community

Editor’s Message
As the international balance of
power slowly moves away from
a unipolar system, new courses
of rhetoric are appearing with
regards to the relationships be-
ing forged amongst countries in
the developing world. China is
leading the way in this regard, as
President Xi Jinping constantly
highlights a community of com-
mon development. This issue of
MESSENGER takes a closer look
at the concept of this commu-
nity and pays special attention to
China’s links to the South Asian
countries of India, Pakistan and Sri
Lanka. The issue also reassesses
the importance of China’s relation-
ship with the US in the context of
growing friendships elsewhere.
Editor-in-chief: Stuart Wiggin
CONTENTS
Immediate Neighbors: India and Pakistan
Sri Lanka - the True Pearl of China’s Maritime Silk Route
China: a stabilizing force in South Asia?
The Deficit
A New Model Amid New Relationships
Interview - Steven Hadley
A New Creation in Asia
Regional Integration, Eye on the Prize
The Community of
Common Development
Is it real?
P6
P14
Neighbors and Borders
China and India
P16
P19
P22
P24
P8
P10
P28
P29
Another Free Trade AgreementP30
2

Shared Destiny
The Community of Common
Development, Is it Real?
Regional Integration,
Eye on the Prize
5

China and Africa as a Litmus Test
The People’s Republic of China has
long been proud of its natural bond
with developing nations ever since
being founded in 1949. Prior to reform
and opening up, China’s foreign diplo-
macy hinged on its ties with develop-
ing nations; the best example of China’s
bond with developing nations being
when the country restored its position
at the UN, courtesy of full-throated
support from African nations.
After reform and opening up, devel-
oping nations have remained at the
center of China’s foreign policy even
as China fosters robust economic ties
with the West. The past two years, in
particular, have witnessed China’s top
leaders going to Africa, Southeast Asia
and Latin America, in a bid to enhance
and renew both political and economic
commitments in order to strengthen
existing ties.
President Xi Jinping visited the conti-
nent of Africa in 2013, vowing to turn
China-Africa ties into a community of
common destiny. The Chinese Presi-
dent also traveled to Latin America
this year in an effort to link China’s
future with that of Latin American
countries. As the economic prospects
of Western economies still remain un-
certain, China, along with other devel-
oping nations, are increasingly looking
at each other for new growth opportu-
nities. But some observers have been
left wondering whether the so-called
“Community of Common Develop-
ment” is real, or whether this ispolitico
speakinanefforttopresentan image of
something that isn’t really there.
Despite the rapid growth of China’s
first-tier cities and the extravagant
lifestyles that rich individuals in these
cities possess, the country is still part
of the developing world. The vast
majority of China is far from being
considered “developed” and cities like
Beijing, Shanghai, Shenzhen, Nanjing
and countless others represent the
zenith of Chinese development rather
than the norm. Even in cities such as
Beijing, people drive expensive sports
cars past individuals who have to sur-
vive on wages which amount to a frac-
tion of the cost of such cars. Widening
inequality is a huge problem facing the
Chinese government; one which they
are acutely aware of and are attempting
to tackle. Nonetheless, if such a com-
munity of common development does
exist, China is certainly eligible to be
considered as a country with continu-
ing development aspirations.
Much rhetoric has emerged under Xi
Jinping’s presidency, with the most
notable sound bite being that of a
Chinese Dream; something that the
nation is attempting to implement and
achieve despite not having a concrete
definition for. Jia Xiudong believes that
this concept of a Chinese Dream is
linked to the community of common
development, in the sense that other
developing nations are all pursuing
their own national dream.
Xi Jinping’s first overseas trip as
President, to several African nations,
was highly symbolic of a belief within
China that Africa has a shared destiny
of sorts, bolstered by the fact that two-
way trade amounted to some 200 bil-
lion USD last year, with further plans
to double that by 2020.
On this burgeoning relationship, Jia
Xiudong states, “When we look at what
the Chinese leaders and African lead-
ers have been talking about recently,
about their vision for their countries
and their plans for the development
of their countries, we can see a com-
mon dream for both. China has…
the Chinese dream, that is we will
develop China into a strong nation; a
civilized nation. And also we have a
plan to fulfill that dream.” Jia Xiudong
also points out that the African Union
has put forward its own continental
agenda, known as AGENDA 2063, “so
that’s like a dream for the development
of Africa for the next 50 years. For the
two sides, we have the same dream for
peace, stability and development.”
President Xi has also talked about a
community of common destiny within
the Asia Pacific region, citing a China/
ASEAN community of common
destiny during a recent APEC sum-
mit meeting. Though China and many
ASEAN countries are no doubt keen to
bolster economic ties with one another,
proliferating maritime disputes make
it harder to promote the idea of such a
community of common development
when the core interests of many coun-
tries within the region directly oppose
the core interests of China. In the case
of Africa and China though, it is much
easier to buy into the idea of such a
community concept.
However, academics are wary of such
a concept, and don’t necessarily see
China and the continent of Africa
sharing the same upward trajectory.
Ian Taylor, Professor of International
Relations and African Politics at the
University of St. Andrews believes
that there are certainly compatibilities
between China and Africa in terms of
Africa being a good and open market
for Chinese products. Furthermore,
Africa also has a lot of natural resourc-
es which China can make use of for
future development.
But as Taylor points out, “with regards
to a shared future, China is on an up-
ward trajectory, likely to be the largest
economy very, very soon if it’s going
to be a great power. Whereas Africa, at
the moment, though we’ve seen very
high growth rates, Africa’s structural
position in the global economy is basi-
cally a provider of natural resources.
That’s how it was inserted into the
global economy during colonialism,
and it hasn’t really changed since then.
China and Africa have mutual inter-
ests, common ambitions and common
aspirations, which is obviously to move
forward with development and move
up the value chain. China has obvi-
ously done that and is doing that now,
but Africa still has a long way to go.”
The Community of Common Development,
IS IT REAL?
6

Nonetheless, Taylor does acknowledge
that, “there is certainly a degree of
friendship and solidarity among China
and Africa which you don’t see with re-
gards to Africa’s relations with the EU
or even the US; there are fairly obvious
reasons for that, primarily colonial-
ism with regards to the EU. So, there’s
definitely a difference of quality with
Africa’s relations with China.”
Such solidarity has become evident
in the promotion of the Forum on
China-Africa Cooperation (FOCAC),
a platform established by China with
the intention of promoting regional
integration between China and African
countries. There have been five forums
held since 2000, taking place in both
Africa and China with the most recent
being held in Beijing in 2012.
With regards to FOCAC and China’s
approach to Africa in general, Profes-
sor He Wenping, director of African
Studies at the Institute of West Asian
and African Studies of the Chinese
Academy of Social Sciences notes that
China “focuses very much on equal
footing, win-win, and the joint declara-
tion. Whenever we have a FOCAC
meeting, we issue a joint declaration
to express those common stances on
(shared issues of concern) or other
international issues. And also we will
issue an action plan,” which according
to Professor He features a detailed and
accurate breakdown of pledges made
during the forum.
In contrast, Professor He points out
that the recently initiated US-Africa
leaders summit features no joint decla-
ration or action plans and no bilateral
meetings between the US president
and African heads of state.
According to Professor Taylor of St.
Andrew’s University, FOCAC is the
institutionalization of Sino-African
relations, the formation of which
marked a very significant event in
the course of Chinese foreign policy
with regards to Africa. Taylor further
notes, “It was also quite interesting that
China’s formation of FOCAC has then
subsequently influenced a lot of other
countries to basically copy what the
Chinese has done.”
But Taylor also points towards a pos-
sible concern related to FOCAC and
the expectations of African leaders,
which could jeopardize the goodwill
that exists within any kind of so-called
community of common development.
“Up until about the 2006 FOCAC,
maybe a bit later, a lot of African
leaders were going to FOCAC with
the expectation that China was going
to deliver a lot of aid, a lot of capital
transfer, a lot of help. And these expec-
tations seem to be getting higher and
higher and higher. I think this is going
to cause a problem for Beijing because
obviously Beijing can’t just hand over
all the money to Africa. China really
needs to lower the expectations of the
African leaders; there has to be a limit
to that although Africa is important to
China.”
Though the concept of a community
of shared development is rather broad,
there is certainly a case to be made
for such a community existing; even if
it isn’t really on the terms that China
suggests it is. It is more appropriate to
see such a community as one of loosely
linked ideas with regards to foreign
policy and self-determination. As
Jia Xiudong of the China Institute of
International Studies explains, “China
adopts an independent foreign policy
and believes that is in the best interests
of China. We believe that all develop-
ing countries should also follow this
independent foreign policy. Actually,
most developing countries are mem-
bers of the non-aligned movement.
They believe that they are capable of
having this independent foreign policy
without being subject to foreign inter-
vention or interference.”
Jia adds, “(China) believes that the
developing world should be very
confident that we can find our own
path of development; we may not copy
any model of any countries especially
the developed countries. Thirdly, we
believe that we should reform the
international system and international
institutions, such as the World Bank
and the IMF, so that they can better
suit the needs of the developing world.”
While the approaches within such a
shared community may differ, China
and other developing countries are al-
ready having an impact on the makeup
of the world’s international institutions
(See page 8), and are likely to exert
greater influence on the international
community at large as they continue
to adopt pragmatic approaches to their
own development.
Chinese construction workers build the new African Union Buildings in Addis Aba-
ba, Ethiopia. The building is built for free. Chinese companies are investing and
working all over Africa and in Ethiopia they are mainly occupied with infrastructure
projects around the country. [Photography: CFP]
7

