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THE PANGOAL REPORT
Apr 17, 2019
Indian Stand on Belt and Road Initiative and Policy Proposals
Indian Stand on Belt and Road Initiative and Policy Proposals

Dr. Youfa Liu, Senior Research Fellow

of the Pangaol Institution


It has been more than three years since President Xi Jinping put forward the Belt and Road Initiative, which has been actively promoted by the Chinese government. China and India are both emerging countries and are the inseparable neighbors to each other, which constitutes one of the preconditions for the smooth promotion of the BRI. As the scheduled Summit is around the corner, it has become a paramount subject to test the strategic wisdom of the leaders of the two countries and governments on how to create conditions for India to fully engage in the joint construction, how to effectively resolve the issue of ¡°misalignment of strategic thinking¡±, how to promote common development via bilateral and regional cooperation, how to manage mutual strategic suspicion via win-win cooperation, how to construct the real strategic partner relations as well as on how to jointly explore the new modality of joint development between major developing countries.


I. Synopsis on the Reasons That Have Brought about the Policy Stand by India on the Belt and Road Initiative.


Three years ago, both China and India had the new governments and the leaders of the two countries soon started ¡°personal diplomacy¡±, and maintained frequent meetings at various bilateral and international occasions, during which the two leaders reached consensus on jointly prompting strategic partner relations. Nevertheless, India has hitherto adopted a ¡°two-approach¡± policy toward the BRI. On the one hand, India outreached to China in becoming a founding member of the AIIB, in an effort to further explore the Chinese market, investment and manufacturing technologies. On the other hand, the former has kept distance with the latter, and adopted ¡°hedging measures¡± from time to time. On the whole, various reasons have attributed to the above scenario.


(I) It is due to the growing deficit of mutual strategic mistrust. China and India established strategic partnership relations toward peace and prosperity in 2005, which have brought about closer cooperation at bilateral, regional and international levels. It is true that the two countries have the convergence of broad and common interests in both traditional and non-traditional security.  Both countries are major developing economies, both members to the BRICS, are both faced with challenges in the field of the climate change, food security, and energy security, both shoulder the responsibility in maintaining regional peace and stability, and both share the common vision in regional and international governance. However, India has been adhering to the concept at strategic level that ¡°friends of the enemy are natural enemies¡±, and has thus kept a high vigilance on any Chinese economic and trade cooperation with countries such as Pakistan, Bangladesh, Myanmar, as well as other countries in South Asia or around the Indian Ocean. Consequently, India, at the economic front, has been eager to tap into the potentials of the rapid growth of the Chinese economy, and set up invisible ¡°road blocks¡± on the entry of Chinese capital and technologies, against the fear that the growing Chinese economic radiation and transfer would ¡°chip off¡± the modality of its modality of ¡°independent development¡±. At the political front, it has been the long cherished aspiration of India to become a permanent member of the Security Council of the United Nations and to join the nuclear suppliers club. India has regarded the above efforts as the paramount foreign policy in terms of its global strategy and has been counting on China for understanding and support. However, China has yet to give the ¡°green light¡± on both issues either at bilateral level or multilateral level. Consequently, India has been complaining openly and has thus decided to ¡°create some issues on Tibet¡± in order to show its dissatisfaction in the above regard. At the security front, India is still in bed with the redundant Cold War mindset, presume that the BRI is nothing but ¡°a strategy of joint development sugar-coated by beautiful diplomatic versions¡± and constitutes no more than a new ¡°pearl necklace¡± to contain India, which promoted India to offset the BRI with the ¡°Project of Mausa.¡±


(II) Economic and trade relations are faced with ¡°bottlenecks.¡± In short£¬China and India are the first and second most populous nation in the world, both are emerging nations, both demonstrating growing consumption market, and both have market growth potentials. However, since the 21st century, bilateral economic and trade relations are faced with series of challenges.


Firstly, it is the misalignment of trade capability. Due to the impact of the changing international situation, the bilateral economic and trade relations were lukewarm since the two countries established diplomatic relations, but maintained mostly a meager trade with a slight surplus on the Chinese side. However, since 1993, India started its own economic reform and opening up, which was aiming at fortifying foreign trade and regarding China as one main partner, in order to jump on the ¡°wagon of the fast growth the Chinese economy¡±. However, China and India have developed different economic structures. China has managed to build up the manufacture industries, elevated manufacturing capability as well as trade capabilities, and managed to join the rank of manufacturing nations. Meanwhile, India concentrated its national resources on information and service industries, joint the rank of information industry and software industry and become the leading nation among developing countries. Consequently, the cheap but quality goods from China has been popular at the Indian market, but the latter is still to export adequate  service products to China, which resulted in the imbalance of the bilateral trade, growing from $800 million in 2005 to $4.12billion in 2006. And, the deficit inflated to $12 billion the next year. In 2016, the bilateral trade realized $71.1bilion against the backdrop of the down-sliding global trade, which also brought the India-China trade deficit to an unprecedented $56 billion. Apparently, the trade deficit has long become an obstacle for the further growth of the bilateral relations. Based on the above analysis, China alone is not to blame for the growing trade imbalance.


