Bloomberg News

India Seals China Border Pact as Singh Hails Li Handshake (1)

October 24, 2013

Chinese Premier Li Keqiang and Indian counterpart Manmohan Singh signed an agreement to resolve border disputes that have hampered ties between the world’s two most populous nations for the past five decades.

Under the agreement, India and China will avoid making threats to use force against each other and refrain from seeking “unilateral superiority” along their 3,500-kilometer (2,175-mile) border. Both sides agreed to exchange information on military exercises and show “maximum restraint” in the event border forces come into contact.

“When India and China shake hands, the world takes notice,” Singh said at a joint briefing with Li yesterday during a three-day trip to Beijing. “My visit to China has put our relations on a path of stable and fast growth.”

The pact signals a warming in ties as India seeks to reduce its trade deficit with China, which has contributed to a 13 percent drop in the rupee against the dollar over the past year. A military standoff in April marked the most serious incident in a quarter century between the nuclear-armed neighbors on the Himalayan border where India and China fought a brief war in 1962.

‘Significant’ Agreement

“The agreement is quite significant and will help assuage the criticism from hardliners,” said C. Uday Bhaskar, a New Delhi-based analyst at the National Maritime Foundation, a research group that specializes in security affairs. “This will be more effective in managing the dispute than the previous ones but I don’t think this will be a fool proof agreement because both sides have their positions.”

The border agreement is evidence that relations between China and India are becoming “mature and rational,” Chinese foreign ministry spokeswoman Hua Chunying told reporters in Beijing yesterday. It will build on previous “good experiences and practices,” she said.

India and China should avoid a strategic rivalry and focus on working together to boost living standards, Singh said in a speech today at the Communist Party’s main training school in Beijing that was broadcast on Indian television stations.

“We both know that the benefits of cooperation far outweigh any presumed gains from containment,” Singh said. “What is at stake is the future of India and China; indeed, what may be at stake is the future of our region and our world.”

Modi Attacks

The latest agreement between the two countries subsumes the previous four deals, the last of which was signed in January 2012. Singh, facing elections next year, has faced attacks from top challenger Narendra Modi, who told an audience last week that the government had been timid in dealing with China on border disputes.

In April, India alleged that Chinese troops had crossed into Indian-held territory, triggering a three-week escalation in tensions that ended with an agreement negotiated by army commanders. China denied any wrongdoing.

Li also agreed to take steps to narrow an “unsustainable” trade balance between the two countries, according to Singh, who is making his second trip to China for bilateral talks since he took power in 2004. The leaders agreed to move forward on plans to establish a Chinese industrial park in India.

India has grown more reliant on China over the past decade, with two-way trade growing to $66 billion last year to account for about 8.3 percent of the South Asian nation’s total commerce, up from about 4.9 percent a decade ago. India’s trade deficit with China increased to $39 billion last year, the biggest gap with any of its trading partners, government statistics show.

To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net

To contact the editor responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net


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