India-China relations is an important topic from the GS Paper II, International Relations
perspective of the UPSC Exam.
The People’s Republic of China (PRC) was established on October 1, 1949, and India was
the first non-communist country to establish an Embassy in PRC. On April 1, 1950, India and
China established diplomatic relations. The two countries also jointly expounded the
Panchsheel (Five Principles of Peaceful Coexistence) in 1954.
India and China mark the 1st of April 2020 as the 70th anniversary of the establishment of
diplomatic relations between them starting from 1950 till now.
To know about the basic overview of India’s Foreign Policy, visit the linked article.
From the IAS Exam perspective, the relation between India and China is an important topic
and aspirants must be aware of the latest bilateral development between the two countries.
India-China Relations:- Download PDF Here
India-China Relations – Latest Developments
Army Chief Gen Manoj Naravane had taken a review of the situation and
announced that further steps will be taken to de-escalate the situation
while calling for restrain from personnel of both the Armies.
A major incident had occurred in the stand-off between India and China
in Ladakh on the night of 15th June 2020. One Commanding Officer and
two jawans of the Indian Army lost their lives during a violent face-off
with Chinese troops in the Galwan area of Eastern Ladakh. These are the
first combat deaths on the disputed boundary since 1975. In total, 2o
Indian soldiers were martyred in the clashes. Indian Army had given a
befitting reply to the Chinese Army and as per different Indian media
reports, the Chinese Army lost a substantial number of soldiers in the
ensuing conflict.
Following a high-level visit by commanding officers of both the Indian
and Chinese forces, the Chinese army on June 9th, 2020 agreed to
withdraw about 2-2.5 km away from the disputed territory, with the
Indian army also agreeing to disengage at some locations. Talks for
further disengagement are to continue in the coming days.
In the initial weeks of June 2020, there was a substantial buildup of
troops on both sides of the LAC, with both the Indian and Chinese army
matching strength for strength
On 10 May 2020, Chinese and Indian troops clashed in Nathu La, Sikkim
(India). 11 soldiers were injured. Following the skirmishes in Sikkim,
tensions between the two countries grew in Ladakh with a buildup of
troops at multiple locations.
India’s response to the recent India- China Clashes
Economically –
1.
1.
The government has banned 59 apps of chinese origin citing the “emergent nature of
threats” from mobile applications.
Though the tensions on the border, as well as the Covid-19 pandemic, have thrown light on
India’s economic dependencies on China but India’s trade deficit with China fell to $48.66
billion in 2019-20 on account of the decline in imports. The trade deficit stood at $53.56
billion in 2018-19 and $63 billion in 2017-18.
However, in several critical and strategically sensitive sectors such as pharmaceutical
ingredients, semiconductors and the telecom sector, where Chinese vendors are involved
not only in India’s 4G network but in on-going 5G trials, India remains reliant on Chinese
products only.
Military –
India has moved in additional divisions, tanks and artillery across the LAC to match Chinese deployments.
Further, India has approved the purchase of 33 Russian fighter jets and upgrades to 59 war planes at a cost
of Rs. 18,148 crore.
Foreign Investment –
1.
Foreign Direct Investment (FDI) from China in India has dipped to $163.78 million in 2019-20
from $229 million in 2018-19. In April 2020, the Indian government tightened FDI norms coming
from the countries which share land borders with India. Government approval has been made
mandatory. Read more on Foreign Direct Investment (FDI) on the linked page.
On 11 October 2019, Chinese president Xi Jinping met with Indian prime
minister Narendra Modi at Mahabalipuram, Tamil Nadu, India for a
second informal meeting between India and China.
In 2019, India reiterated that it would not join One Belt One
Road initiative, stating that it cannot accept a project that ignores
concerns about its territorial integrity.
In May 2018, the two countries agreed to coordinate their development
programs in Afghanistan in the areas of health, education, and food
security.
On 18 June 2017, around 270 Indian troops, with weapons and two
bulldozers, entered Doklam to stop the Chinese troops from constructing
the road. Among other charges, China accused India of illegal intrusion
into its territory, across what is called the mutually agreed China-India
boundary, and violation of its territorial sovereignty and United
Nations Charter.
