WASHINGTON, Nov 20: China will soon become India’s largest trading partner, supplanting the United States, says a US Congressional report.
But the Congressional Research Service also notes that China’s continued military and economic support for Pakistan remains a major source of friction between Beijing and New Delhi.
India and China plan to sign 10 agreements on Tuesday when Chinese President Hu Jintao arrives in New Delhi on a four-day visit. The agreements will cover diverse areas including trade, education and health and, according to the Chinese ambassador in New Delhi, will add 'more substance' to their strategic partnership.
The Leaders of the two countries are expected to review a wide range of bilateral and global issues, including the decades-old border row, the proposed free trade area between the world's two fastest growing economies and UN reforms.
Underlining the importance of bilateral ties between two strained neighbours, the CRS report adds that together China and India account for one-third of the world’s population, and are seen as rising 21st century powers and `potential strategic rivals’.
But the CRS, which prepares policy papers for US lawmakers, also notes that an old border dispute and China’s close ties with Pakistan continue to be two major sources of tensions between Beijing and New Delhi.
“Beijing’s military and economic support for Islamabad — support that is widely believed to have included WMD-related transfers — is a major and ongoing source of friction,” the report says. Past Chinese support for Pakistan’s Kashmir position has added to the discomfort of Indian leaders.
“Adding to New Delhi’s sense of insecurity have been suspicions regarding China’s long-term nuclear weapons capabilities and strategic intentions in South and Southeast Asia,” the report notes. “In fact, a strategic orientation focused on China appears to have affected the course and scope of New Delhi’s own nuclear weapons and ballistic missile programs.”
The CRS points out that while Sino-Indian relations have warmed considerably in recent years, `the two countries have yet to reach a final boundary agreement’.
The two countries fought a brief but intense border war in 1962 that left China in control of large swaths of territory still claimed by India. Today, India accuses China of illegitimately occupying nearly 40,000 square kilometres of Indian territory in Kashmir, while China lays claim to 90,000 square kilometres in the north-eastern Indian state of Arunachal Pradesh.
The 1962 clash ended a previously friendly relationship between the two leaders of the Cold War `non-aligned movement’.“New Delhi takes note of Beijing’s security relations with neighbouring Burma (Myanmar) and the construction of military facilities on the Indian Ocean. The two countries also have competed for energy resources to feed their rapidly growing economies,” the report adds.
The CRS, however, acknowledges that despite historic and strategic frictions, both countries are making efforts to improve their relations.
High-level exchanges between India and China regularly include statements that `there exists no fundamental conflict of interest between the two countries’, the report says.
During a landmark 1993 visit to Beijing, Indian Prime Minister Narasimha Rao signed an agreement to reduce troops and maintain peace along the Line of Actual Control that divides the two countries’ forces at the disputed border.
Periodic working group meetings aimed at reaching a final settlement continue, with New Delhi and Beijing agreeing to move forward in other issue-areas even as territorial claims remain unresolved.
A 2003 visit to Beijing by Prime Minister Vajpayee was viewed as marking a period of much improved relations.
The report notes that military-to-military contacts between China and India have included modest, but ‘unprecedented’ combined naval and army exercises.
In late 2004, India’s army chief visited Beijing to discuss deepening bilateral defence cooperation and a first-ever India-China strategic dialogue was later held in New Delhi.
In April last year, Chinese Prime Minister Wen Jiabao paid a visit to New Delhi, where India and China agreed to launch a `strategic partnership’ that will include broadened defence links and efforts to expand economic relations.
Reviewing bilateral trade between China and India, the CRS notes, in January, the two countries agreed to cooperate in securing overseas oil resources. Sino-India trade relations are blossoming — bilateral commerce was worth nearly $19 billion last year, an eight-fold increase over 1999. “In fact, China may soon supplant the United States as India’s largest trading partner.”