Introduction

On 1 April, 1950, India became the first non-socialist bloc country to establish diplomatic relations with the People’s Republic of China. Prime Minister Nehru visited China in October 1954. While, the India- China border conflict in 1962 was a serious setback to ties; Prime Minister Rajiv Gandhi’s landmark visit in 1988 began a phase of improvement in bilateral relations.
In 1993, the signing of an Agreement on the Maintenance of Peace and Tranquility along the Line of Actual Control (LAC) on the India-China Border Areas during Prime Minister Narasimha Rao’s visit reflected the growing stability and substance in bilateral ties.
India-China relations, though occasionally showing signs of peace and cooperation, have often been afflicted by tension and mistrust. With the potential to make big contributions to regional peace and development, these two Asian powers have, by design or accident, themselves been the sources of regional tension and insecurity to some extent.
Besides their internal dynamics, the interplay of interests and moves of their neigbours, and several external powers would have significant bearing on the equation and relations between them.

Areas of Conflict

(a) Tibet & Dalai Lama.

This led to the first ever war between these two nations. China is very sensitive about the territorial sovereignty and having Dalai Lama run a shadow government in India has historically been a major irritator for them.
India’s support for the Dharamasala regime is a huge issue for China, but not even headline-worthy for India.

(b)Two border disputes

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One in a region called Aksai Chin and another in a region called Arunachal Pradesh. Both nations claim both regions although China controls the former and India the latter.
In both these places the geography favors the current arrangement. With both nations nuclear armed, it is inconceivable for any solution other than formalizing the status quo.
When Prime Minister Narendra Modi visited China in May 2015, one of his objectives was to persuade the Chinese leadership to restart discussions on the clarification of the Line of Actual Control (LAC) through the exchange of maps.
The rationale for India’s demand was that, pending a final settlement of the border question, LAC
clarification would help ease border tensions. But the Chinese leadership was not enthusiastic about India’s proposal. Instead, China called for a comprehensive ‘code of conduct’ for the forces deployed along the border.
Here, it is useful to remember that both LAC clarification and Confidence Building Measures (CBMs) are part of the agreed principles in the 2005 agreement. This mismatch in desired outcomes was the main obstacle in the recent border talks, and it showed once again India and China’s contrasting approaches to border negotiations at large.
India’s reluctance to consider a ‘code of conduct’ suggests that it entertains reservations about agreeing to restrictions on its plans for infrastructure development in the border region.
Perhaps, this reluctance is because of two inferences. One, that the Chinese proposal is aimed at limiting India’s military and infrastructure modernisation, and thereby enabling China to preserve its military advantage in Tibet. And two, accepting the Chinese proposal could potentially curtail the ability to effectively patrol and intercept PLA movements in territory claimed by India.
The Indian position on the Sino-Pakistan understanding on Chinese activities in PoK has been consistent.
There are often debates in India-mostly episodic and lacking vigour-about Sino-Pakistan relations.

(c) Domination of Indian Ocean

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China has been accused of pursuing strategic maneuvers on a well-thought out route encircling India in the Indian Ocean. Beijing has been reaching out to India’s neighbors on the premise of development and trade, allegedly recreating the Silk Route.
From Nepal in the south east to Myanmar, Bangladesh to Sri Lanka in the south and Pakistan in the west, China plans to choke India diplomatically. There are diplomatic visits, courtesy calls, exchange of gifts and promises between Mr. Modi and the heads of all of the surrounding countries, to not just counter the Chinese influence but also strengthen the Indian presence.

Water issue:

The dispute between India and china is mainly regarding the Brahmaputra River flowing through the two countries the search for water resources in China and India has persistently been a source of tension between the two countries.
Chinese efforts to divert the water resources of the Brahmaputra River away from India will worsen a situation that has remained tense since the 1962 Indo-China war.
The melting glaciers in the Himalayas as a result of accelerating global climate change will have a dramatic effect on this river’s water supply. This will increase water scarcity as well as the likelihood of floods, impact agrarian livelihoods and strain the fragile equilibrium between the two Asian giants.

Pakistan factor:

The longtime friendship between China and Pakistan, rooted in a time when both countries were deeply mistrustful of India, has long made New Delhi nervous. The relationship has mainly gone one way, with China providing economic assistance and political backing to Pakistan.
Islamabad is also anxious for an alliance it can use to balance the growing economic and political clout of India. But Pakistan also offers China a gateway to South Asia, Iran and the Arabian Sea, one of the economic beltways that President Xi Jinping has sought to build through the region. Earlier this year, during a visit to Islamabad, Chinese Foreign Minister Wang Yi said China and Pakistan have an “all-weather friendship.”