Secondly, it is the misalignment of production chains. It is an open secret that the real nature of globalization is the fact that transnational corporations have been allocating factors of production around the world and carry out production and marketing of their patented products, in order to maximize expected commercial interests. Since China and India started economic reform and opening up strategies, the two countries have taken stock from their respective comparative advantages and joint the different global production chains, during which China has managed to attract the FDI totaled at more than $2 trillion. Currently, more than one million FDI related enterprises have registered and have been operating across the country, which have literally turned China into a ¡°world factory¡±. Meanwhile, China has also become a major overseas investing country, and Chinese enterprises have been extending their production chains into the international market in large scale, which have become the new force to power the global trade. In contrast, India has been dedicating its industrial endowments on information and service industries. The Indian enterprises have taken stock from the special relations that India enjoys with the developed nations as well as the comparative advantages in English, the global working language, promoted the rapid growth in information and service industries, and eventually established comparative advantages in service trade. The point is that, at the international level, China and India have joint different production chains, which are mostly not mutually complimentary in terms of bilateral trade. As a result, Manufacturing enterprises have to import the software products from developed countries, while India has to import manufacturing products from China, which has been providing fuel to the fire of trade imbalance. The above enterprises have been providing steam for China¡¯s economic development, and have transformed China into the largest trading nation and the second largest economy in the world. However, the ever-growing trade surplus has also turned China into an easy target of the ¡°anti-subsidiary¡± and ¡°anti-dumping¡± investigation by trade partners including India.


Thirdly, it is the misalignment of trade capability. Research finds that economic globalization has produced two outstanding scenarios. One is that transnational corporations have been allocating resources at the global level, organizing productions and marketing of their end-products, which has led to the separation of commodity production, marketing and consumption around the world. To be specific, any product could be divided into various parts and be produced or manufactured in different countries any where in the world and be assembled and packaged in one country, and then be marketed in countries around the world. Over the years, China has taken stock from its Geo-position, relative cheap labor and huge market potential, managed to join the global production chains, build up the capacity to produce some 40% of the daily commodities and durable goods of the world, and managed to let ¡°made-in-China¡± products to be popular around the world. Meanwhile, India has joint the global production chains with its software capability.



The above global chains have thus brought out the second scenario, which caused the ¡°diversion¡± of the traditional trade flows between the countries. For example, India has large number of its citizens who are residing in Singapore and other countries or economies, who are specialized in indirect import and export trade between China and India. According to the traditional trade theory, the above transit trade from India to China would not be tallied as the Indian export to China, while direct trade have been mostly conducted by the Indian merchants. This is a typical case of ¡°trade diversion¡±.


Fourthly, it is the misalignment of trade policies. In accordance with the international experience, the development of the bilateral trade depends much on the market scale, the production capability as well as the capacity to provide each other with trad-able goods. China and India are the first and second most populous nation in the world, which are experiencing rapid expansion of consumption. From the perspective of structure of import and export, India exports mostly primary products to China, of which roughly half comes from the primary industries. Meanwhile, India imports mostly machinery products from China, contributing to about one half its annual total, and the rest are chemical products, metal ware, fibers and textile products, etc. Therefore, the above inter-industrial trade would easily cause the imbalance of the bilateral trade. Since the 21st century, the Indian government drastically cut down on the export of primary products to China, out of the consideration to protect natural resources and develop its manufacturing industries, which also added ¡°fuel¡± to the burning trade deficit. Looking into the future, the cooperation in information industry could become one new area to promote the bilateral trade. However, the two countries are yet seriously to put the above cooperation on the agenda of the two governments, as India is still driven by the Cold War mentality, animosity toward and the security concern over China.