The Asian Infrastructure Invest-
ment Bank, an initiative first put
forward early in 2014, is set to
become a reality after 21 partici-
pating countries signed off on its
creation. The bank is going to
begin with a seed of 100 billion US dollars, half of
which China is putting forward. The Asian Infra-
structure Investment Bank will operate in a similar
fashion to that of the World Bank. The United
Nations, the Asian Development Bank, the World
Bank and other international finance institutions
support the creation of the bank.
However, there are countries in the region which
have yet to endorse its creation, including Indone-
sia, South Korea and Australia. Mike Bastin, Direc-
tor of the China Business Centre at Southampton
Solent University shared his views on the creation
of the new facility with China Radio International
and MESSENGER.
What’s in it for the countries which agree to par-
ticipate in the creation and operation of the Asian
Infrastructure Investment Bank?
I think countries neighboring China in this region
do see China’s rapid industrialization and also the
contribution that China is making and can make to
infrastructure development, obviously with large
foreign reserves, as a very positive thing. So, I
think that’s really the attraction or the rationale
behind it. I think from China’s point of view, it’s
good to focus on infrastructure and have a bank
that’s dedicated to that and to that region, rather
than perhaps the World Bank and the Asian devel-
opment bank which are spread across many other
areas; maybe too many.
Why is their trepidation or a certain amount of
unwillingness from several Asian countries when it
comes to getting involved with the bank’s creation?
With Australia, it’s heavily suggested that the US are
perhaps a little bit reluctant, a little bit fearful of this
organization. They dominate the World Bank and
to a certain extent the Asian development bank and
China has limited voting rights there. So, I think
there are political concerns there, and these are US
allies that perhaps are a little bit concerned of this
new organization but without foundation.
How different would an Asian Infrastructure Invest-
ment Bank be from the Bretton-Woods model? Is it
likely to follow the same lines in terms of execution?
South Korea has publicly suggested concerns of the
environmental impact on the infrastructural pro-
jects and compliance with international rules and
regulations. (But) there’s no suggestion that (the
Asian Infrastructure Development
Bank) won’t follow international
standards. It will be under the
same international scrutiny if not
more than the World Bank and
the Asian Development Bank, and
again it will be focused on infrastructure which is
a very, very necessary step in industrializing and
developing these economies in the Asian region. It
has to be a good thing where China is already a ma-
jor contributor, so launching this bank very much
dominated by Chinese capital is a sensible next step.
Is the creation of an Asian Infrastructure Investment
Bank connected to the concept proposed by President
Xi Jinping of a Silk Road Economic Belt throughout
the Asian region?
I think so. I think China is taking a responsible step
in kick-starting Asian development in neighboring
economies and those economies can see how they
can benefit from China’s rapid industrialization,
which is nothing short of miraculous if you go back
ten or fifteen years in Chinese cities. Certainly, I
think it’s a way of giving back to the area something
it has a lot to give. This local focus has to be the way
forward. Many have argued that the World Bank is
about poverty alleviation; that’s very general, that’s
spread right across the world. This is focused, it’s in-
frastructure dominated and that’s necessary in Asia.
Has there been any indication as to where the fund-
ing may go towards?
I think that’s what we’ll see very, very soon. (The
bank) is due to start operation in 2015 and I suspect
we’ll see a lot of activity very early next year. A
lot of activity is necessary and I think the Asian
Development Bank forecast the need for 8 trillion
US dollars of infrastructure investment by 2020
and I think this bank will play a huge part. So, I
think we’ll see that disclosed very soon and we’ll see
activity very, very soon as well, which will hopefully
alleviate some of the fears the US and its allies have.
China is responsible for contributing half of 100 mil-
lion US dollars of the initial seed money for the Asian
Infrastructure Investment Bank. Is it likely that we
will witness the size of this investment bank continu-
ing to grow?
I think it will grow substantially and I think what
the bank will do very soon is show hard impact and
hard evidence, tangible benefits of this initial capital
in order to justify further investments. So I think it’s
a step-wise process with a results-driven approach
and I think China and other neighboring countries
will fund it considerably more in the future; it’s a
very exciting step.
8

Part of the aims of the recent Asia
Pacific Economic Conference (APEC)
was to promote prosperity by remov-
ing trade barriers and promoting trade
and investment between member
countries. However, infrastructure is
lacking in and between many nations
across Asia. At present, China is put-
ting forward a series of infrastructure
measures designed to improve the
connections between nations in South
East Asia, South Asia and Central Asia,
in order to promote mutual develop-
ment. But many are wondering what
China has to gain from this focus on
developing infrastructure.
Many developing nations in Asia suffer
from what economists call “infra-
structure bottlenecks”, that is, their
lack of infrastructure puts a drag on
businesses operating in these coun-
tries and thus inhibits growth in the
overall economy. During the recent
APEC meeting, Chinese president Xi
Jinping pledged 40 billion US dollars
towards a Silk Road Fund intended to
finance construction of infrastructure
that will help bring the nations of
Asia - as well as their economies, and
markets - closer together.
Furthermore, the creation of the Asian
Infrastructure Investment Bank
(AIIB) is also a major part of efforts
to rejuvenate the region (See page 8).
These efforts can be roughly divided
into the Silk Road Economic Belt,
going through Eurasia by land, and
the 21st Century Maritime Silk Road,
connecting Asia and Europe by Sea.
China’s motives in vigorously promot-
ing increased connectivity between its
Asian neighbors, via both direct fund-
ing and through the AIIB, are varied.
Cheng Gang, research fellow at the
East Asia Institute of the National Uni-
versity of Singapore explains that there
are several motivations behind “China’s
grand initiative.” Though benevolence
may be a minor factor in the choice to
pursue greater connectivity, according
to Cheng, such a desire comes down to
simple economics.
Addressing bottlenecks alone “would
be a motivation from the other coun-
tries. It’s not China’s motivation for
starting this initiative,” claims Cheng;
suggesting that there is more nuanced
reasoning behind Chinese motivations.
Cheng adds that there is a lot of poten-
tial for investment in these countries;
but doing so without the necessary
infrastructure would be worthless. “If
we look at China’s relationship with its
neighbors, especially the relationship
with South East Asian countries, South
Asian countries and Central Asian
countries, you will find that the rise
of China’s economic power actually
has been benefiting all these regions.
But to some extent, many countries,
due to various reasons, couldn’t take
full advantage of China’s economic
rise. Moreover, past experiences have
shown that most of the economic
cooperation has been mainly limited to
trade (related to) the investment and
service realms. I think there’s still huge
potential to further economic coop-
eration with all these countries.”
Cheng also points out that China is
now facing serious overcapacity do-
mestically and is keen to address this
problem by nurturing the development
of possible markets in neighboring
countries. “The domestic market can-
not fully absorb this industrial overca-
pacity in the short term,” Cheng posits,
adding, “That’s why China needs to
expand this capacity to other parts
of the world; especially its neighbors.
For example, China now has huge
infrastructure construction capacity.
But we all know that, due to the past
few years of economic boom, actually
there’s very little room for China to
continue to use all this infrastructure
capacity domestically.”
Seeking greater connectivity not only
helps to develop markets for future
exports and investment, it also ad-
dresses a problem that the country is
experiencing right now with regards to
industrial capacity.
Alongside the creation of the Silk Road
Investment Fund, the 22nd APEC Lead-
ers’ Meeting in Beijing mapped out
ambitious blueprints for closer trade
integration and connectivity in the
Asia Pacific region. As the Doha round
of talks are still mired in the perpetual
debate between the developed and
developing world, bilateral Free Trade
Agreements have mushroomed across
the world. In the Asia-Pacific region
alone, the total number of FTAs now
stands at more than 250 and while they
may have worked well to eliminate
trade barriers between nations, when it
comes to the Asia-Pacific as a whole, a
regional FTA is still needed to bring all
economies under one banner.
Regional Integration, Eye on the Prize
The railway from Dunhuang to Golmud is being built.
[Photography: CFP]
10

With this goal in mind, China pushed
for the creation of a Free Trade Area
of the Asia-Pacific or FTAAP, during
this year’s APEC Summit in Beijing.
The summit ultimately produced
agreement on a roadmap for the
FTAAP, which China hopes can be
implemented by 2025.
The agreement could be far-reaching
in the sense that it has the potential
to bring free trade in the Asia-Pacific
region under one overarching frame-
work in the context of ongoing
discussions regarding two mega
frameworks for multilateral trade.
Those so-called mega frameworks in-
clude the ASEAN-led Regional Com-
prehensive Economic Partnership
(RCEP) and the US-led Trans-Pacific
Partnership (TPP); both of which in-
clude political motivations with China
excluded from the TPP and the US not
part of RCEP plans.
According to Victor Gao Zhikai, direc-
tor of the China National Association
of International Studies, “The FTAAP
itself is not politically driven; it aims to
include all countries in the Asia-Pacific
region, so it’s all-inclusive. Also, it
wants to promote free trade in an over-
arching way, covering the whole region
in a very comprehensive manner.”
For Victor Gao Zhikai, even though
bilateral trade agreements like the ones
China has struck with Iceland, New
Zealand, ASEAN, and most recently
Australia (See page 30), are positive
for those countries involved, nations
should avoid the regionalization and
fragmentation of such free trade agree-
ments in the Asia-Pacific region and
instead back the FTAAP plan. At pre-
sent, according to Victor Gao Zhikai,
“We avoid promoting so-called Free
Trade by basing ourselves on political
or even ideological considerations.”
The FTAAP represents a chance to
move away from this stance.
As for why the Asia-Pacific region
hasn’t moved towards such a model
in the past, Professor Ross Garnaut,
Professional Research Fellow in Eco-
nomics at the University of Melbourne
in Australia and former Australian
Ambassador to China from 1985 to
1988, points out that after a lack of
progress due to the Asian financial
crisis, the region was then “overtaken
by interest in bilateral and small group
preferential trade agreements, which
is not free trade; not open multilateral
trade. Since early this century that’s
been the main focus of attention.”
Garnaut elaborates upon this point,
adding, “Once you get away from
thinking about open multilateral trade,
then you’re thinking more about how
you can stop opening up against some
countries rather than how you can
open up to trade with the whole world.
I think the whole psychology of the
discussion of trade has been wrong
since early in this century.”
These views are echoed by Liang Wei,
Associate Professor of International
Policy Studies at the Monterey Institute
of International Studies in the US, who,
in reference to a regional or global
dimension, believes that too many
coexisting bilateral FTAs are causing
lots of problems.
“Not only will this increase transac-
tion cost,” Liang notes, “it will add lots
of confusion to the different terms of
agreements reached by different par-
ties and that will add more difficulties
to the private businesses if they want
to conduct trade. This is particularly
the case in the Asia Pacific. On the
one hand, we have seen an increasing
level of inter-regional trade, which
has reached the level of 60 percent;
in other words, for countries in the
region, 60 percent of their total trade is
trading among the Asia-Pacific coun-
tries. If that is the case, then having so
many parallel coexisting bilateral FTAs
is actually adding more unnecessary
costs to doing business in the region.”
The FTAAP could actually bring true
economic integration of all members of
the Asia-Pacific region if its implemen-
tation can be achieved. And according
to Professor Garnaut, the FTAAP in
no way represents a compromise to the
TTP or the RCEP, pointing out that,
“(The FTAAP) is much better than
either of them (TTP & RCEP) alone.
Above all it would avoid dividing
the Pacific with conflict between the
US and China, which would be bad
for those two countries and bad for
the world. Once you get discrimina-
tory trading arrangements dividing
countries, it becomes very hard to get
rid of them. Protectionist interests in
both countries that benefit from the
absence of free trade between China
and the US will oppose breaking down
those barriers. It would be much better
if we went straight to a FTA of the
Asia Pacific rather than persist with
these subsets of the region as focuses
for free trade.”
As for what impact the AIIB will have
upon increasing connectivity and im-
proving infrastructure throughout the
region, it may be too early to say. “But
if we look at China’s financial capacity
now,” says Cheng Gang of the National
University of Singapore, “I think we
should be confident about this bank. It
will be, in the future, a rival against the
current institutions in place; like the
World Bank as well as the Asia Devel-
opment Bank.”
The road is under construction in Jilin City. [Photo: CFP] 11