South China Sea issue and India:

China opposes India’s oil exploration in the SCS (which has been undertaken at Vietnam’s request) by calling the area of exploration a ‘disputed’ area and asserting ‘Chinese sovereignty’ over the SCS in the ‘historical’ context.
It has been continuously expressing its reservation in this regard in the last few years, and sometimes quite belligerently at that. India has taken note of the Chinese reservation and has carefully gone ahead in signing a few agreements with Vietnam for oil exploration in the SCS.
These exploration fields are very much within the maritime space under the actual control of Vietnam. But at the same time, China casually shrugs off the issue of India’s ‘sovereignty’ over POK in the ‘historical’ context.
China is currently engaged on a variety of investment projects and infrastructural building activities in Gilgit-Baltistan, and these will be expanded under the CPEC project.
China further explains that the Sino-Pak understanding to implement CPEC through POK is based on a range of bilateral agreements and understandings, including their 1963 Border Agreement.

Trade deficit:

India faces trade imbalance heavily in favour of China. India has a trade deficit with China of nearly $50 billion, its largest with any country. Singapore, with a population about 240 times smaller than India, sells twice as many goods to China each year.

Reasons for the deficit:

China imports raw material from India e.g. iron ore and exports the finished goods as it has got core competency in manufacturing sector and provides huge energy subsidies.
Importing finished goods obviously cost more. India also imports power equipments, consumer electronics and telecommunications gear from china. China is dumping manufactured products in India.
On the other hand India does not have a large access to Chinese market and with Indian rupee declining while renminbi gaining centre stage the trade deficit is becoming huge.

Maritime Silk Route project: Impact on India:

Beijing’s plan for a maritime infrastructure corridor in the broader Indo-Pacific region, first proposed by President Xi Jinping’s during his trip to Southeast Asia in October 2013, has attracted attention because of its potential to establish a Chinese foothold in the Indian Ocean. Needless to say, China’s outreach to India – inviting it to join the project – has generated much analytical curiosity.
The first thing of interest about the MSR is that it was initially mooted as an ASEAN-centered project.∙ The intention then was to enhance connectivity and cultural links in China’s strategic backyard-the South China Sea.
Beijing later expanded the scope of the project to include the Indian Ocean, but in reaching out to∙ Colombo and New Delhi, it found a willing partner only in the former. India has been ambivalent about the MSR and is yet to make up its mind on joining the project. The problem with the MSR, essentially, is the ‘opaque’ nature of its proposal.
Outwardly, the project is∙ about the development of massive maritime infrastructure and connectivity in the Indian Ocean and the Western Pacific. Beijing has been careful to project the MSR as an exclusively commercial venture, trying hard to dispel any impressions of it being a cover for maritime military bases.
Surprisingly, however, China has released no details about the project, and this makes many countries doubt Beijing’s strategic intentions. The lack of specifics not only makes it hard to decipher the MSR’s real purpose, it gives credence to∙ suspicions of geopolitical game play by China. Indeed, for a project being touted as a critical enabler of regional sea-connectivity, Chinese planners would have spent much time and effort developing the fineprint.
The lack of firm plans, proposals and timelines then does lead to a suspicion that there may be something about the MSR that Beijing is hesitant to reveal quickly. The MSR’s essential∙ rationale is the leveraging of Chinese soft-power.
The aim apparently is to shore-up China’s image as a benevolent state. Beijing’s would also conceivably use the project’s commercial investments to establish its legitimate interests in the Indian Ocean. And while China can be expected to do everything in its power to force region states to join the project – including offering economic aid to potential partners – the bottom-line for it will be to make an offer to India that is hard to refuse.
For India, it is instructive that the sales pitch of shared economic gains does not conceal the MSR’s real purpose: ensuring the security of sea lines of communications (SLOCs) in the Indian and Pacific oceans. Since African resources are China’s focus right now, the project could well be a surrogate for a giant Chinese SLOC running all the way from the East African coast, to the Southern coast of China – created, maintained and controlled by Beijing.
In its ultimate form, therefore, the MSR could end up setting up Chinese logistical hubs in the Indian Ocean, linking up already existing string of pearls. India’s appreciation of the MSR must be based on an objective appraisal of these new realities. Even assuming the project delivers on its economic promise, it could well turn out to be detrimental to India’s geopolitical interests in the IOR.
As Beijing becomes more involved in building infrastructure in the Indian Ocean, it will play a larger part∙ in the security and governance of the IOR, which could pose a challenge to India’s stature as a ‘security provider’ in the region and also adversely affecting New Delhi’s strategic purchase in its primary area of interest.