Fifthly, it is the misalignment of trade related investment. From the perspective of trade expansion, trade and investment are the ¡°two wheels¡± for the healthy and stable bilateral economic and trade relations. When the trade relations reach to a certain level, expansion of mutual investment become the sure thing to further power the said relations forward, as the ¡°two vehicles¡± are mutually complementary and inseparable to each other. Since the end of the Cold War, China and India both entered into the period of rapid economic growth and have evolved comparative advantages in different industries, which could have become the power-base for economic and trade cooperation via the two way investment. However, since the second decade of the 21st century, the growth of mutual investment has been slow, with the total volume hovering around $20 billion. Meanwhile, Chinese capital has been outreaching to the world in large volumes, and has accumulated a total outbound flow of about $1 trillion, out of which India accounted for less than 1%. Apparently, the above scenario does not tally with the potential growth of the two-way investment, the growing market potentials as well as the prospects of the overall bilateral relations.


Sixthly, it is the misalignment of trade strategies. As mentioned above, China and India are the two most populous nations in the world, which collectively contribute to more than one third of the global population. As the two economies keep growing, the economic scales will expand accordingly, which are to result in the growing scale of the middle classes in the two countries, who are the main power for the global trade. The macadamia community has projected the 21st century to be the Asian Century, mainly based on the growing consumption on the Asian continent. Research finds that the consumption capability and its capacity to attract commodities are largely decide the speed and the prospect of a nation in development. China and India are the second and seventh largest economy in the world, each has its own comparative advantages, and each has its own trade potentials. However, once one trade partner changes its trade policy, it would make it difficult for the bilateral trade to maintain the normal momentum. Take the China-India trade for example, the Indian government can readjust its China-related trade policy in order to address the bilateral trade imbalance by administrative measures for the time being. However, the actual consumption of the Indian people will continue to grow and will have to find other channels to import the same products, which are likely still the ¡°make-in-China¡± products. The only difference is that the Indian customers have to pay more for the same products because of the ¡°transit trade¡± factor. Therefore, in the long term, it is the industrial cooperation, rather than trade policy readjustment, will help address the issue of bilateral trade imbalance.


Last but not the least, it is the misalignment of statistics. From the perspective of statistics, China has been exporting bulk manufactured goods which can be tallied accurately. Meanwhile, Indian exporters to China are mostly medium and small in scale and are mostly carrying out small scale exports to China which are easily missed in statistics by the Customs. In addition, China and India differ in the principle in the field of statistics in terms of transit trade via the third places such as Singapore and Hong Kong, which have helped to balloon up the Indian trade deficit with China. More importantly, India has comparative edge on China in the service trade, but it is not included in the statistics of the bilateral trade.


(III) The legacy of the border issue still at work on Indian side. The largest ¡°historical crux¡± of the bilateral relations is still the border war in 1962. Between October and November 1962, the PLA launched the war of anti-aggression at the border at South Tibet between the two countries, and won the victory at the battlefields, maintained the security of its Southern border and dealt a heavy blow on the forces aiming at splitting Tibet from China. From the historical perspective, the war was not started by China and thus China was not to be held responsible for the war. However, in order to give the Indian side an opportunity to learn from the lesson, the Chinese troops withdrew to the northern side of the line of ¡°actual control¡±. However, the Indian troops took the advantage and occupied the disputed area of South Tibet until today.


The said border war was the end-result of military, political, security and diplomatic arm-twisting between the two countries, which saw all the factors re-enforcing one another, producing impacts surpassing the pure military conflict. Chairman Mao Zedong gave comments on the war on several occasions and predicted that the war would bring peace at the border for at least 10 years. Unfortunately, it also brought the bilateral relations to the zero point at one time. In 1979, China and India restarted the negotiation on the border issue, and, for that matter, established the regular meeting mechanism of special representatives. In 2005, the two countries signed the ¡°Agreement on the Political Guidelines on the Resolution of the Border Issue¡±. In addition, the two governments also signed the ¡°Agreement on Maintaining the Peace and Stability at the Border Area¡±, the ¡°Agreement on Maintaining Mutual Trust¡±, which allowed the two sides to establish a consultation and coordination mechanism on the border issues. In 2012, the two countries formally signed agreement in the above regard, which authorized the Ministry of Foreign Affairs of the two countries to lead the consultation on the border issues, drawing up regulations and procedures on the consultations and negotiations on the border issues among the officers and diplomats of the two countries, in order to facilitate conditions for the eventual resolution of the issue and for the development of the bilateral relations as a whole. In April 2013, shortly before the scheduled visit by Premier Li Kaqiang to India, the Indian side provoked the ¡°tents confrontation¡± at the border area. However, the leaders of the two governments managed to avert the crisis. In October of the same year, the two governments signed the ¡°Agreement on Border Cooperation between the Two Governments¡± (BDCA), which is to prevent strategic misjudgment by either side and to prevent the border issues from becoming the ¡°road blocks¡± for the bilateral relations of win-win cooperation. In 2014, 2015 and 2016 respectively, President Xi Jinping met with Prime Minister Modi on several occasions, during which they made political decisions on the border issue, and both leaders agreed to ¡°compartmentalize¡± the thorny issue and concentrate on the cooperation in other areas. On February 22, 2017, China and India held the strategic dialogue, which also included the border issue. This has become an important channel of dialogue and communication which dedicates to the promotion of political cooperation and strategic trust, in order to cement the said strategic relations. However, the Indian side, in line with its consistent mindset, still insisted to link the border issue with possible Indian participation in the joint construction of the Belt and Road Initiative.


