Created: 9/1/1994

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Intelligence Report

fire of Near Eastern and Soulh Asian Analysis

India: Improved Relations With China Tempered by Conflict and Competition

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Office of Near Easiem and Soulh Asian Analysis

India: Improved Relations With China Tempered by Conflict and Competition


India: Improved Relation* Wllh China Tempered by Conflict and Compctilfon

n"Kiuitnd political benefits from -ofis^ntaiw ihe rapprochement that has developed over the past three years:

India is benefiting from increased trade with China, according to

ppen lources, and is seeking to expand other

Types uio Indian economic cooperation.

between India and China will probably flare intermitiendv because of unresolved issues, such as the Sino-Indian bonier dispute. India coniuiuesave concerns about the long-term miliiary threal China poses. Moreover, relations ore likely to be strained by increased competition for foreign investment and access to international markets:

Despite iheir efforts over the past six years. India and China have been unable to resolve their border dispute, and progress is likely to be slow.


India regards China as its greatest competitor for access to foreign investment and inlcmational markets, according to press reporting.

HIS* I*24

India: Improved Relations With China Tempered by Conflict and Competition

the Relationship

Relations between India and China have beensince themv competing tcniicralcbbms alonglomeier border.ndia and China engagedonihlong miliuvy conflict over the disputed border in which India suffered humiliating territorial losses on iu northwestern border in ihe area known as AM Chin. They again came id the brmk of war7 over competing claims to Wangdung Ridge in the northeast but managed to avoid mililary confrontation.

In Ihe aftermath of7 border crisis. New Delhi and Beijinf Kxighl way* id improve oVir relations. The upturn tn relations began8 when then Indian Prime Minister Rajiv Gandhi visited Beijing. The end of the Cold War provided further impetus to improved relations. Wilh (hecollapteof the Soviet Unionndia lost its principal tourer, of mililary and economic aid and was forced to search (or new partners. China, for its pan. no longer Ind ui worryostile Soviet-Indian alliance, which made it possible for Beijing toelations with New Delhi.

Ia recent years India and China have recognized that they share common interests and perspective* on irnportam latemational issues sach as nonproliff rauon and human rights. Both countries resist cMcmal pressure on these issues us interference in their iniemaJ affairs, even though India would like lo see China cease its weapons assistance lo Pakistan Their mutual support in these areas has helped ease bilateral Krcaons and provided additional momentum lo improving relMtoM.

The growing rapprochement between India and China has been underscored hy high-level exchanges since Gandhi's visit

Ini Peng became Ihe first Chi Premier io visit India inears.

The Sino-lndlan BonUr ConjVcl

India and China have fought over ihrir border dace tar Al the Simla Conferencehe Untied Kingdom andloiter considered by London to be politically autonomous at thea border agreement establishing the Mentation line China refused lo recognise die agreement, denying Tibetan attlhoeity to make ihe agreement. (IS)

ndia and China rngegtdonihlong military conflict over the disputed border thai resulted in major territorial gains for China in<-Chin.esult of India's defeat. China claimed territory south of the McMahon line,ew line of control that India does not recognue. I" iheir unilatertli erase fire ofhe Chinesehlometer buffer tone and warned India not to try to reoccupy the tone north of the line of control. (U)

The buffer tone helped maintain peace in the regionhen tensions between India and China escalated to the brink of military confrontation. Chinese border patrols provoked Indian forces when they established bases on Indian-claimed territory at Wangdung Ridge India countered the Chinese move by increasing its forces in the area. During the standoff. India and China responded to what each side perceived as provocation by ureng-hening forces in the border area. The large number of troops amassed on either side of the border0 each) probablyater military confrontation, ond the two countries returned to the negotiating table in November.

Inndian President Vcnkaiaraman met with Li in Beijing. This resulted in an agreement io settle the Sim-Indian border dispute through negotiations.

India's Expeditions

Economic Growth and Dtttlopmrni. India is already benefiting from increased trade and improved economic



eooperatioo with China, especially since ihc balance of uadc currently favors India:

India has entered into at least five joint ventures with Chinas of vice! arJ cenvnt production, coal mining, and pharmaceutical manufacturing, totthe Indian press reports thai India's largest drug manufacturer, Ranbaxy Laboratories Limited, will holdercem equityillion pharmaceutical joint venture with two Chinese companies.