China’s Reluctance to Support India’s membership of international bodies

China has continuously blocked India’s entry in UNSC. Recently China has blocked India’s entry in NSG. Chinese diplomats say Beijing wants NSG entry to be norm-based — in other words, whatever rules govern Indian entry should apply to others too.
Norm-based entry would, presumably, help Pakistan gain entry, something many in the NSG are certain to resist because of the country’s record as a proliferator of nuclear-weapons technology to Iran, Libya and North Korea.

Areas of Cooperation

Despite their rivalries, the two countries have played up their cultural links-such as the importation of Buddhism into China by wandering Chinese monks more than 1,500 years ago-and have found ample room for economic cooperation.
Both are members of the BRICS grouping of emerging economies, which is now establishing a formal lending arm, the New Development Bank, to be based in China’s financial hub of Shanghai and to be headed by a senior Indian banker.
India also was a founding member of the China-backed Asian Infrastructure Investment Bank, which plans to be formally established by year’s end and seeks to emulate institutions such as the World Bank and International Monetary Fund.

Educational areas:

India and China signed Education Exchange Programme (EEP) in 2006, which is an umbrella agreement for educational cooperation between the two countries. Under this agreement, government scholarships are awarded to 25 students, by both sides, in recognized institutions of higher learning in each other’s country. The 25 scholarships awarded by India are offered by Indian Council for Cultural Relations (ICCR).

Trade cooperation:

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Two countries have shown tremendous economic growth. Change in the dynamics of the global economy has provided the opportunity to both countries to cooperate on wider scale. China and India are the major trading partners in the region. During the last decade, bilateral trade has increased notably. In 2014, the trade between China and India exceeded over $65 billion mark.
According to the Trade Map figures, in 2013, China accounted for 11.1 percent of India’s imports, while 4.1 percent of India exports were destined for China. Chinese exports to India are mainly comprised of electric and electronic equipment, organic chemical, fertilizers and furniture. On the other side, China’s imports from India chiefly consist of cotton, pearls, precious stones, copper ores, slag and ash.
Bilateral trade has expanded substantially in recent years. Nevertheless, the balance of trade still remains in China’s favor.
Following table summarizes the latest trends in trade between China and India. Source: China India Trade and Investment Center Though, compared to the past, the economic cooperation between the two countries has accelerated.
However, there are still enormous opportunities that have not been exploited in such fields as manufacturing, construction, electricity, gas and water industries, infrastructure (such as, roads, buildings, transportation, storage and communication), hotels and tourism, financial institutions, agriculture, healthcare, education and the various training sectors. China and India have synergies in many areas.
China has wide experience and expertise in the field of construction industry. Due to its international recognition, Chinese firms have been successful in creating infrastructure base for many countries.
India could utilize Chinese expertise in the development of its high speed railway network, metro lines and other infrastructure facilities. While the sides are seeking to expand bilateral trade to $100 billion this year, China exports far more than it imports, something Indian Prime Minister Narendra Modi hopes to alter with increased market access for Indian goods and services.

Areas of Competition in Africa:

The rapid economic growth experienced by China and India has resulted in an increase in competition for∙ global resources and investment opportunities. Unsurprisingly, the abundance of natural resources in Africa has made the continent a hotspot for Chinese and Indian economic activity.
This growing Sino-Indian involvement has been economically beneficial and has resulted in widespread∙ investment and development, with African leaders welcoming the competition. Africa is now the latest front in an increasingly global competition between India and China for new markets,∙ agricultural land and access to natural resources.
While Western media and politicians have reacted with varying degrees of alarm over the surge of Chinese∙ trade and investment in Africa, Indian companies have been quietly building their presence on the continent.
As China drives deeper into what many Indians consider their sphere of influence in South Asia, Africa offers∙ an ideal opportunity for Indian firms to challenge China’s growing influence in the region. For many Indians, particularly in certain political circles and on the blogosphere, competition with China is∙ presented in a classical real politik paradigm.
The headlines misleadingly frame the issue in terms of win/loss or even as a “race” between the two∙ countries. Although it may be compelling, even somewhat entertaining, to draw on 19th century colonial cliches (e.g. the Scramble for Africa or the Great Game) it is entirely misleading as both the Indians and Chinese are employing radically different strategies in Africa than earlier European powers.
Ironically, the enhanced competition among Chinese and Indian companies will most directly affect∙ European and American firms who are rapidly being shut out of Africa’s emerging markets. While China’s aggressive economic approach has caused it to achieve more influence in Africa than any∙ other country, its dominance is slowly being impeded by India’s growing involvement in the region.
India has focussed on emphasising its cultural and historical ties to enhance the development of its trade relations with resource-rich countries like Zimbabwe, Ethiopia and Sudan.
The success of India’s soft power strategy has been evident in countries like Sudan, where Indian∙ corporations have attained near complete control of the local oil and natural gas industry. The same trend is occurring in Zimbabwe where China’s dominance in the energy and resource sectors is∙ being challenged by private and state-owned Indian enterprises.

