SINO-INDIAN RELATIONS IN THE CONTEXT OF INDIA’S “LOOK EAST” POLICY SHUBHASHREE SEN NATIONAL UNIVERSITY OF SINGAPORE 2006 SINO-INDIAN RELATIONS IN THE CONTEXT OF INDIA’S “LOOK EAST” POLICY SHUBHASHREE SEN (M.A., Calcutta, India) A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF SOCIAL SCIENCES DEPARTMENT OF POLITICAL SCIENCE NATIONAL UNIVERSITY OF SINGAPORE 2006 Acknowledgements I am indebted to many people who have helped me in my course and in the writing of this thesis. First and foremost, I am sincerely grateful to my thesis supervisor Dr. Kripa Sridharan without whose immense patience, intellectually stimulating discussions and the constant cheerful guidance I would not have been able to complete my thesis. I am thankful to Professor C. Rajamohan, Professor S.D.Muni, Professor Swaran Singh, and Professor Baladas Ghoshal from Jawaharlal Nehru University (JNU), New Delhi. My sincere thanks to Professor Brahma Chellaney from Centre of Policy Research, New Delhi for his enriching analysis. I am thankful to Dr. G.V.C. Naidu and Dr. Uday Bhanu Singh of the Institute for Defence Studies and Analyses (IDSA), New Delhi, for their valuable insights. I also thank Major General Dipankar Banerjee, Director of the Institute of Peace and Conflict Studies (IPCS), New Delhi, for sharing his views on the subject. I am specially grateful to Ambassador C.V. Ranganathan for giving me his valuable time and sharing his rich personal experiences as an ambassador to China. I also extend my thanks to Mr Saurabh Kumar, Director (China), Ministry of External Affairs (MEA), India for his observations on the topic. I would like to thank Professor Swaran Singh for providing me with an introductory note which enabled me to gain access to the libraries at JNU and IDSA, New Delhi. I am grateful for the help received at the Central Library at National University of Singapore i (NUS) and at the following libraries in New Delhi: JNU Main library, Nehru Memorial Library, IDSA Library and the MEA Library. I express my deepest gratitude to the Department of Political Science (NUS) and to the Head, Associate Professor Lee Lai To, for providing me with the Research Fee Allowance and other material and financial assistance during the tenure of my coursework. Finally, I would like to convey my thanks to my parents and parents-in-law for their understanding and interest in my work. The birth of my baby, Samadrita, has been a challenging motivation in itself. Last but not the least, the sheer encouragement and support that I received from my husband, Debanjan, is what made this enriching experience at NUS possible in the first place. ii TABLE OF CONTENTS Page Introduction 1 Aim of the thesis Main argument Theoretical Framework and Organisation of the Thesis Scope of the Thesis Importance of Southeast Asia in the context of the thesis Background and the evolution of India’s China policy Chapter 1 Conflictual Interaction 39 Introduction The Look East policy Territorial Dispute Strategic Dimension Role of Navy Conclusion Chapter 2 Competitive Interaction 76 Introduction Economic Competition Geopolitical Competition and the US factor Competition for Energy Security The Nuclear Question Sino-Indian competition and Southeast Asia Conclusion iii Page Chapter 3 Cooperative Interaction 117 Introduction − The Cooperative Security approach Cooperation as a Process Cooperation as a Means i) Trade and WTO ii) Information Technology iii) Cooperation against US unipolarity iv) Energy Security v) Cooperation against Terrorism Sino-Indian cooperation and Southeast Asia. Conclusion Conclusion 159 Bibliography 181 Appendix I 192 Appendix II 200 Appendix III 206 iv SUMMARY This thesis studies the evolving Sino-Indian relationship from 1988 till the beginning of 2006. It seeks to determine India-China relations in the context of India’s Look East policy. It examines the trajectories of the three basic forms of interaction, conflict, competition and cooperation, which govern this bilateral relationship. The thesis analyses the consequences of this interaction for India’s foreign policy options specifically in the Southeast Asian region, which has come to assume much importance from the perspective of India’s geopolitical interests and economic growth. Southeast Asia being a traditional Chinese sphere of influence, it is but natural that any Indian policy options in the region will have a significant China content. This study shows how the simultaneous interaction of the three quests for wealth, status and security is pivotal across all aspects of this relationship. Not much research has taken place on the changing dynamics of Sino-Indian relations from the 1980s onwards. Literature is available on Sino-Indian border dispute and on India’s Look East policy separately. There have been occasional indications in some studies about how relationship with China has been a factor influencing Indian foreign policy choices. However, no study has focused in detail this bilateral relationship in the context of a third