China’s rising global power and its implications on Sino-Tibetan affairs

This analytical paper is written to coincide with the gathering of the second special general meeting of the Tibetan Diaspora towards the end of September 2012.

The Kashag of the Central Tibetan Administration and the Tibetan Parliament-in-Exile have convened this important gathering to mobilise, energise and find new solutions to overcome the very urgent and desperate current situation in occupied Tibet, particularly the stream of selfless act of self-immolations carried out by Tibetans inside and outside of Tibet. The general consensus of the motivation and reasons behind the drastic acts of these Tibetans were for the return of His Holiness The Dalai Lama to Tibet and to achieve freedom for Tibetans from the rule of communist China.

This piece that I am about to communicate is an independent analysis of the present day China, China and the world, the world and China, the Tibetan issue and the opportunities as well as the realities that Tibetan movement faces. I am writing this piece not as an academician or as a specialist on either China or Tibet but as a lay person, who has watched, worked and continues to study the Sino-Tibetan relationship or no relationship with keen interest.

Therefore, it is fitting to quote a stanza from an ancient master Shanti Deva who said:

“Here I shall say nothing that has not been said before,

And in the art of prosody I have no skill.

I therefore have no thought that this might be of benefit to others;

I wrote it only to habituate my mind.”

I am sure that there is nothing in this piece that the reader has not read or heard already. But I hope this piece will serve as a small aide-memoires of the current position of China and the current international scenario that are necessary to be considered in making our deliberation to find solutions for Tibet and Tibetans inside Tibet.

It is particularly important this time because the deliberations of the delegates will not formally be commented, protected or blessed by His Holiness The Dalai Lama as the political head of Tibetan people. In other words, we do not have the safety cover of His Holiness The Dalai Lama, which we have always relied upon as a fall back and a guarantor. We are not so lucky now.

It is absolutely essential and vitally important that we consider the wider context under which China is now operating in the world and how other countries including superpowers are behaving, positioning and formulating not only their foreign policies, but also their economic and domestic policies towards China and its impact and consequences on Tibetan issues now and for years to come.

Within a period of thirty years, a periodic span of three generations of Chinese leadership (Deng Xiaoping, Jiang Zemin and Hu Jintao), China has been transformed from a crippling communist regime to a super power next to the United States.

At the beginning of 2012, The Economist almost as a matter-of-fact reported that China will have a larger economy than America in purchasing power parity in less than five years from now (2016)

The economist also methodically chronicled and published the following statistics:

* China’s net foreign assets surpassed the United States in 2003 (China’s net foreign assets of $2 trillion today versus US net foreign debt of $2.5 trillion);

* Chinese exports surpassed the US in 2007;

* Chinese fixed capital investment took the lead in 2009;

* Chinese manufacturing output surpassed US in 2010;

* Chinese energy consumption also surpassed US in 2010;

* Chinese patent applications granted exceeded the United States applications for the first time in 2010.

* Based on reasonable projections of relative real growth rates China will have the larger GDP as measured by market exchange rates within the next seven years (2018)

China’s stated global aim and core interests:

Beijing’s stated core objectives, loosely and by no means exhaustive, consists of (a) the preservation of communist party and it’s rule in China, (b) unification of Taiwan with mainland China, (c) continuation of rule of Tibet, (d) unhindered access to world’s mineral resources and (e) non acceptance of what China calls imposition or importation of western values such as human rights and democracy in Chinese society.

The world and China

What has become evident is that, during these last three decades, China’s attitude towards the rest of the world has significantly changed since the early days of Deng Xiaoping’s modernisation program or vision of Chinese economy for alleviating the Chinese society from poverty in the aftermath of Mao’s cultural revolution and isolation of China from the rest of the world.

During the past decade, buoyed by China economic success, the country’s regime has manifested in a very assertive entity, threatening those countries with punitive economic repercussion who criticises its human right records, democracy, and issues relating to Tibet and Xinjiang.

This assertive Chinese policy on global development and dominance is imposed on other countries through a mixture of force and diplomacy. It has rattled and confronted the reality, the challenges that other governments especially western governments, parliamentarians, political thinkers and ordinary members of the society alike, may have envisaged on such a turn around. But none are not only unprepared for the consequences but at the speed of its arrival.

It seems the reality of Deng Xiaoping’s famous tactical policy for China of “biding time and hiding one’s talents or strength” has arrived suddenly within a very short period of three decades, with shock waves for the future of world order politically, economically, and the emergence of the concept of human rights, democracy and rule of law in Asia. My assumption here is that once China has actually obtained national wealth and superpower status, it will increasingly act unilaterally without adherence to international norms.

As a consequence is visible from the changing US policy and perhaps many regional countries too are likely to take active measures to hedge against a more unilateral China in the future so that they are not caught unprepared.

American President George W Bush senior rightly saw and politely stated that China is a competitor, but the US and western world accepted China as a “friendly partner” overshadowed by the stream of cheap imports from China that was to glut the insatiable wants of the western consumer society.

Transfer of western manufacturing know-how and technical expertise to China in the search for high profits for the corporations has made the economic benefits more lucrative to political expediency in the past three decades.

The Rise of China and its Impact on the Regional and Global Order

The real question throughout the world today is what does this rise and rise of China means for the regional and global order. What are its real impacts on both regional and global peace, prosperity, security and stability for the immediate decades ahead? How does this economically powerful China affect it treatment of Tibetans, Uyghurs, Mongolians and other minorities in China?

The current rise of economic power of China has been compared to the possible down fall of Western economic power primarily due to the global financial crisis, which started around 2006 that resulted in a long and still continuing economic recession in Europe and USA. The present economic crisis in Europe is so acute that it is not only affecting the economic recovery of US, but it still has the full potential to unleash a second round of Global Financial Crisis.

For the Western world this unprecedented rise of China is a very uncomfortable force to be reckoned with. According to Kevin Rudd, the former Prime Minister and current Foreign Secretary of Australia, “this will be the first time ever a non western power will dominate the global economic power since the rise of Spanish Empire in 1492 and that this will be the first time ever a non-democratic country will be the world’s largest economy for nearly 300 years”.

When we look at the impact of the rise of China in terms of global peace and security, we must look at it in a much wider worldwide and historical context than the relatives of G2 (US and China) metrics of the 21st century. The global implications of China rising to the top of the global economic position are simply jaw dropping to consider.

It is, therefore, a subject worthy of the most serious reflection and analysis, not just in Beijing and Washington, but across Asia, across Europe and across the world.

Asia Pacific and USA Foreign Policy change:

The inexorable rise of China has forced US to look eastward withdrawing from their war engagements from Iraq and Afghanistan and Europe First policy engagement with North Atlantic Alliance, which has been the back bone of US foreign policy for the past 60 years.

US Secretary of State Hillary Clinton pronounced the Obama administration’s new approach to Asia Pacific in her November 2011 “America’s Pacific Century” speech where she declared that “the future of politics will be decided in Asia, not Afghanistan or Iraq, and the United States will be right at the center of the action”. And she further went on to say that “as we move forward to set the stage for engagement in the Asia-Pacific over the next 60 years, we are focused on the steps we have to take at home to secure and sustain our leadership abroad”.

In a very fluid world of changing politics dominated by giants powers, we need to look back and recollect with deep interest how President Obama’s administration has written a new chapter in American foreign policy, saying that United States will move away from South West Asia to focus on the rising power of china.

Clearly, America is broadening its strategic reach and relations in the pacific region both with individual countries as well as with Asian institutions such as ASEAN (Association of South East Asian Nations) and EAS (East Asia Summit) to engage and to maintain a balance of power to counter the growing power and assertive influence of China. China’s growing global power, influence and its assertive territorial claims in South China Sea has made ASEAN countries nervous of the intentions of China. The Asia Pivot policy of Obama Administration has embraced the US by Vietnam and other member countries as a fallback security against their giant neighbour.

It is important to point out that for the first time ever in the ASEAN Regional Forum’s 45 year history, since its inception, there was no agreed communiqué in their 2012 Annual meeting in Phnom Penh, Cambodia, because South-east Asian countries have failed to reach an agreement on how to deal with China’s assertive sovereignty claims on disputed territory in the South China Sea. 

The Philippines and Vietnamese wanted ASEAN Regional Forum to have a unified policy on South China Sea dispute and to resist Beijing’s insistence that the disputes should be handled on a bilateral level only. Perhaps, American Asia Pivot Foreign Policy may have given these smaller countries some confidence and may have increased their resistance level with China and it seems such countries are reciprocating favourably to the US declared role in Asia Pacific. Rival countries have made claims over territory in the South China Sea for centuries but the recent upsurge in tension has sparked concern that the area is becoming a flashpoint with global consequences.