The US$ 4 billion takeover of Zimbabwean steelmaker Zicosteel, by India’s Essar Group, was hailed by the∙ Zimbabwean Government as the largest foreign direct investment deal in Zimbabwe in recent decades. Competition for the takeover was intense, as various Chinese corporations challenged the Essar Group’s bid.∙

The incident has been viewed by some as a reflection of the intense rivalry developing between China and∙ India, and while China continues to dominate African markets, the success of India’s economic strategies has raised uncertainty towards China’s future economic dominance in the region.

Competition in foreign policy

China and India are still strategic rivals despite their increased economic cooperation.∙

Alongside the U.S., Japan, and Australia, India is also seen as one of the major actors that have an interest in offsetting China’s dominance over Asia. That India and China came to be known as fellow members of the BRICS does not suffice by itself to reverse∙ the two giants’ inherent tendency towards taking sides with rival groupings which are once again beginning to overwhelm Asia’s strategic environment.
Moreover, New Delhi set its permanent membership on the United Nations Security Council (UNSC) as a primary national goal in the name of being recognized as a great power on a global scale. In contrast, China pioneers the opposition bloc which stands firmly against any attempts to reform the UNSC because such would mean including not only India but Japan and several other countries in the Council as well.
The two countries’ strategic interests in South Asia are also mutually exclusive.
China maintains intimate ties with Pakistan, with high-level defense cooperation at the core thereof, a reality that deeply disturbs India as might be expected. On the other hand, Beijing feels extremely uncomfortable with India’s hosting of the Tibetan opposition.
China even fears that India might still be supportive of Tibet’s independence. Likewise, there is a heated rivalry between Beijing and New Delhi for influence over Bangladesh, Myanmar,Sri Lanka, and Nepal.
New Delhi shapes its foreign policy in tandem with the West, backing Myanmar’s opening to the rest of the world as well as its related democratization project.
However, Beijing believes one of the essential motivations behind such a policy is to detach Myanmar from China’s larger zone of influence.

PM Modi’s visit to China in 2015

The visit was rich in symbolism and substance and it opened up a new chapter in India-China relations. For the first time, Chinese President Xi Jinping travelled outside Beijing to receive a foreign leader, in Xi’an in his home province of Shaanxi.
President Xi also accompanied Prime Minister to the Big Wild Goose Pagoda and organized a grand welcome∙ ceremony at the Xi’an city wall.
There were 24 agreements signed on the government-to-government side, 26 MoUs on the business-tobusiness side and two joint statements, including one on climate change.
The fact that India and China could come up with over 50 outcome documents in just eight months reveals the huge potential that exists between our two countries, as well as the efforts that we have made to elevate our partnership.
They included such diverse fields as space cooperation, earthquake engineering, ocean sciences, mining,railways, skill development, education, culture, Yoga, tourism and many more.
Prime Minister interacted with 21 CEOs of leading Chinese companies and over 40 prominent Indian CEOs attended the Business Forum along with their counterparts from China.
The 26 business understandings worth over US$ 22 billion signed at the Forum covered such varied sectors as industrial parks, renewable energy, thermal energy, telecommunication, steel, capital goods, IT and media.
There was, moreover, an action-oriented accord on broad-basing the bilateral partnership, as could be seen from the range of agreements signed and in the establishment of new dialogue mechanisms, such as the one between the DRC and the NITI Aayog and the Think Tanks’ Forum, besides a bilateral consultative mechanism on WTO negotiations.
Three new institutions were launched in partnership, the Centre for Gandhian and Indian Studies in Shanghai, Yoga College in Kunming, and National Institute for Skill Development and Entrepreneurship in Ahmedabad. Both sides decided to establish new Consulates in each other’s country, in Chengdu and Chennai and to∙ expand our interactions at the sub-national level.
Two agreements signed-one on cooperation between the Indian Ministry of External Affairs and the∙ International Department of the Central Committee of the CPC and another on the establishment of a State/Provincial Leaders’ Forum-reflect this understanding.
A number of sister-city and sister-state relations agreements between: Karnataka and Sichuan, Chennai and∙ Chongqing, Hyderabad and Qingdao, Aurangabad and Dunhuang were also signed. Prime Minister also announced the extension of the e-visa facility to Chinese nationals wishing to travel to India.

