Bordering on hysteria

China and India are brothers,” declared Jawaharlal Nehru, India’s first prime minister, in the 1950s.

But there’s growing fear in India of Chinese hegemony. As a border dispute heated up again last week, it provoked an impassioned public debate.

And any argument involving 37% of the world’s population merits some explanation.

So what caused the row?

The Chinese Foreign Ministry condemned a visit from the Indian prime minister – Manmohan Singh – to the disputed border state of Arunachal Pradesh, which China refers to as ‘Southern Tibet’. “We demand the Indian side address China’s serious concerns and not trigger disturbance in the disputed region,” said the Ministry spokesperson.

This latest controversy comes soon after Indian media reports of incursions by Chinese patrols, who allegedly threatened local nomads and spray-painted ‘China’ in Mandarin on rocks. The Chinese government vigorously denied the reports, and the Indian government is referring to them as ‘navigation errors’.

Arunachal Pradesh is roughly the size of Austria but the key strategic site in the area is the town of Tawang, which connects Tibet with the Brahmaputra Valley and is home to the second biggest monastery in Tibetan Buddhism after the Potala Palace in Lhasa.

The status of China and India’s 4,000 kilometre shared border remains unresolved, despite provoking a brief war in 1962. In that conflict an unprepared Indian army was defeated decisively and memories of the country’s first military defeat have coloured relations with China ever since.

Following their victory, the Chinese army withdrew to today’s de facto border called the ‘Line of Actual Control’. This gave China control of Aksai Chin in the East, while Arunachal Pradesh in the West was left under Indian control. Despite decades of negotiations on the status of the border, it remains contested.

Is a military confrontation likely?

In spite of a reported build up of arms on both sides of the border, war between the two nuclear powers is very unlikely in the near term. Both sides have tried to play down the incursions and reiterated their commitment to dialogue.

But Indian military planners are not ruling out the possibility of conflict in the future.

They believe China has a ‘string of pearls’ strategy to contain India, that involves using foreign direct investment and good diplomatic relationships to gain access to ports and airfields in countries surrounding India. As reported in WiC16, China is helping to build and upgrade ports in Sri Lanka, Pakistan, Bangladesh and Burma.

This has an impact on business between the two?

Not really. In 2008 China overtook the US to become India’s largest trading partner, with total trade valued at $52 billion. Bilateral trade has taken off since 1992, when the two countries agreed to focus on commercial ties while peacefully negotiating their border dispute.

Global investors have gone further, coining ‘Chindia’ as an investment thesis to highlight the two nations’ combined potential.

In fact, the two countries have very different political and economic models.

But in economic terms, China’s ‘state-capitalism’ has enabled impressive infrastructure development and manufacturing growth, helping it rapidly overtake India’s GDP.

The result has been a growing trade imbalance, and heightened competition for India’s small and medium-sized companies.

Last year’s trade deficit reached a record $11 billion, with India exporting raw materials, and importing higher value-added machines and consumer products from China.

The Indian Federation of Chambers of Commerce and Industry has spoken out recently against the ‘Chinese predatory pricing’ driving its SMEs out of business.

Politicians have echoed the complaint. “China is a non-market economy,” says Commerce Secretary GK Pillai. “They have created huge capacities in their country. Where are they going to sell their products? They are going to dump [them] in India,” he claims.

The Indian intelligence services are also concerned about the spread of some Chinese products.

As we wrote in WiC30, fears of exposing phone networks to attack have reportedly led India’s Department of Telecommunications to ask local telecom providers not to use equipment made by the Chinese firms Huawei and ZTE.

Aren’t the Indians worried about water too?

Water originating in the Himalayas supplies seven of Asia’s most important rivers, and hundreds of millions of people.

But glacier melt – due to climate change – and rapid population growth are putting pressure on increasingly scarce water resources.

With the massive ‘Three Gorges Dam’ and ‘South-North Diversion’ projects on the Yangtze River, China has also demonstrated an ability to manipulate water resources that is ringing alarm bells for it neighbours.

It has already dammed the upper reaches of the Mekong River, causing unease downriver in Vietnam, Thailand, Burma, Laos and Cambodia.

The Indian media is convinced the next target will be Tibet’s longest river, the Brahmaputra, which passes through India and Bangladesh, joining the Ganges to form the world’s largest delta.

Dams closer to the river’s source in Tibet would likely pose a serious threat to the water security of more than 200 million people in Eastern India and Bangladesh.

Critics say dams would have to release water during monsoon months, exacerbating floods. They might also withhold water in dry months for power generation.

In India, there’s a fear too that the dams would be a first step towards diverting the Brahmaputra altogether, as part of the South-North diversion project.

This would force millions of people in Northeast India and Bangladesh to migrate permanently and could provoke a wider confrontation.

It’s a charge that China rejects. “[China] has categorically denied that there is a plan to build any such large scale diversion project on the Brahmaputra river,” admits the Indian Ministry of External Affairs.

Besides, others argue that China and India have much more to gain by uniting on major environmental issues than falling out over them.

And, with the UN summit in Copenhagen approaching, the two countries signed a five year pact this week committed to cooperating on climate change proposals.

In particular, they both oppose the binding targets for greenhouse gas emissions being urged by many developed countries.

Border disputes and water tensions notwithstanding, China’s top climate change negotiator referred to India glowingly as a “sincere, devoted friend” at the signing ceremony.

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