INDIA-CHINA RELATION-2011

Introduction

India and China have had ancient civilizational contact. In recent times, the process of development and diversification of bilateral relations has gathered pace. The focus is on enhancing mutually beneficial cooperation while simultaneously addressing differences.

Political Relations

The People’s Republic of China (PRC) was established on October 1, 1949, and India was the second non-communist country to recognize it. Within a few months, on April 1, 1950, India and China established diplomatic relations. The two countries also jointly expounded the Panchsheel (Five Principles of Peaceful Co-existence) in 1954. Chinese Premier Zhou Enlai visited India in June 1954 and Prime Minister Nehru visited China in October 1954.

The circumstances leading to the attack by China in 1962 led to a serious setback in bilateral relations. India and China restored ambassadorial relations in August 1976. Higher political level contacts were revived by the visit of the then External Affairs Minister, A.B. Vajpayee in February 1979. The Chinese Foreign Minister Huang Hua paid a return visit to India in June, 1981.

The next milestone was Prime Minister Rajiv Gandhi’s visit to China in December 1988. During this visit, both sides agreed to develop and expand bilateral relations in all fields. It was also agreed to establish a Joint Working Group (JWG)  - to seek fair, reasonable and mutually acceptable solution on the boundary question  - and a Joint Economic Group (JEG).

From the  Chinese side， Premier Li Peng visited India in December 1991. Prime Minister Narasimha Rao visited China in September 1993. The Agreement on the Maintenance of Peace and Tranquility along the Line of Actual Control (LAC) in the India – China Border Area was signed during this visit.

President R. Venkataraman paid a state visit to China in May 1992. This was the first Head of State-level visit from India to China. President Jiang Zemin’s state visit to India in November 1996 was similarly the first by a PRC Head of State to India. The four agreements signed during his visit included the one on CBMs in the Military Field along the LAC covering adoption of concrete measures between the two militaries to enhance exchanges and to promote cooperation and trust.

The Chinese side reacted sharply to India’s nuclear tests in May 1998. During the then External Affairs Minister Jaswant Singh’s visit to China in June 1999, both sides reiterated that neither country is a threat to the other. President K.R. Narayanan visited China in May -June 2000, marking a return to high level exchanges.Premier Zhu Rongji visited India in January 2002. MOUs and Agreements signed during the visit covered wide areas including tourism, water, space, science and technology etc.

Prime Minister A.B. Vajpayee visited China in June 2003 during which a Declaration on Principles for Relations and Comprehensive Cooperation was signed. This was the first comprehensive document on development of bilateral relations signed at the highest level between India and China. India and China concluded a border trade protocol to add a border crossing between Sikkim and Tibet Autonomous Region. The two Prime Ministers appointed Special Representatives to explore from the political perspective of the overall bilateral relationship the framework of a boundary settlement.

Premier Wen Jiabao visited India in April 2005. A Joint Statement was signed by Premier Wen and Prime Minister Dr. Manmohan Singh. During the visit, the two sides issued a Joint Statement establishing a Strategic and Cooperative Partnership for Peace and Prosperity. It reflects the consensus that bilateral relations transcend bilateral issues and have acquired a global and strategic perspective. The agreement on Political Parameters and Guiding Principles signed during the visit represents successful conclusion of the first phase of the work of the Special Representatives on the boundary question.

Chinese President Hu Jintao visited India in November 2006. During the visit, the two sides issued a Joint Declaration containing a ten-pronged strategy to intensify cooperation in all areas and to give greater content to India-China Strategic and Cooperative Partnership. 

President of the Indian National Congress and Chairperson of the United Progressive Alliance Smt. Sonia Gandhi visited China at the invitation of the General Secretary of the Communist Party of China (CPC) President Hu Jintao on 25-29 October 2007. She met with President Hu Jintao and Premier Wen Jiabao besides other leaders of the CPC. She paid another visit to China in August 2008 at the invitation of the Communist Party of China to witness the opening ceremony of the Beijing Olympic Games and met, among others, PRC Vice President Xi Jinping.

Prime Minister Dr. Manmohan Singh visited China on 13-15 January 2008. During the visit, he had extensive discussions with Premier Wen Jiabao and met with President Hu Jintao and NPC Chairman Wu Bangguo. A joint document entitled  “A Shared Vision for the 21stCentury of the Republic of India and the People’s Republic of China” was issued during the visit, outlining common positions on a number of international and some bilateral issues. Prime Minister also addressed a high-level business event and delivered a speech at the Chinese Academy of Social Sciences. Prime Minister visited China again in October 2008 to participate in the 7th Asia-Europe Summit held in Beijing on 24-25 October.