(IV) There are still conflicts of interests in security strategies. Ever since India realized its national independence, successive governments have regarded the Indian Ocean and the relevant countries in South Asia as its ¡°front yard¡± or ¡°rear yard¡±, and ¡°regarded the Indian Ocean as its life line.¡± As early as in 1983, Indira Gandhi, the then Prime Minister put forward the Indian version of ¡°Monroe Doctrine,¡± which stipulated that India would assume the responsibility of ¡°manager¡± in South Asia. For that matter, India has always regarded any Chinese economic and commercial presence in the area as security to India, and regarded any military and economic cooperation between China and other countries in the region as the ¡°encirclement on India¡±. The main stream India media still has the view that, as the dominant neighbor, China would ¡°exert south-ward expansion¡± once the country becomes strong and prosperous. And, as soon as the ¡°new maritime silk road¡± manages to meet the ¡° inland new silk road¡± in South Asia, the two roads would become the strategic tools for China to realize its strategy of ¡°South-ward expansion¡±. It is on the above assumption that India has regarded the positive responses to the BRI by the countries in South Asia and those around Indian Ocean as their ¡° China cards¡± versus India. In the second half of 2014, the docking of the Chinese submarine fleet at the Colombo Port in Sri Lanka immediately sent the shocking waves to the sensitive political nerve of India, which promoted the rampant surge of ¡°China threat.¡± Consequently, India put forward the ¡°Project Mausa¡± as a tit-for-tat response. Meanwhile, India took stock from its special relations with Sri Lanka and succeeded in helping bring down the government friendly to China during the follow up general election, and made sure that the new government would put the harbor project on hold. However, the tall order of the countries in South Asia and around the Indian Ocean is the sustainable development that warrants the reliance on the Chinese market, capital, technologies and industrial transfers as well as the ¡°public goods¡± that China could offer. Apparently, India was fully aware that it did not have those capabilities to satisfy their appetites, but still put forward the ¡°Project of Mausa,¡±in order to attract the attention of the international media and to reap the effects of ¡° diplomatic hedging¡±.


(V) There have been conflicting interests of the Geo-strategies. For long, India has regarded China as a competitor. It is true that China and India differ in ideology, strategic interests, and the two countries are still locked in the stalemate over the disputed border area of 125,000 square kilometers. For that matter, India has been on high alert as China moves forward fast in political, economic and military capabilities, carries out more and more interactions with other countries in South Asia and exerts more influence on its partners. Therefore, India has given paramount attention to the elevation of its military capability and regards it as the major tool to realize its national strategic goals, in order to ensure its dominating position in the region. It is still the view of India that ¡°diplomacy must rest on the military might, and the former must subject to the latter, and the military capability is the ¡°trump card¡± for diplomacy. For that matter, long since the end of the Cold War, India has been spending a large proportion of its annual budget on national defense and still regards China as the focal point for national defense policy. During the era of the post international financial crisis, as the Chinese economy keeps growing fast, countries headed by the United States have been intensifying their strategic encirclement on China, for which India found itself in a more favorable strategic position in terms of regional politics. For that matter, the developed countries have been courting collectively with India. Meanwhile, the Modi government has been outreaching in all directions, in an effort to gain an upper hand over China and ¡°earning more chips¡± versus China. In order to realize its global strategy, the Modi government has formulated and implemented an all round foreign policy, which dedicates to actively pursue relations with the developed countries in America, Europe and Asia, in order to attract the capital and technologies for its national development, to expedite industrial rejuvenation, realize the goal of leapfrog development, expand its military capability, and build up its global status as the nuclear power.