Neighbors and Borders, China and India
Immediate Neighbors: India and Pakistan
Sri Lanka - the True Pearl of China’s
Maritime Silk Route
The Deficit
13

Throughout the course of China’s long
history there have been many say-
ings about how to deal with one’s
neighbors, but all of them were
invariably talking about the impor-
tance of being a good neighbor. So it
should hardly come as a surprise that
officials in Beijing have put developing
good-neighborly relations high on
the country’s foreign policy agenda.
Such an approach has led to increased
levels of interaction between China
and another of the world’s growing
superpowers, India, with the aim of
bringing the two countries closer both
politically and economically.
China has been floating practical
ideas to better economic, political
and cultural links with neighboring
developing nations through a number
of various mechanisms. For instance,
in an effort to strengthen economic
and cultural links with central Asia and
beyond, President Xi Jinping put for-
ward his concept for a New Silk Road
Economic Belt, which this magazine
covered extensively in the previous
issue. Chinese academics claim that
concrete proposals like the Silk Road
Economic Belt have linked China with
its immediate neighbors together in a
so-called community of shared destiny.
However, the focus on promoting
good-neighborly relations should not
be interpreted as a wholesale shift in
the country’s foreign policy orienta-
tion. As Professor Ye Hailin of the
Editorial Department for South Asia
Studies at the Chinese Academy of
Social Sciences points out, “Neighbor-
ing areas are getting more important
than in past years for China’s foreign
(policy) issues. We can’t say that
only neighboring areas are the
priority. We should say that China
still pays huge attention to the rela-
tionship with global powers but also
tries to create a friendlier and more
encouraging environment for China
and its neighboring countries.”
And despite the fact that many aca-
demics and think-tanks are eagerly
awaiting concrete proposals regarding
President Xi’s overwhelming concept
of a new Silk Road economic belt and
maritime route, Professor Ye urges
observers to look at the importance of
proposing such a concept rather than
the concrete aspects of the project at
such an early stage.
“This is a new type of doctrine for
China to encourage cooperation with
neighboring countries. We have seen
that with the support of infrastructure
building, China not only wants to build
communication with the neighboring
countries, it also wants to encourage its
economic overseas presence by intro-
ducing some industrial complexes and
trying to promote the Chinese compa-
nies’ internationalization level, and also
(by) trying to use Chinese FDI to make
a balance between Chinese foreign
trade and foreign investment. We know
that most of the (neighboring) coun-
tries suffer a huge trade deficit in the
bilateral relations with China. This is
really difficult to change because China
basically provides more industrialized
products to the overseas market.”
And nowhere is this trade deficit more
evident than in India. 2014 marked the
first visit to India by a Chinese Presi-
dent in 8 years. Furthermore, Chinese
President Xi Jinping was received by
Prime Minsiter Narendra Modi, a
well-known admirer of the Chinese
economic model, in the Indian Prime
Minister’s home state of Gujurat. The
meeting marked the first time that a
Prime Minister has received a foreign
head of state outside of Delhi, signify-
ing the importance and new direction
of Sino-Indian ties. Working under
the assumption that greater economic
integration can help develop India’s
economy and thus develop potential
markets for China’s exports, the Chi-
nese government has readied some 100
billion US dollars intended for further
cooperation as part of the country’s
economic commitment towards India.
A large portion of this money is ear-
marked to go towards investment in
key infrastructure sectors which are
proving a major bottleneck to India’s
development. But aside from helping
one of its neighbors with the long-term
aim of nurturing potential markets,
Wang Dehua, director of South and
Central Asian Studies at the Shanghai
Municipal Center for International
Studies believes that both sides want to
“warm up” the relationship that exists
between the two countries; mindful of
nagging border issues.
As for China’s economic commit-
ment towards India in general, Wang
believes that “energy cooperation will
be an important sector in the future.
I’m cautiously optimistic about the
future cooperation. Of course, there
are still barriers in the future coopera-
tion especially in the deficit of trust,
and how to speed up the solution of
the boundary question left over from
British colonialism.”
Meanwhile, Amitabh Mattoo, professor
of international relations at both the
University of Melbourne and Jawaha-
rlal Nehru University, in the Indian
capital of New Delhi, interprets China’s
economic assistance as the country
“reaching out to South Asia [with
President Xi having also visited Sri
Lanka and the Maldives] to ensure that
there is goodwill for China; India is
already China’s fourth biggest trading
partner. In terms of strategy, I think
China does also want to ensure that
India and other countries do not align
themselves to the US or to any other
formation that sees China as a threat.”
The boundary issue, mentioned above,
that exists between the two countries
concerns two large areas and several
smaller areas that lie between India
and China’s Xinjiang Uyghur Au-
Neighbors and Borders, China and India
14

tonomous Region in the west. Wang
Dehua calls for a continued “shar-
ing” of the issue in order to maintain
peace around the border, and firmly
believes that economics are trumping
the issue. However, Amitabh Mattoo
points out that increased economic
interdependence is no guarantee for
peace in the future, noting that the
liberal institutional view within the
school of international relations is
“that if you increase interdependence,
that if the elite of both countries have
greater stakes in stability, the chances
of conflict are less. But as you know,
historically, there have been occasions
when great powers have clashed with
each other even when there have been
reasons not to and when there are
great levels of interdependence.”
And while the Chinese government
may be hoping that the boundary issue
can be placed on the back burner in
favor of economic cooperation, Mat-
too believes that the two governments
“cannot postpone continuously the
border question. I think the time has
come when you have to address that.
Until you do that there will always be
a trust deficit. As long as that trust
deficit exists, this relationship will
not really live up to its potential. The
border conflict still has the capacity to
undermine the larger relationship; so it
must and should be addressed as soon
as possible.” Resolution to the border
issue may prevent Indian observers
from claiming that China is attempt-
ing to create alliances encircling India,
the so-called string of pearls, designed
to undermine Indian influence in the
region. Pushing through a resolution
of the border issue would mean, ac-
cording to Mattoo, that “India will take
a much more positive or benign view
of Chinese investment.”
Yet the failure to resolve issues such as
this alongside an approach of fostering
good-neighborly relations has prompt-
ed suggestions within the media and
amongst academics that China may be
facing a dilemma in terms of pursuing
its foreign policy alongside achieving
greater economic integration. On this
point, Ye Hailin believes that a candid
approach to the topic should be taken,
noting, “If we are agreeing there is a
security dilemma or a dilemma of the
Chinese foreign policy then we
should admit that; unless you
think that peace means
no arguments, other-
wise there’s no such
kind of dilemma.”
Putting the situa-
tion in context, Ye
explains, “For the
past several years,
in Chinese foreign
policy, there is a problem (whereby)
China pays huge attention on how to
stabilize their regional environment
in the neighboring areas. But stabiliz-
ing doesn’t mean you try to avoid all
the obstacles, all the arguments, all the
difficulties. If you really want to seek a
peaceful environment you have to face
the problems and try to solve them; not
only avoid them.”
Referring to wider issues throughout
the Asia Pacific region, covering not
only border issues but also disputes
regarding territory at sea, Ye states
that governments “can postpone the
problems but it doesn’t mean you can
solve problems by postponing them.
If China really wants to provide some
public goods to the security issue,
especially to the regional security issue,
China has to make a real contribu-
tion; show willingness and strength to
maintain regional stability. This means
China should want to talk and be ready
to solve the problems and make an
effort to contain countries that want to
make trouble.”
At present though, at least in terms
of public perception, it appears that
the boundary issue between China
and India has been shelved in favor
of economics. Despite the apparent
shelving, however, Professor Ye Hailin
does not believe that this represents a
dilemma between China’s foreign and
economic policy. “I don’t think there’s
a security dilemma between China’s
peaceful demands to the region and
also protecting its core interests. If you
can’t protect your core interests, how
can you protect regional peace? It’s
highly unlikely.”
What both sides agree upon at this
stage is that the boundary issue re-
quires strong leadership in order for
a resolution to be reached. As Mattoo
points out, President Xi Jinping com-
mands authority and respect within
Beijing and Prime Minister Modi is
one of the strongest Indian leaders in
modern history. Hopefully, both lead-
ers can use their strength and influence
to help push beyond prolonged bilat-
eral talks between senior functionaries
and instead achieve a concrete and
satisfactory outcome for both sides.
The choice of Gujarat as Presi-
dent Xi Jinping's first stop during
his India visit marked a departure
from protocol, which many saw as
a sign of warm relations between
the two leaders.
In Ahmedabad, President Xi and
Prime Minister Modi witnessed
the signing of two agreements,
one concerning an industrial park
in Gujarat and the other on region-
al cooperation between Gujarat and
south China's Guangdong province.
Indian media paid special atten-
tion to the fact that this marked
the first time that pacts have
been signed by a visiting foreign
dignitary outside the capital, and
the less formal itinerary in Modi's
home state for the Chinese leader
showed the importance that Modi
attaches to the bilateral ties and
the buildup of his personal rela-
tionship with Xi Jinping.
15

