The Updated Paradigm

Edited text of the Admiral RD Katari Memorial Lecture by the Minister of ExternalAffairs on November 22, 2003:  The Emerging India-China Relationship and ITS Impack on India / South Asia


I have been asked to share a few thoughts with you on one of the most important bilateral relationships wehave. Let me begin on a somewhat provocative note by saying that the title of this lecture – "The EmergingIndia-China Relationship and its Impact on India/South Asia" – represents a particular mind-set that is nolonger valid.

This is because first, I think that the relationship between India and China today ismature enough to be seen as having "emerged" rather than "emerging", though in a sense the relationsbetween these two large countries will always remain a work in progress. Secondly, the impact of ourrelationship is global and to restrict the canvas to South Asia is to limit the scope of our understanding ofIndia-China relations.

Let me substantiate my first contention regarding the maturity of the relationship betweenIndia and China. In recent years, relations between India and China have progressively developed anddiversified. This is a process that both governments have consciously promoted.

Our Prime Minister’s visit to China marked the beginning of a new phase in theIndia-China relationship. It was a historic visit, the results of which have surprised many. During the visit,the leaders of the two countries agreed that we should qualitatively enhance the bilateral relationship in allareas, while addressing differences through peaceful means in a fair, reasonable and mutually acceptablemanner. We agreed that the common interests of the two sides outweigh their differences, and that they are nota threat to each other.

For the first time, the two Prime Ministers signed a Joint Declaration. It is an importantdocument, which outlines the principles and shared perspectives that will guide the future development of ourbilateral relations. The Declaration sends a signal to Asia and the world that our two countries are committedto working more closely together, including through our common desire to strengthen the trend towardsmulti-polarity.

I will illustrate the maturity of the present state of our relations with China with a fewobservations, which do not attempt to present a comprehensive picture. First, India and China have todayextensive dealings in bilateral, regional and multilateral forums. We are seeking improved relations with eachother without pre-conditions.

We continue to have differences, including an unresolved boundary issue, but over theyears, we have, together, evolved a remarkable matrix of relations, under which we have consciously decided to"compartmentalise" our differences and address them without letting them come in the way of thedevelopment of relations in other areas. We have not allowed our differences to define our relationship. It isa pragmatic model of inter-state relations, which has obvious relevance in other situations, including in ourdealings with Pakistan.

Secondly, it is a relationship that is characterised by a strong political commitment, and indeed investment,by the leaderships of the two countries. This is evident in the pattern of high-level exchanges. There is noobjective reason for discord between us. We also believe that mutual exclusion or containment is not a validpolicy choice.

At the same time, we are fully aware that there is a deficit of trust, which must beaddressed as the two countries move towards their shared vision of a constructive and cooperative partnership.Our Prime Minister’s visit to China represented a major step forward in that direction.

Thirdly, the level of mutual understanding that has been achieved is exemplified by oursuccess in maintaining peace and tranquillity along the border. It is no mean achievement considering that wehave a common border that extends for almost 3500 kilometres and where there are clear differences ofperception, both in terms of the boundary and the Line of Actual Control (LAC).

You are aware that in the late 1980s, there was tension along the border, particularlyafter the Wangdung incident, but the two countries responded in a sensible manner and have over the yearscarefully put in place an edifice of CBMs, of dialogue and interactions at the diplomatic and bordercommanders levels, of service-to-service exchanges, including the first-ever joint search and rescue exerciseconducted by our Navies only a week ago.

This has helped preserve and reinforce peace, tranquillity and indeed amity in borderareas. We are engaged in clarifying the LAC, a process that must be expedited. During the Prime Minister’svisit to China, the two Prime Ministers appointed their Special Representatives to explore the framework of aboundary settlement from the political perspective of the overall bilateral relationship. It is an issue Iwill return to a little later in my talk.

Fourthly, bilateral economic and commercial interactions have acquired an altogether newdimension now. Possibly for the first time in the exchanges between India and China since our independence, wehave now a significant economic aspect to this relationship. Our bilateral trade has shot up from around US $200 million in the early nineties to around US $ 5 billion in 2002, and this year we hope to reach US $ 7billion.

Indian business and industry have overcome their initial cultural and commercialapprehensions of Chinese business and are strengthening their linkages in a pro-active manner. Enhanced tradeand investment linkages not only make great economic sense but also provide ballast to the politicalrelationship; mutual economic stakes will be a factor of stability in a relationship, which has seen many upsand downs in the past.