On 28 August 2017, China and India reached a consensus to put an end to
the border stand-off. Both of them agreed to disengage from the standoff
in Doklam.
On 16 June 2017 Chinese troops with construction vehicles and road-
building equipment began extending an existing road southward in
Doklam, a territory which is claimed by both China as well as India’s ally
Bhutan.
In September 2014 the relationship became strained as troops of the
People’s Liberation Army (PLA) reportedly entered two kilometers inside
the Line of Actual Control (LAC) in the Chumar sector. The next month,
V. K. Singh said that China and India had come to an “agreement of
views” on the threat of terrorism emanating from Pakistan.
Read about Silk Road Economic Belt in the linked article.
Background of India-China Relations
1. Chinese Premier Zhou Enlai visited India in June 1954 and Prime
Minister Nehru visited China in October 1954. Premier Zhou Enlai again
visited India in January 1957 and in April 1960.
2. The Sino-Indian conflict, which took place from October 20 in 1962 led
to a serious setback in bilateral relations. India and China restored
ambassadorial relations in August 1976.
3. Higher political level contacts were revived by the visit of the then
External Affairs Minister, A.B. Vajpayee in February 1979.
4. The Chinese Foreign Minister Huang Hua paid a return visit to India in
June 1981. Prime Minister Rajiv Gandhi visited 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 a fair, reasonable, and mutually acceptable
solution on the boundary question – and a Joint Economic Group (JEG).
5. 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, providing for both sides to respect the status quo on the
border, clarify the LAC where there are doubts and undertake CBMs.
6. 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.
7. 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 the adoption of concrete measures between the
two militaries to enhance exchanges and to promote cooperation and
trust.
8. India-China political relations are enhanced and strengthened by various
mechanisms. There is a close and regular interaction between strategic
and foreign policy think-tanks.
To know more about the major boundary lines of the world, visit the linked
article.
Relations After Nuclear Test
After the nuclear tests on 11 May 1998, the relations faced a minor setback.
External Affairs Minister Jaswant Singh visited China in June 1999 and both
sides reiterated that neither country is a threat to the other. President K.R.
Narayanan’s visit to China in May – June 2000 marked a return to high-level
exchanges. Premier Zhu Rongji visited India in January 2002. 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 the 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.
From the context of India-China, read the related articles linked below,
for UPSC 2022:
Indian Companies in China
With the growth in bilateral trade between India and China in the last few years,
many Indian companies have started setting up Chinese operations to service
both their Indian and MNC clientele in China. Indian enterprises operating in
China either as representative offices, Wholly Owned Foreign Enterprises or
Joint Ventures with Chinese companies are into manufacturing
(pharmaceuticals, refractories, laminated tubes, auto-components, wind energy,
etc.), IT and IT-enabled services (including IT education, software solutions,
and specific software products), trading, banking, and allied activities.
While the Indian trading community is primarily confined to major port cities
such as Guangzhou and Shenzhen, they are also present in large numbers in
places where the Chinese have set up warehouses and wholesale markets such
as Yiwu. Most of the Indian companies have a presence in Shanghai, which is
China’s financial center; while a few Indian companies have set up offices in
the capital city of Beijing. Some of the prominent Indian companies in China
include Dr. Reddy’s Laboratories, Aurobindo Pharma, Matrix Pharma, NIIT,
Bharat Forge, Infosys, TCS, APTECH, Wipro, Mahindra Satyam, Essel
Packaging, Suzlon Energy, Reliance Industries, SUNDARAM Fasteners,
Mahindra & Mahindra, TATA Sons, Binani Cements, etc. In the field of
banking, ten Indian banks have set up operations in China. State Bank of India
(Shanghai), Bank of India (Shenzhen), Canara Bank (Shanghai) and Bank of
Baroda (Guangzhou), have branch offices, while others (Punjab National Banks,
UCO Bank, Allahabad Bank, Indian Overseas Bank, Union Bank of India, etc.)
have representative offices. Apart from PSU banks, private banks such as Axis,
ICICI also has representative offices in China.