Other Important issues

(a)ONE BELT

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ONE BELT, ONE ROAD (OBOR)

The One Belt, One Road (OBOR) initiative is part of China’s major policy framework to boost domestic development and foreign diplomacy. China also wants to ‘reconstruct’ the world order to fulfill its interests and become a dominant world power.

About OBOR

The “belt and road” have two components—the Silk Road Economic Belt (SREB) that would be established along the Eurasian land corridor from the Pacific coast to the Baltic Sea, and the 21st century Maritime Silk Road (MSR).

The “belt and road” run through the continents of Asia, Europe and Africa, connecting the vibrant East Asia economic circle at one end and developed European economic circle at the other.
The SREB focuses on bringing together China, Central Asia, Russia and Europe (the Baltic); linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia; and connecting China with Southeast Asia, South Asia and the Indian Ocean.
On land, the initiative will focus on jointly building a new Eurasian Land Bridge and developing China- Mongolia-Russia, China-Central Asia-West Asia and China-Indochina Peninsula economic corridors.
The 21st-Century MSR, in turn is designed to go from China’s coast to Europe through the South China Sea and the Indian Ocean in one route, and from China’s coast through the South China Sea to the South Pacific in the other.
To implement the concept, the Chinese have stressed on joint consultation and joint building. China sees this as the most effective model that can be used to safeguard mutual benefits.

What China expects from OBOR?

Address security threats
Achieve long-term economic benefits
Reduce America’s threat to trade lifelines

Analysis

Analysts point out that the ‘One Belt One Road’ initiative, backed by a solid financial institutional network, once implemented, is expected to accelerate the shift of geo-economic power away from the United States, towards Eurasia.
More than 4.4 billion people, or 63 per cent of the global population countries, are expected to benefit from China’s game-changing plans.
Analysts say that the “belt and road” initiative could shift the center of geo-economic power towards Eurasia, and undermine the “Asia Pivot” of the United States and its allies.
Chinese President Xi Jinping is hopeful that the mega-trade volumes among the Silk Road economies would touch $ 2.5 trillion over the next 10 years.

Pros of India joining OBOR

The technical know-how the project will bring back could be used to develop or iron out issues facing∙ technical bottlenecks.

The OBOR initiative could be icing on the cake for India’s flagship programs like Digital India.

The “Information Silk Route” has the telecom connectivity between the countries through fiber, trunk line and under-sea cables.

This will expand the bandwidth capabilities for India significantly, without which offering e-Governance and∙ delivering public services in an efficient manner will remain a pipe dream and a good marketing campaign. India will have excellent connectivity of various transport modes, and a great facilitator to Make In India∙ initiative if India joins such global infrastructure project.

India’s strategy to counter OBOR

India is not part of OBOR. India reaffirmed its opposition of One-Belt-One-Road initiative of China, with Foreign Secretary stating that New Delhi will join multilateral connectivity initiatives in Asia, only if they were pursued through a consultative process.

India has indicated that it sees China’s OBOR as a “national Chinese initiative”.

The defence establishment is concerned that the project might not be altogether benevolent and that these corridors in future could be used for military mobilisation.
There are concerns in India about being part of a “hegemonic project” that would ensure China led development in the Indian Ocean region.
The main point of contention for India is the China-Pakistan Economic Corridor or CPEC, which is also part of OBOR.
For New Delhi, OBOR may be a potential economic opportunity but it also threatens India’s interests.

India’s strategy to counter OBOR

India recently proposed the ‘Cotton Route’ (seen by many as its answer to the Silk Route) to strengthen economic ties between countries in the Indian Ocean rim.
It has also launched Project Mausam and Spice Route apparently in response to China’s Belt and Road initiative.
The ‘Mausam’ project envisages the re-establishment of India’s ancient maritime routes with its traditional trade partners along the Indian Ocean.
The ‘Spice Route of India’, visualises the India-centered linkup of historic sea routes in Asia, Europe and Africa.
Many people in India perceive the Mausam Project and the Spice Route as rivals to the Maritime SilkRoad.