US had clearly concluded that it not only has vital interests in this Asia Pacific Region in the century ahead, but also that this region will progressively represent the centre of gravity of global economic and strategic power.

US and most of its allies believes that this strategic positioning has kept and will keep the region in peace, thereby enabling open economies to develop, trade and commerce to flourish, and democracies to emerge.

This is where core American and Chinese strategic concepts clash against each other, because the Chinese view that US alliance structures in Asia and Pacific are relics of a cold war past that should be disbanded and that the retention of these alliances is designed to constrain China; and in doing so, continue to frustrate the reunification of Taiwan with the motherland.

Burma

It is not a coincidence that the Secretary of State Hillary Clinton should make the first-ever and a landmark historical visit to Burma in December 2011, reversing a fifty year US Policy of engagement with Burma so soon after Obama Administrations Asia Pivot Policy announcement. US is well aware that such high level visit by the administration will not only give high hopes and expectations for the democratic movement in Burma, but that this will also provide the possibility for the Burmese authorities to rebalance its one sided and suffocating relationship with China, which has been resented by ordinary Burmese people.

Secretary of State Clinton’s meeting with Ms Aung Sun Suu Kyi, a Nobel Laureate, human rights icon and champaign of democracy in Burma, has paved the way for greater normalisation of relations between Burma with US and Europe.

Burma has become a client state of China for the past many decades. China has invested heavily in Burma both for its natural resources and for securing and carrying out the so called Maoist encirclement strategic position in surrounding India – which has given home to His Holiness the Dalai Lama, the exiled Tibetan community and enabling and facilitating the exile Tibetans to preserve their language, customs and the unique cultural heritage of Tibet – from the east, Sri Lanka from the south, Pakistan from the west and occupied Tibet and Nepal from the north.

Japan

The continued mistrust between Japan and China are self evident in the past, but the clash between Chinese fighting boats with coastguard off Japan at the end of 2011 and allowing anti-Japanese protests and demonstration to take place in major cities in China by the Chinese Communist Party is a reminder of another flash point with global consequences.

Japan is one of the most important partners of USA in Asia, and China has consistently complained at USA and Japan’s military alliance. In reference to the annual USA and Japan military drill, which took place in Gotemba at the foothill of Mount Fuji on 21st August 2012, China Daily quotes a defence commentator as saying that the drill “is increasing tension in the region and has shown Washington’s true colours, despite its so-called neutral stance over the issue of disputed islands in the East China Sea”.

Again if we look back to the early days of Obama presidency, one could argue that the preparation for the Asia Pivot and American Pacific Century thinking was already underway soon after the end of 2008. It was evident because the Japanese Prime Minister was the first Oval Office visitor from abroad in early 2009 and Secretary Clinton’s first overseas trip was to Tokyo and not to London or Europe.

Australia

In line with US new policy of engagement in Asia, United State has secured a far reaching agreement with Australia to expand its military presence in the country and facility for joint exercises, training, and access to bases and eventual postings of up to 2500 American troops in northern Australia. Naturally, China is very unhappy with this US positioning.

Australia being a member of the club of G-20 and East Asia Summit Forum is also interested in shaping the future of Asia and Pacific region. Australia has huge commercial interests with mainland China with its mineral resources.

European Union and China

The European Union is the biggest and most important trading partner of China. The EU pursues a friendly strategic partnership with China and welcomes Chinese nods and winks when it hints that they may prop up the Euro. Chinese are openly lobbying Chinese government’s interests in Brussels and in the capitals of the European countries, yet at the same time Chinese leaders are telling off and pointing fingers at the European leaders for their lack of leadership for not “putting their houses in order”. Perhaps, it is really a sign of change in time of European fortune that we witness remarkable and extraordinary acts of dependency and vulnerability to see European States publicly seeking China’s financial support to intervene in Euro-bond markets.

Europe welcomes Chinese investments and China has taken advantage in investing and taking over well known brands and buying up ownership in strategic key industries requiring cash injection for the corporation’s survival.

In less prosperous European economies they have invested by either taking over the control or have taken stakes in key industries such as Ocean terminal at Piraeus port in Greece and wind-power farm in Romania. In other key industries they have taken stakes such as in the makers of polysilicon for solar panels in Norway, 40% stake in Norwegian Statoil, Addax Petroleum of Switzerland, a stake in the Fortis bank of Belgium, stake in the Barclays bank in UK etc.

China has two major demands from the EU. Firstly, China would like EU to lift the arms embargo imposed on it after the 1989 Tiananmen Square massacre. Secondly, it would like EU to grant them the status of a full market economy, which would shield it from anti-dumping measures.

EU member states remains divided and unable to agree on both issues because of the very sensitive political nature of the arms embargo and the inherent nature of the protection required for home grown industries to safeguard employment from cheap imports.

This has inevitably allowed China to manipulate the internal divisions of the member states and play one member state against others thorough the so called bilateral talks and discussions a format China has very successfully followed in South East Asia.

China and Africa, Latin America

Although China’s global influence, be it through force of assertiveness, through natural course or through bullying and blackmailing tactics, is felt almost throughout the entire world. In the above short and very superficial analysis, I have concentrated mainly on China and its relationships with the United States of America, Europe, Asia and Pacific.

Dominance of Chinese influence in the entire continent of Africa is without any dispute. China’s economic controls and political influence in the whole of Latin American world, former USSR republics are also undisputed. China is promoting their state interests in these countries through a combination of aid programs, particularly in Africa where China is now using aid programs to explore open markets for oil, minerals and other resources. In return for the access to natural resources, China lends cheap money, builds roads, railways, airports, bridges, hospitals, sport stadiums, schools and official buildings.

Although, Secretary of State Hillary Clinton did not mention Beijing by name but was directed at China when she said “be wary of donors who are more interested in extracting your resources than in building your capacity. Some funding might help fill short-term budget gaps, but we’ve seen time and again that these quick fixes won’t produce self-sustaining results.” at the global summit on development and aid held in South Korea.

For many of the developing nations China has become an essential partner particularly for those repressive and rogue regime states in African continent, Middle East and Latin American oil reach states.

An Overview on China

Whilst China’s economic power is growing and unstoppable, yet this is a country not at ease with itself and there is a huge number of areas which could derail their progress from becoming the world’s number one superpower.

The particular areas to look out for are both internal and external forces, but the explosion of an internal force is more likely and will have more devastating and chaotic outcome if that were to happen. The internal pressure for reform in China is like a boiling kettle and the Chinese government’s own admitted cost of maintaining the internal security in 2010 was US Dollars 93 billion. Experts believe that this amount is $1 billion more than the government’s publicly admitted national defense budget, and surely, such spending on internal security is a devastating blow for the image of a stable China, which it would like to portray and an undoubted evidence of a State at odds with its own people.

A leading UK think-tank on international affairs, Chatham House, states that there were 9 million petitions to the central government in 2009 and estimates that there are as many as 180,000 mass incidents each year. Most of the disputes have arisen because of infringement and summary acquisition of land rights, unsettled pension payments, conflict of political and lack of participation in decision making process in civil society frustrated by the non transparent and control imposed by one party system.

The second major area of internal conflict pressure point is the existence of massive inequalities in income between cities and countryside; development and income gap between coastal and inland regions; between eastern and western regions, as most of the development and wealth is concentrated in coastal regions. The scale of inequality is illustrated by World Bank’s statistics which states that China has 150 million people living in abject poverty, 24 million people malnourished, but China has 35 Dollar billionaires and over 100 Dollar millionaires.

The third pressure point is the massive problem of corruption and nepotism in Chinese society which is enhancing the marginalisation of ethic minorities, non communist party members, religious affiliated groups and other vulnerable members of the society.

The fourth pressure point is both an internal as well as an international issue which relate to Tibet, Xinjiang and Inner Mongolia on one hand and Taiwan on the other. China’s continued inability to address and resolve the real and unprecedented grievances of the people of Tibet and Xinjiang has continued to dogged the Chinese government by a series of public disorders, unrest, protests and international condemnation of the Chinese government for its hard line policies and handling of these issues, which continues to taint it’s authority and legitimacy of rule in these ethnic regions, especially in occupied Tibet.

Sino-Tibetan Relations: The Way Forward

The objectives of Memorandum on Genuine Autonomy for the Tibetan People proposed by the Tibetan side, which provides the basis for a realistic and sustainable political solution to the issue of Tibet, is sill achievable through a strategy of campaign and continued engagement and negotiation with China even in the face of the latter’s intransigence. All we need is a political will from Beijing to resolve the question of Tibet. The last round of talks between the two side was held in January 2010.

A progressively wealthy and powerful China should have the confidence to settle the Tibetan issue during the life time of His Holiness the 14th Dalai Lama, who is revered and enjoys the full confidence of all Tibetans both living inside and outside of Tibet. China should not fear the sincere overtures of His Holiness in helping China to settle the question of Tibet for the mutual benefit of Tibetan and Chinese peoples.

