- The Washington Times - Thursday, January 1, 2004

Asia’s two fastest-growing economies — India and China — are likely to continue edging closer in 2004 through recently improved diplomatic, defense and economic ties.

The highlight of 2003 was a visit to Beijing by Indian Prime Minister Atal Behari Vajpayee in June, and a trip to India by Jia Qinglin, chairman of the National Committee of the Chinese People’s Political Consultative Conference, China’s leading mass organization.

“The visit [by Mr. Vajpayee] has been a small step forward in the long march forward in Indo-China rapprochement,” John Garver, a professor at the Sam Nunn School of International Affairs at the Georgia Institute of Technology, said at the time.

Mr. Vajpayee’s visit was the first by an Indian leader to China in a decade, and although the agreements signed were symbolic, analysts said the benefits would manifest themselves in the long run.

“In the long term, there is some benefit … We have to have a constructive relationship with our neighbor,” said S. Chandrasekhar, director of the South Asia Analysis Group, a think tank near New Delhi.

Ties between the world’s two most-populous countries traditionally have been frosty. Each regards the other as a rival for regional dominance. They fought a brief but bitter border war in 1962, resulting in a heavy Indian defeat and loss of territory, which still is disputed.

Mr. Vajpayee’s trip managed to move ties between India and China beyond the realm of Pakistan, which is New Delhi’s rival and Beijing’s ally. New Delhi traditionally has balked at Beijing’s close ties with Islamabad and its purported transfer of technology that allowed Pakistan to acquire nuclear and missile know-how.

The breakthrough visit also came at a crucial time: Mr. Vajpayee was the first leader of a major nation to visit China while it still was under risk from severe acute respiratory syndrome, the flulike disease that killed more than 1,000 people worldwide.

Diplomatically, India was able to get China to concede, though implicitly, that Sikkim, the Himalayan kingdom annexed by New Delhi in 1975, was part of India. Chinese maps show the northeastern state as an independent country.

China was happy because India accepted its sovereignty over Tibet. The region has been a bone of contention between the two sides since the Dalai Lama, Tibet’s spiritual leader, and his followers fled in 1959 to India, where they still live.

Although the bulk of the border dispute remains unresolved, the two countries agreed to work together to maintain peace in border areas until an “ultimate solution” is reached. The two sides contest a 2,800-mile border in Kashmir and on the northeastern states of Arunachal Pradesh and Sikkim.

In other deals cut during the trip, the two sides agreed to conduct regular high-level exchanges, including between their armed forces, and annual foreign-minister level meetings.

As part of this, a high-level Indian military delegation visited China and inspected bases throughout the country, including in Tibet.

The two countries also held the first-ever joint naval exercises in November off Shanghai, in which front-line warships of both navies as well as aircraft and helicopters participated.

An Indian naval spokesman called the exercises a “stepping stone in enhancing interoperability between the two navies.”

Economically, the two sides pledged to enhance ties and cooperation within the World Trade Organization.

They also agreed to double bilateral trade to $10 billion by 2005. Trade exchanges reached $4.95 billion last year, up 37.6 percent from a year ago. From January to May last year, trade grew 70 percent to $2.9 billion.

In 2002, 71 Indian companies had invested in China, and 15 Chinese firms had invested south of the border. Both sides recognize there is room for growth. China wants to sell its textiles to India’s vast market, and India sees the 2008 Beijing Olympics as a major investment opportunity.

India also wants to use its information-technology sector to make inroads into what it regards as an untapped market.

Several information-technology firms, including the top four software manufacturers and exporters in India, have begun operations in Shanghai, and many of the U.S. contracts being awarded to Indian information-technology companies are being outsourced by India to China.

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