The President of India paid a state-visit to China from 26-31 May, 2010. In Beijing, she held talks with Chinese President Hu Jintao and met with NPC Chairman Wu Bangguo, Premier Wen Jiabao and CPPCC Chairman Jia Qinglin. The Indian President, along with Chinese Vice President Xi Jinping, attended the reception to mark the 60th anniversary of diplomatic relations jointly organized by CPAFFC and the Embassy of India. She visited Luoyang to inaugurate the Indian-style Buddhist Temple which was dedicated as a gift from India to the people of China. In Shanghai, she visited the Indian pavilion and the Chinese pavilion at the 

EXPO and also had a meeting with Shanghai Party Secretary, Yu Zhengsheng. A Tagore bust was unveiled by the Indian President.

Chinese Premier Wen Jiabao paid a three day official visit to India from 15-17 December 2010. During his visit, Premier Wen met with President Smt Pratibha Patil, PM Shri Manmohan Singh, Vice President Shri Hamid Ansari, UPA Chairperson Smt Sonia Gandhi and the Leader of Opposition Smt Sushma Swaraj. Premier Wen also interacted with children in the Tagore International School; addressed India-China business cooperation summit; delivered a lecture at the Indian Council of World Affairs; and attended the closing ceremony of the Festival of China in India along with the Indian PM. Six agreements on cultural exchange, green technologies, media exchanges, hydrological data, and banking were signed and a Joint Communiqué was released. During the visit, a bilateral trade target of 100 billion USD was set to be reached by 2015. A Strategic Economic Dialogue and a CEO’s Forum were established; and 2011 was declared as ‘Year of India-China exchange’. The establishment of hotline between the Indian Prime Minister and the Chinese Premier, a mechanism of annual Foreign Ministers Meeting and a regular high level exchange mechanism were also announced.

 Prime Minister Dr. Manmohan Singh visited Sanya, China from 12-15 April 2011 to attend the BRICS Leaders Meeting. Indian PM met Chinese President Hu Jintao on 13th April 2011 on the sidelines of the BRICS Leaders Meeting.

Leaders of the two countries have maintained regular contacts and have met frequently during international gatherings. In 2008, Prime Minister met President Hu Jintao at the G-8 Summit in Hokkaido, Japan in July and on the sidelines of the ASEM Summit in Beijing in October. Both leaders met again on the sidelines of the SCO Summit in Yekaterinberg in June 2009. Indian PM also met Premier Wen Jiabao on the sidelines of the UNGA in New York in September 2008, on the sidelines of the EAS in Hua Hin, Thailand in October 2009 and on the sidelines of the EAS in Hanoi, Vietnam in October 2010. They also met on the sidelines of the Copenhagen Summit in December 2009. In 2010, Prime Minister met with Chinese President Hu Jintao on the sidelines of the BRIC summit in Brasilia in April. EAM Shri Pranab Mukherjee visited China to attend the India-Russia-China trilateral meeting in Oct 2007. In 2008, foreign ministers of the three countries met in Yekaterinberg in Russia in May. Following this, EAM Shri Pranab Mukherjee paid a successful visit to China on 4-7 June 2008. The Chinese Foreign Minister Yang Jiechi paid a return visit  --- his first as Foreign Minister  --- to India on 7-9 September 2008. The foreign ministers of the two countries met in Phuket in July 2009 at the sidelines of the ASEAN forum meeting. It was EAM Shri S.M. Krishna's first meeting with the Chinese FM. The Trilateral Foreign Ministers' Meeting was held in Bangalore on 27th October 2009. The Chinese FM also had a separate bilateral meeting with EAM. EAM Shri S.M. Krishna again visited China from 5-8 April 2010 on a bilateral visit. He held talks with the Chinese FM and met with Premier Wen Jiabao. During the visit, EAM launched the Festival of India in China and also attended a reception to mark the 60th anniversary of establishment of diplomatic relations. Later EAM visited Wuhan in Hubei province of China on 14-15 November to take part in the trilateral foreign ministers meeting. During his visit, EAM also held bilateral meeting with the Chinese FM Yang Jiechi. In addition, the two foreign ministers have had telephonic conversations on major issues of interest. Besides exchanges at the government levels, Parliamentary and Party exchanges have also expanded. Speaker of the Lok Sabha Shivraj Patil visited China in 1993, following which NPC Chairman Qiao Shi visited India in 1995. NPC Chairman Li Peng and Speaker of the Lok Sabha Manohar Joshi paid visits to each other in 2001 and 2003 respectively. Hon'ble Speaker of the Lok Sabha Somnath Chatterjee led an Indian Parliamentary Delegation to China in July 2006 during which both sides signed an MOU to further strengthen the friendly relations and cooperation between the parliaments. To facilitate high level exchanges of Party leaders from China and State Chief Ministers from India, a special arrangement has been entered into by the International Department of the Central Committee of the Communist Party of China and the Ministry of External Affairs of India since 2004. There are regular Party-to-Party exchanges between the CPC and political parties in India. Karnataka Chief Minister visited China in September 2009, BJP President visited China in January 2011 and Bihar Chief Minister visited China from 12-18 June 2011.