His Holiness has often talked about and recognised the need and benefits of a wealthy, powerful and industrious China to help bring economic development to Tibet. It is important for the Chinese leaders to realise and appreciate His Holiness’s genuine views and hopes for the benefit of both Chinese and Tibetan communities.

China must also be wise and confident enough to accept that it is in the best interest of China to settle the Tibetan issue as quickly as possible. The unsettled Tibet problem is one of the worst burdens that China has and this is holding back China in the eyes of international community. An amicable political settlement of the issue of Tibet with the return of His Holiness to Tibet will undoubtedly earn China international recognition for its political maturity and moral authority necessary to be a world super power.

Since the election of Kalon Tripa Dr. Lobsang Sangay, the unannounced official Chinese position had been that of a non engagement policy with His Holiness the Dalai Lama and the Central Tibetan Administration.

Of course, this is much regretted from Tibetan side and I hope the new Chinese leadership, which will be selected in mid October, will reverse the existing hard line policy of non engagement with His Holiness the Dalai Lama and Central Tibetan Administration. The new Chinese leadership has the opportunity to seize the moment to restore freedom in Tibet by putting an immediate end to the draconian control imposed in Tibetan areas. This will give breathing space for normal existence to begin, whereby the trauma of hopelessness will cease and may help to end the cycle of tragic self-immolations in Tibet.

As I am giving my finishing and final thoughts to this piece, the number of Tibetans who have set themselves on fire reached 51, of which 41 died. But unfortunately, there is no sign of abatement in this drastic form of non-violent protest against the continued Chinese rule in occupied Tibet and the denial of the return of His Holiness the Dalai Lama to his homeland.

The political movement of self-immolation, which started from inside Tibet, is a testament of desperation and unhappiness endured by Tibetans in Tibet.

We really need to collectively engage in the forthcoming Second Special General Meeting to come up with strategies and programmes, which will enable us to achieve an amicable resolution of the political future of Tibet based on the forward-looking and foresighted principles, philosophies and guidance of His Holiness the Dalai Lama.

Sonam T Frasi is a former Member of Tibetan Parliament-in-Exile

The Dangers of a China-Japan Trade War

Protests against the Japanese purchase of the Senkaku / Diaoyu Islands took place in various Chinese cities recently, including Beijing, Shenzhen, Luoyang and Xi’an amongst others.  Japanese branded products, including numerous cars (and even a camera belonging to a protestor) were attacked and destroyed by the angry crowds.

Panasonic and Toyota as well as Nissan reported damage to commercial properties (a factory and car dealerships respectively).   

Canon has also closed some facilities whilst Japanese clothing chain Uniqlo chose to shut several locations, and covered signs at others.  Protestors have also targeted Chinese owned Japanese branded products - images of which cannot be encouraging for prospective customers.  Meanwhile, some Chinese protestors are calling for consumer boycotts of Japanese branded products.

Consumer boycotts can be damaging and reflect a level of political risk inherent in doing business in foreign markets – they are by no means limited to China.  This aspect of political risk is troublesome, but with the growing importance of China’s market, “political risk with Chinese characteristics” must be accepted as part of the business environment. Readers may remember previous rounds of anti-Japaneseprotests in the mid-2010s, as well as the targeting of Carrefour and MacDonald’s branches in 2008 in response to instability in Tibet and the Olympic torch protests.  In a globalized world strong brands and their logos are often taken to represent a country as much as its embassies or flag. If a large brand is operating successfully in a foreign market, they may effectively be on the front-lines of disagreements over which they have no control.  

Consumer boycotts can take various forms and be over various issues. In Europe and the U.S., they often occur over perceived immoral or unjust actions by companies, including safety concerns, actions in developing countries, poor environmental records, and the mistreatment of workers. Examples of these could be the boycotts against Nestle in the late 1990s and the more famous protests against Nike over its labor practices.

Japanese companies can expect a certain chill whilst doing business in China over the coming months, even if Beijing doesn’t take any public formal economic action against Japan.  The Chinese media has been suggesting that formal action may be in the cards, and with China accounting for nearly 20% of Japan’s exports, there is a lot at stake. However, such measures can be troublesome under World Trade Organization (WTO) obligations and tend to damage a country’s reputation.  The punishment of Japan through rare-earth export restrictions in 2010 is an example of the more extreme national level action, but the backlash against China was damaging.  Other than private consumer led boycotts and formal national policy boycotts, however, China has a powerful third option.

Unofficial boycotts are possible in China because of the power of State Owned Enterprises (SOEs) and the wider public sector in the economy.  Without announcing formal measures which are difficult given WTO rules, there has been a documented effect on trade and sales from nations as well as corporations which have displeased China.  This can be in the form of web restrictions such as that currently affecting the free Bloomberg website in mainland China (after Bloomberg published a damaging expose on Xi Jinping’s extended family wealth) or in unpublished policies at state companies (there have been reports that sales of Bloomberg Terminals have plummeted in China). 

In fact, two academics at the University of Goettingen in Germany published a discussion paper looking at the effect on trade when a foreign country angers Beijing by arranging official meetings with the Dalai Lama.  Fuchs and Klann, the paper’s authors, find a definite pattern whereby a country’s exports to China will fall by 8.1% or 16.9% (depending on method of measurement) and will remain depressed for two years after such an event.  The paper finds that heavy machinery and transport equipment are the sectors most consistently hit by such “unofficial” boycotts.  Needless to say, these sectors in China involve many state owned players (transport and infrastructure development).

Yet despite China’s growing clout in international economics, the boycott/consumer action sword can cut both ways.  Whilst Japan is the current target of action in the mainland and Hong Kong, companies from all nations are being made more aware of the particularities of political risk in China – and will also remember the recent experiences of Carrefour and MacDonald’s.  Investment decisions are affected by risk, and a company’s costs are increased if insurance premiums rise. Even shutting down facilities for a week or two is damaging to a corporation. 

Foreign firms do provide employment in China and also pay taxes, as well as deliver products which Chinese consumers usually seem keen to own.  What’s more, Japanese consumers buy Chinese made products too; a tit-for-tat boycott war will harm both sides, and many companies (not just Japanese ones) considering investment in China may now be looking at other options.  It is now well known that strong economic relationships before WWI didn’t stop the march to war, but they can’t have hurt. Let’s hope that cooler heads will prevail. 

James Parker

A tide of angry protests has swept the country for more than a week since September 11 after Japan announced that it had purchased the Senkaku (Diaoyu Dao) Islands in the East China Sea from their private owners. Beijing, which claims sovereignty over the islands, has warned that the move might have unpleasant consequences for bilateral trade. Analysts point out that the aftermath of a potential trade war could be even more disastrous than the damage caused by a direct armed standoff.

Wednesday saw no more anti-Japanese protests in Beijing or other Chinese cities. The government’s address followed Tuesday’s incident that nearly injured the U.S. ambassador to China. But the sharp escalation of tension over the Senkakus raised fresh concerns about a looming Sino-Japanese trade war. The Chinese Ministry of Commerce has acknowledged that the situation is unfavorable and that Japan is fully to blame for it. Some Chinese media have called for a ban on Japanese imports. Calls are also being heard to stop exporting rare earth metals to Japan. Yakov Berger, a senior analyst at the Institute of Far-Eastern Studies of the Russian Academy of Sciences, believes that neither of the sides will gain anything from a possible trade war.

"If a trade war breaks out, Japan will be the hardest hit due to its greater dependence on China, as follows from the export statistics. All the more so that the Japanese economy has been showing almost no growth over the past decade, and it is still recovering from the damage caused by the tsunami. But China has pretty much to lose either. Japan has invested huge sums into the Chinese economy and built assembly plants that produce all sorts of goods for Chinese and other markets and employ Chinese workers, mostly unskilled and low-educated people. The plants’ shutdown will force all those people to return to their villages where there are no jobs for them."

Many Japanese companies, including Panasonic and Canon, suspended production at their Chinese affiliates when the protests erupted.

Some analysts have dismissed the prospect of all-out trade war as unlikely. Alexander Salitsky, a prominent Russian economist and Orientalist, is one of them.

"In the 21st century, it’s companies and markets that decide everything. Naturally, large capital will intervene to put an end to any actions that exceed the limits of reason. The times of boycotts of British or other goods are gone. A trade war is a thing that can be regulated pretty well, including through mass media. Production is too closely intertwined to allow for any serious standoff."

China has experience of settling territorial disputes with its other neighbors, Russia included. But the dispute over the Senkakus has escalated to the point where emotions might prevail over economic expediency. Recollections of the Japanese occupation of the 1930s-1940s are still fresh in the minds of the Chinese and the government is doing its best to nurture them. Schools and mass media keep calling on children and adults not to forget those disgraceful episodes in Chinese history. A film about the 1937 Nanking massacre starring Hollywood actor Christian Bale has hit Chinese screens recently, becoming one of China’s most expensive films ever made.