(b)SOUTH CHINA SEA (SCS) DISPUTE

The three million square kilometers South China Sea is the maritime heart of Southeast Asia but also a disputable property. Maritime boundaries in the South China Sea are particularly problematic because they involve six separate claimants in a mostly enclosed body of water with a large number of disputed land features.

The South China Sea is ringed by Brunei, China, Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam, and dotted with hundreds of small islands, shoals and reefs, many of them occupied by the disputants.

The fundamental issue in the South China Sea is one of territorial sovereignty, that is, which state has sovereignty over the islands and their adjacent waters.

UNCLOS has no provisions on how to determine sovereignty over offshore islands. As there is no treaty that governs the issue of sovereignty, states have to look for guidance to the rules of customary international law on the acquisition and loss of territory.

Main Disputes:

The Spratly Islands are located in the central part of the South China Sea, north of the island of Borneo (which comprises Brunei Darussalam and the east Malaysian States of Sarawak and Sabah), east of Vietnam, west of the Philippines, and south of the Chinese island of Hainan.

The Spratly Islands are claimed in their entirety by China, Taiwan, and Vietnam, while some islands and other features are claimed by Malaysia and the Philippines. The Spratly Islands consist of more than 140 islets, rocks, reefs, shoals and sandbanks (some totally or occasionally submerged while others are always dry) spread over an area of more than 410,000 square kilometres.

The Paracel Islands are located in the northern part of the South China Sea, approximately equidistant from the coastlines of Vietnam and China (Hainan). They are claimed by China, Taiwan and Vietnam. China forcibly ejected South Vietnamese troops from the Paracels in 1974, and they are now occupied exclusively by China.

China denies the existence of a dispute over these islands, but they are a continual source of tension between China and Vietnam. The Paracels consist of about thirty five islets, shoals, sandbanks and reefs with approximately 15,000 km² of ocean surface.

Woody Island, the largest island in the Paracels, which is about the same land area as all of the Spratly Islands combined. Woody Island is the location of Sansha City, a prefecture-level city established by China in June 2012 as its administrative centre for its claims in the South China Sea.

Scarborough Reef is located in the northern part of the South China Sea between the Philippines and the Paracels, and is claimed by China, the Philippines and Taiwan. Scarborough Reef is located about 130 miles from the Philippine island of Luzon. Most of the reef is either completely submerged or above water at low tide, but it contains several small rocks which are above water at high tide. It has been a major source of tension between China and the Philippines since the Philippines attempted arrest of Chinese fishermen in June 2012.

The Pratas Islands are located just over 200 miles southwest of Hong Kong. They are occupied by Taiwan, and are also claimed by China.

Macclesfield Bank, a large sunken reef that is completely submerged at low tide, is located between Scarborough Reef and the Paracels. It is claimed by China and Taiwan.

Resources as a Driver of Competition

Many analysts feel that resource competition has become one of the key drivers of territorial disputes and tension, particularly in the South China Sea and East China Sea.

The South China Sea, for example, is a major source of fish resources for each of the nations that borders it, and the largest source of fish for China, the Philippines and Vietnam. The over-fishing in coastal waters has led to depletion of resources thus competition has led fishing boats to work towards offshore.

Many energy industry observers believe that the sea also has substantial reserves of oil and natural gas. The rising energy demand in countries has encouraged more offshore energy development in their economic planning.

New technologies are making complicated offshore oil and gas development more feasible, and high energy prices are contributing to the desire to control these resources.

Energy Resources

Because much of the South China Sea has never been fully explored, accurate assessments of exploitable oil and gas reserves do not exist. A report by the Department of Energy’s Energy Information Administration (EIA) in 2008 cited some of the most optimistic estimates-Chinese assessments that it could have reserves totaling 213 billion barrels of oil and 900 trillion cubic feet of natural gas. Many analysts argue, however, that because much of the northern part of the South China Sea is deep, energy resources may not be exploitable on this scale.

In May 2012, the state-owned China National Overseas Oil Corp (CNOOC) unveiled a deep-water drilling rig that could extend its ability to exploit resources into waters deeper than its current capabilities allow. Still, industry analysts believe that international energy companies have considerably more technical ability to develop resources in difficult offshore settings-and thus, much of the sea will likely go undeveloped as long as the disputes continue.

Offshore energy development is based on assertion of sovereignty over parts of the sea, and because such assertions are still widely overlapping, there are increasing chances for conflict. For example, China warned international oil companies in 2006 that they should not work in regions with unsettled territorial disputes where Vietnam was seeking development partners.