At the regional level, India still abides by the policy of ¡°Non-alignment¡±, and still carries out the policy of ¡°strategic independence¡±, in terms of the relations among India, the US, Russia and China, claiming not to take side with any other partner. However, in January 2015 when President Obama visited New Delhi, the two governments signed a joint communique, which stipulated that the ¡°Indian Eastward Strategy¡± and the US ¡°Pivotal to Asia¡± are to provide a historical opportunity for the two countries to step up closer cooperation with other countries in the Asia and Pacific, and provide steam for the regional cooperation. In 2016, President Trump basically inherited the Indian policy by the former administration and initiated telephone conversation with Prime Minister Modi ahead of President Xi Jinping, during which Trump called India as the best non-allied nation in the world. Based on the above analysis, India will find it hard to make the political decision to fully engage itself in the BRI.


(VI) Kashmir has remained a point for contention. For more than half a century, India and Pakistan have been standing face to face over the disputed area of Kashmir. For that matter, the two countries have been regarding the other side as the main competitor.


Kashmir is the short form of ¡°Jammu and Kashmir¡±, which is bordering with India, Pakistan, China and Afghanistan, and covers an area of some 190,000 square kilometers. The issue of Kashmir is the direct result of the policy of ¡°divide and rule¡± by the British colonial power. In mid 18th century, the Indian Subcontinent became a colony of the British Empire. After WWII, India managed to win independence from the British colonial rule. In June, 1947, Mountbatten, the last British Governor to India drafted a master plan called ¡°the Mountbatten Plan¡± to divide the Indian colony into two areas of administration and allow the latter to become two independent nations.


In accordance with the Mountbatten Plan, the areas where are mainly populated by the Hindus would belong to the future India, and where are mainly populated by the Muslims would belong to the future Pakistan. However, the British colonial masters made the decision that the future of Kashmir would be decided by the ruler of the native state to choose its future belonging or to remain independent. At that time, 77% of the local dwellers were Muslims, who preferred to join Pakistan. However, the king was Hindu who remained undecided at the initial stage, then shifting policy stands on whether to join Pakistan or India until the official separation of India and Pakistan, which resulted in the current status of Kashmir.


Soon after the separation, the two countries locked into the war in October of the same year over Kashmir, the first India-Pakistan War. In December 1947, the issue of Kashmir was put forward to the United Nations for arbitration. In August 1948 and January 1949 respectively, the United Nations passed the resolution to authorize the cease fire and authorize the referendum to decide the future of the territory, which were accepted by both India and Pakistan. Therefore, the cease fire came into force in January 1949, and cease fire line was drawn in July of the same year. According to the line, the area controlled by India would be under the administration of India, and that by Pakistan would under the jurisdiction of Pakistan, which allowed both sides to set up local authorities in the respective territories.


In August 1953, the prime ministers of India and Pakistan issued a joint communique after the consultation that the future of Kashmir would be decided by the local people in referendum. However, in June 1956, the two countries were locked into the second war over the same issue. In December 1971, the two countries were deep in the third war over the separation of East Pakistan from Pakistan, during which India sent the troops into part of the disputed area.


In July 1972, India and Pakistan signed the ¡°West Lamb Agreement¡±, according to which both sides agreed to honor the cease fire line which was established in the 1971 agreement. In order to resolve the disputes, the leaders and ministers of the two countries held several talks but still failed to reach an agreement.  Since 1989, the two countries encountered continuous armed conflicts over Kashmir, which brought huge damages to both sides.


On November 11, 2003, Mr. Jamal, the Pakistani Prime Minister announced that his government would withdrew the troops and would automatically stop fire on the Pakistani side of the line of actual control, effective on Balram (Id al Fitr). The next day, India welcomes the above initiative and also adopted the reciprocal measures. Therefore, the military authorities of the two countries agreed after consultation the two Armies would stop fire starting from the midnight of the same day at the ¡°international borderline¡± in Kashmir, the border line of actual control as well as at the Siachen actual contact line. The two sides also agreed to promote the permanent cease fire. On October 29, 2005, the two countries, after long negotiations, signed the Islamabad Agreement which warranted the opening of 5 check points along the line of actual control in Kashmir, allowing citizens to cross the line to carry out self-salvation after the earthquakes.


On the part of China, since late 1970¡¯s, the successive governments have readjusted the policy on South Asia and implemented the policy of ¡°neutrality and peace promotion¡±, which has provided the political foundation for China¡¯s strategy of friendly relations with both India and Pakistan. However, the BRI has enlisted Pakistan as one of the key countries, listed the China-Pakistan Economic Corridor as the flagship project, and jointly build the transportation and communication corridor which includes railways, highways, oil transportation pipelines, and optical cables. For that matter, Chinese government has committed a total investment of $46 billion while the proposed Chinese investment to India was only one third of the former. What is more, the CPEC is schedule to cut across the disputed area of Kashmir where India and Pakistan are yet to seek agreement. Consequently, India subjectively assumed that China has joined hand with Pakistan to ¡°infringe on the Indian core interests¡±. In retaliation, India has lodged repeated protests and presentations.