Japanese investments in China have already started to decrease as the Chinese economy is slowing down. So far, the fall has been insignificant – just 1.2% in August, Bloomberg reports. But the worsening relations may send investment plummeting.

Polina Chernitsa

China’s Made-in-America Success Story

NEW DELHI – America’s strategy in Asia for more than a century has sought a stable balance of power to prevent the rise of any hegemon. Yet the United States, according to its official National Security Strategy, is also committed to accommodating “the emergence of a China that is peaceful and prosperous and that cooperates with us to address common challenges and mutual interests.” So America’s Asia policy has in some ways been at war with itself.

In fact, the US has played a key role in China’s rise. For example, rather than sustain trade sanctions against China after the Tiananmen Square massacre in 1989, the US decided instead to integrate the country into global institutions. But US foreign policy had been notable for a China-friendly approach long before that.

In 1905, President Theodore Roosevelt, who hosted the peace conference in Portsmouth, New Hampshire, after the Russo-Japanese War, argued for the return of Manchuria to Manchu-ruled China and for a balance of power in East Asia. The war ended up making the US an active participant in China’s affairs.

After the Communists seized power in China in 1949, the US openly viewed Chinese Communism as benign, and thus distinct from Soviet Communism. And it was after the Communists crushed the pro-democracy movement in 1989 that the US helped to turn China into an export juggernaut that has accumulated massive trade surpluses and become the principal source of capital flows to the US.

America’s policy toward Communist China has traversed three stages. In the first phase, America courted Mao Zedong’s regime, despite the Korean War, China's annexation of Tibet, and domestic witch hunts, such as the Hundred Flowers Campaign. Courtship gave way to estrangement during the second phase, as US policy for much of the 1960’s sought to isolate China.

The third phase began immediately after the 1969 Sino-Soviet military clashes, with the US actively seeking to exploit the rift in the Communist world by aligning China with its anti-Soviet strategy. Although China clearly instigated the bloody border clashes, America sided with Mao’s regime. That helped to lay the groundwork for the China “opening” of 1970-1971, engineered by US National Security Adviser Henry Kissinger, who until then had no knowledge of the country.

Since then, the US has pursued a conscious policy of aiding China’s rise. Indeed, President Jimmy Carter sent a memo to various US government departments instructing them to help in China’s rise – an approach that remains in effect today, even as America seeks to hedge against the risk that Chinese power gives rise to arrogance. Indeed, even China’s firing of missiles into the Taiwan Strait in 1996 did not change US policy. If anything, the US has been gradually loosening its close links with Taiwan, with no US cabinet member visiting the island since those missile maneuvers.

Seen in this light, China’s spectacular economic success – including the world’s largest trade surplus and foreign-currency reserves – owes much to US policy from the 1970’s on. Without the significant expansion in US-Chinese trade and financial relations, China’s growth would have been much slower and more difficult to sustain.

Allies of convenience during the second half of the Cold War, the US and China emerged from it as partners tied by interdependence. America depends on China’s trade surplus and savings to finance its outsize budget deficits, while China relies on its huge exports to the US to sustain its economic growth and finance its military modernization. By plowing more than two-thirds of its mammoth foreign-currency reserves into US dollar-denominated assets, China has gained significant political leverage.

China is thus very different from previous US adversaries. America’s interests are now so closely intertwined with China that a policy to isolate or confront it is not feasible. Even on the issue of democracy, the US prefers to lecture other dictatorships rather than the world’s largest autocracy.

Yet it is also true that the US is uneasy about China’s not-too-hidden aim to dominate Asia – an objective that runs counter to US security and commercial interests and to the larger goal of securing a balance in power in Asia. To avert Chinese dominance, the US has already started to build countervailing influences and partnerships, without making any attempt to contain China.

For the US, China’s growing power actually helps to validate its forward military deployments in Asia, maintain existing allies in the region, and win new strategic partners. Indeed, an increasingly assertive China has proven a diplomatic boon for the US in strengthening and expanding its Asian security relationships.

The lesson is clear: The muscle-flexing rise of a world power can strengthen the strategic relevance and role of a power in relative decline. Barely a decade ago, the US was beginning to feel marginalized in Asia, owing to several developments, including China’s “charm offensive.” But now America has returned firmly to center stage. South Korea has beefed up its military alliance with the US; Japan has backed away from an effort to persuade the US to move its Marine base out of Okinawa; Singapore has allowed the US Navy to station ships; Australia is hosting US Marine and other deployments; and India, Vietnam, Indonesia, and the Philippines, among others, have drawn closer to the US as well.

But no one should have any illusions about US policy. Despite America’s “pivot” to Asia, it intends to stick to its two-pronged approach: seek to maintain a balance of power with the help of strategic allies and partners, while continuing to accommodate a rising China.

Brahma Chellaney, Professor of Strategic Studies at the New Delhi-based Center for Policy Research, is the author of Asian Juggernaut and Water: Asia’s New Battleground.

China Pushes Tibet Tourism in Theme Park Project

Just outside Tibet’s capital, Lhasa, the Chinese government is building a $4.7 billion theme park that critics describe as a fairy tale universe that trivializes Tibetan culture and glosses over the nation’s troubles.

The construction gets into high gear as Tibetans continue to demonstrate and set themselves on fire to protests Chinese policies in the nation Beijing invaded 63 years ago. The 50th such self-immolation took place this week.

The Chinese Embassy in Washington refuses to comment on the theme park project, or the self-immolations. But Beijing’s official news agency, Xinhua, quoted the deputy mayor of Lhasa, Ma Xingming, as saying the project “is designed to improve Tibet’s tourism credentials and be a landmark of the cultural industry.”

Xinhua said the park, scheduled for completion in three to five years, will be centered on the theme of a Chinese princess who marries a Tibetan king. It said the park will include displays of Tibetan handicrafts, medicine and folklore.

Pilgrims and tourists visit Potala Palace in Lhasa in Tibet Autonomous Region, July 5, 2006. Potala Palace, the Dalai Lama's traditional home, is more than 1,300 years old.

Tenzin Dorjee, Executive Director of Students for a Free Tibet in New York, is not impressed, noting that the project comes as Tibetan activists continue to protest Chinese dominance of their homeland.

“They are spending these billions of dollars in building a theme park in Tibet at a time when Tibetans are setting themselves on fire for freedom,” Tenzin said. “And this is China’s way of not addressing the problem, not addressing any grievances.”

Tenzin also accused Beijing of trying to distort Tibetan history by highlighting its own version of the nation’s past.

Stephanie Brigden, director of the London-based Free Tibet campaign, is another critic of the Chinese project.

“When you look at the proposed scale of the theme park, it’s vast and it’s … a strategy of ‘Disneyfication’ of Tibet,” Brigden said. “It’s not one of sharing and celebrating Tibetan culture.”

She said the park’s theme, intended to showcase harmony between China and Tibet, is insulting when so many Tibetans “have felt that their only recourse is to set themselves on fire, underlying that it’s far from a harmonious situation.”

But at least one Chinese commentator said it is about time for Tibet and its culture to catch up with the times.

“Over the past decades, breaking economic isolation and stagnancy has served as a basic prerequisite for cultural growth,” said Chen Chenchen, opinion editor of China’s Global Times newspaper, a part of the Communist Party’s People’s Daily group. “It’s increasingly impossible that a bulwark can be erected to ‘protect’ the Tibetan culture from external impact.”

"Younger generations of Tibetans are already making changes in their traditions,” Chenchen said, adding that ordinary Tibetans do not want to live in a backwater museum to be exhibited to foreign visitors...”

Brigden said Beijing apparently believes the theme park project will create enough jobs that it “will reduce Tibetan demands for freedom.” But she said previous Chinese projects “have not brought any economic benefit to ordinary Tibetans, whether that be in terms of employment opportunities or … money filtering down to ordinary people.”

Tom Grunfeld, professor of Central and East Asian Studies at the State University of New York, acknowledged that the project probably would create jobs for Tibetans, but that it was still self-serving.

“Most of the Tibetan economy is funded by the … central government of China,” he said, “So anything that can boost the economy is going to help the central government.”

The goal, Grunfeld added, is to boost tourism - the largest part of Tibet’s economy.

Chinese figures put the number of tourists visiting Tibet in 2011 at 8.5 million, and estimate that the first six months of this year brought in revenues of $381 million. And the Tibetan administration hopes to raise that figure to 15 million visitors annually by 2015, according to Xinhua.

But Grunfeld warned that a massive influx of tourists to a city like Lhasa is a double-edged sword that could produce ethnic hostility as well as make money.

