
area, boasting an edge in trade, infrastructural investments, and
energy diplomacy, whereas India is believed to enjoy the soft power
of cultural affinity and historical links. Projections of contending
interests may limit the space of cooperation between both sides in
tapping oil and natural gas in the energy-rich region.88 And despite
having shared concern, there has been no reliable mechanism for
them to conduct meaningful cooperation on curbing regional
extremism, especially in terms of linkages with Xinjiang and Kashmir.
Therefore, it is still premature to anticipate any positive engagement
between China and India in Central Asia or to rule out the possibility
that they will act as contenders in a renewed “Great Game”.
Southeast Asia has proven a meeting point of Chinese and
Indian influences in both the cultural and political sense. Both Beijing
and New Delhi have made initiatives to solidify engagements with the
ASEAN nations and are among the active partners of the regional
economic arrangements (ASEAN plus 3 and ASEAN plus 1) and
security dialogues (ARF) over the recent years. Beijing has convinced
the regional actors, with modest success, that it is a facilitator of
regional development and security rather than a threatening factor.
For this reason, Beijing even shelves its disputes with some of
ASEAN members on the sovereignty of islands in the South China
Sea. For its part, India‟s Look East policy is aimed at enhancing its
diplomatic profile and economic weight; and various ASEAN nations
may also look to India to balance pressure from China. This has
presented mixed implications for Beijing‟s agenda in the region. New
Delhi‟s initiative to engage the ASEAN and further extend to East
Asia, as defined by its Look East approach, considerably broadens
the room for interaction with China. As a calibrated reaction, Beijing
has been vocal about an interest in launching a “healthy competition”
with India in terms of the emerging opportunities in the region by
participating in the ASEAN-plus mechanisms of free trade.89
However, the two Asian powers might amplify their conflicts of
interest if they fail to manage such a “healthy competition” on a
reciprocal basis.
87
M. K. Bhadrakumar, “India follows China's Central Asian steps,” Asia Times, Nov.
29, 2004.
88
Sanjay Dutta, “Raising bar: China poses threat to India's Central Asia gas plan,”
The Times of India, June 26, 2008; Zhang Guihong & Rong Tingrong, “From Contest
to Win-win: China-India Contest and Cooperation in Central Asia,” South Asian
Studies Quarterly (Chengdu), Vol. 4, 2008.
89
Kang Sheng, “India‟s Eastward to ASEAN: Implications for China,” Journal of
Yunnan Government College (Kunming), Issue 8, 2006; Zhuang Rui, “China and
India join Regional Economic Cooperation: A Comparative Analysis,” Contemporary
Asia-Pacific Studies (Beijing), Issue 2, 2007.
30
© Ifri
Trade frictions and economic impediments
While keeping a steady increase, the bilateral trade and economic

ties between the two nations have begun to experience some
unaffordable challenges. With a broadening gap of trade in China‟s
favor since 2007 (more than $20 billion by 2008-2009), trade frictions
and a concealed trade war have become more characteristic of the
bilateral trading ties.90 New Delhi complains that Beijing has become
the real beneficiary of expanding two-way trade because the benefits
mainly go to China rather than India.91 Even the trend of the bilateral
trade indicates a continued broadening of this gap in the years to
come. The mounting anxiety of trade imbalance urged the Indian
government to officially present a demarche to China during the
bilateral Joint Economic Group meeting in Beijing in the early 2010.
The origins of widening disparity are multidimensional. According to
Chinese analysts, the prevailing trading problem primarily results from
an imbalanced composition of trade and comparative disadvantages
of Indian commodities.92 On the other hand, New Delhi attributes the
problem to restricted access to the Chinese domestic market and
China‟s less liberal trade policy and non-tariff barriers.93
India‟s exports to China are dominated by raw materials and
semi-finished steel products, of which iron ore accounted for
approximately 70% in 2008.94 China secures an edge on India by
exporting value-added merchandise such as electrical equipment,
electronics, organic chemicals and a variety of consumer goods. To
check the flooding of made-in-China goods, New Delhi tends to adopt
a protectionist agenda. For instance, the Indian government has
frequently invoked anti-dumping actions against Chinese exported
items and China has become the biggest target of New Delhi‟s anti-
dumping strategy.95 There is also a raised voice from the Indian
business community calling for substantially reduced exports of raw
materials including iron ore and an expansion of IT product/service
exports to China to rectify the ongoing import-export disequilibrium.96
90
Satyajit Mohanty, “Sino-Indian Trade Relations: An Uncertain Future,” IPCS
Papers, Feb. 2, 2010, http://ipcs.org/article/china/sino-indian-trade-ties-an-uncertain-
future-3053.html.
91
B. Raman, “Sino-Indian trade: It's helping only China,” Rediff Papers, Jan. 28,
2008, http://www.rediff.com/money/2008/jan/28china.htm.
92 Th
Liu Xiaoxue, “60 Anniversary of China-India Relations: To Develop Closer
Economic and Trade Cooperation,” March 23, 2010,
http://www.china.com.cn/international/txt/2010-03/23/content_19644956_2.htm.
93
Amiti Sen, “Growing Trade Deficit: India keeping close watch on China, mulls
steps,” The Economic Times, Feb. 18, 2010.
94
Yin Yonglin, “The Trend of Sino-Indian Bilateral Trade and Recommendations,”
Southeast and South Asian Studies (Kuming), Vol. 3, 2009.
95
Anurag Agarwal, “India faces Chinese dumping,” The Statesman, May 18, 2009.
96
“Progress on India-China Regional trade agreement unlikely during SM Krishna's
visit,” PTI, April 4, 2010, http://www.dnaindia.com/india/report_progress-on-india-
china-regional-trade-agreement-unlikely-during-sm-krishna-s-visit_1367286.
31
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Added to the emerging trade frictions, the bilateral economic