In 2012, a Chinese state oil company, the Chinese National Overseas Oil Corp. (CNOOC) offered tenders for offshore oil and gas exploration within Vietnam’s EEZ, overlapping with areas Vietnam had already tendered and, in some cases, in which companies were already exploring and drilling. This action prompted angry reactions in Vietnam, which deemed the moves illegal.

Such disputes have created uncertainties that constrain offshore resource exploration and development, which requires long-term periods of stability.

There are, however, some examples of exploration and development that have taken place in disputed areas. China, the Philippines, and Vietnam have each undertaken oil-and-gas exploration in disputed parts of the South China Sea, and the Philippines and Vietnam have offered exploration and development contracts to international oil-andgas firms, including American companies.

Fishery Resources

Fishing presents another potential source of conflict. The South China Sea is the largest source of fish, an important foodstock, in each of the claimant countries.

The fishing industries of each of the disputants include large numbers of vessels which travel increasingly farther from their home coasts due to overfishing in coastal waters, bringing them into disputed waters. This has led to frequent incidents of harassment of vessels, confiscation of catches and equipment, and sometimes imprisonment of fishermen.

A 2012 dispute between the Philippines and China at Scarborough Shoal, an outcropping of rocks within the Philippines’ EEZ and China’s nine-dash line, began when Philippine coast guard officials boarded Chinese fishing vessels and confiscated illegally obtained shark and coral. Some analysts point to joint management of fisheries as a potential path towards lowering tensions and fostering functional cooperation among disputants.

Attempts for Resolution

Currently, states in Southeast Asia are utilizing four different strategies to try to solve the issue.
First, states are pushing for bilateral solutions in incremental stages. Beijing has repeatedly stated a preference for this method, but regional states widely regard it as an attempt to freeze resource development, while doing little to actually resolve the various claims. On the other hand, Vietnam and China recently used bilateral diplomacy to reduce tensions.
Second, attempts are being made to resolve the issue at the multilateral level, that is utilizing ASEAN. So far it is difficult to achieve much, as only four of ASEAN’s 10 member states are involved in the South China Sea issue, and China has been able to detach the other six members at various times from positions taken by Vietnam, Malaysia, Brunei and the Philippines.
Third, fostering closer ties to the US also remains an option, as Washington is still the predominant power in the region. The Philippines and Vietnam in particular have sought strategic reassurance through new or renewed security agreements with the US; and Washington – concerned that China covets such a strategic sea line of communication – has responded warmly.
And fourth, Southeast Asian nations are involving non-regional states in the issue. Vietnam’s agreement with India on drilling in contested waters falls into this strategy, and follows a general campaign by Hanoi to engage external states and oil firms – such as Chevron, Exxon Mobil, BP and Zarubezhneft as a form of pressure on Beijing. But these strategies are not making the slightest difference, and serve only to exacerbate tensions.

India and South China Dispute

India has a strong interest in keeping sea lanes open in the South China Sea. The South China Sea is not only a strategic maritime link between the Pacific and the Indian Oceans, but also a vital gateway for shipping in East Asia.

Almost, 55% of India’s trade with the Asia Pacific transits through the South China Sea. Apart from helping secure energy supplies for countries like Japan and Korea, India has the unique distinction of shipping oil from Sakhalin to Mangalore through sea routes of the region. Therefore, it is vital for India to have access to the region.

If China continues to assert dominance over these waters, it will be difficult for India to continue with its activities through this channel.

But China’s hard line on the South China Sea has affected India too. New Delhi was a bit taken aback after Beijing denounced plans by an Indian Company to develop oil fields in the region.

The Chinese objection was to ONGC Videsh’s (OVL) venture for off-shore oil exploration in water’s belonging to Vietnam (not recognized by China), Beijing urged India to refrain from entering into deals with Vietnamese firms exploring oil and gas in the disputed South China Sea over which China enjoys ‘indisputable’ sovereignty.

India however, in recent years, has been seen as a credible counterweight to China. Southeast Asian countries, wary of continued Chinese aggression in the South China Sea, have encouraged joint maritime exercises with India.

In February 2010, the Indian Navy concluded its Milan series of maritime exercises in the Andaman and Nicobar Islands and almost all ASEAN countries participated in Milan exercise.

India, which has helped Malaysia in building up its Coast Guard in the past, must consider assisting other ASEAN countries. India has a strong Navy with technological credibility that can be leveraged by ASEAN. Collaboration on missile technology, radar systems, defence component systems and supporting hardware are again areas where ASEAN countries can work in partnership with India. China, naturally, does not welcome the ASEAN move to interact militarily with India.