“You’re flooding your 500,000 to 600,000 population – half that population is not permanent; half that population is probably Han [Chinese] who leave for several months a year during the coldest months when there’s no tourism,” he said. “So you’re flooding this with six to eight million people. It’s a tremendous strain on this city."

“And, it increases ethnic tension. The ethnic tension in a city like Lhasa is enormous,” he concluded, adding that so far Tibetans are afraid to speak out against the theme park project for fear of reprisal.

“They don’t feel secure enough to really speak their minds because of the polarization,” Grunfeld said, “so the chance of real Tibetan input into this theme park is zero.”

Exiles, like Tenzin in New York, do feel free to speak out. He is calling for worldwide campaign to block the project.

“This is going to destroy our history,” he said, “and this will not benefit the Tibetan people in the long-run.”

VOA

Rising India And China: Can Two Tigers Learn To Share A Mountain

Amid tensions with its neighbors in East and South East Asian countries like Japan, Vietnam and The Philippines, in a major strategic move Chinese Defense Minister Liang Guanglie has just visited India after eight long years and reached on various confidence building measures including joint military exercises following such a joint naval exercises earlier in Shanghai.

Last year, Reuters published a news analysis on sailing Indian assault vassal – INS Airvat in South China Sea receiving a warning on an open radio channel by a Chinese warship official that the ship was entering Chinese waters.

Airvat was asked to explain its position and official of the Indian warship’s replied that it was 45 nautical miles off the Vietnamese coast considered within Vietnam’s economic zone. The Indian vassal was on a show-the-flag mission from Vietnam’s Nha Trang port near the deep-water harbour of Cam Ranh Bay toward another Vietnamese port of Haiphong. Because of the restraints exhibited by both sides, nothing happened and Indian ship safely sailed towards its destination. Both the Indian and Chinese officials and downplayed the issue wisely.

China – India Relations
On the eve when Indian Prime Minister Manamohan Singh was arriving in Beijing a news story appeared on the New York Times on January 13, 2008, titled “Two Giants Try to Learn to Share Asia”. Three years after that event former Canadian High Commissioner to India as well as nonresident Ambassador to Nepal and Bhutan; David M. Malone wrote a book on Contemporary Indian Foreign Policy named – ‘Does the Elephant Dance’? Malone, who also served his country as an Ambassador to United Nations and also as an Assistant Minister for External Affairs, has an interesting chapter -The Sino- Indian Relationship: Can Two Tigers Share a Mountain? In the book that was published in May. The title given by the news story of ‘The New York Times’ and the title of the chapter in Malone’s book portray the nature of relationship between India and China and its significance to the rest of the world in years to come.

But if the two nuclear power states, supported by great and rapidly rising economies and with world’s largest but most productive population; do not learn how to “share the same mountain” it could sooner or later lead on a collision course detrimental to their potential to lead the new century.

1. A Historical Maritime Power Proceeds With Strategic “String Of Pearls” Strategy
A U.S. Air force official Christopher J. Pehrson in his well researched paper has mentioned how China was a great maritime power more than 600 years from now. According to his paper published in 2006, an emperor of Ming dynasty of China had dispatched a ‘Treasure Fleet ‘of 62 ships under the command of the explorer Zheng He. Some of the ships he, commanded were over 400 feet long and 160 feet wide and were carrying nearly 30 thousands men and thousands of tons of Chinese merchandise. Some of the ships in his command were military and were carrying troops and weapons.

A country like China with such a wonderful maritime history, if has resources to finance and update its past, will not feel content without a strong naval capability at least to compete with other regional powers like India. Also as largest oil consumer of the world, China needs a new silk road to ensure safe route to its fuel tanks from the surrounding waters and run smooth its industrial arteries. Consequently, China’s new maritime strategy in the words of a U.S. defense consultant Booz – Allen Hamilton -“string of Pearls” is gaining bigger ground these days. The report which Hamilton was commissioned to prepare for U.S. Defense Department on ‘Energy Futures in Asia’, was published in the Washington Times (January 17, 2005). It says “China is building strategic relationships along the sea lanes from the Middle East to the South China Sea in ways that suggest defensive and offensive positioning to protect China’s energy interests, but also to serve broad security objectives.”

The Report further mentions that China intends to protect the sea lanes militarily, by strengthening its navy and developing undersea mines and a missile system to deter the potential disruption of its energy supplies from likely threats, including the US Navy. Therefore, Beijing has also been developing strategic alliances with the states along the sea lanes in an effort to increase its influence in the region of South and South East Asia.

But when compared with China, India has a very significant geographical location in Indian Ocean and this gives India a major strategic edge in its waters. Besides the long coastline of the mainland, Lakshadweep Islands in Indian Ocean and a group of 500 more islets of Andaman and Nicobar Islands near Indonesia, Malaysia and Thailand have given India an amazing strategic advantage over other great powers. Therefore India is developing these islands as a major hub of amphibious warfare base and training facilities for Indian Army. The Airvat is a part of the fleet based in Port Blair in Andaman Islands- an entry route to the Bay of Bengal shared by Myanmar, Thailand and Bangladesh. The naval facility built in Andaman and Nicobar has also given India easy access to the waters of South East Asian countries – major trade partners of India.

Similarly China too, not only to fuel the second largest economy but also to feed the largest population of the world as well, needs chain of friendly ports for the smooth supply of energy and minerals for its ever hungry industries and safe passage to its manufacturing worldwide. For this reason, China has developed sea ports encircling India extending from port of Gwadar in Pakistan to Hambantota in Sri Lanka and Chittagong in Bangladesh.

In way to materialize its ‘String of Pearls’ strategy China has constructed one of the world’s deepest -sea port at Gwadar on the Southwest coast of Pakistan at a very important strategic location – a major oil supply route. Although Pakistan is making efforts to develop this base as a major naval base with the assistance of China, China is satisfied while using this port only as a “listening post” from where it can monitor naval activities of other countries in the region. And as China’s naval operations are expanding in Indian Ocean, gradually it might be developed into a military base to protect its interest from Middle East to Central Asia, however this time China has revealed no such intention.

But in Myanmar’s Kyaukphyu port in Rakine state and its access to the Bay of Bengal in order to pipe oil and gas to its land-locked southern and western hinterlands, China is seeking to have a strong foothold. Beijing is currently building two parallel oil and gas pipelines that will connect Kyaukphyu port to the Chinese in southern Yunnan province extending up to the city of Kunming as well as Guizhou and Guangxi provinces.

Another is Myanmar’s Coco Islands – just north to India’s Andaman Islands where China is developing military facilities including helipads and storage system for arms and ammunitions. The information and observatory system installed in Coco Islands are claimed to monitor Indian naval facilities and their operative activities in the Andaman and Nicobar Islands and other navies throughout the eastern Indian Ocean.

2. Worried India And Concerned China
China’s Hainan Island, located in the South China Sea has developed underground nuclear submarine facility at Yulin Naval Base on the southern tip of Hainan. The submarines are capable of carrying dozen more nuclear missiles.

Yulin base was originally developed to serve mainly as a conventional submarine facility, located on the eastern bank of the Yulin Bay. It is close to the Parcel and Spratly Islands in the South China Sea disputed between China, Taiwan, Vietnam, Malaysia, Brunei, and the Philippines. But in recent years, the naval base is expanded up to the nearby Yalong Bay with capability of hiding large number of nuclear submarines from spy satellites. It can also house nuclear ballistic missiles and accommodate aircraft carriers. The naval base is one of the most important bases of the PLA Navy’s South Sea Fleet. The base is also strategically located close to the shipping lane of the narrow Strait of Malacca between Indonesia and Malaysia – a life line for the ASEAN and Pacific islands equally vital for the security and economic interest of India.

All these china’s naval power consolidation with facility to control over the surrounding Indian Ocean region, has been considered in India as a greater security threat to its vital interests in the region and this India takes as a part of China’s “string of pearls” strategy.

Beijing too, is equally concerned over expanded military presence of India on areas starting from west of Persian Gulf to the east of the Malacca Straits, from where China imports 80 percent of its energy needs. For this reason China obviously has deployed new types of submarines, frigates, aircraft and large support vessels ambulance boats, helicopters to support for sustaining long-time maritime missions around its territorial as well as international waters.

China’s defense white paper released in March end and another paper on its peaceful development, released few days ago, have clearly acknowledged that a country with a borderline of over 22,000 kilometers and a coastline of over 18,000 kilometers when confronting with multiple traditional and non-traditional security challenges including the threats of separatists and terrorist forces; upholds its right to modernize its defense capabilities to ensure its security and protect its peaceful development.

