Both India and China currently give the highest priority to their domestic transformation, which will take time. A peaceful periphery, a stable and benign world environment and continued prosperity among our economic partners are of utmost importance to both of us. It is in our mutual interest to work together, bilaterally and with other partners, to reduce uncertainty and create an international environment that is supportive to our domestic transformation efforts.
Economics and development are not zero-sum games. So, we believe that there is enough space for both countries to realise their development aspirations. Economically, we are already integrated with each other to an unprecedented extent. Our bilateral trade reached over $67 billion in the first 11 months of last year, and China has consistently remained our largest trading partner in goods for several years. However, investment flow between us has not kept pace with trade. Indian investment in China worth $433 million is spread over 676 projects, while Chinese investment in India is worth $300 million. There are several opportunities for cooperation in developing infrastructure. India is already one of China’s most important markets for project exports, with a cumulative value of contracted projects at $53.5 billion and turnover realised at $24.6 billion.
What is less noticed is the range of contact between our two societies. For instance, over 7,000 Indian students are studying in China today. This scale of interaction never occurred before in history. Naturally, the corollaries of such an intensification of economic and social engagement are issues of trade imbalance, diversifying the trade basket and commercial disputes. The two governments have taken several initiatives to make our trade more balanced and harmonious. More remains to be done and we will learn by doing. For instance, in September last year, we held the first Strategic Economic Dialogue between India and China, which identified several areas of promise for the future. Equally, the business communities and their chambers need to take advantage of growing opportunities while sharpening competitive edge. I am convinced that our business and economic engagement with each other and with other countries will intensify as we seek to overcome the prospect of sluggish recovery in the traditional engines of growth in the world economy.
Our governments have common or similar positions on the global development agenda, in WTO and on climate change, which has made it possible for us to work together internationally.
A few vocal experts in our two countries and elsewhere argue that notwithstanding the numerous cooperative elements in our economic relations and approach to international issues, India and China are bound to be strategic adversaries. I find such determinism misplaced. It ignores the successful experience and demonstrated expertise of both governments in managing differences and building on commonalities for over three decades and, particularly, since Rajiv Gandhi’s visit to China in 1988. It also ignores the wisdom of the leaders of the two countries, who have consistently worked to ensure that problems are managed in a mature manner. The issue is whether we can continue to manage the elements of competition within an agreed strategic framework, which permits both of us to pursue our core interests. I see no reason why that should not be so. Indeed, I would go further and say the rapid changes in the international situation today also create an opportunity for India and China to work with others to shape benign international outcomes.
The boundary question remains unresolved. A number of mechanisms have been put in place to ensure that the border stays peaceful while we seek a settlement of the boundary question. On the settlement itself, we are in the second stage of the three stage process of agreeing principles, a framework and a boundary line.
Similarly, on other bilateral issues of potential difference there exist mechanisms of dialogue and communication to address them. We appreciate China’s assistance to us in tackling floods and natural disasters in the downstream areas of our shared rivers. There is a need to widen the scope and deepen the level of our communication in some areas. Some security challenges, especially of the non-traditional variety, are common to India and China, and offer an opportunity to work together. Both India and China face the challenge of terrorism in our shared neighbourhood. It requires common effort by all members of the international community to tackle terrorism.
Energy is the key to domestic transformation in both India and China,which is why both of us have a common stake in energy security, and in the freedom and security of transportation on the global commons. We both have an interest in global public goods like a peaceful order, freedom of the seas and open sea lanes. We need to address issues of piracy with common resolve.
Asia’s security is interlinked across this great continent. India has, therefore, argued for an open, inclusive Asian security architecture. India and China will have key roles to play in forging a new compact for common and collective security for Asia. We should also contribute within our capacity to the global public goods that are increasingly important to our well being.
The robustness of our bilateral relation will depend on dialogue and communication, so that the potential for misunderstanding and miscalculation is limited. This dialogue process must not be limited to the two governments. Today, there are multiple stakeholders in our relations, as also multiple determinants of these relations. Each of them, be it businessmen,media or scholars of the two countries, has a responsibility to take our relations to the desired level of equilibrium. It is, therefore, absolutely essential that they acquire an informed understanding of their neighbour. Today, as both India and China change fast, our understanding of each other needs to keep pace. Both the quality and the scale of our interactions have also grown so rapidly that we need to learn new ways of dealing with the relationship.
Edited extract from National Security Advisor Shivshankar Menon’s speech on ‘Developments in India-China Relations’ at a function in the Chinese Embassy in New Delhi on January 9