India-China Relations

India and China share ~3500 km of border, which is the second largest after India-Bangladesh border.

• The India-China border is divided into western, eastern, and middle sectors.
• The states and union-territories of Jammu Kashmir, Sikkim, Himachal Pradesh, and Arunachal Pradesh share borders with China.

Overview:

The relation between India & China date back to >2000 years, which witnesses cultural and economic ties. The major example is the Silk Route, which not only served as a major trade connect between the two nations, but also helped in the spread of Buddhism from India to East Asia.

Background of India China Border Dispute

• Eastern Sector
  • The Eastern Sector sees 1,140 km long border between the two countries. Starting from Bhutan’s eastern border near Talu pass, it connects Tibet, Myanmar and India. The line is known as the McMahon Line.
  • In a tripartite conference in 1913, the British Indian Government formalized the boundary between India and Tibet.
  • China considers the McMahon line illegal, and claims that the Tibetan representatives who signed the 1914 Shimla Convention lacked the authority to do so.
• Western Sector
  • The Western Sector shares 2152 km long border.
  • The border is located between Jammu-Kashmir and Chinese province of Xinjiang.
  • There is a territorial dispute over Aksai Chin in this region.
  • The territorial dispute over Aksai Chin resulted in a war between India and China in 1962.
  • India claims Aksai Chin to be a part of Jammu & Kashmir, while China claims it to be a part of Xinjiang province.
  • British Empire failed to established a clear legal border between Indian colony and China, resulting in a dispute over Aksai Chin.
  • Two borders were proposed during British India – McDonald Line and Johnson’s Line.
  • While the Johnson Line (proposed in 1865) placed Aksai Chin in Jammu & Kashmir, McDonald Line (proposed in 1893) placed Aksai Chin under the control of Beijing.
  • Because of this, there has been a constant tussle between India and China.
• Middle Sector
  • India and China share a 625 km long border in the Middle Sector.
  • This sector runs from Ladakh to Nepal.
  • The states of Himachal and Uttarakhand touch the Chinese border in the middle sector.
  • This region is a dispute region between the two disagreeing parties.

Brahmaputra Issue

The Brahmaputra originates in the Manasarovar lake region near Mouth Kailash.
It flows through the Southern Tibet to India, before draining its water into the Bay of Bengal.
The major issues pertaining to the Brahmaputra is due to the construction of dams in the Tibetian region. India has in the past has raised concerns over these constructions.

Various interactions between India and China on the issue:

1. India and China have a Brahmaputra agreement, according to which China agreed to share hydrological data on Yarlung Tsanpo/Brahmaputra while monsoon. But water being a state subject in India, it remains a deadlock.
2. Border disputes have often overshadowed discussions on the Yarlung Tsanpo constructions.
3. In 2015, China also signed the Lancang-Mekong Cooperation (LMC), which marks a shift on its trans-boundary sharing approach towards a more multilateral arrangement.
4. China is, on water issues terms, cooperates more with Bangladesh than India. Example, China charges $125,000 for the data it provides to India, while they send the data to Bangladesh for free.

Environmental concerns:

• Assam and Bangladesh are flooded each year, affecting the flora and fauna of prominent national parks like Kaziranga.
• Further, the Himalayan belt is prone to frequent earthquakes.
• The northward rerouting of Brahmaputra river from the Tibetan borders through construction of dams leads to drying up of river downstream, in Assam and Bangladesh.

Way ahead for India:

1. India needs to make sure that it defines a desired goal of strategic outcome it wants of the water conflicts.
2. Restrengthening relations with Bangladesh can be a good way of pushing impending Teesta River agreement to restore its image as a responsible riparian.
3. Like in the Doklam issue, India needs to be firm and show strength in negotiations with China.
4. Finally, both countries should also be working together to preserve the environment, and plan to restore ecological balance.

India’s Economic Relations with China

In 2021, India’s trade with China crossed $125 billion. Out of this, a record $100 billion was an import into India.

• India’s Biggest Exports to China:
  • India exports Iron ore, cotton and other raw material based commodities.
• India’s Biggest Imports from China:
  • India has imported large quantity of electrical and mechanical machinery. India also important Active Pharmaceutical Ingredients (APIs), a key to India’s pharmaceutical industry. Over the years in Covid, India’s dependence for Oxygen Cylinders and Personal Protective Equipments (PPEs) has surged.
• Growth in Bilateral Trade:
  • India is among the major trading partners of China, with a 43% year-on-year growth in bilateral trade between the two countries.
  • Compared to India, China’s bilateral trade with ASEAN grew at 28.1%, European Union at 27.5%, and United States at 28.7%.
• Trade Deficit with China:
  • India has been highlighting it concerns over the growing trade deficit with China over the past decade.
  • In 2021, the trade deficit grew by $69.38 billion.
  • India has been calling China to open its market for Indian exports like IT & Pharmaceutical products.
    • Trade deficit is a situation when the countries import dues exceeds the receipts from exports.
• Steps taken by India to counter over-dependence on China:
  • Recently, India increased its scrutiny over Chinese investments in many strategic sectors. Example, India banned Chinese companies from participating in 5G trials.
  • Indian government has made foreign investments restricted to a prior approval from concerned authorities, with countries sharing land border with India.
  • The Indian government in March 2020 approved a package of Rs. 13,760 crores comprising of four schemes to boost the domestic production of bulk drugs and medical devices. This was to reduce India’s dependence on Chinese APIs.
  • In 2020, the Ministry of Commerce and Industry identified 12 sectors – to make India a global supplier and cut import bills.
    • These sectors are food processing, organic farming, iron, aluminum and copper, agro chemicals, electronics, industrial machinery, furniture, leather and shoes, auto parts, textiles, and coveralls, masks, sanitizers and ventilators.