The white paper has also admitted that its navy has developed its capabilities of “conducting operations in distant waters” and in countering non-traditional security threats by enhancing its capabilities in strategic deterrence and retaliation. Few weeks earlier, a top Chinese Navy official Admiral Wu Shengli – close on the heel of Indian assessment admitted that China needed more advanced arsenals to boost the ability to fight the regional wars.

Undoubtedly, India has a powerful navy in Indian Ocean region and being guided by its “Look East” strategy is expanding its scope of activities to counter China’s “Look West”. As a part of this changed strategic focus; India during the last decade, has signed over a dozen defense cooperation agreements with Southeast and East Asian countries. Bigger naval facilities are being developed at Andamans with bases for nuclear submarines with guided missile destroyers, stealth frigates and maritime patrol aircraft. Indian Defense Report 2010-2011 has also claimed that its navy “by virtue of its multi dimensional capability, strategic positioning and robust presence in the areas of interest has been a catalyst for peace, tranquility and stability in the Indian Ocean Region during the year”. It has also acknowledged that India is engaged with other maritime nations to support national initiatives of cooperation and engagement and their fleets have sailed and experienced successfully in the South China Sea, African and the Mediterranean waters.

China seems worried on its neighbor’s “Look East” policy and has protested India’s joint naval exercises with the United States, Japan, Vietnam and Singapore in the East and South China Seas considering this as a part of the strategic encirclement of PRC. But this has added the confidence of countries like South Korea and Japan in the East to Vietnam and Indonesia to the South East – as a counterbalance to China in their region.

This way, China’s naval involvement in the coastal waters of India and India’s joint naval operations with East and South East Asian countries has given a new dimension to India –China strategic thinking and level of preparedness. Together with this, the limited nature of interaction with each other seems increasing the risk of misunderstanding between them.

3. Indo – China Rivalry In High Himalayan Mountains
Regardless of increased trade relationships crossing over $60 billions, Pentagon’s latest report on China has stated that a high degree of mistrust continues to strain the bilateral relationships between India and China. It affirms that with an aim to strengthen its deterrent posture relative to India, the PLA has replaced liquid fuelled nuclear capable Intermediate Range Ballistic Missiles (IRBM) with more advanced and survivable solid fuelled Medium Range Ballistic Missiles (MRBM) facility in Tibet, making easy targets to whole of North India. Defense experts are claiming that China with improved defense infrastructures in Tibet, can now move over half million soldiers to the Indo –China border within a month – out numbering Indian with wide margins. This has created a deep sense of mistrust in India on the strategic intention of China.

While India has a better strategic edge over China in Indian Ocean Region, China with bigger military teeth is also blessed with greater geographical advantages over the land border on all major areas of operational capability, logistics and strategic planning in case of war breaking out. To exploit this situation at best, China has built an extensive network of roads, railways, airports, oil pipelines and other logistic hubs to gear up maneuverability to support its military operations against India.

Furthermore, it is reported that China in its efforts to allow heavier vehicles carry weapons and logistics, has widened Karakoram Highway (linking China to Pakistan) threefold. Different units of Defense Regiments, Mountain Infantry Brigades and Special Divisions are concentrated near the Indian border for providing strong response in case of a breakout of hostilities across the Himalayas.

In 2009, Chinese army ran a major military exercise in Sino – Indian border for over two months, involving nearly 50,000 troops with an aim aims of testing the PLA’s ‘capacity in responding any sudden events in Tibet and other border regions.

Correspondingly, ‘The Hindustan Times’ on March 26, 2009 published a news story disclosing a secret military exercise by Indian Army called ‘Divine Matrix’ fearing that a ‘Chinese aggression’ can take place before 2017. Quoting military sources Hindustan Times also stated that with substantial military build-up and improved infrastructure across Indian border, PLA can “launch an assault very quickly, without any warning”. Similarly, India’s renowned defense analyst Bharat Verma in a book – Threat From China (2011), has claimed that Beijing being pushed by multiple reasons – mainly internal – may desperately attack India by 2012.
Learning from the lessons of 1962 war, India, even with the most treacherous geography has deployed troops on its high mountains and toughest terrain of snow capped peaks, deep valleys, and dangerous passes.

Likewise, in addition to Mig 21s fighter jets, missile batteries and spy drones in the North-East, India is planning to deploy two squadrons of Su-30 MKI advanced fighter jets at its airbase in Tezpur – 150 kilometers south of the Chinese border in Arunachal Pradesh and is improving infrastructure and upgrading airfields in the North-East. It is also going to create a new mountain strike corps after raising two new divisions totaling over 60,000 hard fighting forces in Nagaland and Assam.

4. But Any Way, They Have To Learn To Share The Same Mountain
Obviously, formidable military power like India and China cannot afford the human, financial, environmental and even political cost of a war between them. Even a small human and technical error may cause them return to Stone Age. Indubitably, the leaderships of both countries representing 2.5 billion people, if are honest to their country and humanity as a whole can never let this happen.

Moreover, the two leading economies of the world, more than challenges, share astounding opportunities together, like never before in human history. And peace and better trade relations are sure to offer them with enormous prosperity.

Human endeavor endowed with advanced knowledge on Science and technology has revolutionized the nature of human geography of India and China and this ultimately has massively reinforced each other’s economy and share a common prosperity.

When people of both side of the border join easily with improved access; their economy if is developed in strengthening the needs and benefit of each other and when the relationship between them gains more worth, not only they, but the region as a whole will enjoy a new level of economic success and stability. Once the people of both India and China could substantively realize the benefit of shared progress, a new map of Asia would be sketched – with minimal regional conflicts and forces of chaos, anarchy and instability eliminated.

Two countries if continued with their average 8 percent GDP growth for another ten years, their share in global GDP will cross $ 6.5 trillion. when they will become the largest exporter of manufacturing goods and services adding millions of new middle class populations with their stakes across the border, they will naturally not let their rulers risk their economic prosperity.

The next decade will see the both India and China’s economy grow double in size. China can help India enlarge its manufacturing sector and India to boost China’s service sector and help each other achieve balanced development and make goods and service more competitive and cheaper for such a huge market in both countries. This will also help creating millions of jobs and billions of money for the people living there in poverty.

Nevertheless, the hardest truth for any country to achieve a sustainable global power status is that they must learn to change from within and bring change and share change in their neighborhood, which in return will contribute their stability and increase their prosperity many fold.

But, until India and China are able to solve the serious problems and misunderstandings between them, they have to live under a constant threat even for their internal peace and security with implications to political stability and economic prosperity in their neighborhoods as well. This resultantly will force both India and China to live with more burdens and frictions in their relations.
Nevertheless, to run a great country, is not only a matter of great pride and satisfaction, more than this, is a matter of great national capacity and moral challenge and to qualify themselves as great countries; there is no other way out for India and China than learn to share the same mountain.

Keshav Prasad Bhattarai

India and China - A Himalayan rivalry

Asia’s two giants are still unsure what to make of each other. But as they grow, they are coming closer—for good and bad.

MEMORIES of a war between India and China are still vivid in the Tawang valley, a lovely, cloud-blown place high on the south-eastern flank of the Himalayas. They are nurtured first by the Indian army, humiliated in 1962 when the People's Liberation Army swept into Tawang from next-door Tibet. India now has three army corps—about 100,000 troops—in its far north-eastern state of Arunachal Pradesh, which includes Tawang.

With another corps in reserve, and a few Sukhoi fighter planes deployed last year to neighbouring Assam, they are a meaty border force, unlike their hapless predecessors. In 1962 many Indian troops were sent shivering to the front in light cotton uniforms issued for Punjab's fiery plains. In a weeklong assault the Chinese seized much of Arunachal, as well as a slab of Kashmir in the western Himalayas, and killed 3,000 Indian officers and men. Outside Tawang's district headquarters a roadside memorial, built in the local Buddhist style, commemorates these dead. At a famous battle site, below the 14,000-foot pass that leads into Tawang, army convoys go slow, and salute their ghosts.

In wayside villages of solid white houses fluttering with coloured prayer-flags, China's two-week occupation of Tawang is also remembered. Local peasants, aged 60 and more but with youthful Tibetan features, light-brown and creased by the wind, recall playing Sho (Tibetan Mahjong) with the invaders. Many say they remember them fondly: the Chinese, they note, helped get in the wheat harvest that year. “They were little men, but they were always ready to help. We had no problem with them,” says Mem Nansey, an aged potato farmer. The Chinese withdrew to Tibet, their superiority established but their supply lines overstretched, barely a fortnight after they had come. “We weren't sorry to see the back of them, either,” says Mr Nansey, concerned, it seems, that no one should doubt his loyalty to Delhi, 1,500km (930 miles) to the west.