II. Policy Thought on the BRI Projects Relating to India


Based on the above analysis, the Belt and Road Initiative has been moving forward in full swing, and the relevant trans-regional projects simply cannot bypass India. Meanwhile, as both China and India are on the fast track of growth, the economic frontiers of the two countries are bound to meet with each other which would naturally cause both contradictions and conversions. Looking into the future, India is an inseparable partner for China in terms of national rejuvenation, an indispensable condition as well as an important partner in successfully promoting the Belt and Road Initiative. Therefore, China has every reason to outreach to India and acquire the understanding of the latter, seek support and cooperation from the latter, or persuade the latter at least to go in parallel in regional cooperation in development.


(I) Actively promote strategic dialogues and seek the connectivity of strategies. Research finds that the ¡°Project Mausa¡± put forward by India in September 2014 covers countries on the subcontinent of South Asia, via Sri Lanka to extend westward to the countries in West Asia such as Iran, eastward to include countries in Southeast Asia such as Indonesia, southward to outreach to countries in East Africa, any of which are to converge with the potential partner countries of the maritime silk road. Therefore, China should carry effective bilateral dialogues and policy consultations with India, in order to promote the transparency of the BRI, promote the convergence of interests between the BRI and the Project of Mausa, avoiding possible confrontation between the two.


Firstly, the two sides should carry out dialogues and negotiations which would help promote the partnership between the regional connectivity networks under the BRI and the infrastructure scheme under the ¡° 12th Five Year Plan¡± by the Indian government, in order to promote the connectivity between China¡¯s building capacity and the demand by India in the same field. To start with, it is much desirable to start the cooperation in the areas of the technological renovation of the railways and highways across the country in India, expedite the process, in order to let people from all walks of life benefit from the ¡°dividends¡± of joint construction, and pave the way for closer cooperation in other fields. As India has granted the first high speed railway project to Japan, China should wait for the next available opportunity to bid for specific contract, taking stock from the experience and lessons by Japanese company. As India is still harboring with strategic suspicion on the BRI, it is also desirable to detach India related projects from the BRI programs and carry them out via bilateral channels, observing the international standards, in order to facilitate compatible conditions for the BRI infrastructure networks to extend from Southeast Asia to South Asia and then move on to West Asia.


Secondly, further promote the bilateral economic and trade cooperation, in order to effectively address the imbalance of the bilateral trade. The two countries should actively pursue cooperation in the information industry, which would provide the platform where the Chinese ¡°hardware capabilities ¡±could seek partnership with the Indian ¡°software capabilities¡±, in order to lay the foundation to expand bilateral economic and trade cooperation, and also to help address the issue of trade imbalance.


Thirdly, the two countries should take stock from the reconstruction of Afghanistan and give full play to the comparative advantages of the relevant industries of the two countries, which would bring out the ¡°spill-over effects¡± of South-South cooperation and jointly display collective responsibility of emerging countries.


Fourthly, the two countries should join hands in identifying the areas of cooperation in regional security in and around the Indian Ocean as well as that in South China Sea, which would help promote cooperation in other areas and further promote political mutual trust and transparency of security policies.


Fifthly, the two countries should join hands with India as well as countries in and around the Indian Ocean, discover and preserve cultural legacies of the ancient maritime silk road, carry on and carry forward the new spirit of maritime silk road and facilitate conditions for it to be part of the common heritage of the global civilization.


(II) Strengthen policy dialogues and provide institutional support for the growth of the bilateral trade. China and India have different national situations, different economic structures, as well as the different industrial comparative advantages, which would jointly result in different capacity to participate in and to compete in the field of bilateral trade. Therefore, leaders of the two countries should take stock from the frequent visits and summits among leader of the two countries, during which they could make strategic decisions and provide political guidance on how to further promote the overall bilateral relations. The two governments should hold regular meetings, which would allow the relevant ministers to effectively implement the consensus of the two leaders, and transform the political decisions into concrete policy measures. The two countries should fully utilize the good working relations at the multilateral institutions, start negotiation on the long overdue bilateral free trade agreement, in order to provide legal framework for the bilateral trade promotion and effective resolution of the economic and trade disputes.