For India and Pakistan,
the benefits of being
close both politically
and economically to
their neighbor China
are becoming increasingly
obvious. South Asia has always
been of great strategic importance to
China as the region is not only home
to China’s key neighbors, including
India and Pakistan, it is also showing
greater economic potential, offering
China new markets in which to sell
its goods and new international trade
routes via the Indian Ocean.
Under China’s policy to forge bet-
ter ties with its neighbors, Chinese
leaders have put ties with South Asian
countries high up on their agendas. A
visit by Chinese President Xi Jinping
to India in September, 2014, and one
by Chinese Premier Li Keqiang to
both India and Pakistan in 2013 have
strengthened China’s ties with this
region. The China-Pakistan economic
corridor, which is already in the works,
will extend all the way from China’s
western regions to the Indian Ocean.
President Xi’s visit to India in Sep-
tember has translated into investment
deals worth some 20 billion US dol-
lars. The deals coincide with Indian
Prime Minister Narendra Modi’s
efforts to boost India’s manufacturing
sector in a newly launched campaign
called “Make in India.” As part of
this issue’s focus on Chinese ties with
South Asian countries, MESSEN-
GER presents interviews with the
ambassadors of India and Pakistan in
order to find out what lies ahead for
China-Pakistan cooperation and how
Chinese investment can contribute to
the “Make in India” campaign.
Ambassador Ashok K.
Kantha, Indian Ambas-
sador to China.
We are moving towards
a new level of economic
engagement between India
and China. In this new phase
of economic partnership, two-way
investment flows will be very impor-
tant. While trade is important, we
believe that investment flows in both
directions is going to be an increas-
ingly critical component of economic
partnership between our two coun-
tries. Therefore, during (President Xi’s
September) visit we welcomed the
announcement from the Chinese side
that they’ll be making an investment
of 20 billion dollars in India over the
next 5 years.
At present, total cumulative invest-
ment from China into India is just
about half a billion dollars. We have
already made a good start with the
announcement of two industrial park
projects in India. A fair amount of pre-
paratory work has already been done
to set up these industrial parks. These
parks have two of the leading Chinese
companies as anchor units, so we’re
very confident that these projects will
be rolled out very soon.
Moreover, when it comes to the new
campaign of “Make in India” that
Prime Minister Modi launched, we ex-
pect our foreign partners to play a very
important role. I believe that very few
countries are as well positioned as Chi-
na is to be a key player in the “Make
in India” campaign that will be rolled
out in my country, given (China’s) ad-
vantage as the acknowledged factory of
the world, (China’s) core competencies
in infrastructure segments, (and) given
synergies that exist between our two
countries, that were remarked upon by
President Xi during his visit to India. I
believe there is enormous potential for
our two countries working together.
Key Areas for Cooperation
Two of the industrial parks for instance
that are being launched; one will focus
on automobile and auto components,
the other will focus on power sec-
tor. We have a major deficit when it
comes to infrastructure segment. That’s
another area where Chinese companies
can play a very important role. A good
start has been made with projects that
were identified in the railway sector
during President Xi’s visit.
China will be working with us to raise
speed using existing tracks on Chen-
nai-Bangalore-Masoor segment; a 500
km segment. China is also going to do
a feasibility study on high-speed rail
links, which will be only the second of
its kind. There are a whole lot of other
projects, including smart city projects
where you’re doing one demonstration
project in each country. So a lot of spe-
cific opportunities have already been
identified and concrete decisions taken
during President Xi’s visit.
What can Chinese companies offer
to India’s development, and how does
investing in India benefit investors?
Partly it will be funding, because
India is a capital deficient country
and China is the third largest outward
foreign investor. Capital is one, second
is (China’s) expertise, technology and
capability. Being one of the largest
manufacturing nations in the world
(and) being the factory of the world,
(China) has a certain core competence.
We have set ourselves rather ambitious
targets. We propose raising manufac-
turing as a segment of GDP from 15
percent at present to 25 percent in the
next 8 years. This is a rather ambitious
target, and I believe in achieving this
target China can play an important role.
The most important factor you need to
take note of is that India is one of the
largest markets in the world; in Asia it
is the third largest economy and it is
Immediate Neighbors:
India and Pakistan
16

one economy that has been growing
at the average rate of more than 7.5
percent per annum over the last ten
years; and we’re very confident that
we’ll maintain a high growth trajectory
in years to come. This opens up huge
business opportunities. In addition
to that you have to look at the skill
set that we have, you have to look at
the demographic dividend as a driver
of growth in the economy. So, India
will remain one of the most attractive
investment decisions worldwide for
many, many years to come.
The Sino-Indian trade deficit
We are looking at a multi-pronged
strategy to address this very serious
problem of huge trade deficit that we
have vis-à-vis China. This trade deficit
is not sustainable. One aspect is get-
ting better market access in China,
especially for those products where we
have competitive advantage. This issue
was discussed in great detail during a
recent meeting of the joint economic
group which was chaired by commerce
ministers (from both) countries and
we have taken some specific decisions.
We hope these decisions will be
implemented soon and we’ll see some
concrete progress regarding our getting
improved access to the Chinese mar-
ket. But we’re also looking at invest-
ment led trade promotion, because we
don’t have, at present, enough produc-
tion and supply-side linkages between
the two economies. Much of the global
trade today is being done through such
production and supply chain linkages.
As Chinese companies invest in India,
as Indian companies enhance their
business footprint in China, I believe
that these production and supply chain
linkages will increase., This will lead
to enhanced export of manufactured
items, of intermediate products from
India to China, thereby addressing to
an extent the problem of trade deficit
that we encounter at present in our
business linkages with China.
India’s economic corridors in the wider
context of the creation of the Silk Road
Economic Belt
The economic corridors that we are
talking about in the specific context of
the “Make in India” campaign, these
are domestic economic corridors.
These economic corridors are going to
be major drivers of economic growth
in India in years to come. Now coming
to our external engagement, China has
announced its Silk Road initiatives.
We have our own connectivity agenda
(and) there are some initiatives (where
countries are) working together, for
instance the BCIM economic corridor;
India and China along with Bangla-
desh and Myanmar. We are seeking
to develop this economic corridor
and we would be happy to explore
with China where we have synergies
in the connectivity agendas of our
two countries; I believe there is much
we can do together.
17

Ambassador Masood
Khalid, Pakistani Ambas-
sador to China.
The security situation
in South Asia
The focus of the discus-
sion in the context of South
Asia has been on the imminent
drawdown of the US and ISAF forces.
The participants have discussed the
implications of the withdrawal from
Afghanistan and its likely impact on
the region, especially on neighboring
countries like Pakistan. Of course, we
have our concerns and we have our
apprehensions, but at the same time
we are somewhat positive in our evalu-
ation that Afghanistan has recently
gone through a presidential election.
This particular transition is important
for Afghanistan itself, for the region
and for neighboring countries. We
hope that whosoever comes into power
in Afghanistan will seek good neigh-
borly relations and be a partner with
neighbors like Pakistan to promote
peace, stability and harmony within
the region. That’s very important, not
only for the economic development of
the region but also for the growth and
development of Afghanistan. So, Paki-
stan wishes to see peace and prosperity
in the region, in its neighborhood, so
that we can also focus ourselves on our
issues of concern, like domestic stabil-
ity and economic progress.
Is Afghanistan the new Iraq, a destabi-
lizing vacuum that threatens the peace
of the entire region?
First of all, I think we have to see the
situation in totality. The situation is
that Pakistan on its part is right now
engaged in a really decisive campaign
against terrorists. As you know, our
army and air force is taking action
against the militants who have sought
shelter in the border area of Afghani-
stan and Pakistan. Because of the
prolonged war and conflict in Af-
ghanistan and taking advantage of the
topography, they have sought shelter
in these mountainous areas and they
criss-cross. So we are taking action
and so far the results have been good.
When you talk of peace
in Afghanistan, and
peace in the region,
much would depend on
what kind of political
dispensation emerges in
Afghanistan.
Pakistan will be happy to
deal with whosoever comes in
power in Afghanistan; we don’t have
any favorites. We want to see peace
and stability in Afghanistan which
is intrinsically linked with our own
peace and stability. Secondly, we have
all along maintained that there should
be a reconciliation process within
Afghanistan; that has to be Afghan
owned, Afghan led.
We hope the new government in
Afghanistan will focus on engaging
all political factions, all groups, to
come around a political dispensation
through a reconciliation process. And
we hope that Afghanistan will succeed
and we will support that effort, we will
facilitate that effort; and hopefully as
a result of which, some kind of compro-
mise will be reached, some political dis-
pensation will emerge, which will satisfy
all political forces in Afghanistan.
So, that is the crux. When you have
that political settlement, when you
have that political process, I think
these terrorists and extremists who are
creating trouble for Pakistan and for
the region, they will slowly die down.
But simultaneously, the international
community has to focus on economic
development of Afghanistan also; this
is very important. The Afghan national
forces have been trained and I hope
they will be able to play the role that
is expected of them but I think the in-
ternational community has to sustain
the effort and help the Afghanistan
government to stand on its own feet;
that is very important.
Cooperation opportunities with China
along the Silk Road Economic Belt
China and Pakistan, we all have a stake
in the peace and stability of Afghani-
stan. If there is peace there, if there is
tranquility there, then we will be able
to actualize all these projects, all these
mega plans. Pakistan and China are
working on this economic corridor and
we are greatly encouraged by China’s
response. The vision of President Xi
Jinping’s Silk Road Economic Belt gels
well with our own priorities and our
own projections for the region and
for Pakistan.
We want to focus on the economic
development of Pakistan; economic
progress. And that is only possible
when we have peace within and peace
without. Peace in the region, peace in
Afghanistan is extremely important.
We will work together with China, we
have a very trusted relationship with
China and we will work together to
promote this concept, to promote this
vision so that people of the region,
people of our two countries and people
of neighboring countries benefit.
ChinesecharactersareseenasconstructioncontinuesonasectionoftheChinese-
builtandownednewColomboSouthHarbourinColomboonAugust15,2013.SriLan-
kahassignedadealwithaChinesecompanytobuildanew$1.4-billioncitycomplex
onreclaimedlandneartheharbourofthecapitalColombo.[Photography:LAKRUWAN
WANNIARACHCHI/CFP]
18