India and China have stepped up functional cooperation in all areas. The two foreign ministries have instituted dialogue mechanisms on issues relating to counter-terrorism, policy planning and security, besides strategic dialogue and regular consultations. There are also close cooperation in areas as diverse as water resources, judiciary, science & technology, audit, personnel, finance, labour etc. There is also a close and regular interaction between strategic and foreign policy think-tanks. Youth exchanges have also picked up momentum with annual exchange of 100 youths from each side currently ongoing. Dialogues are being initiated between pairs of India-China academic organizations. 

Trade and Economic Relations

India and China resumed trade officially in 1978. In 1984, the two sides signed the Most Favoured Nation Agreement. 

i) Bilateral Institutional Mechanisms

There are several institutional mechanisms for India’s economic and commercial engagement with China. India-China Joint Economic Group on Economic Relations and Trade, Science and Technology (JEG) is a ministerial-level dialogue mechanism established in 1988 during the visit of former Prime Minister Rajiv Gandhi to China. A Joint Study Group (JSG) was set up after former Prime Minister Vajpayee’s visit to China  in June 2003 to examine the potential complementarities between the two countries in expanded trade and economic cooperation. As per its recommendation, a Joint Task Force (JTF) was set up to study the feasibility of an India-China Regional Trading Arrangement. JTF Report was completed in October 2007. There are also Joint Working Groups on Trade, Agriculture and energy. The two countries also cooperate in the WTO. 

ii) Bilateral Trade

The overall bilateral trade figures for 2010 released by the China Customs are as follows:

(All figures in US$ billions)

                                                                            2008               2009               2010 

India Exports to China                                           20.34              13.70              20.86

Growth %                                                             38.76             -32.63              52.19

China Exports to India                                           31.52              29.57              40.88

Growth %                                                             31.12             -6.17                38.25 

Total India-China                                                   51.86              43.28              61.74

Trade

Growth %                                                             34.02             -16.55              42.66

Trade Balance for                                                 -11.18             -15.87             -20.02

India

Highlights:

· India-China total trade crossed the target of US$ 60 billion for 2010 and stood at US$ 61.74 billion, recording an increase of more than 52%. 

· India’s exports to China for year 2010 reached US$ 20.86 billion, a growth of more than 52% when compared to year 2009. However, India’s exports to China in 2010 were only slightly more than the figure for year 2008 when our exports reached US$ 20.34 billion. India’s exports in 2010 recorded an increase of only 2.5%.

· China’s exports to India for year 2010 reached US$ 40.88 billion, an increase of almost 41% compared to 2009. 

· The trade deficit for India for year 2010 stood at more than US$ 20 billion, more than US$ 15.87 billion trade deficit in year 2009. 

· The total trade for the first five months of 2011 (Jan-May) stood at US$ 29.36 billion, a year-on-year increase of 17.15 %. The trade deficit in this period was US$ 7.69 billion

iii) Bilateral investments

Chinese Investment in India

· 2007- US$16 million 

· 2008- US$49.1 million (Cumulative investment till Dec 2008 was at US$91.1 million)

· Jan-Sep, 2009- US$ 32.7 million. Indian Investment in China

· 2006 - US$52 million 

· 2007- US$ 34 million in 78 Projects

· 2008- US$257 million in 92 projects ( turnover realized was US$88.1 million and the cumulative committed FDI from India into China in the projects till 2008 wasUS$898 million in 426 projects)

· Jan-Sep 2009- 30 million in 57projects.