(III) Increase two-way investment and promote balanced economic and trade cooperation. The two countries should facilitate conditions to negotiate and sign the bilateral investment agreement, which would provide the legal and institutional support for closer cooperation in economy and trade. Currently, China has become the prime trade partner for India, but the latter is experiencing an ever growing trade deficit, which has become the ¡°road block¡± that the two countries cannot pass-by. For that matter, China should encourage and support its national enterprises to increase investment in India, produce and market appropriate products at the local market via joint adventure or sole capital, or jointly market the said products at the third markets around the world, which would help indirectly address the bilateral trade imbalance. The two governments should start negotiation and sign the agreement on protection of intellectual property rights, which would in turn provide legal protection for the information exchanges and technology cooperation, and provide policy guidance for the two countries to carry out trio-party cooperation with any other countries.


(IV) Promote mutual learning and adaptation and jointly promote cultural cooperation. Cultural industry is an important benchmark to judge the stages of development of a country, while the cultural relations constitute the ¡°barometer¡± for the relations between or among countries. Indian culture is still shining with traditional characteristics after some 6,000 year over the history, while Chinese culture still carries the beauty of the oriental culture. Over the history, Buddhism was born from Hinduism but evolved into an independent religion, which became the spirit and cultural legacy among peoples in many countries along the maritime Silk Road. Prime Minister Modi said well when he was receiving the visiting President Xi Jinping that ¡°India and China are the two bodies with one soul.¡± Therefore, cooperation in culture could become the ¡°greatest divisor¡± for the two countries to push forward the joint construction of the Belt and Road Initiative. To be specific, the two countries should regard it as the ¡°convergence of interests¡± to rejuvenate the two cultures, and fortify the efforts to implement the political consensus in the said cooperation, negotiate and sign agreement on joint cooperation in research into the ¡°Buddhist connectivity¡±, endeavor to connect as many historical placed across India as possible via the joint construction of high-speed railway and highways, which would go a long way to promote the cultural connectivity between the two countries, and lay the solid human and cultural foundation for the joint construction.


(V) Promote industrial cooperation with energy industry as a platform. China and India are faced with the spiral growth of dependency on the international market for energy and natural resources. Over the recent years, companies of the two countries have formed the actual partnership or become competitors on many occasions to look for opportunities to prospect and exploit oil and gas along the Belt and Road. Therefore, the two countries should have more reasons to form the partnership in the above area, which would be desirable to invite more Indian companies to join the construction of the transportation pipelines to connect Central Asia, South Asia and West Asia, deepen the existing cooperation in Africa in terms of joint exploitation, joint processing, joint transportation and joint management of the pipeline security, which would warrant the equal distribution of the dividends in proportion to the contribution by the stakeholders. This would certainly help to provide energy support for both countries in terms of economic development, and promote peace and stability in South Asia.


(VI) Effectively manage the relations between interests and moral obligations. The starting point of the BRI is the joint construction, in order to promote the mutual connectivity of infrastructure networks, while the foothold is to promote common development and coordinated governance, in order to provide steam for mutual trade, mutual investment and industrial cooperation, which would facilitate conditions for the regional integration. During the above historical period, China should join hands with India to promote the compatible international benchmarks via bilateral or multilateral cooperation, establish norms for South-South cooperation, and build up the platform for common development. Both countries should uphold the concept of moral and commercial profit, hold high the banner of ¡°mutual benefit¡± and ¡°win-win cooperation¡±, and incorporate them into the practice of joint construction and common development. From the political perspective, the two countries should list the issue into the agenda of the bilateral strategic dialogue and establish the ways and means for India related joint projects, formulate regulations, ensure the fair rights and obligations, in order promote the connectivity of the industries or resources with comparative advantages, expedite national development and harvest the benefit of the ¡°spill-over effect¡±, and provide ¡°positive energy¡± for the growth of the world economy. To be more specific, future India-related projects should take into consideration of the interests under the Indian ¡°Strategy to Look East¡± as well as those under the ¡°Spice Voyages¡±, in order to cement the spirit of ¡°mutual benefit¡± and ¡°win-win outcome¡±, which would serve to soften the strategic suspicion of India on China. In the economic arena, Chinese government should educate and guide its national entrepreneurs to carry out business operations in line with the local laws and international practice, strive to build cordial relations with local partners, respect the local cultures and traditions, and carefully address the reallocation of the temples and their reconstructions. The government should educate and guide its national companies to carry out the corporate social responsibilities and establish the ¡°interests and obligation bonds¡± with the local governments and social organizations, in order to win over their support and cooperation, which would in turn add steam for the maintenance of project construction and operation.