As Sri Lanka rises from the ashes of a
conflict which spanned three decades,
China has emerged as its strongest
partner. The island nation is poised to
become the logistics hub of South Asia
and is a crucial link in China’s plans to
revive the ancient maritime silk route.
Massive red cranes stand in the sea in
front of the Galle-face green, a water-
front promenade in Colombo, where
families go to fly kites and sip lemonade
with mint. Chinese and Sri Lankan en-
gineers can be seen scuttling around on
a vast new breakwater that curves into
the Indian Ocean. This is the site of the
new Colombo Port City, a man-made
islet built with Chinese funding worth
20 billion US dollars. Once completed,
it will be slightly bigger than Monaco
and will help make Sri Lanka the
logistics hub of South Asia.
China has invested in several major
port projects across South Asia
including the deep-water port in
Gwadar, a port in Karachi in Pakistan
and a container facility in Chittagong,
Bangladesh. But its maritime links
with Colombo form the linchpin of
China’s plans to revive the ancient
Maritime Silk Road.
“Sri Lanka sits on the midway point
on one of the world’s busiest interna-
tional shipping lanes. It is China’s most
precious pearl in an economic sense
in South Asia,” said Professor Wang
Dehua, Director of the Institute for
South Asian and Central Asian Studies
at the Shanghai Municipal Center for
International Studies.
Colombo is the only Mega-port in
South Asia, where ships with an
18-metre draft can be berthed and
therefore can serve not only South
Asia but also the Middle East and West
Africa. Its cranes can also cope with
ships 24 containers wide. Nothing in
India compares with that according
to C. Raja Mohan, a senior associ-
ate at the Carnegie Endowment for
International Peace and the author of
“Samudra Manthan”, a book on Sino-
Indian rivalry in the Indian and Pacific
Oceans.
The island nation is exploiting this
competitive edge with support from
its biggest ally - China - as it tries to
rebuild after three decades of civil
conflict that ended in May 2009. Gov-
ernment forces crushed armed rebels
Sri Lanka -
the True Pearl of China’s Maritime Silk Route
By Poornima Weerasekara
19

who wanted to carve out a separate
state for ethnic Tamils in the north of
the country.
China provided over half of the imme-
diate humanitarian assistance, worth
1.2 billion US dollars, in the immedi-
ate aftermath of the conflict in 2009.
China also recently eclipsed India to
become the largest foreign direct in-
vestor in Sri Lanka, with a stake in all
the major infrastructure development
projects in the country.
The Isle of Serendipity
One of the earliest records of trade
between China and Sri Lanka can
be found in the works of early 5th
century Buddhist pilgrim Faxian, who
travelled across South Asia includ-
ing Sri Lanka in search of authentic
Buddhist scriptures. Faxian talks
about Chinese ships laden with jade,
silk and porcelain arriving on the east
coast of Sri Lanka, which thrived on
trading in ivory, blue sapphires and
the prized spice - cinnamon.
It was the melting pot where Arab
traders bartered with Chinese mer-
chants. Chinese mariners in the Tang
dynasty described Sri Lanka as the isle
of gems, while the Arabs named it Ser-
endib, from which the word serendip-
ity is coined. China has again forged
close maritime links with the island
nation following the end of conflict in
2009, after which a period of economic
and political stability was ushered in.
President Xi Jinping inaugurated the
Colombo Port City project, built by
Chinese state-owned developer China
Communications Construction Co.
during his recent visit to the island in
early September, 2014. Artists’ impres-
sions of the finished city put on display
during President Xi’s visit showed a
palm-lined promenade and a yacht-
filled marina surrounding what will
be the island’s tallest skyscraper. It also
features a Formula One racing track.
Once completed, the China Commu-
nications Construction Co. will con-
trol almost one fifth of the land area in
the Colombo Port City either through
direct ownership or through a 99-year
lease. Sri Lanka’s main opposition has
criticized the arrangement citing the
lack of a bidding process when the
government handed out the tender.
This man-made islet will come up
next to a new 500 million US dollar
Chinese-owned container terminal
that helped double the capacity of
the Colombo port in less than 30
months, making it one of the top 20
container ports in the world. “We
can give some competition to Singa-
pore and Dubai, which are running
out of capacity,” Sri Lanka’s ports
authority chairman Priyath Wick-
rama told local media in April, 2014,
when the new Chinese Terminal at
the Colombo port was opened.
As the world’s largest exporter and
second-largest importer, China relies
on maritime routes to conduct over
80 percent of its trade. China controls
a fifth of the world’s container fleet
and by weight, 41 percent of ships
built in 2012 were made in China. “Sri
Lanka’s strategic importance to China
has increased tremendously as China
becomes more dependent upon sea-
line communication,” Professor Wang
Dehua claims.
China recently obtained a controlling
stake of the newly opened Hambantota
international port, off the Southern tip
of Sri Lanka, not far from the historic
port of Galle, where Chinese maritime
explorer General Zheng He landed
in 1409. The Chinese Export Import
(EXIM) bank funded the first phase
of the Hambantota port construction
to the tune of 360 million US dollars,
despite protests from local environ-
In Chinese history, the treas-
ure voyages were the seven
Ming-era maritime voyages of
the treasure fleet between 1405
and 1433. The Yongle Emperor
initiated the construction of the
treasure fleet in 1403. The grand
project resulted in seven far-
reaching ocean voyages to the
coastal territories and islands in
and around the South China Sea,
the Indian Ocean, and beyond.
Admiral Zheng He was commis-
sioned to command the treasure
fleet for the expeditions.
For the third voyage, Zheng He
Arrived in Ceylon in 1409, the
treasure fleet landed at Galle.
20

mental groups. President Xi pledged
another 600 million US dollars to-
wards its further expansion.
“Hambantota is just a port, not a
military base of the Chinese Navy,”
explained Professor Wang, denounc-
ing criticswhosaythatChinaisattempt-
ing to encircle India by colluding with
its neighbors and developing military
bases in and around the region. “On
completion, the Hambantota Devel-
opment Zone will include a liquefied
natural gas refinery, aviation fuel
storage facilities, three separate docks
that will give the port transshipment
capacity, (and) dry docks for ship
repair,” he added.
The Chinese EXIM bank is also fund-
ing the construction of a key express-
way connecting the capital Colombo
with this new port and China has un-
dertaken to develop areas surrounding
the Trincomalee Port, the second larg-
est natural harbor in the world, located
on the Eastern coast of Sri Lanka.
Churning the Oceans
China faces tough competition for
influence in the region from both
India and Japan, which rely on the
same maritime trade routes. President
Xi’s visit comes hot on the heels of an-
other high-profile state visit – that of
Japanese Prime Minister Shinzo Abe.
Abe was in Colombo in late August to
renew Japan’s economic and political
links with its long-standing partner.
But China’s effort to create a shipping
hub just 200 miles from its southern
tip is providing India with something
of a headache. As Raja Mohan reveals
in his book “Samudra Manthan,” Co-
lombo is a transshipment hub for In-
dia: big vessels unload containers there
and feeder boats take these to smaller
ports in South India. The Economist
magazine last year reported that about
13 percent of India’s container traf-
fic traveled via Colombo in 2013. In
the hypothetical scenario where the
new Chinese-owned terminal ran at
full capacity and dedicated itself to
transshipping containers to India, the
volumes could rise to 28 percent, leav-
ing India dependent on a foreign-run
port for a large portion of its trade, the
Economist reported.
“Samudra Manthan” refers to the
ancient Hindu myth of Gods and de-
mons churning the celestial Ocean of
milk in competition with one another.
As the title of the book suggests, Raja
Mohan expects a great deal of churn-
ing in the Indian and Pacific oceans as
big powers like India, China and even
the US, with its recent “Asian pivot”,
seek military and commercial influ-
ence in the region.
For instance, Chinese naval ships have
stopped at Colombo on their way to
Pakistan and during anti-piracy opera-
tions in the Gulf of Aden. “According
to recent reports, the docking of a
Chinese submarine in Colombo on a
long-range deployment patrol earlier
this month is yet another indicator
of the ever-increasing forays of the
People’s Liberation Army-Navy (PLA-
N) in the Indian Ocean Region (IOR),”
Prof. Wang Dehua pointed out.
The Reuters newswire reported that
Submarine Changzheng-2 and warship
Chang Xing Dao arrived at the port of
Colombo on October 31, 2014. This
came seven weeks after another
Chinese submarine, which Professor
Wang identified as “the diesel-electric
Type 039 Song-class” called at the
same port ahead of Chinese President
Xi Jinping’s visit.
New Delhi expressed grave concerns
after the most recent incident on Oc-
tober 31 and called the act “inimical”
to India’s interests. “China’s Navy is
fast transforming from a green-water
force used to operating close to its
own shores into a potent “blue-water”
force, one with “long legs”. Though
the Indian Navy has been tracking the
increased activity of Chinese warships
in the Indian Ocean Region, including
submarines quietly on the prowl in the
Bay of Bengal, this is a rare instance of
a PLA-N submarine openly berth-
ing in the region that India considers
its own strategic backyard,” Professor
Wang explained.
Wang notes that a few Indian policy
analysts with a cold-war mindset
have accused China of “creeping
expansionism” in the region. But is
China really seeking hegemony in the
Indian Ocean? “All these (claims)
are groundless. China will never seek
hegemony in the Indian Ocean. China
is only interested in the smooth pas-
sage of its ships in the Indian Ocean,”
Wang countered.
Model of Coexistence
China and Sri Lanka signed more than
20 bilateral agreements in areas of
energy, education, defense and cultural
cooperation during President Xi’s
recent visit. The two countries are also
putting the final touches on a Free-
Trade Agreement that is expected to
be signed in December.
“The forthcoming FTA is the big-
gest development in China-Sri Lanka
bilateral cooperation since the historic
1952 Rubber-Rice Pact between the
two countries,” Yu Jianhua, China’s
Deputy International Trade
Representative from the Ministry
of Commerce said during his visit to
Colombo on October 17, 2014. Assis-
tant Foreign Minsiter Liu Jianchao has
described Sino-Sri Lankan relations
as “a role model of friendly coexist-
ence and mutual benefit between
countries big and small,” in a recent
interview with Xinhua.
According to Professor Wang Dehua,
China-Sri Lanka cooperation will set
a good example for other South Asian
countries that want to build the Indian
Ocean into a friendly, cooperative and
harmonious ocean. Wang notes that
the win-win partnership between the
two countries is based on the desire
to create a harmonious community
with a shared destiny. “China wants to
help Sri Lanka’s dream of transforming
itself into Asia’s miracle,” he said.
21

