India engaged
with the world’s second and third largest economies over the past two weeks. The
Chinese premier Li Keqiang made his first stop in India on his four nation
itinerary. The visit happened weeks after Chinese military pitched tents 19 km
inside Indian territory in early April. The incident attracted international
attention and set rolling diplomatic manoeuvres between India and China. The
standoff was resolved just in time to salvage the state visit of External
Affairs minister Salman Khurshid to China and recently concluded visit of Mr Li
to India.
China’s
relationship with India has not been smooth in the past decades. Much like China’s strained
relationship with its other neighbours in South China Sea, its relationship
with India is soured over a border dispute (both countries fought a brief war in 1962, which India lost). Despite the border issues and lack
of mutual trust both countries do significant amount of trade between them.
China is India’s largest trade partner with total trade in 2012 at USD 66
billion (a decline of 12% over 2011). While trade is a good sign of cooperation
and stability between the two countries, the fundamentals of a lasting peaceful
coexistence are missing. Both countries accuse each other of encircling eachother with strategic assets in its immediate neighbourhood. The long standing
border dispute, one of the main reasons for lack of trust is not heading
towards a solution. China and India are rapidly building up their military and
naval powers much to the dislike of each other.
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| The hand across the Himalaya |
Given the
strained relationship of India and China the visit of premier Li should have
been used to start a process of easing the tensions. Sadly the visit ended with
lot of politically correct statements and eight uninspiring documents signed by
the two sides. Of these eight documents only two were of any real value. The
first is the work programmes of three working groups for services and trade
promotion, economic and trade planning and trade statistical analysis. The
second is sharing of information on Brahmaputra (a river in north eastern India, which originates in Tibet) during flood seasons. The other
six documents deal with Kailash Mansarovar yatra (a Hindu pilgrimage
in Himalayas now under Chinese control), meat quarantine, sewage treatment,
irrigation, translation and publication of classical work and identifying
sister cities. Mr Li however reiterated that the handshake across the Himalaya
is now stronger than before. When two fastest growing emerging economies sign
agreements on sewage treatment and meat quarantine it can hardly be seen as a
handshake. It was more of a nodding from a distance than a real handshake.
The more
interesting visit is however that of India’s prime minister Mr Manmohan Singh
to Japan. Japan, like many other countries in the region shares an uneasy relationship with China which goes back
to the days of imperialist Japan. On top of that both countries have seen loud sabre
rattling over a group of uninhabited islands (Senkaku to Japanese and Diaoyu to
Chinese) recently. In fact the situation there is much more volatile than that between India and China. The rise of Mr Shinzo Abe, a nationalist as the prime
minister of Japan has made matters worse for China. He has taken an aggressive
stand against the long stagnation of the economy and is projecting himself as a
man who wants to restore the lost glory of Japan.
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| Lets do it together |
At the end of
the visit India and Japan agreed on various issues ranging from civil nuclear
energy cooperation, possible technology transfer of an amphibious aircraft the
US-2, funding for urban infrastructure, funding of Chennai – Bangalore industrial
corridor, a high speed train between Mumbai and Ahmedabad, educational grants
and so on. This kind of cooperation will have a long lasting impact on the
bilateral relationship and will create opportunities for both countries in the
near future. India with its growing economy and younger population is a large market for Japanese investments.
At present Japan is the second
largest foreign investor in China with a total investment of USD 70 billion. A
survey by Japan export trading organisation last year showed that India is emerging as the most preferred alternative
site for Japanese investment. Japanese companies are facing problems in China
due to the political relations of the two countries. Industry experts say that
even if a small fraction of the Japanese investment in China moves to India it
will create many jobs and boost industrial production.
The difference
between the two visits is stark. The Chinese visit can at best be considered as
a step towards an attempt to forge good relationship. The Japanese visit on the
other hand is graduation of a long relationship into that of a natural indispensible
partnership.