region, Southeast Asia. Immense developments in India’s relations with China and the ASEAN states have taken place over the last decade and a half. India’s Look East policy has been revived and given a specific focus. Initially it implied trade and investment linkages with the ASEAN v region. However in its second phase, the strategic aspect of the policy has been gaining ground with the focus now being on wider economic and security issues. From the analysis of these interactions it is evident that India-China relationship has influenced overall Indian security perceptions, economic interests and strategic aims. The thesis demonstrates how Southeast Asia has become a crucial arena for the interplay of the multidimensional forces governing India-China relations today. How the two simultaneously rising Asian giants manage their relations, would have an important bearing for not just the ASEAN region but would actually go a long way towards maintaining Asian peace and stability. vi LIST OF TABLES Table 1 Socio Economic Indicators of India and China 77 Table 2 GDP Growth Rate of India and China 82 Table 3 China-ASEAN Trade 87 Table 4 India-ASEAN Total Trade 90 Table 5 India-ASEAN Trade 91 Table 6 Comparison of India – China Defence Expenditure 98 Table 7 Energy Consumption 103 Table 8 China’s Exports and Imports with India 133 Table 9 Data for India and China 148 (a) Energy Production (b) Nuclear Energy (c) Energy Use vii LIST OF ILLUSTRATIONS A) Disputed territories of Sino-Indian border along the Eastern Sector 1.1 Map of the battle of Thag La Ridge 52 1.2 Map of the battle of NEFA 52 1.3 Map of the forward policy in the Western Sector 53 B) Graph on India’s Oil Production and Consumption 104 viii LIST OF ABBREVIATIONS APEC Asia-Pacific Economic Cooperation ARF ASEAN Regional Forum ASEAN Association of Southeast Asian Nations ASEM Asia Europe Meeting BIMSTEC Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation BJP Bharatiya Janata Party BOBCOM Bay of Bengal Community BRIC Brazil, Russia, India, China Btus British Thermal Units CBM Confidence Building Measure CCPIT China Council for the Promotion of International Trade CII Confederation of Indian Industry CTBT Comprehensive Test Ban Treaty EAS East Asian Summit EEZ Exclusive Economic Zone FDI Foreign Direct Investment FENC Far Eastern Naval Command FTA Free Trade Agreement GDP Gross Domestic Product ICBM Inter-Continental Ballistic Missile IRBM Intermediate Range Ballistic Missile ix IT Information Technology JSG Joint Study Group LAC Line of Actual Control LOC Line of Control MoU Memorandum of Understanding N-5 Nuclear Five NIE Newly Industrialised Economy NPT Nuclear Non-Proliferation Treaty NWS Nuclear Weapons State SCO Shanghai Cooperation Organisation SEANWFZ Southeast Asia Nuclear Weapon-Free Zone SLOC Sea Lane of Communication SLORC State Law and Order Restoration Council TAC Treaty of Amity and Cooperation Tcf Trillion cubic feet TCS Tata Consultancy Services UN United Nations UNSC United Nations Security Council US United States WMD Weapons of Mass Destruction WTO World Trade Organisation x Introduction 1 The Sino-Indian relationship is a unique relationship characterized by the elements of complex security. The two nations not only have to manage their age old rivalry but also seek cooperation. Over the last couple of years, both China and India have emerged as major economies and potential global powers and are together the topic of much academic focus and media coverage. The underlying elements of mistrust, tensions and disputes still remain deep rooted. However the regional shifts in balance of power and changing dynamics in the international milieu have resulted in the two states striving to engage with each other, while simultaneously reviving the process of confidence building and also competing for greater global power and influence. This introductory chapter would cover the aim of the thesis, the main argument, the theoretical framework and organization of the thesis, the scope, the relevance of Southeast Asia in the context of this thesis and the background and evolution of India’s China policy which forms the foundation of this study. Aim of the thesis This thesis aims to address the changing dynamics of India-China relations in the context of India’s Look East policy (which was initiated not only with regard to Indian policy options in the Southeast of Asia, but also incorporated East Asia). This study basically looks at the dynamics of Sino-Indian interactions from 1988 onwards (when initiatives were taken by either country to normalize bilateral relations for the first time) and its implications for India’s policy options in Southeast Asia. In addition to the traditional instruments of direct rivalry, increasingly both countries are emphasizing on indirect approach to competition. The complexity and the multidimensionality of the evolving 2 relationship which has expanded to include the issues of economics, status and security is bound to spill over to the Asian continent at large.