A flurry of activity took place in
Beijing during October and November
that showed China’s greater commit-
ment to ushering in economic prosper-
ity and stability in both Pakistan and
Afghanistan. When Afghanistan’s new
President Ashraf Ghani came to China
in late October for his first state visit
abroad, Chinese President Xi Jinping
welcomed him as “an old friend of the
Chinese People.”
It was a strategic choice on Ghani’s
part, who hoped to attract Chinese in-
vestment and security assistance as US-
led NATO forces gradually pull out of
Afghanistan. That same week, Beijing
also hosted a special conference where
foreign ministers from Central and
South Asian countries came together
to discuss the political, economic and
security challenges of a post-NATO
Afghanistan. Speaking at this “Heart of
Asia conference,” Chinese premier Li
Keqiang said all Afghan groups should
“lay aside former enmity and join the
political reconciliation process.”
China is Afghanistan’s biggest investor,
pledging 327 million US dollars in aid
through 2017 in order to develop the
crumbling infrastructure within the
country. This is a sharp increase from
the 250 million US dollars invested by
China in the last 13 years since the fall
of the hardline Islamist Taliban regime
in 2001.
Pakistani Prime Minister Nawaz Sharif
visited China the week after Ghani’s
trip and Afghanistan’s stability and
Pakistan’s latest counter-terrorism
efforts were top of the Agenda when
Sharif met President Xi. China is
stepping up its efforts to ensure that
Afghanistan does not rescind into the
clutches of religious extremists, who
may threaten the stability of China’s
northwestern frontier region of Xinji-
ang, says Associate Professor Han Hua
who is the Director of the Center for
Arms Control and Disarmament at
the School of International Studies at
Peking University.
“There will be a power vacuum after
the withdrawal of NATO. This was also
the case after the withdrawal of soviet
troops in 1988. They (China) have
seen what happened after that. From
1988 to 2001, this power vacuum was
a reason for Afghanistan to become a
place for religious extremism or terror-
ist groups. That is a concern for China,”
Prof. Han Hua explains.
But Beijing has repeatedly said that it
does not seek to fill a void left by the
U.S. withdrawal of Afghanistan, prom-
ising instead to play a big commercial
role in the country’s reconstruction.
“The Chinese role is to bring more
economic development to the region
rather than through a military pres-
ence. That is a very different approach,”
Dr. Han Hua said.
A GAME CHANGER
China has both the political currency
and the economic muscle needed to
make both Afghanistan and Pakistan
more stable, according to Mustafa
Hyder Sayed, Executive Director of
the Pakistan-China Institute, a private
think tank based in Islamabad.
“China has certain goodwill from both
the governments and the people of
Pakistan and Afghanistan. And they
have the economic muscle to improve
people’s lives. They have lending insti-
tutions that can finance big projects at
very competitive interest rates, which
other western institutions cannot offer
because they are still going through an
economic meltdown,” Mr. Sayed notes.
“The establishment of the Asia
Infrastructure Investment Bank for
example and the important role that
the Chinese Export-Import Bank is
playing; they are game changers for
these countries which need reconstruc-
tion and infrastructure development,”
Sayed adds.
In the long run, stability in the region
is vital for China’s plans to build a new
economic corridor along the lines of
the ancient Silk Road and increase its
trade with the emerging South and
Central Asian markets. In Afghani-
stan, China wants to help the country
tap into its vast natural resources and
leverage its strategic location so as to
achieve sustainable growth. Wedged
between Iran, Pakistan, China and
other Central Asian states, Afghanistan
can act as a “regional land bridge” be-
tween South and Central Asia once its
road and rail network is developed.
In 2007, Chinese state-owned min-
ing giant China Metallurgical Group
Corporation (MCC) made a whop-
ping 3 billion US dollar investment in
the Mes Aynak copper mine south of
Kabul. It is the largest copper mine in
the world with an estimated 5.5 million
tons of high-grade copper ore. A 2013
report from the US Geological Surveys
department called Afghanistan “the
Saudi Arabia of Lithium.” Lithium is a
core component of smart phones and
By Poornima Weerasekara
Pakistan and Afghanistan have the potential to serve as China’s gateway to energy rich Central
Asia, but only if the region can first win its fight against terrorism and usher in peace. Can China’s
efforts to spur economic growth in these two countries help ensure greater stability in the heart of
South and Central Asia?
22

other electronic devices. The report
says that Afghanistan sits atop more
than three trillion dollars’ worth of
untapped natural resources including
iron ore, gold, oil and gas.
In Pakistan, China has worked closely
to resolve the country’s energy crisis,
boost infrastructure and strengthen
its defense capabilities. “During the
Cold War era, China-Pakistan relations
were a counter measure to India. But
after that the relations have grown far
beyond that,” Prof. Han Hua points
out. According to Prof. Han, “The
importance of Sino-Pakistan rela-
tions is three-fold: The first is ensuring
China’s regional stability, especially in
Xinjiang. The second is energy security
- the energy corridor and pipelines
going through Pakistan’s territory will
link the Middle East to China. Finally,
Pakistan is pivotal for the economic
integration of Asia as a whole with the
revival of the Silk Road.”
China is pouring in 42 billion US dol-
lars in order to develop the ambitious
China-Pakistan Economic Corridor.
This is the single largest investment
that China has carried out in any
one country. The project includes
a 200 km long tunnel that will link
Pakistan’s strategic deep-water port
in Gwardar on the Arabian Sea with
Kashghar, a key city along the ancient
Silk Road route, located on the edge
of northwest China’s Xinjiang Uyghur
Autonomous Region, near the border
with Pakistan. A Chinese state-owned
company took over the management
of the Gwadar deep-water port to the
consternation of India.
The port in Gwadar can serve as
China’s base for trade with both
Central Asia and the Persian Gulf,
says Mustafa Hyder Sayed. But more
crucially, 60 percent of China’s oil im-
ports can be whisked in from Dubai to
Gwadar and then transported via land
to China once the infrastructure along
the China-Pakistan economic corridor
is complete. Currently, crude supplies
to China from the Persian Gulf must
travel over 16,000 km on rough seas
to the port in Shanghai. During the
two- month journey, supplies are also
vulnerable to pirate attacks in the
Gulf of Aden.
Pakistan’s Prime Minister Nawaz Sharif
signed 19 bilateral deals when he was
in Beijing in early November, most of
them focusing on energy cooperation.
China is investing some 20 billion US
dollars to develop coal, solar and hydro
energy sources in Pakistan and in De-
cember last year, China committed 6.5
billion US dollars to building a major
nuclear power project in Karachi. “All
these power projects together would
generate about 25,000 MW. Most
of Pakistan will be energy efficient,”
remarks Mr. Sayed.
Furthermore, China is also Pakistan’s
largest weapons supplier providing 52
percent of the country’s defense sup-
plies in 2013, according to a leading
global think tank, the Stockholm Inter-
national Peace Research Institute.
Stability through
Development
China’s long-term mantra to ensure
that terrorist elements do not spill
out over the border from Pakistan or
Afghanistan and thus upset the delicate
security balance in its northwestern fron-
tier region of Xinjiang has been to spur
development in these troubledregions.
Earlier this year Chinese media
reported that almost 3,000 new cars
were hitting the roads of Urumqi, the
regional capital of Xinjiang, narrowing
the development gap between east and
west China. But unrest continues, with
the latest streak of violence unleashed
after the killing of an Imam at Kash-
gar’s ancient mosque, which Xinhua
News Agency notes was carried out
by separatist elements fighting for a
homeland for the minority Uighurs.
“Stability in Afghanistan and Pakistan
is directly linked to the stability in
the northwest region of China. But
we have seen some terrorist activities
not only in that region but outside, for
instance during the recent attacks in a
train station in south China’s Kunming
that killed 29 civilians. One faction
behind these terrorist activities is the
separatists (in Xinjiang), especially
when we talk about the East Turkistan
Independence Movement. Therefore, it
affects the national security and integ-
rity of China,” Prof. Han Hua said.
China is clearly concerned about for-
eign elements trying to fund and train
separatist groups at home. “According
to some reports or some local regional
government officials in China, they
talk about the training of bombers; that
they were trained in Pakistan.” Prof
Han adds. “But we never have a doubt
about the willingness or the determi-
nation of the Pakistani government to
cooperate with China to deal with this
problem and to fight against terrorism.”
Both the Afghan president and the
Pakistani premier reiterated their
commitment to crushing any militant
cells belonging to the East Turkestan
Islamic Movement that may operate
on their soil. But China is not willing
to take any chances with its territorial
integrity. It is stepping up efforts to
usher in stability in the heart of South
and Central Asia, which shares a com-
mon destiny with China. As Mustafa
Sayed says “a peaceful Afghanistan
means a Peaceful Pakistan. A peaceful
Afghanistan and Pakistan also means a
peaceful Xinjiang.”
“China has certain goodwill
from both the governments
and the people of Pakistan
and Afghanistan. And they
have the economic muscle to
improve people’s lives. They
have lending institutions that
can finance big projects at
very competitive interest rates,
which other western institu-
tions cannot offer because
they are still going through an
economic meltdown.
”Mustafa Hyder Sayed,
Executive Director of the Pakistan-China Institute
23

India is running a massive trade deficit with China.
Figures from India’s Ministry of Commerce and Industry
show that bilateral trade between the two countries from
2013-2014 was valued at roughly 66 billion US dollars;
but while India exported around 15 billion dollars in
goods to China, the South Asian giant spent approxi-
mately 51 billion dollars on imports from its East Asian
neighbor. Indian figures show that the country’s trade
deficit with China averaged 35 billion US dollars in the
last three years.
The persisting trade deficit has put pressure on the
recently-elected administration led by Prime Minister
Narendra Modi. The 64-year-old politician won India’s
election in May by campaigning on the promise to boost
the country’s struggling economy. Those promises are
now being called to task, and Modi is being urged to
rebalance India’s trade deficit with China.
By Bejan Siavoshy
24

