China-India Border Deal Opens the Way to More Trade

October 24, 2013 Posted by India Briefing Reading Time: 3 minutes

Bangladesh-Myanmar-India-China Economic Region Suggested

Oct. 24 – The meetings yesterday between Indian Prime Minister Dr. Manmohan Singh and Chinese Premier Li Keqiang was a mixture of détente over border issues, some cultural cross-referencing, and the laying down of a platform for increased trade opportunities. In what turned out to become a remarkably cordial and informal series of meetings, the quotes came fast and thick from both sides:

“If the host is hospitable and generous, there will be more frequent visits from guests,” as mentioned by Premier Li. Not to be outdone, Chinese President Xi Jinping also told Singh the famous saying “We need to stand tall and look far, a journey of 1,000 miles begins with a single step.”

Xi offered the proverb after the two sides signed a border protocol, mooting a hotline between military headquarters, and China pushed for an ambitious Bangladesh-Myanmar-India-China economic corridor along the old south Silk Road route.

Indian officials are particularly pleased with a memorandum on water signed as part of nine agreements at the impressive Great Hall of the People that puts “issues of mutual interest” back in dialogue. While stapled visas to Arunachal Pradesh residents remain an irritant, the breakthrough on border management and a preparedness to address a yawning trade deficit remain positive developments.

Stressing common goals, Chinese Premier Li Keqiang said, “Our two peoples have the wisdom and our two governments have the ability to manage our differences along the border so that it would not affect the overall interests of our bilateral relations.”

Singh agreed, but underlined Indian concerns, saying, “As large neighbors following independent foreign policies, the relationships pursued by India and China with other countries must not become a source of concern for each other. This will be our strategic reassurance.”

Singh followed this up by firmly underlining that peace on the border was a “strategic benchmark” while emphasizing the bonhomie by saying, “When India and China shake hands, the world takes notice.”

Getting the border deal has been strenuous work, but the Indian side feels the agreement on trans-border rivers — that had not been nailed down until two days before Singh’s meeting with Li — opens a tightly closed door. Apart from cooperation on sharing hydrological data, the MoU says the two sides will “exchange views on other issues of mutual interest” — meaning India can raise queries on controversial planned dams on the Brahmaputra River, a main source of water for both India and Bangladesh.

The Bangladesh-Myanmar-India-China economic corridor is an alluring concept, one that China is setting a lot of store by. In the area of counter-terrorism cooperation, Li spoke of joint training in Southwest China and the Indians confirmed that Pakistan’s role in fostering and using terrorism was discussed. The economic component of the dialogue, although less prominently highlighted, saw China agreeing to consider a proposal for an industrial park in India to help redress an increasingly unviable trade gap.

“This particular diplomatic breakthrough clears away a lot of dead wood and allows both nations to move more closely together in terms of developing bi-lateral trade,” comments Chris Devonshire-Ellis of Dezan Shira & Associates. “There are some exciting developments ahead, and the India-China trade corridor looks as if it will continue to grow and develop at a fast pace.”

India-China bilateral trade hit US$66.5 billion 2012 and is expected to reach US$100 billion in two years.

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