(VII) Search and establish new ways and means for human and cultural cooperation. There should be no doubt that the BRI is dedicating to the development promotion and common prosperity, which is eventually to improve the well beings of the peoples of the partner countries. For that matter, the India-related projects should regard economic cooperation as the foundation, give full play to the comparative advantages that both countries have, give priority to the joint construction in transportation, energy transportation pipelines, in order to promote the two way trade, create new areas for trade growth, help to address the trade imbalance. Both countries should expand industrial cooperation, facilitate conditions for the two-way investment, and encourage enterprises of both countries to fully participate in the construction of economic belts and major connectivity networks in major cities. Meanwhile, both governments should attach importance to people-to-people exchanges, broaden scales of overseas students programs and jointly establish colleges and universities, which would help to carry on and carry forward the cooperative spirit of the new Silk Road. Taking into account that India does not support the scheme to establish Confucius Institutes, suspecting that the scheme would result in ¡°cultural expansion by the Chinese side¡±, the two governments should allow each other to establish cultural centers, which are to dedicate to promote Taiji and Yoga, and promote excellent cultures of the two countries. Explore possibilities of establishing cooperation mechanism of mass media between the two countries, join hands in preserving projects under the world heritage framework, step up cooperation in the tourist industry, and give full play to the function of ¡°bridges¡± by the political parties, parliament, mass media, think tanks and the NGOs, in an effort to cement the foundation of public opinion and social foundation.


(VIII) Attach importance to education and guidance to mass media. The two countries should formulate the joint publicity mechanism in line with the national situation and public opinion in India, which would serve to present the real voice from China and present real Chinese stories, in order to provide ¡°positive energy¡± for the construction of the India-related projects. There should be no denying that the Indian mass media is most outspoken in inciting ¡°China threats¡± among developing countries. Relevant department of the government should dig deep into the relevant laws and regulations in India, do research into the current institution in the sector, and strive to establish institutional cooperation in the field of news and mass media, and strengthen supervision over the official and non-official mass media. China should take full advantage of publicity at the international arena, accurately explain the real essence of the BRI, provide the international community with ¡°positive energy¡±, take initiative in guiding the mass media, share light on the principles of ¡°joint consultation, joint construction, and sharing¡±, and stress the mutual benefit, openness and inclusiveness of the said joint construction.


(IX) Prudently handle the triangle relations among China, India and Pakistan. Pakistan is strategically located in the security structure of China¡¯s surrounding area, and has become the ¡°experiment ground¡± as well as the ¡°bridgehead¡± of the BRI. In accordance with the bilateral relations and political and economic situation in South Asia, China should conduct issue specific dialogues with India and explain China¡¯s absolute necessity to construct the South-bound seaport, in an effort to reduce Indian strategic suspicion, help India and Pakistan to get out of the vicious circle of ¡°tit for tat¡± and construct the new ways for the trio-party relations to move out of the long standing stalemate of the disputes and conflicts. Therefore, China should fully utilize the ¡°greatest divisor¡± of peaceful development among the three countries, promote all round cooperation among three countries. China should make full use of the platform of the China-Pakistan Economic Corridor¡± and the Economic Corridor of Bangladesh, China, India and Myanmar, which would help to push three pairs of bilateral relations to move forward in parallel. On top of that, China should persuade countries in South Asia, especially India and Pakistan to join the construction of the connectivity networks, facilitate conditions for the three countries to form the ¡°interest community¡± in the field of energy and natural resources, via joint planning, joint development, joint processing and joint marketing. China should take stock from the reconstruction of Afghanistan, and form the interests community of security cooperation, and contribute to the stable development of the bilateral relations between India and Pakistan.


(X) Attach importance on reducing deficit of political trust. China should maintain the momentum of high level visits and summits, which would allow leaders of the two countries to make political decision on major issues relating to the bilateral relations, and carry out strategic planning on bilateral, regional and global issues, contributing to elevating strategic mutual trust. China should give full play to the bilateral strategic and economic dialogues, exchange experience on national governance, coordinate industrial policies, expand areas of cooperation in an orderly manner, and search for effective ways and means to address the economic and trade disputes. China should improve the above said dialogue mechanisms, more effectively coordinate regional policies, establish and expand the convergence of interests, as well as the interests community in the area of politics, economy and security. China should continue to give full play to the ministerial dialogue mechanism among China, Russian and India, in order to further promote mutual trade, mutual investment and industrial cooperation. China should join hands with India and promote regional and international cooperation in governance, put forward joint agendas, protect the common interests, and strive for the common international space for development. China should effectively deepen the bilateral academic cooperation, in order to jointly carry out researches on the historical connectivity, jointly discover and reconstruct the legacies of history and culture, jointly carry forward the spirit of the ancient silk road, and jointly create the new brilliance of the silk road.



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