According to press reporting. Chinese investment in India through coHaboraiive ventures tmalcd


Sino-Indian Relations From China's Perspective

China'I mutations for improving relations with India include the need totable regional environment for China's economic growth and improvedrelations following the collapse of the USSR. China has shifted at approachouth Asiaapitalite on ike new opportunities brought about by the end of the Cold War. Beijing is strengthening its political and etonormc links to India to counter what ii sees as efforts by ihe West to fill Ihe polilical rap left by the decline of Soviet influence in the region.

China is expanding Us relationship with Indiaeans of reassuring few Delhi that China't relations with Pakistan are benign. Beijing's goalough balance of power in the subcontinent between India and Pakistan and thus attempts to maintainties to both. Similarly. Beijing views its continuing relationship with Islamabaday lo limit India'so establish preeminence In South Asia.

Military strategists and defense experts writing in the Indian Defence Review have argued that, whether they are used to reinforceulnerable sectors such as Punjab or to add muscle to one of die strike corps, additional troops withdrawn from the border near Tibet could makcamapi difference in the north and wesi

Indian representatives rdysppori of iheir Ounew:advanceargument (hat Australia Oroup export control guidelines violate the chemical and biological convention*.

India and China hive bong offered lintilaa cniufucs of

the nuclear NcchProl derationas

pward developing countries.

Redirecting Military Commitments. Improved Sow Indian rekboni hart prompted Indian military leaden to reassesi iheu posture along the Chinese border and begin redirecting their forces as port of an effort to reduce defenie expenditure*;

Enduring Obstacles

Although bilateral relations have improved, unresolved sources of tension continue to impede rapid progressenuine or complete Sino-Indian rapprochement Despite recent progress, resolution of the border dispute is unlikely In Ihe next few years because of Indian political communis Tensions between New Delhi and Beijing will also be iharpened from time to lime by Indu's protection of Tibetan exiles. New Delhi's primary concern will conunue to be the long-trim military threat it tecs China posing to Indian national security. |

Border Dispute. India and China have been unabletheir border dispute despite efforts over theyears:

China has proposed resolving the dispute by offering to cede the Himalayan Sikkim region to India in exchangeeciprocal concesswn from New Delhi in Aksai Chin. I

Domestic political constraints significantly Until New Delhi's flexibility in dealing with the issue:

Indian Apatity Orer Recent Chinese Military Buildup In Tibet

New Delhi appeared unconcerned aboui ihe Chinese military buildup tn Tibet in May, which was probably to deter Tibetan unrest. Accordingress report, an Indian Defense Ministry spoketman dismissed the Chinese mdoory tniildup in Tibet and claimed that the border situation with China was "absotuielyf India had penttved China's actions as threatening, precedent suggests that New Delhi would haveemarche to Beijing or moved additional troopshe border with China

National Security.crcepbon of the ih/ca* posed by China'i military capabilities, weapons development programs, and military relationship* are another key source of tension in Sino-Indun relations.

Beijing's weapons oevelopment ellorlt. its support id Pakiuan. and itsurma fuel Indian suspicions and are ma jar obstacles id rapprochement.

I ndian businessmen are increasingly concerned about Chinese competition in areas such as garments, sprees, and apuaculiure that are important export markets for India, according to Indian press


ptti lirta

The pursuit of economic development and recognitionlobal power arc two key areas where con petition between India and China is likely to generate new tensions in their relationship.!-

Alihoufhenefits from expand ng trade relations the Chinese. Inctia regards China as its greatest competuor lor accessoreign irwestment and

The Indian press continually cacs China'sha* Beijing is attractingould oiherose go io India. For example,hina drewillion hi foreign investment compared toillion.aid-in mrestment in China surgedecordillion, more than rive limes7 billion.3

India's aiiludc toward its relations with China is likely lo remain ambivalent, reflecting New Delhi's simultaneous pursuit ofpotentially contradiciorypolicy objectives New Delii will be able io manage this ambivalence, in our view. It will continue its efforts to expand economic relations midroader Chinese market tor Indian goods and services. Diplomatic advantages gained from closer ties toeffectiveness at thwarting inirmiiiKMvil pressure on nonproliteration and human nghu, and backingermanent seat on die UN Securityremain paramount. P

To balance iu relations with China. New Delhi will seek benefits from improved tiesother countries, mch as Ihe United Stales and Russia- New Delhi willfforts to urge tne United States lo restrict China's nuclear weapons program, which India perceiveshreat. India has vowed not lo sign anyrapro*iferauoo agreement, such as the global teil ban treaty and fissile matenaJ treaty, unless efforts arc made io curtail China's nuclear program. Finally, India will seek Russian weapons contractsompete railiiarily with China and Pakistan.

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