The prime minister brought up his concerns about the
trade deficit to Chinese president Xi Jinping during the
Chinese leader’s three-day visit to India back in mid-Sep-
tember. Following a meeting between the two leaders in
Delhi, Modi said, “I raised the issue of [the] trade imbal-
ance between [China and India]. I urged President Xi to
give our companies better market access and investment
opportunities in China.” The Indian leader added that Xi
“assured that he will take concrete steps in this regard.”
Last year, just 3.6 percent of India’s exports went to China,
according to figures from India’s Department of Com-
merce. Likewise, the majority of those exports are raw
cotton, copper and iron ore, which account for roughly 51
percent of India’s exports to China. India has struggled to
overcome the barriers of entry to China’s IT and service
sectors — markets the South Asian nation is looking to
enter on, at least, a regional scale, if not a global one.
The opposite can be said about China’s foray into
India. An analysis of the China-India trade deficit in
the India-based business publication “The Financial
Express” shows that about 83 percent of goods China
exports to India as of July are capital and intermediate
goods; these are goods that require medium-to-high
labor skills, such as consumer electronics and machin-
ery — China’s top exports globally.
In June, China sent its foreign minister, Wang Yi, to meet
with Sushma Swaraj, India’s external affairs minister, in
New Delhi to establish initial contact with the then newly-
elected government under Prime Minister Modi. High on
the agenda of talks between the two sides was the trade
deficit. The Times of India reported that Wang and Swaraj
discussed China giving greater access of its IT and phar-
maceutical markets to India and ramping up investment
in the South Asian nation, which in June sat at around 900
million US dollars.
Precluding Xi Jinping’s September 17 trip to India was the
speculation that the Chinese leader would commit around
100 billion US dollars to invest in India to offset the trade
deficit. Earlier that month, Japanese Prime Minister
Shinzo Abe pledged an investment of 35 billion US dollars
over the next five years in India, which included the devel-
opment of bullet trains, during Modi’s visit to Tokyo.
China’s consul-general in Mumbai, Liu Youfa, was quoted
in a September 13 piece in the Times of India as saying:
“On a conservative estimate, I can say that [China] will
commit investments [in India] of over 100 billion US dol-
lars, or thrice the investments committed by Japan during
our president Xi Jinping’s visit next week. These will be
made in the setting up of industrial parks, modernization
of railways, highways, ports, power generation, distribu-
tion and transmission, automobiles, manufacturing, food
processing and textile industries.”
Xi’s visit to India in September 2014 resulted in 14 agree-
ments being signed between the two sides, but with China
pledging to invest only 20 billion US dollars in India over
the next five years. Under the agreements, China also
agreed to upgrade India’s ageing railway system, pump
more money into its industrial parks in Gujarat and Maha-
rashtra, and give more market access to India’s pharma-
ceutical and farm products — something India’s present
and prior government has pushed for.
But the trade imbalance still persists; and bilateral trade
looks like it will fall short of hitting 100 billion US dollars
by 2015 — a target proposed by both sides when Chinese
premier Li Keqiang visited India during the administra-
tion of prime minister Manmohan Singh in May of 2013.
However, India’s trade deficit with China is also indicative
of many countries’ trade relationship with the country. The
main reason for this is that China is the last stop on the
regional production line for East Asian goods being sent
to the rest of the world. As of October 2014, China’s trade
surplus sat at 46.5 percent of total trade, driven mainly by
sales to the US amid slowing Asian demand, according to
figures from China’s General Administration of Customs.
India’s own trade maneuvers and economic conditions
have also been a big contributor to the country’s trade
deficit with China. The South Asian giant runs a trade
deficit with 16 of its top 25 trading partners. India imports
way more than it sells abroad. The country’s restrictive
labor, tax and land laws have led to a shaky economy and
manufacturing sector, according to an article in Forbes
following President Xi’s visit to India.
During the “Make in India” conference in July 2014, which
was organized to showcase the country as a prime loca-
tion for the world’s factories, Indian Commerce Minister
Nirmala Sitharaman said that the country’s government is
looking to boost manufacturing from 15 to 25 percent of
its 1.9-trillion-dollar economy.
That figure is lower than manufacturing percentages in
Asia’s other major economies, including Thailand (33 per-
cent); China (32 percent) and South Korea (31 percent),
according to data from the World Bank. At the two-day
Indian Economic Summit in early November 2014, Indian
Finance Minister Arun Jaitley said the government was
working on fresh measures to push through economic
reforms that would ease labor regulations and changes to
the country’s Land Acquisition Act.
World Bank data shows that India ranks 134 during 2014
on the Ease of Doing Business Index — down from 131
the previous year. Another big obstacle in the way of
India’s manufacturing progress is energy. According to
Forbes, roughly 70 percent of India’s trade deficit is due to
the country’s net imports of oil and coal, with its gold im-
ports adding to the elevated figure. While China loosening
restrictions will help India boost its exports to the East
Asian nation, India taking care of economic issues at home
could ultimately spur the narrowing of its trade gap.
25

Interview - Steven Hadley
27

Following the Second World War,
the 20th Century saw the emer-
gence of the US as a world power.
Its influence over the current
international system is undeniable
and immediately after the fall of
the Soviet Union, its power was
seemingly uncontested. However,
as China’s economy has grown
massively, so too has its power
and international influence.
Us and China
In the 21st century, China’s re-emer-
gence as a world power is changing the
face of international relations, so much
so that the rest of the 21st Century
will depend upon the existing power,
the US, and the emerging power,
China, cooperating peacefully. Fur-
thermore, relations between the two
giants also influence relations with
third-party countries.
As a guideline for relations between
the two powers, Chinese president
Xi Jinping proposed the “New model
of major-country relations”, a series
of guidelines to ensure that relations
between the US and China would be
free from conflict in the future. Last
year, both countries endorsed the idea
of establishing a new model of major-
country relations, though terminology
and definitions between both sides
have varied, as is evident from the
comments of Steven Hadley, former
US National Security Advisor, serving
under President George W. Bush (See
page 29).
Nonetheless, the new features at its
core are the principles of no conflict,
no confrontation, mutual respect,
cooperation and common prosperity.
More specifically, both China and the
US have agreed to press ahead with
more cooperation on anti-terrorism,
nuclear non-proliferation, climate
change, as well as other international
and regional issues. The two coun-
tries have also set up multi-layered
mechanisms to promote economic,
political, technological, and military-
to-military exchanges.
According to Jin Canrong, professor
of International Studies at Renmin
University in Beijing, China is “deter-
mined to escape from the transitional
tragedy of big powers.” Jin elaborates
that “The purpose of President Xi Jin-
ping raising this term (new model of
major-country relations) is to show
his determination to escape from this
historical tragedy. In principle, the
United States accepts this concept;
they want to do the same thing and
also escape from this tragedy.”
However, the US has shown hesita-
tion when it comes to embracing the
terminology put forward by China.
Though some may find it trifling that
countries differ over the term, in the
world of diplomacy, terminology is
an important tool when it comes to
shaping concepts. Despite use of the
term by President Obama at the G20
last year in St. Petersburg and by Susan
Rice during a speech at Georgetown
University last November, the US has
since reverted to referring to a “new
type of relationship” rather than a “new
model of major-country relations”.
Clifford Kiracofe, a former senior
professional staff member of the US
senate foreign relations committee,
believes that hesitation on the US side
is part of a wider learning curve within
the US administration as Washington
readjusts to the reality of an emerging
multipolar world. “Washington needs
to think more in multipolar terms
than in hegemonic terms or unipolar
terms,” opines Kiracofe, noting that a
move away from so-called “megaphone
diplomacy” would be a good start in
order to press forward with work-
ing out any type of new relationship
between the two powers.
One of the core tenets of the new con-
cept, according to Xi Jinping’s inter-
pretation of the new model, is respect
for the core interests of the other party.
Within China, many academics believe
that the US is not willing to treat China
as an equal partner at present.
According to Jin Canrong, the forth-
coming “increase of China’s compre-
hensive national power” will ultimately
lead to it being treated equally by the
US. However, despite this interpreta-
tion that China is not yet being treated
as an equal partner, Jin Canrong does
not believe that Beijing is attempting to
downgrade China-US relations in favor
of relations elsewhere. Instead, the
situation is much more nuanced and
reflects the rapidly changing reality of
international relations.
“Over the past four decades, China-US
relations are always at the very top of
our agenda; enjoying absolute impor-
tance in our foreign policy. But now,
at least on the surface, our leaders pay
more attention to our neighborhood,
to other big powers; Russia, EU, Brazil,
etc. China’s strategy has become more
sophisticated. But whether that means
China will downgrade the importance
of China-US relations, I’m not sure. I
think it’s too early to say.” By increasing
its ties with its neighbors, China is also
strengthening its bargaining position
with the US.
So while it may seem that China has
recalibrated its foreign policy to focus
on its immediate neighborhood, Jin
is convinced that “The final target is
to strengthen US-China relations,”
via building new relations elsewhere.
Whether the US is attempting to
contain China or not, the international
framework of institutions is slowly
being influenced by China’s economic
influence (See page 8); a fact that
may speed up the learning curve that
Washington is currently trying to come
to terms with.
28

