Friday, November 17, 2006

Indo-China relations

On the eve of Chinese President Hu Jintao’s visit starting November 20th.

Border dispute:

McMohan Line separates the Indo-China border. We have inherited this dispute from the British when they left the country without settling the border dispute with China.

In the 1962 war Chinese have taken over 33,000 sq kms of Indian land at Aksai Chin.

1988 Rajiv Gandhi’s visit to Beijing

The first major thaw in Indo-China relations occurred with both countries agreeing to setup the Joint Working Groups mechanism to deal with the border disputes. The real negotiations are being carried out in the Western Sector comprising the 33,000 sq kms Aksai Chin and another 5,000 sq kms China got from Pakistan as part of their tactical pact aimed at providing China strategic access to Tibet.

1993 Agreement on Confidence Building Measures.

1996 Agreement on Maintenance of Peace and Tranquility in the Border Areas.

In 2003 China de jure accepted the Indian integration of Sikkim in 1975 and exchanged maps. But it is still holding on to its claim on Arunachal Pradesh – Tawang swathe.

Trade with China

1978 Trade resumed with China after the 1962 debacle.

1995 – 1998 Trade levels surged dramatically between the two countries.

Presently the trade between the two countries is about $20 bn.


China gives 2 year multiple entry visas to Indian tourists.

India issues 6 months multiple entry visas to Chinese.

As against 4 lk Indians visiting China, only about 1 lk Chinese visit India. This is largely attributed to our security fixation when it comes to issuing visas to Chinese.


China’s ICBC (Industrial & Commerce Bank of China) has issued a hugely successful IPO last month worth $19 bn. The bank is valued at $130 bn.

In comparison, the 37 listed Indian banks’ combined market capitalization stands at $63 bn.

But China seems to suffering from a lot of bad bank loans in its portfolio. It is estimated that about $911 bn are in bad debts. But China officially admits to only about $164 bn. The Chinese government infused a capital of $300 bn to mop up non-performing loans into its banking system.