India has also shown keenness to sell Brahmos missiles to friendly countries including the neighboring Southeast Asian countries. Most of the ASEAN countries have been engaged in a defense modernization programme and would like to obtain assistance in weapons up-gradation and systems integration.

Like India, most of the Southeast Asian countries also rely on Russia for their defence procurements. India with its long experience in using Russian products and developed the technological capabilities for low cost servicing could be a potential ally for ASEAN in this field. Assisting ASEAN will also improve India’s relations with the Southeast Asian countries bilaterally and multilaterally and it will also boost India’s morale in balancing China in the IOR.

India’s Interests in the SCS

India has a strong interest in keeping sea lanes open in the SCS.

The SCS is not only a strategic maritime link between the Pacific and the Indian Oceans, but also a vital gateway for shipping in East Asia. Almost, 55% of India’s trade with the Asia Pacific transits through the SCS.
Apart from helping secure energy supplies for countries like Japan and Korea, India has the unique distinction of shipping oil from Sakhalin to Mangalore through sea routes of the region. Therefore, it is vital for India to have access to the region. If China continues to assert dominance over these waters, it will be difficult for India to continue with its activities through this channel.
Presence of India in SCS is not only Counter balance China in South East Asia but it will put pressure on China in South Asia too.
Presence in South China Sea will help India to have effective control over Malacca strait.
SCS is crucial in India’s Look East Policy-2.

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Recent Ruling of the Tribunal

The Permanent Court of Arbitration (PCA) in The Hague, Netherlands, has ruled that China’s claims of historical rights over South China Sea (SCS) has no legal basis. The case was brought to the court in 2013 by the Philippines, centring on the Scarborough Shoal, but Beijing chose to boycott the proceedings.

What did the arbitration panel rule?

The court at The Hague ruled that China’s claims to the waters within the so-called “nine-dash line”, with wide-ranging economic interests, was in breach of the UN Convention on the Law of the Sea (UNCLOS).
The court slammed China for damaging parts of the ecosystem in the Spratly islands- a contested archipelago– on account of overfishing and development of artificial islands.
The Court also said that China violated the Philippines’ sovereign rights. It said China has caused “severe harm to the coral reef environment” by building artificial islands.

What is the ‘nine-dash’ line?

The ‘nine-dash line’ stretches hundreds of kilometers south and east of its southerly Hainan Island, covering the strategic Paracel and Spratly island chains. China buttresses its claims by citing 2,000 years of history when the two island chains were regarded as its integral parts.

Chinese response to ruling of PCA

China rejected an international ruling on the South China Sea as “null and void” and devoid of any “binding force”.
China is contemplating to establish a military Air Defence Identification Zone (ADIZ) in the South China Sea (SCS). The imposition of an ADIZ would require overflying planes to first notify China.
Many Chinese experts stressed that the entire episode was a cover to enforce the US’ “Pivot of Asia” or Rebalance strategy, aimed at the containment of China.

India’s response

India has made it clear that it recognised that the tribunal had been set up within the jurisdiction of the UN’s Convention on the Law of the Sea (UNCLOS) that must be given the “utmost respect”.

Comment

Despite gloomy predictions about the inevitability of competition between China and India, cooperation between Asia‘s two emerging powers is possible. It, will however, require a much more concerted effort to bridge the gap in socio-cultural understanding that existed between them, there remains a fundamental lack of appreciation on the part of each country of the underlying cultural and societal norms that define the other norms that influence each country‘s perception of its own national interest.

It is argued that greater appreciation of these elements is critical if China and India are to successfully address issues such as the ongoing border dispute and the mounting trade imbalance.

In present and future scenarios, strategic and diplomatic relations between China and India are fraught with complication, tensions and misgivings on both sides upon the historical legacies of relations between the two countries. Much of the mistrust and misgivings emanate from the legacy of the 1962 war between the two countries.

The following five decades have seen generation of Indians growing up with an inherent wariness of China and anything Chinese. The public popular imagination in India was fuelled by the often repeated stories of the great betrayal by the supposed ally nation.

In recent decades after India gained its independence from Britain in 1947, there was a lot of popular hope for a strong and mutually beneficial partnership between the two nations. This was reflected in the popular phrase that was chanted by Indian children in the 1950s: Hindi-Chini bhai-bhai, the general atmosphere of bonhomie and Friendship was such that most Indians could not imagine the advent of Chinese military aggression on their relative unguarded northeast.

India-China Relations

Introduction