India China
India China
India China
1. Economic Dynamism
Trade between the two countries resumed in 1978 and the Most
Favored Nation Agreement was signed in 1984. Trade between the
two countries has increased from a mere US$339 million in 1992 to
US$57.4 billion in 2018.
Analysts, however, highlight two drawbacks: in terms of product
composition, the Indian export basket is still extremely limited,
comprising mostly primary products, and since 2005–6, we see a
continuous and rising trade deficit in favor of China. India has
consistently demanded that China give greater market access to
Indian pharma and IT sectors (two areas where India is
competitive) and there is undoubtedly urgent need to restructure
India–China trade relations.
The proposed Free Trade Area (FTA), putting together the markets
of two of the most populous nations in the world would be even
bigger than the current FTAs such as the European Union, NAFTA,
ASEAN, APEC, etc. It is estimated that within the next decade,
India and China will be among the ten most important bilateral
trading relationships in the world.
This trading partnership is viewed as window for peace by both the
nations.
3. The US factor
India has claimed that China has assisted Pakistan to set up its
nuclear program despite the NSG guidelines. This, along with
China’s nuclear tests of 1964 are the major reasons behind the
development of India’s nuclear program.
This response irked the Chinese and was responsible for tensions
between the two nations.
There are various examples to support India’s claims. For example,
Nehruvian denial for nuclear research till 1962 and his acceptance
for the same in 1964. Prime Minister Vajpayee’s letter to the then
US President Bill Clinton and the statement of Indian Parliament on
27th May 1998 proves the above claims.
Beijing, however, denied India’s claim of any threat posed by it to
New Delhi.
5. Encirclement of India by proxy and India’s counter
6. Territorial disputes
a. Chinese territorial claims
i) McMohan line