Interview
Steven Hadley
As both China and the US attempt to
forge the concept of a new model of
relations, MESSENGER presents an
interview with Steven Hadley, former
US National Security Advisor, serv-
ing under President George W. Bush,
touching upon Xi Jinping’s promo-
tion of a new model of major-country
relations as well as the wider situation
of the Asia Pacific region in general.
Looking back over 35 years of diplomatic
ties, how do relations between China and
the US compare from then to now?
I think there’s been enormous pro-
gress in US-China relations over the
last 35 years. I think it’s a tribute to the
leadership of both countries. I think a
commitment to building a positive re-
lationship between the two countries
has been the position of both Chinese
leaders over time and it has been the
position of American administrations
consistently, whether Republican or
Democratic; so I think there’s been a lot
of continuity on both sides and I think
it’s produced a very positive growth and
development of the ties between our
two countries.
In order to achieve a New Model of
Major-Country Relations, what mecha-
nisms need to be put in place?
There are already a lot of structures
between China and the US. There are
meetings between US and Chinese of-
ficials at all levels in our government.
And of course, American businesses are
active in China and Chinese businesses
are increasingly active in the United
States. So I think the structure of the
relationship is fine. What we need is
more intensive, high-level engagement
among our leader to develop this new
model of relations. We need to develop
the principles on which it should be
based, but also practical steps that can
be taken to try to operationalize those
principles in terms of concrete coopera-
tion between our two countries. I think
that’s what is most important; identify
some concrete projects that are in the
interests of both China and the United
States; that are important to both peo-
ples, and it will be high enough pro-
file to signal to our peoples that in fact
there’s a new relationship between the
two countries and that it can provide
positive benefits for both peoples.
What barriers stand in the way of imple-
menting any kind of new model?
What needs to happen is the two coun-
tries need to engage on this subject in a
very intensive and focused way. It’s dif-
ficult; the world is a very complicated
place. There seems to be one crisis af-
ter another and I think that the crises
sometimes divert attention from the
kind of committed, consistent work that
needs to be done to develop a concept
that is as challenging as the new model
of major-country relations will be.
How can China and the US go about
seeking more cooperation on regional
and international security issues?
They need to talk to each other on a
very consistent basis. I think sometimes
we fall into the habit of communicating
to each other by what we say in public
and I’m not sure that’s the best way for
countries to communicate with one an-
other about sensitive issues. So I think
there need to be more frequent and in-
tensive, candid conversations between
representatives of the two governments
behind closed doors to try to build un-
derstanding. I think too much of the
communication burden is perhaps be-
ing carried in the media and not enough
by the kind of discreet talks that really
are more like traditional diplomacy.
With regards to military-to-military
exchanges, how important is the new
model?
I think there has been progress in the
mil-to-mil relations between our two
countries. I think the kind of concrete
cooperation at sea that our two navies
have been able to engage in in the gulf
of Aden off the east coast of Africa and
anti-piracy activities has both strength-
ened the anti-piracy capabilities of both
countries but it’s also to help build some
confidence and understanding and fa-
miliarity at the operational and military
level. I think that can be an important
element of stability and improved rela-
tions over time and I think it can make
a contribution to developing the new
model of great power relations because
one of the things I think could derail
the new model is if we had some kind
of confrontation between our militar-
ies, particularly our naval forces at sea.
How should both countries go about
reducing tension in the Asia Pacific Re-
gion?
I think it is not true that the United
States has interfered in the East China
Sea or the South China Sea. I have indi-
cated that the framework for the United
States is that we don’t take a position on
the issues; we think they should be re-
solved among the parties without force
or the threat of force, and that the navy
forces of the countries that border the
South China Sea and East China Sea
need to have the kinds of instructions
and communications links and crisis
management protocols to avoid inci-
dents at sea provoking a confrontation.
That’s been the position of the (US)
government and I think it is a good
position for the US government to
take. The kind of strategic dialogue
I’ve talked about would go a long way
towards improving relations between
the two countries and maybe get us
on the road towards defining a new
and more positive relationship be-
tween the two countries.
As the two largest economic powers, how
can China and the US jointly lead the
way in solving the world’s common chal-
lenges?
One of the things they can do is to lead
towards trying to establish in the Asia
Pacific a single and a common trade
and investment framework for all the
countries. I think that would be a dra-
matic first step and the two countries
can do that. It’s also very important
that the two countries work together to
strengthen the global financial system
so we do not have, and are not subject
to the kinds of economic downturns
that occurred in 2008. I think these are
two very useful items for the agenda
between our two countries in the eco-
nomic sphere.
29

In November of 2014, Chinese President Xi Jinping
and Australian Prime Minister Tony Abbott an-
nounced that the two countries had completed a
landmark free trade agreement, capping nine years of
bilateral negotiations. However, the bilateral agree-
ment, which will benefit both countries greatly,
represents another example of fragmentation within
the region with regards to free trade. Nonetheless,
Australian Prime Minister Tony Abbott hailed the
agreement as a reflection on both countries’ ability
to be reliable partners.
Chinese President Xi Jinping delivered an address to
the Australian federal parliament in Canberra, follow-
ing the completion of the G20 summit in Brisbane,
outlining China’s plans for peace, stability and prosper-
ity, based on a comprehensive strategic partnership
and the substantial completion of FTA negotiations.
The two sides not only announced the substantial
completion of FTA negotiations, they also revealed
that they have decided to elevate the bilateral relations
into a comprehensive strategic partnership.
Speaking on the FTA agreement, Abbot told reporters
in Brisbane, “This has been a ten-year journey but we
have finally made it and both our countries will see the
benefits flow through in the years ahead. It is, as I said
at the beginning, a good day for Australia, a good
day for China, a good day for consumers in both our
countries and ultimately a good day for workers in
both our countries.”
According to the announcement, Australia will even-
tually reduce tariffs to zero on all goods imported from
China, and China will remove tariffs on a vast majority
of Australian goods. This will include popular products
such as dairy, beef and wool. Li Jian, from the Chinese
Academy of International Trade and Economic Coop-
eration, says the renewed agreement will increase trade
in farm products. “From the point of Chinese produc-
ers, the resources in Australia have many advantages.
The demand for their resources is increasing annually,
which is also good for boosting the market in China.
Animal husbandry and crop farming in China will also
expand accordingly.”
Li Jian adds that the deal will also boost China’s
agricultural production level. “For animal husbandry,
Australia has better land, water and other natural
resources including weather conditions (compared to)
China. The lowered threshold will bring more Chinese
enterprises to invest in Australia. The products can
also be sold to China. The singing of the FTA between
the two counties will be a mutually beneficial thing.”
In regards to investment, the pair agreed to grant each
other the most favored nation (MFN) status once the
FTA takes effect. This will bring more opportunities
to Chinese investors as they become more and more
interested in agricultural investment in Australia.
Jason Hayler, an Australian local land agent, claimed
that most investors have no intention of flying out to
Australia, building a house and running the property
themselves. “What they are after is partnerships with
caring Australian producers that have the skill and ex-
pertise to run an efficient and profitable fund; so that is
where the real opportunity is.”
Following the G20 summit, President Xi noted that
bilateral relations between China and Australia had
developed very quickly in recent years and have bright
prospects for the future, adding that “The two-way
trade between China and Australia has grown from
86 million US dollars in the early years of bilateral
diplomatic relations to 136 billion in 2013. And China
has been Australia’s biggest trading partner for five
years. China has become Australia’s largest source of
International students and tourism revenue. In 2013,
China and Australia established a strategic partner-
ship, which was a significant milestone in the growth
of the bilateral relationship.”
Xi Jinping wants the two sides to endeavor to build
trust and become stronger partners but is also mindful
of international perceptions when it comes to disa-
greements between nations. “China is like a big guy in
the crowd; others will naturally wonder how the big
guy will move or act. They may be concerned that the
big guy will push them around, stand in their way, or
even take their place. So here let me address several
key issues that are of interest to you. First is that China
remains unshakable in its resolve to pursue peaceful
development.”
The Chinese president added that China also remains
unshakable in its commitment to pursuing common
development and in its resolve to pursue a policy
of promoting cooperation and development in the
Asia-Pacific. With this in mind, he urged China and
Australia to enhance strategic dialogue and be sincere
and trustworthy partners going forward so as to jointly
safeguard regional peace and stability within the Asia-
Pacific region. Certainly, the US will be paying close
attention to the growing ties.
Another Free Trade Agreement
30

Chinese Language and Culture College
picture dictionary
of chinese measure
words
Contains 210 frequently-
used measure words
Includes nominal measure
words, verbal measure
words, concurrent
measure words, etc.
Compiled according to the
HSK examination outline
Features multiple
retrieval methods
36, Wang Fu Jing St. Beijing, 100710, China
Tel: 86-10-65258899 ext.407
Email: duanxiayun@cp.com.cn
CROSSING THE
GENDER LINES
The unkind world of
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PROSTITUTES AND POETS
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Online porn survives
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Handcuffs in
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CROSSING THE
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The unkind w
transgenderi
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PROSTITUTES AN
Muses and ba
from the worl
oldest profes
CHINAPORNWAR
Online porn s
and thrives un
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EXANDLAWAWA
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andcuffs in
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2013 ISSUE 4 BI-MONTHLY
2013年第4期 �第41期／双月刊
SHARING STORIES, SHARING CULTURE 发现中国，共享世界
MEDAL FATIGUE
Olympic success
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MMAINTHEMIDDLEKINGDOM
Bruisers pay their bills with
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THEWAYOFTHEPOLE
They’re not strippers;
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HOOLIGANS
A peek into the culture
and causes of football
hooliganism in China
2013年第4期�第41期／双月刊YLHTNOM-IB4EUSSI3102
¥ 19.00 USD 7.0
THE
FOROROpicture dictionary
of chinese measure
words
Contains 210 frequently-
used measure words
Includes nominal measure
words, verbal measure
words, concurrent
measure words, etc.
Compiled according to the
HSK examination outline
Features multiple
retrieval methods
36, Wang Fu Jing St. Beijing, 100710, China
Tel: 86-10-65258899 ext.407
Email: duanxiayun@cp.com.cn
F
cover.indd 1 11/21/13 10:33 PM
2013-02cover.indd 1 11/22/13 10:33 PM
2012年第6期�第37期／双月刊YLHTNOM-IB6EUSSI2102
Release date: June 2012ease date: June 2012
Address: 36,Wang Fu Jing Street, Dongcheng District, Beijing,100710,China
Tel: 010-65278537 65126429, Fax: 010-65249763
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¥ 19.00 USD 7.00
ATIBETAN
TAPESTRYFrom spiritual journeys
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Will a new law requiring real-name
registration mark a turning point for
Chinese microblogs?
A L L H A IL T HE QUEEN OF W EIBO
An interview with Yao Chen, China’s
most popular microblogger
M A RC H OF T HE Q Q PENGUIN
How an instant messaging service
changed the face of the Chinese internet
www.theworldofchinese.com

Editor-in-chief -
Design -
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Executive editor -
Stuart Wiggin
Cui Chaoqun
Stuart Wiggin
Cui Chaoqun
Xie Qiao

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