interaction has begun to be affected by new restrictions by India on
Chinese companies to bid for construction projects in India and the
visa-issuing bottleneck for skilled Chinese workers. Out of conside-
rations for security, New Delhi has tried to close opportunities for
Chinese bidders to access its “strategically sensitive” infrastructure
projects such as the construction of ports and airports as well as
telecommunications. The number of visas granted to Chinese emp-
loyees for the agreed projects in India sharply dropped from roughly
20,000 in 2008 to less than 3,000 in 2009, evoking grievances from
Chinese side. Beijing also criticizes India‟s reluctance to implement
the Regional Trade Arrangement (RTA) that has been proposed to
expedite trade and economic cooperation.97
97
“China and India re-open talks on RTA: New Delhi‟s misgivings,” Jan. 5, 2007,
http://news.sina.com.cn/c/2007-01-05/085911958873.shtml.
32
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Conclusion: Thoughts on Policy
In order to move the Sino-Indian partnership forward and make it

more credible, major endeavors have to be made by both Beijing and
New Delhi to produce tangible results.
First of all, given that the unsettled border dispute is an
outstanding issue in the way of the bilateral relations, the political
leadership of the two nations should seek an early settlement of the
problem. At the operational level, there should be some key steps
taken. To fulfill an early settlement, both governments have to preset
calibrated policy directions/objectives for the ongoing special
representative dialogue on border issues, design a reasonable
timeframe and a clear-cut roadmap and, perhaps more immediately,
secure irreversible progress through negotiations. The identifiable
issues include a precise recognition of the present line of actual
control of different sectors, basic points of difference (i.e. the status of
Tawang), respective security concerns and interest sensitivities along
the border, and implementation of the consensuses already reached
(agreements, political parameters and guiding principles, and
technical and operational formalities). All this is of central significance
to nudging towards a final settlement of the protracted border issue.
Otherwise, the enduring stalemate could likely cause a collapse of
confidence on both sides to seek a mutually acceptable recipe.
Second, given the fact that China and India have been
engaging each other in South Asia, Central Asia, ASEAN, and the
Indian Ocean, it is extremely important for both sides to reconcile
their regional strategies in order to serve constructive purposes. For
Beijing, a successful regional agenda should be based on positive
interaction with India rather than the contrary. Thus, China has
reasons to continue the balanced diplomacy initiated in the 1990s
towards its South Asian neighbors, namely searching for a reliable
partnership with India while maintaining its time-tested strategic
partnership with Pakistan. Regardless of the caprices of the regional
strategic climate, this balanced regional strategy will surely best serve
China‟s national interest in the region. At the same time, Beijing
needs to articulate its policy directives of enlarging a constructive role
in enabling the Indo-Pak rapprochement and in managing any major
conflict in the region. In the same vein, India is expected to recognize
China‟s growing input and constructive clout in a positive way, as
China sees its nexuses with other, smaller regional actors as an
essential part of the broader strategy of upgrading its regional profile.
33
© Ifri
Third, there is an increasing need for China and India to