Chinese Project Contracts in India

· 2007- US$4.56 billion ( turnover realized in 2007 was US$1.99 billion)

· 2008- US$12.9 billion (turnover realized from these projects during 2008 was US$4.3 billion)

· Jan-Sep 2009- US$ 6.4 billion ( Turnover realized is at US$ 4.4 billion) 

· Cumulated value of Contractual Chinese investment (Projects) till June 2009 is US$ 29.6 Billion. The overall turnover realized from these  projects till June 2009 is about US$11 billion

iv) Indian Companies in China

Indian business presence in China is in a range of operations including manufacturing (pharmaceuticals, refractories, laminated tubes, auto-components, wind energy etc.), IT and ITenabled services (including IT education, software solutions, and specific software products), trading, banking sector (major Indian banks from the public and private sector are present in China), and trade and industry associations including CII and FICCI. Air India also has an online station in China. The vehicles for the presence of Indian companies in China are joint ventures with the Chinese partners, wholly owned foreign subsidiaries or through contractmanufacturing.  Some of the prominent Indian companies in China include Ranbaxy, Orchid Pharmaceuticals, Dr. Reddy Laboratories, Aurobindo Pharma, NIIT, Bharat Forge, Infosys, TCS, Satyam Computers, APTECH, Orind Refractories, Essel Packaging, Suzlon Energy, State Bank ofIndia, Bank of India, Punjab National Bank, Canara Bank, ICICI Bank, Bank of Baroda, Reliance Industries, KGK Diamonds, Sundaram Fasteners etc. The total number of Indian companies is slightly over 100.

v) Chinese Companies in India

Many large Chinese State-owned companies in the field of power generation, machinery and infrastructure construction have won projects in India and most of these companies also have a presence in India. These include Sinosteel, Shougang International, Baoshan Iron & Steel Ltd, Sany Heavy Industry Ltd, Chongqing Lifan Industry Ltd, China Dongfang International, SinoHydro Corporation etc. Many Chinese companies into electronics, IT and hardware manufacturing are also based in India. These include Huawei Technologies, ZTE, TCL, Haier etc. Major Chinese projects in India are in the field of infrastructure construction, including roads and bridges, power projects, including EPC and also supply of heavy equipment, industrial projects mainly in the iron and steel sector, including boilers, turbines and pelletization plants, as well as telecommunications.

Cultural Relations

 The broad contours of the India-China cultural cooperation was laid down in the Agreement on Cultural Cooperation signed in May 1988, which provides for an executive Cultural Exchange Programme (CEP) for implementation. The latest CEP signed in Dec 2010 during the visit of Chinese Premier Wen Jiabao to India provides for cooperation in a gamut of cultural fields including exchanges of visits of performing artists, officials, writers, archivists and archaeologists, organizing cultural festivals, film festivals and exchanges in the field of mass media, youth affairs and sports.

In April 2005, a MoU was  concluded between the two Governments and India committed to build an Indian-style Buddhist Temple in the International Garden on the west side of the White Horse Temple in Luoyang, Henan Province. Indian President Smt. Pratibha Patil in May 2010 inaugurated the temple during her visit to China. Earlier in February 2007, the Xuanzang Memorial Hall was inaugurated at Nalanda (India).

A Centre for Indian Studies was inaugurated in Peking University in June 2003. The Centre has a visiting Professor of Hindi on deputation from ICCR. Other visiting Professor chairs were established in Shenzhen University (2008), Jinan University (2010) and Fudan University (Shanghai) (2010).

The year 2008 marked the 70th anniversary of the Indian Medical Mission to China and the two countries organized India-China Joint Medical Mission to commemorate the event. During the visit of Prime Minister Dr. Manmohan Singh in January 2008, the Mission was flagged off. Ten doctors from India visited China in January 2008 and a team of Chinese doctors went to India in the latter part of the year under a MoU between the Indian Council for Cultural Relations (ICCR) and the Chinese People's Association for Friendship with Foreign Countries (CPAFFC). The second version of the same was exchanged in 2010.

