Unexpected gains

Some forward strides appear to have been made during the Prime Minister's talks with his Chinese counterpart, Wen Jiabao, in Beijing. The two leaders have signed a document, called "A Shared Vision for the 21st Century", that (among other things) commits Beijing to supporting New Delhi's desire to play a greater role in the United Nations Security Council. The agreement also commits India and China to pursuing bilateral co-operation in civilian nuclear energy. To be sure, China's stance on India's role in the UN Security Council is not a major improvement on the existing position, since the Chinese have all along been appreciative of India's aspirations to playing a greater role in the United Nations, without any specific reference to the Security Council. The headway that the Indians claim they have made in the new agreement is that, for the first time, the Chinese have recognised India's "aspirations to play a greater role in the UN, including the Security Council". Whether this will help India secure Chinese support for India's claim to a permanent seat in the Security Council remains unclear. For the moment, the "incremental" gain can be savoured.

In contrast, the agreement on bilateral co-operation in civilian nuclear energy appears to hold more substantive promise, even though India's nuclear energy deal with the US is in trouble. It is true that the vision document predicates the Indo-Chinese co-operation in civilian nuclear energy on the two countries meeting their respective international commitments. But what has been released goes beyond what the Chinese prime minister declared in Singapore a few months ago. China is a member of the Nuclear Suppliers Group; by agreeing to co-operate with India in this area, it is sending out a positive signal on its likely stance in the NSG forum, on the question of allowing India access to uranium for its nuclear power projects.

On the economic front, the vision document refers to the findings of a joint feasibility study that favours a regional trade agreement between India and China. A joint economic group has already been constituted to explore the possibilities of such an agreement. Indian industry remains nervous about rising imports from China, especially since the rupee has moved up more than the yuan in the last year and also because the logic of Chinese pricing of manufactured products remains a mystery to many Indian companies. In other words, any version of a free trade agreement is problematic if the two systems are playing by different rules. Against this backdrop, the Indian government's move to enter into a regional trading agreement with China should be seen as only a first step, and there can be little doubt that it will hasten slowly. What is encouraging in this context is that the yuan has in fact moved up against the dollar by a few percentage points in recent months.

The vision document is interesting in what it says on the contentious border question, especially in the context of Indian perceptions that China has resiled to some degree from the 2005 agreement on not exchanging settled populations when it came to the boundary settlement. The vision document seeks fair, reasonable and mutually acceptable solutions, based on the guiding principles announced in 2005. Does that contain a hint of Chinese accommodation of Indian concerns?