India-China Relations:- Download PDF Here
Chinese Companies in India
According to information available with the Embassy of India, close to 100
Chinese companies have established offices/operations in India. Many large
Chinese state-owned companies in the field of machinery and infrastructure
construction have won projects in India and have opened project offices in
India. These include Sinosteel, Shougang International, Baoshan Iron & Steel
Ltd, Sany Heavy Industry Ltd, Chongqing Lifan Industry Ltd, China Dongfang
International, Sino Hydro Corporation, etc. Many Chinese electronic, IT, and
hardware manufacturing companies also have operations in India. These include
Huawei Technologies, ZTE, TCL, Haier, etc. A large number of Chinese
companies are involved in EPC projects in the Power Sector.
These include Shanghai Electric, Harbin Electric, Dongfang Electric, Shenyang
Electric etc. Chinese automobile major Beijing Automotive Industry
Corporation (BAIC) has recently announced plans to invest US$ 250 million in
an auto plant in Pune. TBEA a Xinjiang-based transformer manufacturer has
firmed up plans to invest in a manufacturing facility in Gujarat. During the visit
of Premier Wen to India, Huawei announced plans to invest in a telecom
equipment manufacturing facility in Chennai.
India-China economic relations constitute an important element of the strategic
and cooperative partnership between the two countries. Several institutional
mechanisms have been established for enhancing and strengthening economic
cooperation between the two countries. Besides the India-China Joint Economic
Group on Economic Relations and Trade, Science and Technology (JEG), and
the India-China Strategic and Economic Dialogue (SED), a Financial Dialogue
has also been taking place between the two countries since 2006.
India-China Financial Dialogue
In accordance with the MoU on the Launch of the Financial Dialogue between
India and China, signed during Chinese Prime Minister Wen Jiabao’s visit to
India in April 2005, the two sides have since successfully held Financial
Dialogues. A Joint Statement was signed and released at the end of the
Dialogue. During the Dialogue, both sides exchanged views on the global
macroeconomic situation and policy responses, with specific reference to
current risks to the global economy and the role of India and China in the post-
crisis recovery phase. Discussions also took place on G20 issues including
reforms in the International Monetary System and the Framework for Strong,
Sustainable, and Balanced Growth.
To know about the types of monetary systems, visit the linked article.
Banking Links
Many Indian banks have established their presence in mainland China in the last
few years. Four Indian banks, namely, State Bank of India (Shanghai), Canara
Bank (Shanghai), Bank of Baroda (Guangzhou), and Bank of India (Shenzhen)
have to branch offices in China. At present, the State Bank of India is the only
Indian bank to have the authorization to conduct local currency (RMB) business
at its branch in Shanghai. More Indian banks are planning to upgrade their
Representative Offices in China to branch offices and existing branch offices
are applying for RMB license. Various Government institutions and agencies
from the two countries have also been interacting with each other for furthering
cooperation in areas such as taxation, human resource development, and
employment, health, urban development, and tourism. There are a close
exchange and interaction between the economic think tanks and scholars as
well.
Chinese President XI Jinping’s Visit (In September 2014)
China’s President Xi Jinping’s visit to India will go down history in five major
aspects.
Result of the visit
Annual Visits at the level of heads of State/Govt.
A city in each country identified for a smart city demonstration project
Increase speed on the existing line from Chennai to Mysore via
Bangalore
Training in a heavy haul for 100 Indian Railways officials
Redevelopment of existing railway stations and establishment of a
railway university in India
2015 as the ‘Visit India Year’ in China and 2016 as the ‘Visit China
Year’ in India
Promoting tourism products and routes in India based on the historical
travels of the Chinese-monk scholar Xuan Zang to India in the 7th
century AD
China would be a partner country at the Delhi International Book Fair
2016
China would be a guest country at the Indian International Film Festival
2014
Strengthen exchanges in movies, broadcasting and television shows
The first round of maritime cooperation dialogue to be held this year.
Background. The main cause of the war was a dispute over the sovereignty of the widely
separated Aksai Chin and Arunachal Pradesh border regions. Aksai Chin, claimed by India to
belong to Ladakh and by China to be part of Xinjiang, contains an important road link that
connects the Chinese regions of Tibet and Xinjiang.
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