Finally, the India-China dialogue already transcends bilateral relations to encompass international issuessuch as security, environment and sustainable development. These are being discussed through dialoguemechanisms which have recently been extended to new subjects such as counter terrorism and policy planning.

Our deliberations in these forums have revealed a growing convergence of views on keyissues, including on terrorism. We have an increasing commonality of interests within the WTO and overlappingconcerns on globalisation, as was evident at the recent ministerial meeting at Cancun. Our coordination andcollaboration in various multilateral institutions is expanding into newer and newer areas.

Both countries seek to reinforce multilateralism and multi-polarity. The concept ofmulti-polarity must not, however, be mistaken for creating poles in opposition to each other. We do not wantto reinvent the confrontationist model of the Cold War. Both India and China look upon the next twenty yearsas a window of strategic opportunity to raise the living standards of their peoples.

It is clear that as in India, there is also a need felt in China to improve the bilateralrelations. This is not only because together we represent one-third of humanity. This has much to do with thechanging perceptions about India, her economic success, her achievements in the field of science andtechnology, and global reach and dynamism of her foreign policy.

It is also a factor of our steadily improving relations with the United States, thecontinued strategic partnership with Russia, our comprehensive partnership relations with the EU and itsconstituents, and our initiatives in West Asia, CIS countries, Africa and Latin America. It also has to dowith our improving relations with other Asian countries, particularly ASEAN.

It has to do with the increasing scope of potential cooperation between India and China inregional and multilateral forums, as we face new global challenges such as terrorism, drugs and piracy, aswell as dangers in the fields of public health, environment, etc. It has to do with the fact that we are bothin the forefront of developing countries and have similar approaches to many global and regional issues.

It is clear that both India and China respect each other’s independent foreign policiesand are adjusting their relationship to take into account the new global realities, each other’s growth asvibrant nations and economies and also in response to the dynamics operating regionally and globally.

Let me also clarify here what does not drive our relations with China. There are some whoargue that India’s relations with the United States could be used as a counterforce against China. Wecategorically reject such notions based on outmoded concepts like balance of power. We do not seek to developrelations with one country to ‘counterbalance’ another.

We value our relations with both China and the USA and both relationships have their owncompelling logic. We must also debunk the theory that India’s ‘Look East’ policy of greater engagementwith ASEAN is somehow aimed at containing China. Indeed, as I have stated at other forums recently, we havenow entered Phase-II of the ‘Look East’ policy, which encompasses not only the ASEAN Ten but also China,Japan, and other countries of East Asia, including Australia and New Zealand.

I would also like to reiterate, what I have said earlier, that we reject the theory that aconflict between India and China is inevitable. India neither pursues nor makes policy towards China based onthe belief that the conflict between the two is inevitable. India’s approach to China is and will remainforward-looking and full of optimism. It will not be driven by a sense of either fear or envy.

We are convinced that both countries can grow strong and prosperous in partnership ratherthan in conflict, and maintain their independence and national character in the process. While it isundeniable that China and India are in some sense competitors, it is also clear that, just as the US andEurope, we can be both partners and competitors at the same time. All that is required is that thiscompetition be healthy.

This also relates to the level and rate of success achieved by the different developmentparadigms followed by India and China. While China may be seen by some as currently being ahead in thiscompetition, India’s success is clearly recognised and better understood now nationally and internationallythan before. The management of this competition is the challenge and the Joint Declaration signed during PrimeMinister’s visit to China provides an agreed via media for that.

Likewise, the argument that the dominant theme of China’s South Asia policy is to preventthe rise of a potential rival or competitor in the form of India is a defeatist argument. There are probablysome in our neighbourhood who seek to play their "China connection" or "China card" to "counter"or even "contain" India. The bankruptcy of this approach is however becoming increasingly evident. Chinacannot objectively be a competitor for India in South Asia.

Destinies of the countries of South Asia are interlinked by the overwhelming logic ofhistory, geography and economics. I believe the current relationship between India and China is certainlybeneficial for each other and for South Asia. That India and China have succeeded in maintaining peace andtranquillity on their borders, and are steadily increasing the lines of communication between them, brings alarge measure of stability to the region.

We do not and should not judge our relationship with China in the context of our bilateralrelations with any other country, whether in the region or outside the region. It also means that othercountries need to adjust their own equations with both India and China to factor in the reality that it is nolonger a matter of playing one against the other. It must also be recognised that increasing cooperationbetween India and China in the multilateral arena, which is a sub-set of our current relationship, will alsohave a positive cascading effect on the region, especially on issues relating to the interests of developingcountries.