Debt-Trap Policy of China

Debt-trap diplomacy is a theory that in which a powerful lending country gives enormous debts to a borrowing country, to increase its leverage over the country.

Concessional loans granted by China

1. Loans at an interest rate lower than the market rates or
2. A leniency in grace period
3. Longer grace periods.

How does China’s debt trap diplomacy work?

1. China dispenses billions of dollars in the form of concessional loans to developing countries, and tries gaining political and economic ascendency across the globe.
2. Most of these concessional loans are in the form of large-scale infrastructure, which can be leveraged by China with an upper-hand.
3. The low income and middle income are unable to keep up with the repayments of Beijing, and Beijing uses this as a chance to demand advantages in exchange of debt relief.

For instance, Sri Lanka was forced to hand over the Hambantota port project to China for 99 years, owing to the massive debt trap of China’s concessional loan.

This allowed China to control a strategic key port to counter India, along with a key commercial and military waterway.

China also constructed its first military base in Djibouti using its exchange for relief.

Angola, another example, is repaying multi-billion dollar loan to China in the form of crude oil, which has created major issues in its economy.

What is India’s situation with China in this case?

While India has not taken any loan directly from China, it continues to be the top borrower of Asian Infrastructure Investment Bank (AIIB) of which China is the largest stakeholder.

• China is the largest shareholder (26.6% voting rights)
• India the second (7.6% voting rights) among other countries.

Is the debt-trap affecting India?

Most of India’s neighbours are a part of the $8 trillion project of China – the One Belt One Road Initiative (OBOR). The initiative seeks to improve the connectivity between countries in Asia, Africa and Europe.

• Many countries gave away the control over strategic sea ports which might affect India’s regional security.
• Kashmir, an integral part of India, is being used in OBOR using Pakistan, thus China trying to increase India’s political cost of dealing with China.
• Kautilya, the famous India theorist on statecraft, suggests it is important to monitor and contain the activities of the state’s “enemy” and its diplomacy through engagement and cooperation rather than war.

Brahma Chellany wrote in the Japan Times, pointing out how China’s real intention was to attempt “Indeed, by working to establish its dominance along the major trade arteries, while instigating territorial and maritime disputes with several neighbors, China is attempting to redraw Asia’s geopolitical map.”

In The Times of Central Asia, James Dorsey informs that a leaked long-term plan for China’s massive $56-billion investment in Pakistan exposes the goals of Beijing’s One Belt, One Road initiative as a “ploy for economic domination, the creation of surveillance states, and allowing China to influence media landscapes.”

Kautilya, the famous India theorist on statecraft, suggests it is important to monitor and contain the activities of the state’s “enemy” and its diplomacy through engagement and cooperation rather than war.

Steps by India:

1. New Delhi has been promoting Japanese investment in the Iranian port of Chabahar.
2. Indian efforts towards joint India–Japan Asia–Africa Growth Corridor are aimed at checking China’s OBOR initiative, though it is no match to BRI.
3. India plans to step up foreign diplomacy by highlighting poor returns and debt trap issues.
4. New Delhi is also actively involved in Quad involving USA, Australia and Japan. It aims to deter China’s control over South China sea and collectively reduce trade imbalance with China.

Belt and Road Initiative – its impact on India

With the Belt and Road Initiative (BRI), Chinese government developed a strategy to fund infrastructure projects in nearly 70 countries.

Following China’s String of Pearls, BRI is a plan to dominate the Asian region. New Delhi sees China’s initiative as a way to create unsustainable debt burdens for the countries in the Indian Ocean, which can seize control of regional choke points.

What is China’s real intent?

1. BRI is seen as a counter to push back US “pivot to Asia”.
2. Promoting economic activities in separatist prone region can be seen as a way to turn the people of region against India.
3. Restructuring the economy to avoid the “middle-income-trap”.

How does New Delhi react to BRI?

India has been vocal about not joining BRI, considering how the initiative is about undermining India’s business. India has opposed BRI because of a key component – the China-Pakistan-Economic-Corridor (CPEC) passes through PoK.

While China continues to engage with India’s immediate neighbours like Pakistan, the corridor has the potential to threaten power dynamics in the region. Example – the Hambantota port, a port located in economically strategic position, was forced leased to China for 99 years.

1. BRI can undermine India’s sovereignty as it passes through disputed border territories.
2. BRI can push China’s dominance in the region and give it undue economic and diplomatic leverage.
3. BRI is not based on principles of good governance, rule of law and transparency, rather on unsustainable debt burdens in some recipient countries.

Are there any potential advantages for India from BRI?

1. BRI can help India finance country’s domestic infrastructure projects.
2. BCIM corridor could push infrastructure in the North-Eastern region.
3. India can have access to Central Asia, pushing trade opportunities in the region.

What steps should India be taking?

1. India must invest in strategic assets like Andaman and Nicobar Islands, to project power across Indian Ocean.
2. India will likely maintain bilateral collaboration with countries like Japan, who will remain engaged with BIMSTEC, which doesn’t include China.
3. India should be collaborating with its neighbors to push more connectivity projects.
4. Collaborations like QUAD with Australia, Japan and US needs to be further pushed to deter Chinese aggression in the South East Asian region.