His ambivalence is widely shared. China and India, repositories of 40% of the world's people, are often unsure what to make of each other. Since re-establishing diplomatic ties in 1976, after a post-war pause, they and their relationship have in many ways been transformed. The 1962 war was an act of Chinese aggression most obviously springing from China's desire for western Aksai Chin, a lofty plain linking Xinjiang to Tibet. But its deeper causes included a famine in China and economic malaise in both countries. China and India are now the world's fastest-growing big economies, however, and in a year or two, when India overtakes Japan on a purchasing-power-parity basis, they will be the world's second- and third-biggest. And as they grow, Asia's giants have come closer.

Their two-way trade is roaring: only $270m in 1990, it is expected to exceed $60 billion this year. They are also tentatively co-operating, for their mutual enrichment, in other ways: for example, by co-ordinating their bids for the African oil supplies that both rely on. Given their contrasting economic strengths—China's in manufacturing, India's in services—some see an opportunity for much deeper co-operation. There is even a word for this vision, “Chindia”. On important international issues, notably climate-change policy and world trade, their alignment is already imposing.

Their leaders naturally talk up these pluses: at the summit of the BRICs (Brazil, Russia, India, China) in Brasília in April, for example, and during celebrations in Beijing earlier this year to commemorate the 60th anniversary of India's recognition of the People's Republic. “India and China are not in competition,” India's sage-like prime minister, Manmohan Singh, often says. “There is enough economic space for us both.”

China's president, Hu Jintao, says the same. And no doubt both want to believe it. The booms in their countries have already moved millions out of poverty, especially in China, which is far ahead on almost every such measure of progress (and also dismissive of the notion that India could ever rival it). A return to confrontation, besides hugely damaging the improved image of both countries, would plainly jeopardise this movement forward. That is why the secular trend in China-India relations is positive.

Yet China and India are in many ways rivals, not Asian brothers, and their relationship is by any standard vexed—as recent quarrelling has made abundantly plain. If you then consider that they are, despite their mutual good wishes, old enemies, bad neighbours and nuclear powers, and have two of the world's biggest armies—with almost 4m troops between them—this may seem troubling.

Forget Chindia

There are many caveats to the recent improvement in their relationship. As the world's oil wells run dry, many—including sober analysts in both countries—foresee China-India rivalry redrawn as a cut-throat contest for an increasingly scarce resource. The two oil-gluggers' recent co-operation on energy was, after all, as unusual as it was tentative. More often, Chinese state-backed energy firms compete with all-comers, for Sudanese oil and Burmese gas, and win.

Rivalry over gas supplies is a bigger concern for Indian policymakers. They fear China would be more able to “capture” gas by building massive pipelines overnight. Water is already an object of contention, given that several of the big rivers of north India, including the Brahmaputra, on which millions depend, rise in Tibet. China recently announced that it is building a dam on the Brahmaputra, which it calls the Yarlung Tsangpo, exacerbating an old Indian fear that the Beijing regime means to divert the river's waters to Chinese farmers.

As for Chindia, it can seem almost too naive to bother about. Over 70% of India's exports to China by value are raw materials, chiefly iron ore, bespeaking a colonial-style trade relationship that is hugely favourable to China. A proliferating range of Chinese non-tariff barriers to Indian companies, which India grumbles about, is a small part of this. The fault lies chiefly with India's uncompetitive manufacturing. It is currently cheaper, an Indian businessman says ruefully, to export plastic granules to China and then import them again in bucket-form, than it is to make buckets in India.

This is a source of tension. India's great priority is to create millions of jobs for its young, bulging and little-skilled population, which will be possible only if it makes huge strides in manufacturing. Similarly, if China trails India in IT services at present, its recent investments in the industry suggest it does not plan to lag for long.

Yet there is another, more obvious bone of contention, which exacerbates all these others and lies at the root of them: the 4,000km border that runs between the two countries. Nearly half a century after China's invasion, it remains largely undefined and bitterly contested.

The basic problem is twofold. In the undefined northern part of the frontier India claims an area the size of Switzerland, occupied by China, for its region of Ladakh. In the eastern part, China claims an Indian-occupied area three times bigger, including most of Arunachal. This 890km stretch of frontier was settled in 1914 by the governments of Britain and Tibet, which was then in effect independent, and named the McMahon Line after its creator, Sir Henry McMahon, foreign secretary of British-ruled India. For China—which was afforded mere observer status at the negotiations preceding the agreement—the McMahon Line represents a dire humiliation.

China also particularly resents being deprived of Tawang, which—though south of the McMahon Line—was occupied by Indian troops only in 1951, shortly after China's new Communist rulers dispatched troops to Tibet. This district of almost 40,000 people, scattered over 2,000 square kilometres of valley and high mountains, was the birthplace in the 17th century of the sixth Dalai Lama (the incumbent incarnation is the 14th). Tawang is a centre of Tibet's Buddhist culture, with one of the biggest Tibetan monasteries outside Lhasa. Traditionally, its ethnic Monpa inhabitants offered fealty to Tibet's rulers—which those aged peasants around Tawang also remember. “The Tibetans came for money and did nothing for us,” said Mr Nansey, referring to the fur-cloaked Tibetan officials who until the late 1940s went from village to village extracting a share of the harvest.

Making matters worse, the McMahon Line was drawn with a fat nib, establishing a ten-kilometre margin for error, and it has never been demarcated. With more confusion in the central sector, bordering India's northern state of Uttarakhand, there are in all a dozen stretches of frontier where neither side knows where even the disputed border should be. In these “pockets”, as they are called, Indian and Chinese border guards circle each other endlessly while littering the Himalayan hillsides—as dogs mark lampposts—to make their presence known. When China-India relations are strained, this gives rise to tit-for-tat and mostly bogus accusations of illegal border incursions—for which each side can offer the other's empty cigarette and noodle packets as evidence. In official Indian parlance such proof is grimly referred to as “telltale signs”. It is plainly garbage. Yet this is a carefully rehearsed and mutually comprehensible ritual for which both sides deserve credit, of a sort. Despite several threatened dust-ups—including one in 1986 that saw 200,000 Indian troops rushed to northern Tawang district—there has been no confirmed exchange of fire between Indian and Chinese troops since 1967.

Hands extended—and withdrawn

It would be even better if the two countries would actually settle their dispute, and, until recently, that seemed imaginable. The obvious solution, whereby both sides more or less accept the status quo, exchanging just a few bits of turf to save face, was long ago advocated by China, including in the 1980s by the then prime minister, Deng Xiaoping. India's leaders long considered this politically impossible. But in 2003 a coalition government led by the Hindu-nationalist Bharatiya Janata Party—which in 1998 had cited the Chinese threat to justify its decision to test a nuclear bomb—launched an impressive bid for peace. For the first time India declared itself ready to compromise on territory, and China appeared ready to meet it halfway. Both countries appointed special envoys, who have since met 13 times, to lead the negotiations that followed. This led to an outline deal in 2005, containing the “guiding principles and political parameters” for a final settlement. Those included an agreement that it would involve no exchange of “settled populations”—which implied that China had dropped its historical demand for Tawang.

Yet the hopes this inspired have faded. In ad hoc comments from Chinese diplomats and through its state-controlled media—which often refer to Arunachal as Chinese South Tibet—China appears to have reasserted its demand for most of India's far north-eastern state. Annoying the Indians further, it started issuing special visas to Indians from Arunachal and Kashmir—after having denied a visa to an Indian official from Arunachal on the basis that he was, in fact, Chinese. It also objected to a $60m loan to India from the Asian Development Bank, on the basis that some of the money was earmarked for irrigation schemes in Arunachal. Its spokesman described a visit to Tawang by Mr Singh, ahead of a general election last year, as “provocative and dangerous”. Chinese analysts warn against understanding from these hints that China has formally revised its position on the border. But that is India's suspicion. And no one, in either country, is predicting a border settlement soon.

In fact, the relationship has generally soured. Having belatedly woken up to the huge improvements China has made in its border infrastructure, enabling a far swifter mobilisation of Chinese troops there, India announced last year that it would deploy another 60,000 troops to Arunachal. It also began upgrading its airfields in Assam and deploying the Sukhois to them. India's media meanwhile reported a spate of “incursions” by Chinese troops. China's state-controlled media was more restrained, with striking exceptions. Last year an editorial in the Global Times, an English-language tabloid in Beijing, warned that “India needs to consider whether or not it can afford the consequences of a potential confrontation with China.” Early this year India's outgoing national security adviser and special envoy to China, M.K. Narayanan, accused Chinese hackers of attacking his website, as well as those of other Indian government departments.

Recent diplomacy has brought more calm. Officials on both sides were especially pleased by their show of unity at the United Nations climate meeting in Copenhagen last December, where China and India, the world's biggest and fourth-biggest emitters of carbon gas, faced down American-led demands for them to undertake tougher anti-warming measures. A slight cooling in the America-India relationship, which President George Bush had pushed with gusto, has also helped. So, India hopes, has its appointment of a shrewd Mandarin-speaker, Shivshankar Menon, as its latest national security adviser and special envoy to China. He made his first visit to Beijing in this role last month; a 14th round of border talks is expected. And yet the China-India relationship has been bruised.