 The new Culture and Information Wing of the Mission began functioning from June 2008. A Kathak dance teacher joined the Mission on ICCR deputation to hold classes for dance students. This Wing conducts other events every month, which includes lectures, film/documentary shows, performances, book talks, etc dealing with Indian culture and heritage. The Wing also has an open library with around 3000 reference books on India.

 A Memorandum of Understanding was signed in Beijing in December 2009 by the Governments of India and China to organize the "Festival of India" in China and the "Festival of China" in India in 2010. The decision to hold the two festivals was taken by the  two Governments during the visit of H.E. Mr. Hu Jintao, President of the People's Republic of China to India in November 2006. As part of the Festival of India in China from April to Oct 2010, eleven Indian performing groups performed in 40 cities across China. The Festival also included India Film Weeks in three cities, one large scale Exhibition in three cities, India’s participation at the Beijing International Book Fair – 2010 as Guest of Honor country, a series of food festivals and a Painting Exhibition by Chinese artists on Indian themes, etc.

Defence Exchanges

 Bilateral defence interaction has been growing. Peace and tranquility along the Line of Actual Control in the border areas is being maintained by both sides in accordance with the agreements of 1993 and 1996. During the visit of Premier Wen Jiabao to India in April 2005, additional confidence building measures were agreed to. As part of CBMs, a few activities have been organized along the LAC, including a small joint mountaineering expedition and sports matches between two forces and participation in each others National Days and festivals. 

 Study and goodwill visits have been exchanged between the Armed Forces of both sides over the last few years. The first ever Search and Rescue Exercises between Indian and Chinese Navies were held off the coast of Shanghai in November 2003. The two armies have also participated as observers in each other’s exercises. Military training and academic institutes also have regular exchanges of officers. 

 During the visit of Shri Pranab Mukherjee as Raksha Mantri in May-June 2006, the two sides signed a Memorandum of Understanding for exchanges and cooperation in the field of Defence. The MOU provides for an Annual Defence Dialogue, more frequent high-level exchanges between the two defence ministries and armed forces and training exchanges. In pursuance of this, the first Annual Defence Dialogue was held in Beijing in November 2007, while the first joint training exercise between the two Armies was held in Kunming in December 2007. The second joint training exercise was conducted in India in December 2008, while the second Annual Defence Dialogue was also held in the same month in India. The 3rd  Annual Defence Dailogue was held in Beijing on 6th January 2010. The Chief of Air Staff Air Chief Marshall F. H. Major visited China in November 2008, while the Commander of the PLA Navy Gen. Wu Shengli paid a visit to India at around the same time ---- making it the first time in the history of exchanges between the two armed forces that such high-level exchanges were conducted simultaneously. The Surya Kiran Aerobatic Team of the IAF participated in the Zhuhai Airshow in November 2008. Two Indian ships participated in the International Fleet Review held in Qingdao in April 2009 on the occasion of the 60th anniversary of the PLA Navy. COAS and Chief of Navy Staff Admiral Sureesh Mehta also paid a bilateral visit at this time. Eastern Army Commander Gen V.K. Singh visited China in August 2009. Chinese Deputy CGS Gen Ge Zhenfeng visited India in late 2009. An Indian Army multi-Command delegation visited China from 19-25 June 2011. Besides Beijing, the delegation also visited Urumqi and Shanghai.

Indian Community in China

The Indian community in China is an increasing one. Present estimates put the community’s strength in Mainland China at around 39000, with 5000 in and around Shanghai, 20000 in southern China (Guangzhou, Shenzhen and surrounding areas), and the remaining in Beijing and other areas. Hong Kong has a larger Indian presence, with an estimated 12000 Persons of Indian Origin (PIOs) holding Hong Kong Special Administrative Region (HKSAR) and British National Overseas (BNO) passports, apart from passports of other countries. There are also a further 23000 Indian Passport holders in Hong Kong. A major component of the community in Mainland China is students. Over 6700 Indian students are enrolled in various Chinese Universities, particularly in Chinese medical universities where they are pursuing MBBS studies. A number of Indians, including PIOs, are professionals employed with multi-nationals, UN and other agencies, and multilateral organizations. Many Indians are also employed with representative offices of over  100 Indian companies in China. In Mainland China, the Indian communities in Beijing, Shanghai and Shaoxing have set up community associations, known respectively as the Indian Community of Beijing, Shanghai-Indian Association and the Shaoxing Indian Business Association.August 2011