devise an accommodative and non-confrontational regional agenda in
their shared peripheries and in the broader neighborhood. As two
rising global powers and possible geopolitical opponents, both
nations may inevitably claim the same spheres of influence, which
include Central Asia, the ASEAN region, and the Indian Ocean, in
addition to the other South Asian neighbors. Hence, a proposed
“healthy competition” rather than confrontation should be a welcome
mandate and proper use of soft powers will be an acceptable means
to enlarge their respective interests while refraining from entering a
conflict. To work toward this aim rather than otherwise, each side has
to envisage the other‟s core interests and strategic sensitivities and
make their respective strategies more transparent and more
predictable.
Fourth, promoting CBMs in a reciprocal way has proven
extremely helpful for Beijing and New Delhi in removing
misperceptions and misreadings of each other‟s strategic intentions.
As obviously perceived, the strategic trust between China and India
remains fragile or even nominal, especially in security and defense
areas. Their strategic interactions with major powers, the US in
particular, also should have created less undermining effects on each
other in terms of the implications for their bilateral ties. As this reality
shows, both Beijing and New Delhi are expected to clarify their
differences of perception and clash of interests and pursue a highly
pragmatic approach to the existing problems. It may prove unhelpful
to disguise and downplay strategic divergences and trust deficiencies.
In this sense, thus, an intensive dialogue in the strategic sense
normally offers a reliable base for political policymakers to pursue
their measured policy objectives while managing their sophisticated
relationship.
Fifth, Beijing and New Delhi need to reinforce the bolstering
effect of their vibrant trade and economic links in building a credible
strategic partnership. To advance economic relevance, both sides are
expected to address the emerging trade frictions and related
problems, and overcome the identifiable bottlenecks of expanding
bilateral trade and investment. Encouragingly, both sides have begun
to be more serious about negotiating a proactive settlement. In the
early months of 2010, trade imbalance has shown a sign of
improvement in India‟s favor. To ease New Delhi‟s concern, China
promises a more liberal import policy and increasing market access
opportunities for Indian products. The Chinese government has
launched several trade fairs exclusively for promoting the made-in-
India label in Beijing and Kunming. The Chinese government sent its
procurement delegations to India to tap opportunities for expanding
Indian exports. Both governments have also agreed to negotiate a
memorandum of understanding on relaxing the visa restrictions on
Chinese employees in India. In the long run, dynamic trade and
economic ties will continue to be indispensable for substantiating the
Sino-Indian partnership at large.
34
© Ifri
Last but not least, there comes a pressing necessity to

breathe more substance into the existing framework of Sino-Indian
strategic partnership. So far, an institutionalized regime of strategic
engagement and cooperation between China and India has yet to be
credibly established. In such circumstances, it becomes highly neces-
sary for both sides to activate their multilayered strategic consultation
and to reciprocate political goodwill in order to deepen strategic
engagement in a constructive, credible and sustainable way. It is
such an institutionalized engagement that can secure a healthy,
stable and constructive bilateral relationship between them. Achieving
this goal requires and deserves a concerted endeavor.
35
© Ifri

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Asie.

Center for Asian Studies

Headed by Thierry de Montbrial since its founding in 1979, Ifri is a non-

Using an interdisciplinary approach, Ifri brings together political and economic

The opinions expressed in this text

The Ifri China Program‟s objectives are:

 To develop expertise and a sophisticated

 To build a China-France partnership through

This Program is supported by:

John SEAMAN, “Energy Security, Transnational Pipelines and

Sino-Indian relations have become increasingly significant and

 To reconcile regional strategies in South Asia,

 To promote confidence-building measures and

strategic intentions, and to envisage each other‟s core

 To reinforce the bolstering effect of vibrant

 To breathe more substance into the existing

SINO-INDIAN RELATIONS: AN OVERVIEW OF RECENT HISTORY ............. 6

COMPLEX DYNAMICS OF SINO-INDIAN REENGAGEMENT ........................ 9

THE CHALLENGES TO BE MET ........................................................... 25

CONCLUSION: THOUGHTS ON POLICY ................................................ 33

As rising global powers, China and India have both committed

Zhang Li is a professor of international relations in the Institute of South Asian

In the post-war Asian context, the relationship between China and

demarcated boundary between China and India along the Himalayan

Post-Cold War pragmatism

global profile and proactive diplomacy, which have enlarged its

Political links and high-profile interaction

On the political front, high-level interaction plays an important role in

made a package initiative of the “Ten-pronged Strategy” to elevate

Trade and economic interaction –

including Indian industrial tycoons such as Infosys, Tata, NIIT,

At a sub-regional level, China and India have tried to move

The Sino-Indian security and defense nexus

Enhanced political engagement and pragmatic strategic calculus have

seems uncertain for Beijing and New Delhi to institutionalize their

Energy security: cooperation vs. competition

its major refineries by using highly attractive financial incentives.48

despite some differences yet to be resolved. For years, India has

policy.64 Rarely unnoticed by Chinese, in return, India‟s media

China responding to India’s global aspirations

Beijing‟s feedback on India‟s aspirations to be an emerging power is a

and China) has come to be a theme of serious interest.67 The idea of

the misleading idea of a “China threat”.71 Unlike Washington, Beijing

The Challenges to Be Met

While promising a healthy bilateral relationship and peaceful rise

The border issue

In spite of the written agreements, political guidelines, and multi-level

The Pakistan factor and the Indo-Pak equation

For India, China‟s long-standing cordial partnership with Pakistan has

Moreover, China and India have been involved in a fierce

The US factor in Sino-Indian engagement

The United States has developed complex relationships with both

reaction to the conceived formula of an “Asian NATO” in 2003 and

Security in the Indian Ocean

The Indian Ocean is of growing relevance to China‟s security

Afghanistan, Central Asia and ASEAN

In a broader template, Afghanistan, Central Asia and ASEAN nations

China‟s dealing with India in Central Asia involves some major

Trade frictions and economic impediments