As I have stated earlier, during Prime Minister’s visit to China in June this year, bothcountries agreed to qualitatively enhance their bilateral relationship in all areas and also charted out aroadmap for doing so. Let me share with you some of my thoughts on what can be done by India and China tobring about a quantum jump in the relationship.

While the basic paradigm of the relationship – of seeking improved relations at all levels and in diverseareas while addressing differences – remains valid, the time has perhaps come to deal with some of thoseoutstanding issues in a determined manner, without postponing tough decisions for the next generation. Webelieve the relationship has reached a level of maturity where we can discuss those issues with a greatersense of urgency. This updated paradigm of relationship is both desirable and sustainable.

The initiative on the appointment of the Special Representatives flows from such anassessment. As Prime Minister stated recently, a final resolution of the boundary question is a strategicobjective and both countries should be ready to take some pragmatic decisions to achieve it. While India andChina agree that their differences should not be allowed to affect the overall development of bilateralrelations, there is little doubt that a boundary settlement will give a major boost to the relationship. Itwill also send a powerful signal to the rest of the world that India and China have broken out of the shacklesof the past.

Secondly, the two countries must pay closer attention to each other’s sensitivities andaspirations. This has been agreed to in the Joint Declaration signed by the two Prime Ministers. We have takena principled position on issues like Tibet and Taiwan, and our position is appreciated by China. We are happythat the understanding reached during Prime Minister’s visit to China started the process by which Sikkimwill soon cease to be an issue in India-China relations.

Some aspects of China’s relations with Pakistan, including their nexus in nuclear andmissile proliferation, however, continue to cause serious concern in India as they have a direct and negativebearing on our national security environment. We regard China as a friend and we expect friends to showgreater sensitivity to our security concerns. It is also important that both countries acknowledge eachother’s strengths and aspirations, and try to ensure that each has sufficient strategic space in keepingwith the principle of multi-polarity to which both India and China subscribe.

Thirdly, we must be far more pro-active and ambitious in developing our economicpartnership by exploiting more fully our complementarities and the new opportunities created by globalisation.Though our bilateral trade has shown an impressive increase in recent years, the turnover is still less than1% of China’s overall trade, which is expected to reach US $ 800 billion this year. India-China trade isquite inadequate when compared to the complementarities that exist.

For the first time, the business communities of the two countries are seriously looking ateach other, with optimism and not with anxiety, and the two Governments must encourage this process withappropriate policy initiatives. Our economic engagement must be commensurate with the fact that India andChina have two of the fastest growing economies in the world. A recent report by Goldman Sachs projects thatIndia’s economy will overtake that of France, Germany and Japan in less than thirty years and emerge as thethird largest economy in the world in US dollar terms (and not just in Purchasing Power Parity), next only tothat of the USA and China.

I believe that we in India must be ambitious, and not excessively cautious. Our experienceduring the last two-and-a-half-years has shown how our apprehensions regarding Chinese goods overwhelming ourmanufacturing sector, following the lifting of quantitative restrictions on imports, were greatly exaggerated.This is a matter of some personal satisfaction to me because, as Finance Minister, I was at the receiving endof all this criticism.

I do expect that the India-China Joint Study Group, agreed upon during Prime Minister’svisit, will examine the feasibility of an upgraded bilateral framework for relationship, including a FreeTrade Area. I know that some will receive this suggestion with disbelief and regard it as premature, as theydid when Prime Minister proposed a framework agreement for a Free Trade Area between India and ASEAN just overa year ago.

But the fact is that we have already concluded a framework FTA with ASEAN. An Asian FTA,including China, Japan and South Korea, apart from ASEAN and India should therefore be within the realm ofpossibility. Indeed, I am also inclined to believe that in the years to come, India and China will be keypartners in regional economic arrangements transcending Asia.

Finally, it is in the interest of both India and China to continue to raise the level ofmutual trust and understanding. We must upgrade the quality of our dialogue and continuously address eachother’s concerns in a frank but constructive manner, not as adversaries but as friends, convinced that thereis no fundamental contradiction in our basic interests.

The degree of positive or negative influence which the actions of other countries can haveon the bilateral relationship between India and China is proportional to the level of mutual trust andunderstanding that exists between us. It is important to continue in the conflict resolution mode that nowexists between India and China, and indeed accelerate this process, not only because it is beneficial to usbut also because it is beneficial to the region, and to the world.