Negative views

In China, whose Communist leaders are neither voluble nor particularly focused on India, this bruising is mostly clear from last year's quarrel itself. The Chinese, many of whom consider India a dirty, third-rate sort of place, were perhaps most obviously to blame for it. This is despite China's conspicuous recent success in settling its other land disputes, including with Russia and Vietnam—a fact Chinese commentators often cite to indicate Indian intransigence. Chinese public opinion also seems to be turning against India, a country the Chinese have been wont to remark on fondly, if at all, as the birthplace of Buddhism. According to a recent survey of global opinion released by the BBC, the Chinese show a “distinct cooling” towards India, which 47% viewed negatively.

In garrulous, democratic India, the fallout is easier to gauge. According to the BBC poll, 38% of Indians have a negative view of China. In fact, this has been more or less the case since the defeat of 1962. Lamenting the failure of Indian public opinion to move on, Patricia Uberoi, a sociologist at Delhi's Centre for the Study of Developing Societies, notes that while there have been many Indian films on the subcontinent's violent partition, including star-crossed Indo-Pakistani romances, there has been only one notable Indian movie on the 1962 war: a propaganda film called “Haqeeqat”, or “Truth”, supported by the Indian defence ministry.

Hawkish Indian commentators are meanwhile up in arms. “China, in my view, does not want a rival in Asia,” says Brajesh Mishra, a former national security adviser and special envoy to China, who drafted the 2005 agreement and is revered by the hawks. “Its main agenda is to keep India preoccupied with events in South Asia so it is constrained from playing a more important role in Asian and global affairs.” Senior officials present a more nuanced analysis, noting, for example, that India has hardly been alone in getting heat from China: many countries, Asian and Western, have similarly been singed. Yet they admit to heightened concern over China's intentions in South Asia, and foresee no hope for a settlement of the border. Nicholas Burns, a former American diplomat who led the negotiations for an America-India nuclear co-operation deal that was concluded in 2008, and who now teaches at Harvard University, suspects that over the past year China has supplanted Pakistan as the main worry of Indian policymakers. He considers the China-India relationship “exceedingly troubled and perturbed” and thinks that it will remain “uneasy for many years to come”.

Fear of encirclement

For foreign-policy realists, who see China and India locked in a battle for Asian supremacy, this is inevitable. Even fixing the border could hardly mitigate the tension. More optimistic analysts, and there are many, even if currently hushed, consider this old-school nonsense. Though both India and China have their rabid fringe, they say, they are rational enough to know that a strategic struggle would be sapping and, given each other's vast size, unwinnable. Both are therefore committed, as they claim, to fixing the border and fostering better relations. Yet there are a few impediments to this—of which two are most often cited by analysts in Beijing and Delhi.


One is represented by the America-India nuclear deal, agreed in principle between Mr Singh and Mr Bush in 2005. Not unreasonably, China took this as a sign that America wanted to use India as a counterweight to China's rise. It also considered the pact hypocritical: America, while venting against China's ally, North Korea, going nuclear (which it did a year later), was offering India a free pass to nuclear-power status, despite its refusal to sign the Nuclear Non-Proliferation Treaty. Indian analysts believe that China, in a cautious way, tried to scupper the deal by encouraging some of its opponents, including Ireland and Sweden, to vote against it in the Nuclear Suppliers Group, a 46-member club from which it required unanimous approval.

This glitch reflects a bigger Chinese fear of encirclement by America and its allies, a fear heightened by a recent burst of American activity in Asia. The United States has sought to strengthen security ties with South-East Asian countries, including Vietnam and Indonesia. It has also called on China, in an unusually public fashion, to be more accommodating over contested areas of the South China Sea—where America and India share concerns about a Chinese naval build-up, including the construction of a nuclear-submarine base on the Chinese island of Hainan. In north-east Asia, America has launched military exercises with South Korea in response to North Korea's alleged sinking of a South Korean warship in March. Some Chinese analysts, with ties to the government, consider these a direct challenge to China.

China is deeply suspicious of America's military campaign in nearby Afghanistan (and covertly in Pakistan), which is supported from bases in Central Asian countries. It is also unimpressed by a growing closeness between India and Japan, its main Asian rival. Japanese firms are, for example, expected to invest $10 billion, and perhaps much more, in a 1,500km “industrial corridor” between Delhi and Mumbai. In 2007 Japanese warships took part in a naval exercise in the Bay of Bengal, also involving Indian, Australian and Singaporean ships and the American nuclear-powered vessels USS Nimitz and USS Chicago, which was hosted by India and was the biggest ever held in the region.

This seemed to back a proposal, put about by American think-tankers, for an “axis of democracies” to balance China. Officially, India would want no part of this. “We don't want to balance China,” says a senior Indian official. But, he adds, “all the democracies do feel it is safer to be together. Is China going to be peaceful or not? We don't know. In the event that China leaves the path of peaceful rise, we would work very closely together.”

India also fears encirclement, and with reason. America's Pentagon, in an annual report on China's military power released on August 16th, said China's armed forces were developing “new capabilities” that might extend their reach into the Indian Ocean. China has also made big investments in all India's neighbours. It is building deepwater ports in Pakistan and Bangladesh, roads in Nepal and oil and gas pipelines in Myanmar. Worse, it agreed in 2008 to build two nuclear-power plants for its main regional ally, Pakistan—a deal that also worried America, who saw it as a tit-for-tat response to its nuclear deal with India. (China has become Pakistan's biggest supplier of military hardware, including fighter jets and guided-missile frigates, and in the past has given it weapons-grade fissile material and a tested bomb design as part of its nuclear support.)

Muffling Tibet

Hawkish Indians consider these Chinese investments as a “string of pearls” to throttle India. Wiser ones point out that India is too big to throttle—and that China's rising influence in South Asia is an indictment of India's past inability to get on with almost any of its neighbours. Under Mr Singh, India has sought to redress this. It is boosting trade with Sri Lanka and Bangladesh, and sticking, with commendable doggedness in the face of little encouragement, to the task of making peace with Pakistan. That would be glorious for both countries; it would also remove a significant China-India bugbear.

The other great impediment to better relations is Tibet. Its fugitive Dalai Lama and his “government-in-exile” have found refuge in India since 1959—and China blames him, and by extension his hosts, for the continued rebelliousness in his homeland. A Tibetan uprising in March 2008, the biggest in decades, was therefore a major factor in last year's China-India spat. It led to China putting huge pressure on India to stifle the anti-China Tibetan protests that erupted in India—especially one intended to disrupt the passage of the Olympic torch through Delhi en route to Beijing. It also objected to a visit to Tawang by the Dalai Lama last November, which it predictably called a “separatist action”. This visit, from which leftover banners of welcome still festoon the town's main bazaar, perhaps reminded China why it is so fixated on Tawang—as a centre of the Tibetan Buddhist culture that it is struggling, all too visibly, to control.

Mindful of the huge support the Dalai Lama enjoys in India, its government says it can do little to restrict him. Yet it policed the protest tightly, and also barred foreign journalists from accompanying him to Tawang. India would perhaps rather be spared discreet balancing acts of this sort. “But we're stuck with him, he's our guest,” says V.R. Raghavan, a retired Indian general and veteran of the 1962 war. Indeed, many Indian pundits consider that China will never settle the border, and so relinquish a potential source of leverage over India, while the 75-year-old lama is alive.

A Dangerous Child

After his death, China will attempt to control his holy office as it has those of other senior lamas. It will “discover” the reincarnated Dalai Lama in Tibet, or at least endorse the choice of its agents, and attempt to groom him into a more biddable monk. In theory that would end a major cause of China-India discord, but only if the Chinese can convince Tibetans that their choice is the right one, which seems unlikely. The Dalai Lama has already indicated that he may choose to be “reborn” outside China. There is talk of the important role Tawang has often played in identifying incarnations of the Dalai Lama, or even that the 14th may choose to reincarnate in Tawang itself.

For the abbot of Tawang's main monastery, Guru Tulku Rinpoche, that would be a great blessing. “If his holiness chooses to be born in Tawang, we would be so happy,” he says in his red-carpeted monastic office, as half a dozen skinny lads file in to be inducted into monkhood. Silently, they prostrate themselves before the abbot, while he scribbles down their new monastic names. Outside his window, the early morning sun sparkles through the white clouds that hang low over Tawang. It is hard to think that this remote and tranquil spot could have caused such a continent-sized ruckus. Yet, if the abbot has his wish, it will cause a lot more trouble yet.

The Economist