What’s in Today’s Article?

• India – China Bilateral Relationship (Historical Background, Economic Ties, Strategic Cooperation, Challenges, etc.)
• News Summary

Historical Background:

• The relationship between India and China dates back over two millennia, with deep-rooted cultural and economic ties through the Silk Road.
• However, their modern diplomatic relationship began post-independence, with India becoming one of the first non-communist countries to recognize the People’s Republic of China (PRC) in 1950.
• The relationship faced a significant setback due to the Sino-Indian War of 1962, which created a long-lasting border dispute, particularly in the Ladakh and Arunachal Pradesh
• Despite several rounds of negotiations, the border issue remains unresolved, casting a shadow over their bilateral relationship.

Economic & Commercial Ties:

• Economic cooperation between India and China has grown rapidly, despite political differences. As of 2023:
  • China is India’s largest trading partner, with bilateral trade exceeding $135.98 billion in 2022-23.
  • India’s imports from China, primarily in electronics, machinery, and chemicals, contribute to a significant trade deficit, which stood at $83.2 billion in 2022-23.
  • Conversely, India's exports to China, which include iron ore, cotton, and other raw materials, are considerably lower, raising concerns about economic dependency on Chinese imports.
• However, recent years have seen India adopting measures to reduce this trade deficit and enhance domestic production capabilities through initiatives like Atmanirbhar Bharat.

Strategic Cooperation:

• Despite tensions, India and China have cooperated on various global platforms:
  • Both countries are part of multilateral organizations such as BRICS, Shanghai Cooperation Organization (SCO), and the Asian Infrastructure Investment Bank (AIIB), reflecting their shared interests in regional and global governance.
  • India and China are key stakeholders in the Regional Comprehensive Economic Partnership (RCEP), though India has refrained from joining the agreement citing concerns over Chinese dominance in trade.
  • There has also been collaboration on climate change, where both countries push for greater action by developed nations while advocating for the rights of developing countries.

Challenges in Relationship:

• Despite strong economic and multilateral engagements, the India-China relationship faces several challenges:
  • Border Disputes: The primary challenge remains the Line of Actual Control (LAC). Tensions escalated in 2020 with the Galwan Valley clash, leading to casualties on both sides.
    • Even though there have been multiple rounds of military and diplomatic talks, the situation remains fragile, and troop standoffs continue in parts of the LAC.
  • China-Pakistan Nexus: China’s close strategic and economic ties with Pakistan, particularly through the China-Pakistan Economic Corridor (CPEC), which passes through the Pakistan-occupied Kashmir (PoK) region, is a significant point of contention for India.
  • Belt and Road Initiative (BRI): India has raised concerns over China's BRI project, which it perceives as undermining its sovereignty, especially given the CPEC's route through disputed territories.
  • Trade Imbalance: The growing trade deficit continues to be a major challenge for India, along with concerns over China’s trade practices and its impact on domestic industries.

News Summary:

• On October 23, 2024, Prime Minister Narendra Modi and Chinese President Xi Jinping held their first formal talks in five years on the side-lines of the BRICS summit in Kazan, Russia.
• This meeting signals an important step toward recovery in India-China relations, which were severely damaged by the 2020 military clash in Ladakh.
• Both leaders emphasized the need for maturity, mutual respect, and efforts to ensure peace and stability in their ties.
• Prime Minister Modi highlighted the importance of not allowing border-related differences to disturb peace and tranquility at the borders, while both sides welcomed the recent border agreements that resulted from sustained dialogues over the past few weeks.
• Modi and Xi stressed that a stable bilateral relationship between India and China would have a positive impact on regional and global peace.
• Diplomatic efforts have gained momentum in recent months, with talks focused on easing the border tensions.
• The discussions may also pave the way for potential Chinese investments in India, as India had made improving business ties contingent on resolving the border stand-off​.